The crypto market has recently found itself in a period of relative stagnation. Over the past month, centralized exchange volumes hit their lowest point since October 2020. The liquidity drop-off may be partly attributed to the retrenchment of trading firms such as Jane Street and Jump trading due to regulatory scrutiny. Importantly, on-chain data suggests that over the past months decentralized trading venues have captured significant market share from centralized exchanges, implying that increased regulatory pressure and exchange collapses have motivated users to use decentralized alternatives.
Meanwhile, Coinbase’s earnings beat estimates this month, accomplished by diversifying their revenue streams away from volume-based trading fees. Coinbase was able to expand their subscriptions and services revenue, which included staking and interest income from USDC. Importantly, QoQ trading volume and users have remained flat, which combined with their profitability is a positive to see in this relatively calm market environment. Coinbase remains under investigation by the Securities and Exchange Commission (SEC) and updated shareholders about the ongoing legal situation. Coinbase expressed disappointment over the lack of clarity from the regulator despite continuous engagement. In a letter, Coinbase revealed its readiness to defend its stance, if necessary, while urging Congress to establish clear industry regulations.
After a tumultuous start of the year for stablecoins due to banking collapses in the U.S., Tether shared a strong earnings report. Most notably was their increased Bitcoin position which currently stands at $1.5 billion in BTC holdings. Tether deploys roughly 85% of their reserves in cash and cash-like assets such as U.S. treasury bonds which offer attractive yields due to the recent increase in rates. As a result, Tether announced their decision to allocate up to 15% of the realized profits from investments – excluding any unrealized price appreciation of its reserve assets – to purchase BTC and will add the tokens to the reserve surplus.
NFT protocol Blur announced a new lending solution called Blend for NFTs. The protocol enables perpetual lending, meaning that the loans have no set expiration date and this allows NFT holders to make their holdings liquid. Blur launched in October of last year with an aggressive incentive program that attracted many traders to its platform. Over the past month, Blend has facilitated nearly 16,000 loans for a total of 123,500 ETH, or $225 million. Additionally, Binance announced plans to get into the NFT lending space when it introduced a new feature that allows customers to borrow cryptocurrency using non-fungible tokens as collateral.
Apple has shown encouraging signs of their increased acceptance of crypto. In April, Uniswap's iOS wallet went live on Apple's App Store after a delay. This month, Apple allowed the popular NFT game “Axie Infinity: Origins” in their store which is a step towards wider distribution and adoption of Web3 gaming. Additionally, the popular blockchain powered fitness pp STEPN announced a new integration which will allow users to purchase digital assets using traditional debit and credit cards linked to Apple Pay. This is potentially even bigger news, since Apple’s App Store rules historically have stifled adoption of blockchain-enabled applications, with the company restricting how and where digital assets can be purchased using its devices while also taking a 30% cut of in-app sales.
We're excited to announce that we co-led the Seed fundraising round for OpenFort, who are building a “wallet-as-a-service” software product, which is aimed at game developers and publishers to allow them to harness the UX benefits provided by account abstraction in their own in-game wallets.
We are equally excited that our participation in the pre-seed round of Lagrange was also announced this month. Lagrange is using ZKP technology to create cross-chain state (storage) proofs that allow for trustless interoperability between apps and chains
Additionally, our portfolio company Anoma completed a third funding round of $25 million with an aim to extend its intent-centric technology to blockchain platforms. Anoma's innovative, intent-focused architecture signifies a novel approach to building blockchain infrastructure layers, with the first iteration of the Anoma tech stack, called the Namada network, looking to go live before EOY.