Maven's Insights - July 2022

01 August 2022

This month was quite saturated with events in the run-up to Ethereum’s ‘Merge’ event, during which the Ethereum network will undergo a transformation to the Proof-of-Stake consensus mechanism. The first of many merging milestones this month was the one which occurred on the ‘Sepolia’ testnet, which will take over the role of Ethereum’s main testnet. In addition to this event, this month also saw a new shadow fork going live. In anticipation of the mainnet merge it was announced that the final testnet called ‘Goerli’ is scheduled to have its own merge event in August. The Merge on this last testnet is composed of two subsequent phases, firstly ‘Bellatrix’ and secondly ‘Paris’. Bellatrix is scheduled to commence on the 4th of August and will specifically target the consensus layer. Paris is where the execution layer of the blockchain will pivot away from the Proof-of-Work to Proof-of-Stake consensus mechanism.

The Bank of International Settlements (BIS), which serves as a central bank for national central banks and traditionally has been skeptical about Bitcoin, is considering adjusting its stance regarding the digital asset. As part of this change of view, the BIS is considering allowing their member banks to have up to 1% of their balance sheet in bitcoin. Additionally, Barclays is expected to ramp up its investments in the digital asset space. The UK based bank is expected to be participating in a fundraising round of crypto custodian Copper. Finally, BNP Paribas will be offering crypto asset custody to its customers. According to the Head of Digital assets at BNP Paribas the plan is to build a multi-asset, multi-provider platform which, once the regulatory framework allows, will offer full connectivity across traditional and digital assets.

The scalability landscape also underwent some changes during this month. Firstly, Arbitrum upgraded the testnet version of its network to its Arbitrum Nitro implementation, which abandons their previous Arbitrum virtual machine (AVM) for an improved virtual machine to increase EVM-compatibility. Secondly, StarkNet officially announced their long-awaited token, which is set to go live in September. Finally, Polygon announced their zkEVM while competitor zkSync also announced that the 2.0 version of their product would be going live on mainnet in 100 days. These zero-knowledge based solutions have been long-awaited, and we expect that their impending releases could potentially kick off a period of renewed and strengthened interest in scalability solutions.

Following one of the more interesting moves of last month, which was the choice of the dYdX team to move away from their StarkEx-based Ethereum Layer 2 towards a standalone app-specific chain built within the Cosmos ecosystem, one more very noticeable subject in our industry was broached this month. A governance post on the Uniswap forum to start experimenting with turning on the ‘fee switch’, which would mean the protocol would move away from having liquidity providers earning all fees generated by the protocol towards generating revenue as a protocol and potentially having UNI holders receive part of these fees. Similar discussions around the different monetization strategies of protocols will likely remain very relevant for the perceived value of governance tokens in the coming months.

July was a busy month for our portfolio company Merit Circle, as they first launched their own gaming platform, after having launched their NFT marketplace Sphere last month, which is another milestone for the project to become the go-to online platform for a gamer-centric community. This new platform will aid Merit Circle in its mission to educate and manage these gamers in a more effective way and educate them, in an optimized manner which eventually will result in letting these gamers eventually effortlessly navigate through the gaming industry.

Secondly, portfolio company Saga announced a very strong partnership with Merit Circle, another portfolio company. The partnership aims to solidify the symbiotic relationship in which Saga can offer Web3 games (in many of which Merit Circle is active or investing) and access to Web3 infrastructure for their GameFi needs. To kick start this new cooperation, Merit Circle has invested $500,000 in the seed round of Saga.

Our portfolio company, Maple Finance, has issued over 1.5 billion USD in loans as of this month. 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 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. If you would like to learn more about being a lender on Maple Finance, you can reach out to us directly.