LBank Labs Weekly Digest (July 23–29) #5
*All on-chain data is dated as of 12:00 a.m. EST on Sunday, July 30th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about the crypto market in the past week(Jul.23–29).
Author: LBank Labs Research team — Hanze, Johnny
Keywords: #EIP #Non-EVM #Layer2
1 Macro Market Overview
U.S. Stocks rally despite rate hike fears, bolstered by mild inflation data and tech gains. According to WSJ, the U.S. stock market rebounded from a midweek dip to close with a weekly gain on Friday, fueled by moderate inflation data and robust tech stocks. This bounce-back followed the Federal Reserve’s Wednesday decision to hike interest rates by 25 basis points, a move that briefly led to market volatility.
Despite a temporary negative impact due to a surge in U.S. government bond yields on Thursday, subsequent economic reports, including GDP and inflation data, helped mitigate slowdown fears. Meanwhile, FactSet data revealed that on Friday, 80% of the S&P 500 companies reporting their Q2 earnings beat analysts’ consensus estimates, outperforming the five-year average of 77%. Large tech firms, specifically Meta Platforms and Alphabet, contributed significantly to the upturn, with their stocks jumping over 10% this week following reports of accelerated sales growth. All three major indices posted gains this week, with the S&P 500 and Dow Jones Industrial Average securing a third consecutive week of growth, climbing 0.99% and 0.63% respectively. The Dow even marked a 13-day winning streak on Wednesday, its longest since 1987. Propelled by large tech stocks, the tech-heavy Nasdaq Composite saw a weekly rise of 1.99%.
Web3-related stocks lagged the overall market this week, showing lackluster performance as more investors leaned towards lower-risk options for higher returns from government bonds. COIN, MARA, and MSTR saw weekly declines of 6.0%, 1.1%, and 0.6%, respectively.
Japan Signals More Web3 Promotion Policies Are Coming. Japan’s Prime Minister Fumio Kishida said that the country’s annual broad policy outline includes measures that take user protection into account while also improving the environment for utilizing Web3 tokens and revitalizing the content industry. Kishida made these remarks in a recorded video broadcast at the WebX conference in Tokyo which opened Tuesday, continuing the Liberal Democratic Party’s embrace of Web3. The country’s leader reiterated that “Web3 is part of the new form of capitalism,” referring to his flagship economic policy intended to drive growth and wealth distribution by focusing on innovation, startups, and digital transformation.
The ruling Liberal Democratic Party’s policy research council chairman Koichi Hagiuda took to the stage just before Kishida’s speech to lay out the party’s stance towards Web3, saying that even those unfamiliar with the industry should take an “inclusive stance.”
Updated summary of recent series of Bitcoin ETF Applications events. According to Bloomberg ETF analyst, James Seyffart, here is the most updated list of dates to watch for the current Bitcoin ETF Race.
2 Crypto Market Pulse
Market Data
The crypto market slowly recovered after last week’s dip triggered by interest rate hike, and large-scale futures liquidation. BTC experienced a decline of 1.78% last week, from July 23 to July 30, and stood at $29,317 at 12:00am on July 30. ETH, on the other hand, rose by 0.48% to close the week at $1,879. On Sunday, Bitcoin briefly touched $30,291 before losing its support at $30,000 and remained under this level afterward.
The drop can be attributed to various factors such as the absence of short-term positive catalysts and the fading ETF story, with no new developments presently. Moreover, on July 24, leveraged long futures worth $30 million were liquidated, exacerbating Bitcoin’s sudden decline.
The Federal Reserve’s decision on Wednesday to raise interest rates by 25 basis points has also increased borrowing costs, thereby reducing liquidity in the crypto market and negatively affecting investor sentiment across various asset classes.
As per CoinMarketCap data, the total cryptocurrency market cap ended this week at $1.186T, marking a 0.75% decrease from last week’s $1.195T.
$XDC, $MKR, and $DOGE emerged as Top 3 gainers, while $TON, $GALA, and $PEPE were Top 3 losers. XDC Network’s token, $XDC, was this week’s top performer among the leading cryptocurrencies, bolstered by its sponsorship of the WebX Asia conference. The price surge of $MKR is primarily due to its acquisition of Treasury Bills, with Maker reportedly holding $1.732B. Maker’s founder has proposed a significant increase in the Dai Savings Rate (DSR), which has also contributed to the rise. Dogecoin’s surge is potentially tied to Elon Musk’s plans for the newly named X social-media network, raising investor interest. On the other hand, $TON, $GALA, and $PEPE faced declines due to sustained selling pressure and potential security risks.
The market cap for stablecoins shrank below $121.5B this week. Glassnode data showed that net outflows from exchanges peaked between the 23rd and 25th, with net inflows only resuming after the 28th. This aligns with the overall market trend, indicating a significant decrease in investor demand for stablecoins during this period. This shift is partly due to investor concerns about potential interest rate hikes and riskier investments earlier in the week, prompting a pivot towards higher-yielding government bonds.
The derivatives market this week mirrored the overall market trend, with trading activity peaking on the 23rd. BTC and ETH both hit respective highs in liquidation volume on Monday, with long position liquidations significantly outnumbering the others. Post the 24th, ETH saw a more pronounced recovery in the number of open contracts compared to BTC, indicating a weaker impact from the interest rate hike.
The TVL in DeFi markets exhibited a slight downward trend this week, dropping to $43.67 billion. Amidst the backdrop of rising interest rates, the DeFi market saw reduced liquidity and activity. However, Tron and Optimistic fared relatively better, registering weekly gains of 3.71% and 1.67% respectively.
The NFT market continued its downward trajectory from last week, with the market cap falling to $5.76B, a decline of 4.3%. The volume also fell by 27.73% from the previous week, marking a new low in the downturn.
LBK Labs’ Recap
The past week has been characterized by relatively low trading activity in the cryptocurrency market, prompting some to liken it to “watching paint dry” compared to the surging stock markets worldwide. While stock markets are reaching new highs despite the prospects of rising interest rates, the crypto market remains subdued. The SPY500 is merely 5% away from its all-time high, showcasing its resilience in the face of potential interest rate hikes.
During this period, the total supply of stablecoins has experienced a notable drop of $770 million in just seven days. This decline can be partially attributed to investors seeking higher yields from government bonds. Companies such as Maker and Coinbase have capitalized on this demand by purchasing bonds and repackaging them as financial products for investors. Given the prevailing uncertainty in the market, this move appears to be a prudent choice for risk-averse individuals.
Analyzing the liquidation levels, it becomes evident that there is a higher concentration of liquidations occurring near the $28,500 price point compared to above $30,000. As a result, it is likely that this price range will undergo testing in the coming week or the week after. This may be followed by a swift price recovery as the market participants adjust to the prevailing conditions.
BTC price optimistic: $31000 — $33500
BTC price neutral: $29500 — $31000
BTC price pessimistic: $26500 — $29500
3 Major Project News
[Ethereum] EIP-7377 Migrate EOAs To Contract Wallets
Developers propose an EIP for migrating EOAs to contract wallets, and its purpose is to add a new transaction type that allows EOA accounts to permanently migrate to smart contract wallets through a one-time transaction. This provides a feasible path for advancing Ethereum account abstraction. The motivation behind EIP-7377 is to provide a mechanism for migrating from EOA to smart contract wallets at the protocol level, in order to address this real-world need and achieve a smooth transition. This may greatly increase the willingness of existing users to migrate, as well as provide a more pragmatic EOA transition solution for new users entering the market before account abstraction becomes widely adopted.
Nethermind releases a production-ready version of Juno. AltLayer plans to integrate the Espresso Sequencer.
[SUI] Liquid Staking is Coming to Sui
The Sui community has upgraded its protocol through the SIP#6 improvement proposal, which allows trading and transferring of wrapped tokens received from staking, and even wrapping them into another object. The addition of this functionality will enable developers to offer liquidity staking and create applications that provide financial products using liquidity staking tokens.
The protocol upgrade supporting liquidity staking is now live on the testnet, and pending all tests and compatibility checks, it will be added to the mainnet in the next upgrade.
The initiative aims to secure long-term success by nurturing the ASTR token and creating sustainable growth. While the network has already burnt 80% of transaction fees, the team plans to increase the burn amount via DApp Staking Burn: Projects that are part of DApp staking will be tiered according to their value to the network. The higher their value to the Astar ecosystem, the more support they receive from the community. Exceptional developers will still receive increased rewards.
By rewarding the most valuable projects, the team aims to establish a prosperous and sustainable ecosystem for ASTR holders, stakers, and developers.
[Cosmos] Evmos announced that it will be launching Evmos 2.0 on August 2nd
Evmos is Cosmos’s EVM-compatible chain. The version update includes the activation of StakeFi and IBC composability through Evmos EVM extensions, a continuously incentivized Evmos v2 token economy, and the establishment of value consistency with future Evmos SDK chains through software licensing.
[Layer2] Optimism has announced the Law of Chains, aimed at defining an MVP for Superchains
Superchains are a unified set of chains, collectively working towards an open, decentralized blockspace. The Law of Chains sets guiding principles for Optimism’s governance and the Superchain, shifting from governing a single chain to governing shared standards across multiple chains. It aims to keep the blockspace open and accessible to everyone by ensuring chains demonstrate uniformity, neutrality, and openness in their blockspace. Optimism is currently seeking community feedback on the Law of Chains, hoping to launch it alongside the first version of the governance process for adding new chains to the Superchain in the next governance quarter. In this context, a Superchain is an L2 network, while an OP Chain is a single chain within the Superchain. An OP Chain, regardless of its specific attributes, is considered part of the Superchain if officially managed by the Optimism Collective, sharing security, communication layers, and open-source tech stack with each other.
[Layer2] PGN is officially live on mainnet and open for building
The Public Goods Network (PGN), a Layer2 network built on the OP Stack and backed by Gitcoin and others, has announced the launch of its mainnet. Six months post-launch, PGN will evaluate and distribute fees based on accumulated data. Gitcoin Grants 18 will be run on PGN, with the donation round scheduled from August 15th to 29th, 2023, and applications opening on August 1st.
PGN is a highly composable EVM-compatible Rollup, supported by The Protocol Guild, Public Nouns, Clr.fund, Giveth, Hypercerts, Protocol Labs, Octant, Eco, Hedgey, and Gitcoin.
[Layer2] Rethinking Rollups with OpEVM: An Open-Source SDK to Build Optimistic Rollups
Polygon’s modular blockchain project, Avail, has open-sourced a new prototype of the Optimism EVM (OpEVM) SDK. This allows developers to build sovereign, EVM-compatible Optimistic Rollups.
This technology provides a decentralized infrastructure for running on Layer 2, supporting decentralized sequencers, eliminating the need for embedded cross-chain bridges on Layer 1, and verifying state transitions in a truly optimistic way. OpEVM is built on the Avail data availability layer and can assist in creating Rollups independent of smart contract execution.
[Application] Sam Altman’s Worldcoin launches token with more than two million sign-ups
Worldcoin has announced the official launch of its WLD token, which will be distributed to over 2 million people worldwide. Users verified through the Orb will initially receive 25 WLD tokens. To expedite registration, Worldcoin has committed to deploying Orbs in over 35 cities across 20 countries. Tiago Sada, the head of product, engineering, and design at Tools For Humanity, Worldcoin’s main developer, stated that by year’s end, the circulating number of metallic orbs will increase from approximately 200 to around 1500.
4 Key Fundraising Data
Last week witnessed a total of 13 financing events, raising a substantial amount of over $135 million*. Fundraising activities are primarily centered in the Blockchain Service sector, encompassing five deals (representing 38.46% of the total). These deals have reached a total of $84.5 million (accounting for 62.59% of all funds). We’ve noted two major financing events exceeding $30 million, respectively originating from the Service sector’s Flashbots and the CeFi sector’s hi Dollar. Further details are given below.
* 3 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: Cryptobank, Foresights, LBank Labs)
Below, we listed the most noteworthy fundraising deals for you:
1. [Service] Flashbots becomes unicorn after completing $60 million raise
Flashbots is a research and development organization formed to mitigate the negative externalities posed by Maximal Extractable Value (MEV) to stateful blockchains, starting with Ethereum. Paradigm led the series B round. The financing was raised through a so-called “beauty contest for decentralization” in which investors were selected based on their reverse pitches, according to a statement Tuesday from Cayman Islands-based Flashbots.
The funding gives it a valuation of at least $1 billion, a representative of Flashbots said, and will be used to help finance the development of a new version of the technology.
- Official Link: https://www.flashbots.net/
2. [CeFi] Metaverse Giant Animoca Brands Plunges $30M Into Crypto ‘Super App’ hi
Hi Dollars is a financial platform issued by hi Reserve Limited, with the aim of providing a range of innovative mobile and online financial services (alternatives to traditional banking) for global users. Animoca Brands, a metaverse gaming group, is investing $30 million in this financial application to enhance the utility of NFTs within the industry.
Looking ahead, the co-founders of hi anticipate that this substantial $30 million investment will improve existing products and fuel the development of new ones. Support for corporate accounts may also be a possibility, and Animoca’s established operations in Latin America could open up new markets.
- Official Link: https://hi.com/
3. [Service] Aethir Closes $150 Million Valuation, Pre-A Funding Round to Scale its Decentralized Cloud Infrastructure
Aethir, the leader in decentralized GPU infrastructure, announced today that it has completed its Pre-A round of financing, raising over $9 million and reaching a valuation of $150 million. It is reported that this round of financing is another round of financing after the seed round financing led by Framework Ventures and Infinity Ventures Crypto. This round is led by top global investors such as Sanctor Capital, Hashkey, Merit Circle, and CitizenX.
This investment will enable Aethir to accelerate its global business expansion in key markets such as Southeast Asia, Latin America, and North America, and strengthen its technical research and development and application innovation support.
- Official Link: https://www.aethir.com/
4. [Service] Japanese Web3 developer HashPort Group raises $8.5M in funding round
Japanese blockchain developer HashPort has raised 1.2 billion Japanese yen ($8.5 million) in a Series C funding round led by Sumitomo Mitsui Banking Corporation, The University of Tokyo Edge Capital Partners and Japanese billionaire entrepreneur Yusaku Maezawa. The new round brings HashPort’s total funding to 2 billion yen ($14.2 million).
The funds will be used to aid the firm’s global expansion across tough regulatory landscapes.
- Official Link: https://hashport.io/
See you next week! 🙌
📢 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.
