In October, the crypto sphere witnessed a landmark event as Celestia launched, setting the stage for the new era of modular blockchains and strengthening collaborations with major ecosystem players.
The highly anticipated Celestia went live and thereby initiating the start of the new modular era. Prior to launch Celestia had announced important partnerships with key players in the space. Early in October the governance process for Celestia was announced, in partnership with a list of ecosystem projects such as Risc Zero, Neutron, Skip, Eclipse, Astria and Rollkit. In addition Celestia announced their Blobstream product, built together with Succint Labs, which allows using Celestia for Ethereum settled rollups such as Optimism stack chains. Finally, and in the same vein, Celestia announced their partnership with Arbitrum, this would allow Arbitrum Orbit chains to use Celestia for data availability.
One exciting catalyst igniting the markets is still the possible approvals of a Bitcoin and Ethereum spot ETF. Rumors about an approved Blackrock spot Bitcoin ETF resulted in the price of Bitcoin rising more than 10% in a single day. The false alarm caused a large cascade of liquidations, but sentiment remains and so does anticipation for the real approval. Many applications have been updated by the filers to better meet the SEC’s requirements, and consensus shows the likelihood of a decision before the 10th of January in 2024.
Layer 2 networks have been seeing increased interest as positive sentiment and volume starts to come back to the markets. This paved a good moment for Scroll to go live with its zero knowledge EVM on the mainnet. The goal of Scroll is to address the scaling limits of Ethereum through their zk-rollup design. On the topic of Layer 2’s, Arbitrum concluded their Grants Program where they distributed 50 million $ARB tokens to projects that reached quorum for votes. On the other side of the spectrum, a project that opted to move away from a Layer 2 design and become an appchain went live. This was the V4 upgrade of DYDX through which it became a standalone blockchain based on the Cosmos SDK. This migration enhanced decentralization through a fully decentralized, off-chain orderbook. Also, via their off-chain matching engine, they can scale orders to much higher throughput.
JPMorgan is moving $1 billion daily through JPM Coin (their permissioned blockchain-based intra-bank value transfer system). It is quite low compared to their traditional platform where JPMorgan handles $10 trillion in daily payments, however, it demonstrates some significant traction already. JPM Coin processed over $300 billion in transactions since its launch in 2020. Furthermore, JPMorgan’s Tokenized Collateral Network (TCN) has gone live (a blockchain-based collateral settlement application). TCN allows clients of JPMorgan to utilize tokenized assets as collateral. The first transaction was already made with Blackrock and Barclays. BlackRock used TCN to convert shares in one of its money market funds into digital tokens, which were then transferred to Barclays as collateral for an OTC derivatives trade between the two institutions.
The web2 payment industry has seen an increase in crypto adoption. First of all, Mastercard is planning Web3 collaborations with self-custody wallet firms. They are now working with both MetaMask and Ledger amongst others. Mastercard stated that a payment card helps wallet providers increase the number of active users and build other revenue streams, like giving users a new way of spending their crypto balance. Mastercard is also exploring new models for global issuance using stablecoin on-chain settlement via inexpensive fast chains. Furthermore, Mastercard is partnering with the crypto payment firm MoonPay, who will incorporate the compliance-friendly credential system of Mastercard. MoonPay will also integrate the same payments tech as the ‘click to pay’ of Mastercard. Further web2 payment adoption is coming from the luxury car manufacturer Ferrari. In the United States, Ferrari now accepts payments for its cars in Bitcoin, Ether and the stablecoin USDC. They plan to expand this payment method to Europe in Q1 of 2024.
Portfolio company Openfort has announced a strategic alliance partnership with Particle Network. Particle network offers enhanced security with their Multi-Party Computation technology to safeguard the users' private keys. This, combined with Openfort’s Account Abstraction and smart wallet infrastructure, facilitates smoother interactions with on-chain assets & activities. Furthermore, RiscZero is now utilizing Rust to enable provable machine learning with ZK-ML. Developers can now train AI models in Rust using the SmartCore Machine learning crate and use the RiscZero VM for proving inference of a private machine learning model.
There are some first signs of recovery for the decentralized finance ecosystem with users and TVL growing, as can also be seen in our portfolio. For example there is Gyroscope, where TVL has doubled since last month, now surpassing the $25 million mark. Most of the value originates from their newly launched E-CLP pools, which facilitated over $68 million in concentrated swap volume in October alone. Second is Levana, a perpetual decentralized exchange in the Cosmos ecosystem which saw over $50 million in daily trading volume this past week.
