Words by Maven 11 Venture

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We closed the first month of the new year on a positive note as the entire crypto industry found some more steady footing. Specifically noteworthy for Ethereum was the fact that L2’s Arbitrum and Optimism flipped Ethereum in combined transaction volume. The rise in transaction volume was sparked by a sharp rise in daily active wallets on both rollups. At the same time, Ethereum itself reached a milestone of having 500.000 active validators, demonstrating the robustness of the network. Looking ahead, the Shanghai hard fork is a highly anticipated event which is scheduled for the end of March. This will be the first post-merge event where Ethereum stakers will be able to gradually withdraw their balances. While Ethereum is still waiting for its next hard fork, Polygon underwent an important hard fork this month. The upgrade included proposals to change their gas fee mechanism, but more importantly also changes to their Bor consensus mechanism in an effort to decrease the depth and frequency of reorgs which have Polygon since inception.

The recent crypto insolvencies have sparked the interest of regulators around the world. This month we saw officials in the Biden administration urge congress to expand the authority of regulators to police the crypto industry. In the coming months, we can expect “priorities for digital assets research development” to protect customers but not hinder innovation. The UK also revealed plans to regulate crypto trading and lending, with the Treasury laying out guidelines for regulating crypto activities like trading and lending. In the meantime, the UAE is aiming to become the center of cryptocurrency innovation by providing more lenient legislation. In Davos, the UAE minister of state for foreign trade mentioned that “crypto will play a major role in UAE trade going forward”. As a result of this friendly climate, a number of crypto firms have already moved or announced they will move their headquarters to the UAE in the months to come. Finally, the National Australia Bank, the fourth largest Australian bank, has shared plans to launch a Australian dollar-pegged stablecoin AUDN on both Ethereum and Algorand. The token will be fully backed by Australian dollars held by the bank. 

This month saw the world’s largest retailer Amazon take the first thorough steps in its Web3 approach. Amazon is launching a digital assets enterprise, which aims to launch an NFT initiative in the spring. It is rumored that Amazon is building a blockchain-based gaming application with NFT rewards. Additionally, the AWS arm of Amazon announced a partnership with Avalanche, which will see AWS adding one-click deployment of Avalanche nodes and subnets.

This month the highly awaited NFT game ‘Dookey Dash’ was launched by Yuga Labs, the creator of Bored Apes. The game raked in more than $40 million worth of trading volume and has been played more than 4 million times in two weeks time. Experienced gamers are freelancing their skills to help owners of a Bored Ape Yacht Club ‘Sewer Pass NFT’ achieve high-scores in an effort to win substantial prizes. The volumes generated by these NFTs and their accompanying game underlines the consistently high demand for Web3 gaming and NFTs.

Both Alchemy and Electric Capital published their well-regarded developer reports, which showed that developer activity in our industry increased significantly in 2022. Despite the many external factors influencing our industry, full-time developer numbers saw an 8% YoY increase, with more than 60.000 new developers having been onboarded. Interestingly, while the majority of monthly active developers (72%) now work outside of the predominant Bitcoin and Ethereum ecosystems, Ethereum still saw 5X growth in monthly active developers. The encouraging numbers are a testament to the resilience of our industry and its builders that remain dedicated to their craft despite headwinds.

Our portfolio companies Sovereign Labs, NFTPerp and Saga also had notable developments this month. Sovereign Labs finally came out of stealth after having worked on their sovereign rollup design for a significant period of time. Their Sovereign SDK will make it easy for developers to code in familiar programming languages while still benefiting from the powerful security guarantees of zk proofs. NFTPerp has had their closed mainnet beta live for almost two months now, having racked up over $75 million in trading volume, with almost 160 ETH worth of fees from only 1400 whitelisted traders. Finally, Saga announced notable partnerships with two portfolio companies; gaming wallet SDK OpenFort, and Celestia. The partnership with Celestia will see them working together on implementing sequencer-as-a-service to scale rollup architectures, making it possible to automatically launch Celestia rollups with decentralized sequencers on Saga.