Publications

Maven's Insights December

04 January 2022

This month another milestone in the Ethereum 2.0 development was reached. The first significant merge testnet, called Kintsugi, went live. The merge refers to the fact that Ethereum 1.0 (running on Proof-of-Work) and Ethereum 2.0 (running on Proof-of-Stake) will be merged into one. This is not an easy feat considering Eth 1.0 currently secures and transfers billions of value on a daily basis. A proper, long-running testnet is therefore a necessity. This is a good first step and ironically we hope that a lot of bugs are found before moving on to the actual merge. Another interesting announcement from the Ethereum Foundation was the client incentivization program. It has been a goal to get a wide array of software clients built for ETH 2.0 for the purpose of decentralization and security. Therefore the EF has given various teams (9 at the moment) working on this an incentive of 144 validators (4608 ETH or ~17M USD). These will start earning revenue for the teams and post-merge they will unlock these, giving them funding for the next few years. This is a great example of good incentivization for teams and creates a healthy diversity in client software.

Notable names from the traditional financial industry have also been involving themselves more deeply in the blockchain industry. JPMorgan announced a partnership with Siemens to develop a blockchain-based payment system, while Visa announced the launch of their crypto advisory practice to help financial institutions like banks develop their cryptocurrency businesses. A more crypto-native approach is being taken by Switzerland’s SEBA Bank, which is seeking to become whitelisted on Arc, the institutional platform developed by Aave. Their involvement would ultimately allow the bank’s institutional clientele to access the lending & borrowing facilities provided by the Aave platform. The move is similar to Société Générale’s October move, when they proposed to borrow stablecoin DAI in MakerDAO using bonds it issued on the Ethereum blockchain as collateral. Both are examples of traditional financial institutions immersing themselves in very crypto-native DeFi platforms.

CBDCs are the use case for blockchain technology that have garnered the most positive attention and adoption from regulatory and legislative bodies. This month saw the conclusion of an experiment by the Bank for International Settlements, which found CBDCs to be highly effective for settling cross-border transactions. Similarly, the French and Jamaican governments completed their initial testing phases of their CBDCs, the latter expecting roll-out to start this calendar year. The Mexican government also shared plans for the issuance of CBDCs, while the Reserve Bank of India also advised their government to implement a basic initial roll-out soon. Furthermore, the U.S. House Financial Services Committee held a hearing on digital assets and stablecoins, which hosted CEOs of the largest exchanges and stablecoin providers. The general consensus of the hearing was overwhelmingly positive, with lawmakers largely coming across as well-informed and curious, and the crypto industry representatives being able to convey the value of the technology underpinning our industry convincingly.

Once more, NFTs and their mainstream adoption were a prominent topic in the crypto industry this month. Adidas launched their NFT collaboration with blue-chip NFT collection Bored Apes Yacht Club (BAYC), selling out 22 million USD worth of NFTs that entitle holders to both digital and physical Adidas merchandise. Similarly, Nike also purchased NFT collectibles and digital fashion startup RTFKT to accelerate their digital transformation. The fact that these massive household brand names are entering the industry with well-thought out launches and acquisitions shows that this burgeoning sector is burgeoning. To facilitate all of this adoption, this month saw more players joining in the NFT infrastructure sector with both Blockchain.com and Kraken announcing the launch of their NFT trading platforms, following in the tracks of stalwart exchanges Coinbase and FTX that recently launched theirs.

The 2021 year ended with some significant milestones achieved by portfolio company Maple Finance, in which we participate as a Pool Delegate on their institutional lending & borrowing platform. The protocol has managed to surpass the 500 million USD mark in total liquidity provided. Additionally, our liquidity pool is now sitting at a value of over 170 million USD, having originated a total of 33 loans so far, with this month tallying 35 million USD originated through 6 more loans. To further cement the growth our pool has gone through, we have expanded the team with Viktor van Eijk, who brings on-board his broad experience in managerial roles in institutional sales. We have now set our sights higher for the coming year, and hope to continue to grow our involvement in Maple Finance significantly. If you would like to learn more about being a lender on Maple Finance, you can reach out to us directly.