Maven’s Insights - March 2022

01 April 2022

March saw the Ethereum network move one step closer to the much-anticipated ‘Merge’, meaning the move from Ethereum 1.0 with its Proof-of-Work consensus mechanism to Ethereum 2.0 with its Proof-of-Stake consensus mechanism. Ethereum finally merged on the Kiln testnet, which is supposed to be the final testnet to be released before the actual live Ethereum network fully upgrades to the new ETH 2.0 network. Ethereum core developers have remained resolute in stating that the upgrade will happen this year. Looking ahead, many market participants have so far locked up their Ethereum in the ETH 2.0 deposit contract - almost 11 million Ethereum, or 35 billion USD.

The White House finally signed their executive order on cryptocurrencies into existence. The long-awaited bill forces multiple federal agencies to examine cryptocurrencies and their regulatory impact for their respective domains. The order was generally soft and positive in terms of the regulatory approach the Biden administration wants the agencies, such as the Treasury Department and the Federal Reserve, to take. Some of the key aspects touched upon in the order are consumer and investor protections, hindering illicit use of digital assets, exploring the opportunity of a dollar CBDC, and most importantly expressing the wish that the US should play a leadership role in the global. The executive order hints at what could potentially be an encouraging and positive regulatory environment for our industry in the US in the near future.

Another major piece of positive regulatory news came from the EU, where the Markets in Crypto-Assets (or MiCA) directive was stripped of a passage which seemingly would’ve led to a ban on all Proof-of-Work cryptocurrencies, which includes Bitcoin and Ethereum in its current form. While the de-facto PoW-ban was then voted on separately, the ECON committee ended up voting against the ban. While the vote does not mean that the discussion around Proof-of-Work currencies is now over, the disproportionate ban that was contained in the bill has been prevented.

The Terra ecosystem has established the Luna Foundation Guard (LFG), which is a non-profit organization focused on supporting Terra. Specifically, LFG has raised multiple billions of dollars for their Bitcoin reserve, which will act as collateral and a backstop for the ecosystem’s native UST algorithmic stablecoin. The reserve will be fully converted to Bitcoin over the coming time, which means that the fund that acts as collateral for the UST stablecoin will consist fully of Bitcoin.

This month our venture investments in Swell Network and Lava Labs were announced. Swell Network is building a liquid staking solution for Ethereum, which as mentioned previously is quickly becoming relevant with the impending move to Proof-of-Stake for ETH 2.0. Their solution allows users to stake their Ethereum to secure the network, while also being able to generate additional yield on their staked balance. Lava Labs is a Web3.0-oriented game development studio, which is currently working on building out their debut game, which combines many elements found in games that are currently very popular with the Web3.0 ethos.

Our portfolio company, Maple Finance, has surpassed 1 billion USD in loans originated. Our USDC pool originated loans worth over 100 million USDC just this month. Additionally, the protocol also launched their first non-stablecoin lending pools denominated in Ethereum. Through this, our newly launched Ethereum pool already in its first month did over 35 million USD worth of Ethereum loans. While the pool currently has no additional capacity for additional funds, the pool will slowly start to increase its capacity. If you would like to learn more about being a lender on Maple Finance, you can reach out to us directly.