Round Tripping
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tl;dr: stablecoin flows & Tether’s growing dominance, Arbitrum’s healthy metrics while still no token, MATIC’s zkEVM, & the growing altcoin narrative exhaustion
BTC dominance 41% | ETH dominance 17% | DeFi TVL $51B |
Total Crypto Market Cap $1.17T | Stablecoin Supply $136B |
The underlying tech has once again improved as prices continue upwards higher than they were last week. Along with prices again going up, we’ve endured another week without receiving Arbitrum governance responsibilities despite everyone’s best effort of hopelessly willing the token to launch “next week” for the 10th week in a row.
As a result of the endless fabricated ARBI token rumors, combined with overall crypto on-chain activity remaining elevated, Arbitrum’s fundamentals look as healthy as ever. The below images capture Arbitrum’s underlying growth as transaction volume continues to surge to new ATHs and TVL steadily increases.
Of course, this could be the result of farming the constant ARBI hopium, but the success of newer launches such as GRAIL, ARC, PSI, and VELA along with MAGIC’s resurgence suggest that Arbitrum’s recent growth is more than just airdrop farmers.
Arbitrum is far from the only ecosystem benefitting from crypto’s strong rally off the FTX-induced lows as essentially every sector gained multiples more than BTC & ETH this week continuing the trend to start the year. Speaking of the majors and the FTX lows, BTC is now up ~50% this year while ETH follows closely behind gaining ~42%.
With alts throughout the entire ecosystem outperforming BTC & ETH, and liquidity being spread to numerous chains chasing risk further out the curve, it feels as if we’re primed for BTC, and to a lesser extent ETH, to run relative to alts while evaporating the liquidity that has recently been shape shifting. BTC has now attempted to regain the key level of 25.2k multiple times while ETH consistently flirts with expanding from the low 1700s. If those levels are broken or not remains the key question but I’m expecting alts to cool off whether it’s from BTC breaking resistance and increasing dominance or from capital that previously gained multiples flowing back into the premier crypto assets.
Outside of the broad market rally, one of the most interesting dynamics developing is the distribution and dominance of stablecoins. Since the regulatory onslaught the US government began last week, specifically the NYDFS ordering Paxos to stop issuing Binance’s BUSD, Tether’s dominance has continued to grow. USDT now accounts for 52% of the total stablecoin supply, the highest level since November of 2021.
As you can see from the above image, USDT’s growth is mostly a result of the rotation out of BUSD. Since the NYDFS ruling last week, BUSD’s supply is down from $16.1B to $12.9B today. As far as BUSD’s future, CZ has said “we do forsee users migrating to other stablecoins over time…eg, move away from using BUSD as the main pair for trading”. Following that, Binance surprised the market Thursday by minting $50M worth of a lesser known stable TUSD.
The scramble caused by increased regulatory uncertainty could be seen on chain as well where CRV, the premier stableswap protocol, processed ~$1.07B of volume the day of the NYDFS Paxos ruling. While the future distribution and dominance of BUSD, and the stablecoin market in general, is unclear some certainties remain.
US regulators, whether intentional or not, are pushing capital away from the onshore regulated markets of compliant entities like Paxos & Circle’s USDC to the offshore unregulated USDT. Despite the uncertainty, expect Binance, Paxos, Circle and all other current or future stablecoin issuers to defend their market share by any means necessary as stablecoins, backed by US treasuries and other short-term yield bearing assets, are one of the most lucrative businesses ever created.
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funding:
Hub71, Abu Dhabi’s tech ecosystem, starts $2B initiative to back blockchain tech
Yield Guild Games (YGG) raising $75M for its first fund focused on gaming & infra
Taurus, market infrastructure for digital assets provider, raises $65M series B
Superplastic, creative NFT animation shop, raises $20M series A — Amazon’s venture arm led raise with Google, Craft Ventures, & Sony Japan contributing
Monad, EVM compatible new L1 chain, raises $19M pre-seed/seed
Sending Labs, building messaging protocol SendingNetwork, raises $12.5M seed
Alongside, crypto index platform for easy market exposure, raises $11M seed
Zion, social network building on BTC’s Lightning, raises $5M @ $53M valuation
Nefta, infra for crypto gaming/entertainment, raises $5M seed @ $32.5M val
Ironblocks, blockchain cybersecurity platform, raises $7M seed
Cysic, zero-knowledge hardware solutions company, raises $6M seed
Stelo Labs, open-source crypto security extension & developer API, raises $6M
Unagi, crypto gaming studio behind Ultimate Champions game, raises $5M seed
Orb Labs, cross-chain tooling & protocol developer, raises $4.5M seed
Modular Cloud, blockchain tooling provider, raises $1.7M pre-seed
news:
Binance considering de-listing U.S. based tokens, including USDC; Binance mints $50M of TUSD after CZ recently said Binance “could move away from using BUSD as the main pair for trading” due to regulatory actions against BUSD
QG magazine to launch first NFT collection granting access to magazine subscription, merchandise, and live events
Coinbase to integrate direct withdraws to ETH L2 Arbitrum for WBTC, ETH, & DAI
SEC charges Do Kwon as he remains on the run; he allegedly siphoned 10k BTC from Terraform Labs after UST/LUNA’s collapse
Robinhood reports crypto trading volume up 95% MoM
Susquehanna joins Citadel in backing crypto bank Silvergate, buys 7.5% stake
Square Enix to launch blockchain game Symbiogenesis on MATIC “in the spring”
Tencent Cloud partnering with MultiversX (EGLD) to “expand its Web3 products”
Siemens issues tokenized $65M one year bond on Polygon’s MATIC
Sony partners with Astar Network (ASTR) to launch a Web3 incubation program for projects focusing on NFTs & DAOs
Wirex, crypto payments firm, signs long-term partnership with Visa
PayPal pausing stablecoin development as a result of recent regulatory scrutiny
tokens & protocols:
ATOM — completes Rho upgrade, Interchain Security coming later Q1
CANTO/INJ — Injective integrates Canto-based assets to their ecosystem
MATIC — plans to launch zkEVM L2 on mainnet beta March 27th
Flashbots — introduces MEV-Share which distributes a portion of the money made from MEV to users instead of just validators & block builders
FIL — to launch smart contracts and become fully-fledged L1 in March
SUDO — token of the NFT AMM protocol is live & transferable
SUSHI — launches Sushi Studios, decentralized brand licensing & incubator
YGG — raises $13.8M from treasury token sale
EGLD — partners with Tencent Cloud to help Tencent expand its “Web3 products”
ASTR — announces partnership with Sony for “Web3 incubation program”
zkSync — opens their zkEVM to mainnet builders & open sources the codebase
Marginfi — launches new borrow-lend protocol mrgnlend on Solana
COLLAB — confirms token airdrop of 25% of supply to ~2M eligible wallets
Sorare — announces more ETH rewards for soccer competitions
Hyperlane — introduces Warp Routes for permissionless bridging of any asset
Rabbithole — launches v2
Aori — fully collateralized, member-owned, decentralized options protocol
around the ecosystem:
ChainLinkGod on all things RWAs and scaling DeFi to a global level
Coinbase on NYDFS’s Paxos ruling & asserting stablecoins are not securities
tweets:
Glad to see your newsletter get a sponsor - and a solid one at that! Thoroughly deserved tolks