Maven's Insights - August 2022

07 September 2022

August was another month in which Ethereum inched closer to the ‘Merge’ event during which the Ethereum network will undergo a transformation to the Proof-of-Stake consensus mechanism. This month the Goerli testnet has officially merged, meaning that it is currently using the Proof-of-Stake consensus mechanism. This was the last testnet which was awaiting its Merge event prior to the Ethereum mainnet. In addition to this news, a soft date has been determined for the Bellatrix upgrade, the name coined for the actual Ethereum Merge event. This upgrade is scheduled to be around the 13th of September. Importantly, together with the Dutch chapter of the Ethereum Foundation we will be hosting a meetup with drinks and talks diving into everything Ethereum and the Merge. If you’re interested in joining us on September 8th, we would appreciate having you!

Privacy was a contentious topic this month with Tornado Cash, a privacy-enhancing protocol offering users the ability to break the on-chain links of the origins of their transactions, having been sanctioned by the U.S. Government in the form of the Office of Foreign Assets Control (OFAC). The reasoning behind the sanctioning is due to allegations that the protocol facilitates illicit transactions through the obfuscation it provides. To abide by these sanctions, many other protocols and infrastructure providers for the Ethereum network saw themselves forced to exclude impacted wallets and assets.

Moving closer to the Merge, institutional interest in Ethereum and the broader digital asset sector saw an uptick from financial institutions. BlackRock, the 8.5 trillion USD AUM asset manager, announced that it will offer a private trust with direct Bitcoin exposure for their clients, and that it will collaborate with Coinbase to provide crypto access to institutional investors on their investment management platform Aladdin. Additionally, the CME group announced that they would expand their crypto offering by offering Bitcoin and Ethereum futures denominated in Euros.

This month unfortunately saw the exploit of the  Nomad bridge in which almost 200 million USD was lost. Through the use of ‘bug bounty’ reward incentives the protocol has so far been able to retrieve a fairly significant portion of the lost funds. Important to note on the situation is that the exploit was not due to a fundamental flaw in the infrastructure of the bridge, but was due to an oversight during an update to the project’s smart contracts.

After the Arbitrum testnet was upgraded as reported last month, this month the L2 scaling solution on Ethereum launched Arbitrum Nova on mainnet. The upgrade will bring significant improvements in transaction times and costs. One of the first well-known names to migrate to this new solution is Reddit with their system of community points. Meta, the company behind Instagram and Facebook, announced their integration of Coinbase Wallet and the NFT-oriented Flow blockchain to allow users to showcase their digital collectibles on their platforms. Additionally, the company announced support for the integration of NFTs into posts on their platforms.

Portfolio company Swell Network, which is delivering a liquid staking protocol for Ethereum, had its guarded launch on the Ethereum mainnet, meaning that it will launch its service in a controlled environment as the protocol gradually matures over time into a fully permissionless service. In the current phase of the launch, the DAO will play an active role regarding both the demand and supply on the platform. The Merge once more underlines the need for decentralization and democratization of Ethereum staking. Spectral Finance, a portfolio company offering credit scoring based on on-chain activity of an individual user or group of users, announced its 23 million USD fundraise. The funding will be used to build out the credit score mechanism as well as scale the network. The team also released their open beta which allows anyone to create their on-chain credit score.

Our portfolio company, Maple Finance, has seen the launch of a new permissioned pool managed by Maven 11, worth 40 million USD. The pool saw a direct utilization rate of 90% in the first week, lending to parties such as Flow Traders and Wintermute. Maple Finance has issued over 1.5 billion USD in loans, with our capital pools having originated well over 0.5 billion USD through the platform. As was mentioned in our June newsletter, we are happy to share that our pools have not been affected by the recent turmoil in the crypto capital markets and we are steadily continuing operations. For a short recap of our Q2 as a Pool Delegate on the platform, please check out the full article here, and for a recap of August please check out these updates on our USDC, wETH and KYC USDC pools. If you would like to learn more about being a lender on Maple Finance, you can reach out to us directly.