Maven's Insights - April 2022

03 May 2022

One of the most important technological developments in our industry, the Ethereum ‘Merge’, meaning the move towards Proof-of-Stake Ethereum, took another step this month with the first mainnet shadow fork going live. Such a shadow fork allows developers to test features in more realistic scenarios, by copying all data from the mainnet to the dry run shadow testnet. While some were optimistically predicting the Merge to already be happening in June, Ethereum core developers came out saying that the Merge would likely be taking place in Q3 or Q4. Additionally, this month saw the launch of Evmos, the blockchain that will drastically improve interoperability between Ethereum and the Cosmos ecosystem.

April was also rife with regulatory developments, with US Treasury Secretary Yellen thoughtfully laying out the pillars on which crypto regulation should be built. In particular, she mentioned a push for new stablecoin legislation. Her comments followed the “Stablecoin Transparency Act”, a bill that was introduced in the US Senate aiming to bring greater transparency to stablecoins. Closer to home, the UK government also announced to be taking steps to include stablecoins as a means of payment in their existing regulatory framework for digital assets. The European Commission announced consultations with financial services specialists about the digital euro rollout, with 2023 still being named as the timeline for legislation on the CBDC to be proposed.

Fidelity Investments, which manages some 4.2 trillion USD in assets, announced that later this year they’ll be allowing their clients to allocate part of their 401(k)s retirement savings to Bitcoin, as long as their employers allow it. The move could potentially move cryptocurrency investing much further into the mainstream, something which the endorsement of the USA’s largest retirement-plan provider also adds to. Circle, the issuers of the USDC stablecoin, announced a large fundraising round in which notably Fidelity and BlackRock invested. Important to mention is that BlackRock is named as becoming the primary asset manager of USDC cash reserves, a very material step forward in BlackRock’s cryptocurrency engagements. Finally, Fireblocks and FIS, closed a partnership to accelerate crypto adoption in traditional capital markets. FIS, which processes over 2 trillion USD in transactions and which counts over 80% of the capital markets industry’s biggest players as their clientele, will be bringing the Fireblocks custody technology to this clientele, allowing them to access DeFi, crypto lending desks and liquidity providers, and other trading venues.

This month also saw the reappearance of ETF headlines, with the SEC rejecting an application by Ark 21Shares for a spot Bitcoin ETF, citing once more the issue of preventing fraud and manipulation in securing the ETFs integrity. The controversial issue stems from the different Securities Exchange Acts under which the ETF applications can be approve, with all currently approved ETFs having been filed under the “40 Act”. However, recently the SEC approved the Teucrium futures Bitcoin ETF under the 33 and 34 Acts, under which many spot Bitcoin ETFs have been filed. As a result, many see this recent approval as opening the door to the approval of an impending spot Bitcoin ETF.

The NFT industry also saw some interesting developments, with NFT marketplace OpenSea acquiring NFT aggregator Gem, an interesting acquisition given the unusual nature of crypto M&A’s, but perhaps expected with the likely impending IPO of OpenSea. Arguably the most valuable and popular NFT collection, the Bored Apes Yacht Club, did an NFT land sale for their upcoming Otherside game. The sale brought in over 300 million USD in proceeds for Yuga Labs, the company behind the BAYC collection. Notably, the NFT sale also led to serious congestion of the chain, which we see as a strong argument for app-specific chains, rollups, and the general modular blockchain design paradigm. Furthermore, HSBC launched a fund focused on investment opportunities in the metaverse for their Singporean and Hong Kong clientele. Previously, the bank had already acquired virtual real estate in the Sandbox.

Our portfolio company, Maple Finance, has originated almost 1.3 billion USD in loans as of this month. Our USDC pool originated loans worth almost 40 million USDC just this month. Additionally, our newly launched Ethereum pool did more than 10 million USD worth of Ethereum loans. If you would like to learn more about being a lender on Maple Finance, you can reach out to us directly.