LBank Labs Weekly Digest (July 9–15) #3

LBank Labs
11 min readJul 17, 2023

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*All on-chain data is dated as of 12:00 a.m. EST on Sunday, July 16th.

Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about the crypto market in the past week(Jul.9–15).

Author: LBank Labs Research team — Claire, Johnny

Keywords: #CPI #XRP #RWA #Layer2

Bart Heirweg — BELGIUM — Torta al gelato / Icecream cake

1 Macro Market Overview

US stocks rise for a week as inflation fears calm. According to WSJ, the S&P 500 hovered near its highest close since April 2022 on Friday after signs of cooling inflation this week boosted stocks marketwide. The consumer-price index climbed 3% in June from a year earlier, sharply lower than the recent peak inflation rate of 9.1% in June 2022. The broad U.S. stock indexes edged lower for the day after earnings reports from big banks suggested resilience in the economy, but executives cautioned that a recession was still possible.

The Dow Jones Industrial Average and the tech-heavy Nasdaq Composite recorded their best weeks since March, rising 2.3% and 3.3%, respectively. The S&P 500 gained 2.4% in a broad-based advance, with all 11 sectors moving higher for the week.

Moreover, web3-related stocks experienced a significant surge following the XRP ruling on July 13th. The positive progress in Bitcoin ETF applications further contributed to the upward momentum in stock prices. By the end of the week, Coinbase witnessed a remarkable increase of 33.83%, while MARA and MSTR gained 15.3% and 20.38% respectively.

Left: Three Indexes, Right: Nasdaq, COIN & MARA & MSTR (Source: Yahoo Finance)

Ripple, Crypto Industry Score Partial Win in SEC Court Fight Over XRP. According to WSJ, Ripple defeated a significant part of the SEC’s enforcement case over its sale of more than $1.4 billion worth of a digital token known as XRP. U.S. District Judge Analisa Torres agreed with Ripple Labs’ argument that roughly half of its sales of XRP didn’t violate investor-protection laws. Ripple has argued that XRP, a token developed to facilitate cross-border payments, isn’t a security. The decision Thursday could buttress claims made by major cryptocurrency exchanges that are fighting similar SEC allegations over token trading.

Left: XRP Surged, Right: Ripple Tweets(Source: CMC, Twitter@Ripple)

SEC has acknowledged the Bitcoin ETF applications for BlackRock, Invesco, Fidelity, etc. According to Bloomberg ETF analyst James Seyffart, the SEC officially acknowledged receiving Bitcoin ETF applications from BlackRock, VanEck, Invesco/Galaxy, Fidelity, WisdomTree, and Bitwise. This officially kicks off the SEC’s review process. Seyffart noted that “this is just one step in the process, and it could happen even if Gensler/SEC plans to reject them next month.”

(Source: Twitter@JSeyff)

2 Crypto Market Pulse

Market Data

The overall market experienced a “brief” surge last week, primarily influenced by XRP. The first half of the week was relatively stable. However, after the XRP ruling on the 13th, the overall market swiftly surged by over 5% to reach $1.26T, then declined by 4% to $1.2T after a minor 24-hour volatility. Meanwhile, BTC and ETH exhibited similar trends, while BTC experienced a larger decline compared to ETH, indicating the potential resilience of ETH in volatile market conditions.

By the end of the week, the total market cap reached $1.22T, with BTC and ETH ending at $30.20k and $1,927, respectively.

Left: Market Cap, Right: BTC&ETH Price (Data: CoinMarketCap)

$XRP, $COMP, and $SNX emerged as Top 3 gainers, while $BSV, $ZEC, and $BCH were Top 3 losers. Although the overall market was not significantly impacted by $XRP in the long term, $XRP itself set a new record for both 24H and 7D price increases, ultimately ending the week with a gain of 51.40%. Additionally, another market theme this week was #RWA(Real World Assets). $COMP from Compound, one of the leading DeFi protocols, experienced a significant increase of 43.11% due to its RWA involvement as well as new community proposals. Another RWA-related company Synthetix saw a gain of 33.72% after announcing the upcoming launch of its new trading platform, Infinex. Conversely, BSV and BCH encountered persistent selling pressure, resulting in their continued decline.

Top 10 Gainers & Losers (Data: CoinMarketCap, LBank Labs)

The market cap of stablecoins continued its decline, while the net position change on exchanges exhibited a whole week of net inflow. As selling pressure gradually intensified, the exchange position data provided by Glassnode recorded a whole week of net inflow. The overall market cap continued to exhibit a downward trend, indicating that more money is flowing out from the crypto world.

Stablecoins Market Cap & Exchange Net Flow Volume (Data: Glassnode)

The derivatives market experienced peaks in trading activity on the 13th, in line with the overall macro market trends. There were two notable observations in the derivatives area this week: ETH Open Interest exhibited more pronounced reactions to the XRP info, and there was a divergence in the liquidation patterns between long and short positions during the second half of the week.

Left: BTC & ETH Open Interest, Right: BTC & ETH Total Future Liquidations (Data: Glassnode)

DeFi continued to demonstrate a performance similar to the overall market, ultimately reaching a total value of $44.85B. The daily trading volume aligned with the overall market trend, with the volatility on the 13th surpassing the previous week’s highest daily trading record within July. This week, all chains witnessed increases, with Pulse, Optimism, and Polygon emerging as the best-performing chains, experiencing gains of 8.77%, 5.02%, and 3.25% respectively.

Left: TVL & Volume, Right: Top 10 chains (Data: DefiLlama)

The NFT market showed signs of recovery last week, rising by 7.2% to reach $6.46B. Several positive factors contributed to the growth, including the new policies of Google Play regarding NFTs, a significant $20M financing round for the music NFT platform Sound by a16z (see details below), NFT series from Dune and ZkSync respectively, as well as new community plans from Doodles and Cool Cats.

Market Cap & Volume, 7D (Data: NFTGo)

LBK Labs’ Recap

The previous week witnessed favorable developments in the cryptocurrency space, evoking optimism among market participants. Key events included the U.S. District Court of the Southern District of New York’s ruling on Ripple’s lawsuit against the SEC concerning its XRP token, clarifying that while institutional sales violated securities laws, public sales did not. Additionally, the SEC acknowledged applications for Bitcoin spot ETFs from prominent financial firms like Blackrock, Fidelity, VanEck, WidsomTree, and Invesco. Europe also announced its plan to launch its first Bitcoin spot ETF later this month. Simultaneously, in the macroeconomic context, the Consumer Price Index (CPI) dropped to 3%, marking its lowest point since the Federal Reserve began raising interest rates, causing the dollar index (DXY) to dip below 100. These combined factors contributed to a price rally across various cryptocurrencies.

However, despite the positive news, the price of Bitcoin eventually reverted to the same range observed since the end of June. Several factors influenced this situation, including

  • low inflow of stablecoins to exchanges,
  • the U.S. government transferring confiscated funds from Silk Road to exchanges, and
  • the attainment of a short-term liquidity zone at $31,500.

Looking ahead, with no major scheduled events or economic data releases this week, we anticipate that price action in the market will be influenced by open interest levels, reflecting trader sentiment, and trending topics such as memes and artificial intelligence. As retail traders may have missed out on last week’s price movement, their enthusiasm to participate in the market is likely to increase. Presently, the number of people entering short positions compared to long positions is relatively insignificant. Given the proximity of short-term liquidity to the south of the current price, it is expected that the Bitcoin price will decline further before encountering lower resistance, potentially leading to a subsequent upward movement. Additionally, the relative trading volume in Ethereum (ETH) and other altcoins is likely to witness an upswing.

BTC price optimistic: $31500 — $34000

BTC price neutral: $29500 — $31500

BTC price pessimistic: $26500 — $29500

3 Major Project News

[Layer2] Coinbase’s Base launches mainnet for developers, plans public rollout in August

The Layer 2 network Base, backed by cryptocurrency exchange Coinbase, has released a mainnet for developers ahead of a public launch, slated for early August. The developer mainnet, which allows applications to be deployed on Base, comes after the introduction of a testnet version in February.

Base, built on Optimism’s software stack known as the OP Stack, functions as a rollup network. It is a secondary layer that performs off-chain computations with the goal of facilitating faster and cheaper transactions, while maintaining the security advantages of the Ethereum mainnet.

(Source: Twitter@BuildOnBase)

[Layer2] MetaMask Developer ConsenSys Brings Layer 2 Blockchain ‘Linea’ to Ethereum Mainnet

ConsenSys, the research and development firm behind the popular Metamask crypto wallet, plans to roll out its layer-2 network, Linea, to the main Ethereum network this week.

The so-called rollup network is known as a zkEVM, which means it relies on zero-knowledge (ZK) cryptography and is compatible with the Ethereum Virtual Machine (EVM) programming environment, so existing Ethereum-based applications can be ported over without significant additional work.

(Source: Twitter@LineaBuild)

[Layer2] Starknet’s ‘Quantum Leap’ Upgrade Goes Live, with New Plan Updates

Starknet, a layer 2 to the Ethereum blockchain, deployed its “Quantum Leap” upgrade early on Wednesday, designed to increase the number of transactions per second (TPS) and reduce the confirmation times for the blockchain. Quantum Leap was deployed on its Goerli testnet last week, followed by a community vote in which 97.91% of voters agreed to push forward to mainnet.

Volition will be introduced in Starknet 0.13, giving dApp developers the ability to choose their desired security level for contract storage. Starknet 0.14 will introduce a fee market for transactions conducted on Starknet. This will involve a shift from our current fixed gas price per block system to a first come first served transaction processing system.

(Source: Twitter@Starknet)

[Layer2] Manta Launches Manta Pacific: The Modular Ecosystem for ZK Applications

Manta Pacific is an OP Stack layer-2 solution built on top of the Ethereum ecosystem and using Celestia for data availability. Manta Pacific differentiates from existing approaches by offering native composability for ZK applications using universal circuits, which enables new ZK use cases and an ecosystem to support their growth. Manta Network’s L1 parachain on Polkadot will be renamed as Manta Atlantic.

(Source: Medium@Manta Network)

[DeFi] Aave DAO Votes to Launch GHO Stablecoin on Ethereum Mainnet

Aave’s proposal to launch its decentralized stablecoin GHO on Ethereum mainnet has been executed on-chain. Aave officially confirmed the smooth launch of GHO on the Ethereum mainnet.

Previously, the Aave DAO has voted to approve the AIP proposal to launch the GHO on the Ethereum mainnet. The proposal aims to bring GHO to the Ethereum mainnet through the Aave V3 Facilitator and FlashMinter Facilitator. Aave V3 users on Ethereum will be able to Mint GHO using collateral.

(Source: Twitter@AaveAave)

[Polygon] Polygon Proposes Token Switch From MATIC to POL for More Utility, with “Indore” Fork Successfully Executed

Polygon executed the hard fork “Indore”, successfully updating the Proof-of-Stake blockchain through a coordinated action of the various nodes in the network. Polygon thus continues to create value around its infrastructure, which will soon expand to give way to the vision of Project 2.0, bringing unlimited scalability and unified liquidity.

Also as a part of its project 2.0, a group of Polygon founders and researchers proposed a token upgrade that would replace the network’s MATIC token with POL in a move that lets POL function as a single token for all Polygon-based networks. These networks include the main Polygon blockchain, the Polygon zkEVM network, and various supernets — application-specific blockchains that run atop the main Polygon network.

Polygon 2.0 Roadmap (Source: Polygon.technology)

4 Key Fundraising Data

Last week witnessed a total of 22 financing events, raising a substantial amount of over $113.33 million*. Financing activities were concentrated in DeFi, Service, and Social sectors, totaling 17(77.27%) deals with a combined value of $67.33(59.41%) million. However, 2 notable events exceeding $15 million were observed in the NFT and GameFi sectors(see details below).

* 2 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. [NFT] A16z crypto, Snoop Dogg join $20 million Series A funding round for web3 music firm Sound

Web3 music firm Sound has raised $20 million in Series A funding. a16z crypto led the round. Additional participants included Palm Tree Crew, A Capital, Sound Ventures, Collab + Currency, Scalar Capital, Snoop Dogg, Ryan Tedder, and Tay Keith.

“The funds will give us resources to grow our team and further our mission to make Sound the home of music discovery on the web and mobile,” the firm’s co-founder David Greenstein told The Block.

2. [DeFi] Alluvial Drives Global Adoption of Liquid Staking with $12M Series A Raise

Alluvial, a software development company supporting the enterprise-grade liquid staking protocol Liquid Collective, has raised $12 million in its Series A financing round. The round is co-led by Ethereal Ventures and Variant, with participation from Brevan Howard Digital, Avon Ventures, Nascent Capital, a_capital, Robot Ventures, Fenbushi, IOSG, Blockdaemon, and others. Alluvial previously raised a $6.2M Seed round from strategic participants including Coinbase Ventures, Kraken, Figment, and Kiln.

3. [DeFi] Decentralized Trading Platform Ambient Finance Completes $6.5 million Financing Led by BlockTower Capital

Ambient Finance (previously known as CrocSwap) has raised $6.5M in a seed round at $80M network valuation led by Blocktower with participation from Jane Street, Circle, Tensai Capital, Naval Ravikant, Yunt Capital, Susa Ventures, Quantstamp, and Hypotenuse Labs, along with angel investors Julian Koh, llllvvuu, Dogetoshi, afkbyte, Jai Prasad, Don Ho, and others.

The funding announcement comes shortly after Ambient Finance’s mainnet launch. The capital raised in this round will grow the team and ensures our research & development will sustainably create decentralized markets.

4. [Social] LBank Labs joins Draper and INCE Capital in investing in LunarCrush

LBank Labs, a leading blockchain venture fund, is excited to announce its investment in LunarCrush, a social intelligence platform for crypto, NFTs, and stocks. LBank Labs is known for its protocol and exchange-agnostic approach and provides support to projects through direct funding, acceleration, incubation, and networking.

LBank Labs takes pride in its innovative strategy for identifying promising prospects in the Web3 space. The fund’s primary focus is on the Platform Standard Ecosystem (PSE), and LunarCrush stands out as an exceptional example of user acquisition, retention, and aggregation. LunarCrush sets the standard for industry giants like Coinbase and Kraken, aggregating data and surpassing expectations.

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.

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