Words by Maven 11 Venture

In December, the cryptocurrency landscape witnessed a surge in momentum, driven by three key developments: the growing popularity of inscriptions in modular blockchains, the security breach of hardware wallet manufacturer Ledger, and the launch of Astria's EVM rollups powered by a shared sequencer network. These events highlight the dynamic and evolving nature of the crypto ecosystem.

The crypto ecosystem gained momentum throughout December with importantly the ETF approvals approaching and consensus for the chances of approval growing increasingly positive. The date for final amendment submission passed at the end of December for applications to be considered in the ‘first wave’ by the SEC, with final decisions expected early January. While Bitcoin should see further tailwinds through the impending Bitcoin halving which has historically been considered a significant milestone, the Ethereum ecosystem should see similar tailwinds through the emergence of modular blockchains and Ethereum’s impending Cancun upgrade which will introduce proto-danksharding which is expected to reduce fees paid by rollups for Ethereum block space. On the other side of the crypto ecosystem, the Solana ecosystem also performed remarkably well with trading volumes picking up through a renewed interest in the chain’s monolithic technology.

Advancements in modular space: Celestia's role in scalability and the rise of inscriptions

Celestia continues to push the modular space forward, with multiple protocols looking to utilize the DA layer to improve scalability. Last month Arbitrum announced that their L3 Orbit chains will be able to utilize Celestia for DA, and this month multiple applications shared their plans to do so. The Celestia community also participated in the trend of inscriptions. While these inscriptions originate from Bitcoin as so-called ‘Ordinals’ where users introduced them to improve utilization of the chain and increase network revenues, the concept of inscribing digital assets in individual coins or transaction call data can be applied to other blockchains such as Celestia too. These inscriptions have grown significantly in popularity due to their counter-culture nature and the entirely new market of NFT’s it created. Importantly, inscriptions are a niche but apt use case for Celestia, as the chain’s sole use case is making data posted as data ‘blobs’ available for others to retrieve. While the hype was short, over the brief span of 1000 blocks these inscriptions increased Celestia’s fee generation to almost 400M dollar annualized.

Security challenges in the crypto ecosystem: The Ledger HQ exploit and its implications

Despite the generally positive sentiment through the ecosystem, our industry is still occasionally daunted by exploits. Hardware wallet manufacturer Ledger was exploited this month, with their Ledger HQ software being compromised which meant that interacting with dApps using this software could be exploited. Fortunately, the issue was fixed without any significant financial impact, though the situation once more highlights the importance of security in this industry.

The French bank Société Générale, is set to launch its own stablecoin on the BitStamp exchange. The stablecoin will be called EUR CoinVertible and will be fully backed by the euro and complies with all the MiCA rules. Additionally, the bank issued the first digital green bond as a tokenized security on Ethereum. The bond was issued for a term of 3 years and an amount of 10M euro, which was paid for by the investment arm (close to a trillion euro in AUM) of insurance company AXA using their newly issued stablecoin.

Furthermore, portfolio company Ingonyama integrated their Icicle GPU acceleration library with the EZKL library, which enables their hardware acceleration technology to be used to improve the performance of EZKLs zkML technology. Gyroscope launched their stablecoin GYD, which is designed to remain stable as the surrounding environment changes. GYD already has a TVL of almost 4M euro. Polymer reworked its architecture and announced that it will launch as a L2 rollup on Ethereum incorporating settlement of the OP stack and DA from EigenLayer. Through this, Polymer will continue to work on bringing IBC to Ethereum. Additionally, Merit Circle has partnered with ImmutableX allowing their Beam network to launch on the IMX platform and also leverage the Polygon zkEVM. Portfolio companies Sovereign Labs and Informal Systems have partnered to enable Sovereign SDK rollups to connect to chains on the IBC network, bringing the Cosmos ecosystem and Sovereign SDK rollups together via trust-minimized bridges. Additionally, liquid staking protocol Swell has shown strong numbers at the end of the year almost tripling their TVL to nearly 300M dollars and around 115K ETH deposited.

Astria's EVM rollup launch and Rollup-as-a-Service: Navigating network overload and innovation

Lastly, Astria introduced their EVM rollup which is powered by their own shared sequencer network which was quickly overloaded through enthusiastic uptake. Following this release, they announced their Rollup-as-a-Service which are no-code rollups on the same shared sequencer network.