Words by Maven 11 Venture

Maven’s Insight April highlights Bitcoin's third halving event, a crucial development that has historically sparked increased market activity and positioned Bitcoin mining companies for strategic shifts. We also cover Stripe's innovative move to enable USDC payments across multiple blockchain networks, signaling broader adoption of cryptocurrency in mainstream finance. Furthermore, we celebrate the mainnet launches of Renzo and Saga, marking significant milestones in their journeys. 

Bitcoin's third halving: A turning point for mining and blockchain innovation

After an exciting four years, the largest and oldest crypto asset Bitcoin experienced its third halving event. This means the reward for mining new blocks is halved from what was 6.25 BTC to 3.125 BTC. Historically, these halving events have proven to be positive catalysts due to the increased future scarcity of BTC; the other side of this coin is that the reduction in block rewards also increasingly puts Bitcoin mining companies under pressure, with the years post-halving often leading to a consolidation in this market. With the halving event also came the highly anticipated launch of Runes, which introduced a new experimental Bitcoin token standard developed by the developers of Bitcoin’s Ordinals standard. This new Runes standard allows users to mint fungible tokens on top of the Bitcoin blockchain, similar to how tokens can exist natively on Ethereum and Solana. Because the Bitcoin chain does not lend itself particularly well to complex on-chain activities such as those typically found in DeFi, we also saw a significant increase in Bitcoin activity in terms of infrastructure being launched. Examples include the launches of Bitcoin L2’s such as the ‘Build on Bitcoin’ (BOB) Bitcoin L2, the Mezo L2, the largest Bitcoin L2 Stacks having one of its largest ever upgrade called Nakamoto, and Bitcoin ZK-rollup Citrea unveiling their Clementine bridging mechanism.

While the previous month's post-Bitcoin ETF approval saw significant ETF inflows, this month saw a temporary slowdown in inflows. Despite that, institutional interest did not seem to have diminished. Morgan Stanley announced that they are considering letting their 15.000 brokers actively recommend Bitcoin ETFs to clients. The firm is setting up safety measures like risk tolerance assessments and trading limits before proceeding. Furthermore, following in Bitcoin’s footsteps, the applications for an Ethereum spot ETF are still in proceedings. Despite the expected delays for a final decision, many think that the likelihood of an approval by the SEC is continuing to increase, despite the SEC’s seeming trepidation. In the midst of this uncertainty, the SEC has issued a Wells notice to Consensys, alleging that the company is operating MetaMask Swaps and Staking as an unregistered broker-dealer and is selling unregistered securities. Consensys disputes these allegations, emphasizing the non-custodial nature of MetaMask. Similarly, Uniswap received a Wells notice, suggesting that the regulator may be contemplating enforcement actions; allegations similarly are that Uniswap is operating as an unregistered securities broker and exchange. Uniswap asserts that its products do not constitute securities, highlighting concerns about the SEC’s ambiguous regulatory framework for the cryptocurrency industry. To fight back against criticism from the SEC, Consensys has taken action by suing the SEC and its commissioners, seeking a federal court ruling to clarify that Ethereum is not a security and arguing that the investigation under such pretense violates the Fifth Amendment rights.

Expanding crypto payments: Stripe's integration of USDC across major networks

Stripe, a major institutional payment processor, announced that they will now allow merchants to accept USDC payments on the Ethereum, Solana, and Polygon networks starting this summer. Previously, Stripe had discontinued Bitcoin payments in 2018 due to high costs. This renewed development aims to convert USDC transactions automatically into fiat currency, enhancing payment accessibility for users without traditional banking services. Circle has introduced smart contract functionality for the investors in the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), enabling them to exchange their shares for USDC directly with Circle. This development follows BlackRock's investment in Circle and their ongoing partnership. USDC ranks as the second-largest stablecoin on Ethereum, accounting for 28.9% of its total supply.

Telegram updated its platform to allow users to purchase advertisements using TON, distributing 50% of ad revenue to public channel owners. Users can promote their channels by paying a minimal amount of TON and select specific channels for their ads. Additionally, channel owners will soon be able to withdraw their earnings without a fee via Telegram's Fragment exchange. Telegram also announced that users can now send money using USDT through TON, which is supported by a Telegram-created wallet. This move is part of a broader shift to using the TON token instead of euros for payment on Telegram’s advertising platform.

Milestone achievements: Mainnet launches of Renzo and Saga

Two of our portfolio companies had their long-awaited mainnet launches this month, with both Renzo and Saga seeing their application and network, respectively, going live. With their mainnet launches came also their native token generation events, with both protocols going live through the Binance Launchpad. Both mainnet launches were successful, with Renzo still governing approximately $3.5 billion in restaked assets, and many new Saga chainlets having been launched. Furthermore, portfolio company Lagrange has launched as the first ZK-AVS on EigenLayer mainnet, introducing a 'shared security' model aimed at enhancing security, decentralization, and cost-efficiency for interoperability protocols and dApps. The launch features a decentralized network of over 15 independent operators and over $2 billion in committed restaked ETH from various partners. On top of that, Lagrange partnered with portfolio company Polymer to combine Lagrange’s ZK primitives with Polymer’s IBC-based interoperability hub to improve efficiency, reliability and scalability for Ethereum rollups.  Lastly, one of our most recent investments, Movement Labs, who are building a MoveVM L2 for Ethereum, announced their $38 million funding round. The MoveVM is developed to enhance the Ethereum ecosystem through offering the novel Move programming language, which was developed by Meta for its now shelved payment protocol Diem. Applications built using Move, which is a formally verified programming language, are generally more secure and less prone to exploits, which have long plagued the Solidity-based Ethereum ecosystem. This positions the MoveVM as a cutting-edge platform for reliable and secure blockchain applications.