LBank Labs Weekly Digest (December 10–16) #25
LBank Labs Weekly Digest (December 10–16) #25
All on-chain data is dated as of 12:00 a.m. EST on Sunday, December 17th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Dec.10–16). #CPI #PPI #Layer2
Author: LBank Labs Research team — Hanze, Johnny
1 Macro Market Overview
U.S. Stocks rallied this week after Fed opened door to rate cuts. According to WSJ, the broad-market benchmark stalled Friday, slipping 0.01%, but closed up big for the week after the Federal Reserve hinted Wednesday it could slash interest rates next year. Rate cuts would mark a major turning point in the Fed’s roughly two-year campaign to control inflation. The Dow rose 0.2% to a record 37305.16 points, while the Nasdaq Composite was 0.4% higher. All were up more than 2% for the week. For the S&P 500, that marked the longest winning streak since November 2017.
Fresh inflation data released Tuesday kept investors’ soft-landing hopes alive, propelling U.S. stocks upward. November’s consumer-price report is the latest to suggest the U.S. economy is slowing enough to tame inflation, but not enough for the country to enter a recession. The consumer-price index rose 3.1% in November from a year prior, a slight pullback from October and in line with economist expectations. Prices increased 0.1% from the prior month, stronger than the steady reading economists had projected. Adding to investor optimism, Treasury Secretary Janet Yellen on Tuesday said the U.S. economy is on track to achieve a soft landing.
Last week, the three major stock indices in the United States continued their overall upward trend, each gaining over 2%. The Dow Jones Industrial Average and the S&P 500 increased by 2.7% and 2.4%, respectively, while the technology-focused Nasdaq Composite Index rose by 2.8%. Stocks related to Web3 showed mixed performance over the past week. COIN increased by 0.8%, MARA surged again by 9.1%, while MSTR declined by 4.9%.
Macro indexes
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in November on a seasonally adjusted basis, after being unchanged in October, the U.S. Bureau of Labor Statistics reported last Tuesday. Over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment.
The Producer Price Index for final demand (PPI) was unchanged in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported last week. Final demand prices decreased 0.4 percent in October and rose 0.4 percent in September. On an unadjusted basis, the index for final demand increased 0.9 percent for the 12 months ending in November.
The US Dollar Index (DXY) experienced a decline last week, reaching 102.594 at the close on Friday, reflecting a 1.3% decrease. The DXY showed a sustained downward trend last week, influenced by the impact of the Federal Reserve’s hint on Wednesday that there might be interest rate cuts next year.
According to the Federal Reserve Watch tool from the Chicago Mercantile Exchange Group, regarding expectations for the Federal Reserve to maintain the Effective Federal Funds Rate (EFFR) adjustment in January next year, currently, 10.3% of traders believe that the rate will be lowered to the range of 500–525 basis points, while 89.7% expect it to remain unchanged between 5.25% and 5.5%.
Left: EFFR, Right: Target Tate Probabilities for 31 January 2024 Fed Meeting (Source: Federal Reserve Bank of New York, CME FedWatch Tool)
According to WSJ, Bond yields were little changed Friday, with the benchmark 10-year Treasury yield (US10Y) closing just under 4% for a second straight day. US10Y was reported at 3.913%. Traders have rapidly reset their interest rate expectations for next year, sending the 10-year yield down about a percentage point since late October. That means borrowing costs are lower and financial conditions are “easier” in Wall Street parlance, helping spark a rally in many of the riskier, rate-sensitive assets that investors had shunned over the last two years.
Federal Reserve Holds Policy Steady, but Indicates More Dovish 2024. On Wednesday, the Federal Reserve announced that it would keep the benchmark federal funds rate unchanged in the range of 5.25% to 5.50%. However, it revised down the interest rate outlook for the end of 2024 to 4.6%, lower than the 5.1% forecast three months ago. The Fed indicated that tighter fiscal and credit conditions could impact economic activity, hiring, and inflation, but the extent of these effects remains uncertain. The Fed’s quarterly economic projections show an expectation for the core inflation rate to decrease to 3.2% in 2023 and further decline to 2.4% in 2024. The projected real GDP growth rate for 2024 is revised down from 1.5% to 1.4%.
2 Crypto Market Pulse
Market Data
Last week, the cryptocurrency market remained relatively stable, with the total market capitalization falling to $16 trillion. Bitcoin and Ethereum experienced a decline in prices around the beginning of the week, but the crypto market saw a rebound after the Federal Reserve’s announcement of expectations for interest rate adjustments on Wednesday and the release of the latest mild inflation data. As of the early morning of December 17th, the price of Bitcoin was $41,820, representing a 4.6% decrease from the previous week. Ethereum, as the second-largest cryptocurrency, is currently priced at $2,217, a decrease of 5.7%. Furthermore, Bitcoin’s market share declined by one percentage point to 51%, with a market cap falling to $819.6 billion. Ethereum’s market share also slightly decreased to 17%, with a market cap falling to $266.7 billion.
$BONK, $ICP, and $OSMO emerged as Top 3 gainers, while $FTT, $PYTH, and $KAS were Top 3 losers. $BONK is a token meme with a dog theme. The recent surge in this altcoin was driven by Coinbase’s and Binance’s announcements last week that it would be adding the meme coin $BONK from the Solana ecosystem to its platform, leading to a significant price increase. The value of the Internet Computer token, $ICP, has also experienced a recent surge, reaching a new price range. $ICP, created by the DFINITY Foundation, aims to change the way users interact with the internet by providing a decentralized platform for hosting smart contracts and applications. Factors contributing to the recent surge may include increased adoption, project developments, and positive community sentiment. $OSMO is the governance token of Osmosis, allowing token holders to influence the protocol’s development. Osmosis is a decentralized liquidity network, and the rise of the $OSMO token may be related to the success of its liquidity mining and decentralized trading platform offerings.
Last week, the total supply of stablecoins continued to show a significant growth trend, exceeding $125.1 billion. Over the past few weeks, the total supply of stablecoins has consistently followed a stable upward trajectory. While the rate of increase in the net supply slowed down last week, it still indicated a continuous influx of funds into the cryptocurrency market. Simultaneously, observing the net position data of stablecoins on exchanges in the past week, the overall trend exhibited a net outflow, reflecting a decrease in the total supply of stablecoins on exchanges over the 7-day period. However, the overall situation still suggests that the current market aligns with investors’ demand for riskier investments.
In the derivatives market, the open interest levels for perpetual futures contracts of Bitcoin and Ethereum have seen a slight decline. The total volume in the recent futures market lacks new capital inflow, and there are no distinct peaks in trading activities. Additionally, examining the liquidation data from the past week, a significant wave of liquidations occurred on the 11th, with peak liquidation amounts for Bitcoin and Ethereum reaching close to 80 million and 70 million, respectively, predominantly concentrated in long positions. This pattern aligns with the curve where both Bitcoin and Ethereum prices experienced a substantial pullback on the same day of the previous week.
In the DeFi market, the total locked value (TVL) experienced a decline last week, reaching $51.1 billion, a decrease of 1.9%. Over the past seven days, the trading volume on decentralized exchanges (DEX) continued to increase, reaching $30.7 billion, representing a 6.4% increase compared to the previous week. Despite this, the market share gap between decentralized exchanges (DEX) and centralized exchanges (CEX) has narrowed to within 20%, with DEX now accounting for 16% of the total trading volume of CEX. Among the top ten blockchain platforms ranked by TVL, most platforms experienced a pullback in TVL over the past seven days. However, Solana, Base, and Avalanche led with net growth of around 20% each.
Last week, the NFT market value continued to grow by 1.7%, reaching a total of $8.9 billion. However, the total trading volume decreased by 18.6% over the past seven days. In the top NFT collections, both the floor prices and average prices experienced a decline. The floor price of the Bored Ape Yacht Club (BAYC) decreased by 9.0%, and the average price dropped by 6.4%. The floor price of the Mutant Ape Yacht Club (MAYC) decreased by 6.0%, with the average price declining by 4.9%.
3 Major Project News
[Ethereum] Ethereum All Core Developers Consensus Call #124 Writeup. Christine Kim, Vice President of Research at Galaxy, summarized the 124th Ethereum All Core Developers Consensus (ACDC) conference call. The meeting discussed the progress of the Cancun/Deneb upgrade and Devnet #12. Key points of the meeting include: 1) Devnet #12 Update: All EL/CL client combinations, including Prysm, have been integrated into Devnet #12. Most client combinations have enabled MEV-Boost. 2) Punishable Message Updates: Developers discussed the propagation and timing of punishable messages after the Cancun/Deneb upgrade, introducing API events to expedite notifications. 3) Rumor Conditions for Blobs: Discussion on the post-upgrade rumor conditions and their impact on network health. 4) Network Protocol Changes: Consideration of minor modifications to libp2p to reduce amplification of large messages, among other topics. The meeting emphasized the progress and challenges of the Cancun/Deneb upgrade, with a focus on ensuring network health and efficiency.
[Layer2] Starknet developers to receive slice of network operator fees under devonomics program. StarkWare and the Starknet Foundation have announced the launch of a new “devonomics pilot program,” aiming to allocate a portion of network fees to developers building on Starknet. The provisional allocation is set at 10%, with 8% going to DApp developers and 2% to core developers. Under this plan, Starknet developers on the network will receive 10% of all accumulated operator fees since the launch in November 2022, totaling 1,600 ETH (over $3.5 million). The distribution of rewards will be automatic and based on the fee levels generated by each decentralized application. After the initial allocation in Ether, future payments will be made through the upcoming governance token.
Additionally, according to official sources, Starknet v0.13.0 has been launched on the testnet. It includes V3 transactions, a new transaction version that facilitates the payment of transaction fees once the STRK is transferable. Users’ transaction costs will be further reduced through optimizations in Cairo steps and additional optimizations to network configuration. Starknet v0.13.0 is live on the testnet and will undergo community voting on the new Starknet Governance Center.
[Layer2] Cronos, Partner of Crypto.com, to Start Layer 2 Network With Matter Labs. Cronos Labs, the developer behind the Cronos blockchain, has announced a collaboration with Matter Labs to launch a new Layer 2 network called “Cronos zkEVM chain.” Initially introduced as a testnet, this network is based on Matter Labs’ software tools and is designed to facilitate the launch of new Layer 2 and Layer 3 “hyperchains” on Ethereum.
Supported by zkSync’s ZK Stack software suite, primarily developed by Matter Labs, the testnet will add a new chain to the existing Cronos ecosystem. The current ecosystem consists of the Cronos EVM blockchain and the Cronos PoS chain. The mainnet launch for Cronos zkEVM is targeted for the second quarter of 2024.
[Polygon] Polygon Labs discontinues Edge contributions in favor of expanding CDK use. Polygon Labs will cease support for Polygon Edge (a modular framework for bootstrapping Ethereum-compatible networks) and shift its focus to the Chain Development Kit (CDK). Polygon Labs stated that chains deployed based on Polygon CDK will achieve interoperability in the ZK L2 networks within the CDK ecosystem, creating a unified liquidity pool. These functionalities are not supported by Edge itself and would require extensive modifications for migration. In addition, Polygon Labs has announced the launch of Polygon Portal, according to official sources. Polygon Portal provides a comprehensive dashboard for Polygon PoS, Polygon zkEVM, and Ethereum chain asset bridging and management. It offers a unified bridging user experience (UX), third-party bridging, Refuel Gas functionality, developer tools, documentation, and support and feedback.
[Celestia] Celestia to integrate data availability layer with Polygon CDK. Celestia has integrated its data availability layer with Polygon Labs’ Chain Development Kit (CDK). This integration introduces a dedicated data availability solution for Layer 2 projects using Polygon CDK, including networks such as OKX, Immutable, Astar, IDEX, Palm, and others. The aim is to reduce gas fees for these projects by leveraging a specialized data availability solution provided by Celestia in collaboration with Polygon Labs.
[Cosmos] Cosmos Hub has completed the v14 upgrade. The v14 upgrade introduces equivocation cryptographic verification to more effectively prevent double-signing and light client attacks. Starting in the first quarter of next year, it is expected that the Gaia v15 proposal will migrate to Cosmos SDK v0.47.
4 Key Fundraising Data
Last week witnessed a total of 29 financing events, raising a substantial amount of over $300.6 million*. Compared to last week, the number and total amount of financing activities have remained at recent high levels, reaching a new peak. The DeFi sector led with the highest number of financing events, totaling 4. The NFT sector recorded the highest total financing amount, reaching $141.3 million, constituting 47% of the total financing amount. The largest financing event in the NFT space was led by LINE NEXT, raising $140 million. LINE NEXT is the NFT arm of the South Korea-based messaging giant LINE. More detailed information is provided below.
*11 events of unknown amount are included, which have been excluded from the remaining data.
Top Left: Stats in Areas; Top Right: Stats in Rounds; Bottom: All Events
(Data: Cryptorank, Foresights, LBank Labs)
Below, we listed the most noteworthy fundraising deals for you:
LINE NEXT Corporation., LINE’s venture dedicated to developing and expanding the NFT ecosystem, announced today that it has secured a USD140 million investment from a consortium led by the private equity firm Crescendo Equity Partners (“Crescendo”). This investment represents the largest funding round in the Asian blockchain Web3 industry this year. With the raised funds, LINE NEXT aims to expand its global business and develop new services as part of its plan to popularize the Web3 ecosystem.
- Official Link: https://www.dosi.world/
ABU DHABI, United Arab Emirates — Andalusia Labs, formerly known as RiskHarbor, the global leader in risk management infrastructure for digital assets, has successfully raised $48 million in Series A funding round, positioning the company’s equity valuation north of $1 billion. Prominent Silicon Valley venture capital firm Lightspeed Venture Partners led the round with participation from Mubadala Capital, the asset management subsidiary of Mubadala Investment Company, a $280 billion global sovereign investor headquartered in Abu Dhabi, and existing investors Pantera Capital, Framework Ventures, Bain Capital Ventures, and Digital Currency Group. Other existing investors include industry giant Coinbase, Proof Group, Nima Capital, Naval Ravikant, and founders, general partners, and executives from leading global organizations.
- Official Link: https://andalusia-labs.com/
GFO-X announced that M&G Investments has led a $30m Series B funding round for the Company and will join the Board of Global Futures and Options Holdings. The strategic investment will fund GFO-X through its forthcoming launch and support future innovation in the regulated digital asset sector, enhancing trust and credibility in the market.
GFO-X services the significant unmet need of large global institutional participants. They require the certainty of a safe, regulated trading venue enabling them to trade digital asset derivatives at scale while protecting their client’s assets. A ‘regulation first’ approach has already enabled GFO-X to achieve trust and credibility with the largest institutions. GFO-X’s goal is to bring partners along the journey of innovation, step by step, as digital assets deliver more sophisticated institutional grade products.
- Official Link: https://www.gfo-x.com/
Web3 identity verification and authorization platform Dynamic Labs has successfully raised $13.5 million in funding, with a16z and Founders Fund leading the investment. Dynamic Labs, founded by MIT graduates Itai Turbahn and Yoni Goldberg, offers technology for both cryptocurrency and non-cryptocurrency companies to create a seamless login experience supported by digital wallets. Clients include NFT company Doodles and blockchain analytics platform Flooz. Dynamic Labs previously raised $7.5 million in seed funding in 2022, with a16z as the lead investor. This funding will help accelerate their work of supporting builders.
- Official Link: https://www.dynamic.xyz/
See you next week! 🙌
🎙Forum: Feel free to leave your comments on our official LBank Labs Twitter account, and don’t hesitate to ask questions about the tokens or projects that interest you. We will diligently gather them and discuss them in the recap section of our weekly digest!
📢 Disclaimer: The weekly crypto market insights are provided for informational purposes only and should not be considered as financial advice. The cryptocurrency market is highly volatile and unpredictable. Prices and trends can change rapidly, and past performance is not indicative of future results. Always conduct thorough your own research and consult with a qualified financial professional before making any investment decisions.
