LBank Labs Weekly Digest (September 3–9) #11
*All on-chain data is dated as of 12:00 a.m. EST on Sunday, September 10th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Sep.3–9).
Author: LBank Labs Research team — Hanze, Dannie
Keywords: #ETF #Layer2 #Social
1 Macro Market Overview
U.S. Stocks dragged down by tech for the week. According to WSJ, Apple shares ended the week down 6% after China ordered central-government officials to stop using iPhones. Shares of Nvidia, the graphics-chip maker at the heart of the AI boom, dropped 6.1% for the week. Both tech stocks have a major influence on the broad U.S. stock index. Furthermore, data last week raised concerns that the economy may be running too hot for Fed officials to stop raising interest rates. The services sector of the economy expanded for an eighth consecutive month in August, an index from the Institute for Supply Management showed Wednesday. Initial jobless claims, a proxy for layoffs, fell to the lowest level since early February, the Labor Department said Thursday.
Investors are looking ahead to the next release of the consumer-price index on Wednesday. The data could help them gauge the Federal Reserve’s next steps in its campaign to tame inflation. The central bank’s rate-setting committee is scheduled to meet the following week.
The S&P 500 fell 1.3% for the week while the tech-heavy Nasdaq Composite declined 1.9%. The Dow Jones Industrial Average, which includes Apple but not Nvidia, slipped 0.7%.
On the other hand, Web3-related stocks saw marginal gains overall last week. Despite Grayscale’s recent legal victory, investor confidence in the crypto market remains subdued. COIN and MSTR rose by 5.2% and 1.5%, respectively, while MARA declined by 9.2% after announcing a $417M note-to-equity conversion.
Macro indexes The US Dollar Index (DXY) extended its weekly winning streak to its longest since 2014, supported by recent data indicating the continued resilience of the U.S. economy. As of the closing, the index stood at 105.06, marking a 0.8% increase over the course of the week.
The Effective Federal Funds Rate (EFFR) was at 5.33%, still residing within the historical high range of 5.25–5.50%.
The US 10-Year Treasury Note (US10Y) experienced a modest uptick during the week. The yield on the 10-year Treasury note, a key benchmark, climbed from 4.173% to 4.225% over the span of one week, representing a 1.25% increase.
ARK filed for a Spot Ethereum ETF. According to Bloomberg’s Senior ETF Analyst, ARK filed for a Spot Ether ETF last week. Additionally, a previous applicant, VanEck, had already submitted a Spot Ether ETF S-1 as early as 2021. The next step for one of them is to file a 19b-4. The analyst also noted that this is different from the earlier Ark/21shares S-1 filing because this will ultimately start that clock we are so used to following with spot Bitcoin filings.
Furthermore, the analyst summarized two potential cryptocurrency-related bills, both of which have less than a 50% chance of passing. The likelihood of any action being taken on these bills this year is very low.
2 Crypto Market Pulse
Market Data
In the past week, the cryptocurrency market has seen a consistent minor decline, maintaining low volatility. $BTC briefly surpassed $26,000 on Sunday and Monday, then touched $26,400 on Friday before regaining support levels. Due to the current lack of positive catalysts in the market, investor confidence in Bitcoin remains subdued.
By the weekend, $BTC remained relatively unchanged compared to the previous week, closing at $25,860 per coin as of 12:00 AM on September 10th. $ETH is currently priced at $1,631 per coin, marking a 0.24% decrease. The total market capitalization of the global cryptocurrency market has also remained relatively stable at $1.041T. Bitcoin continues to dominate the market with a 48.40% market share, valued at $503.8B, while Ethereum holds 18.84% of the market, with a market cap of $196.1B.
$XLM, $RNDR, and $SNX emerged as Top 3 gainers, while $GALA, $MNT, and $XDC were Top 3 losers. Recent announcements from Stellar Lumens have generated significant market interest, leading to a surge in $XLM. Stellar’s historical partnerships with MoneyGram and Circle provide hints about the potential impact of upcoming revelations. $RNDR, as an AI-related token, exhibits a strong correlation with Nvidia. Recent analyses suggesting that Nvidia’s stock price will continue to rise have propelled the recent rebound of $RNDR. The native cryptocurrency of the decentralized finance protocol, $SNX, began gaining momentum on Monday, shortly after the protocol disclosed details about the upcoming perpetual futures V3 testnet.
Regarding the top losers of the previous week, most were influenced by the overall market downturn and faced selling pressure. In particular, $GALA experienced a significant drop due to concerns within the community stemming from litigation issues among co-founders.
The market cap of stablecoins experienced a slight decline last week. On the whole, the exchange net position change exhibited a pattern of alternating net outflows and net inflows, indicating a lack of positive catalysts, low volatility, and subdued investor sentiment in the current market. Meanwhile, funds continue to flow out of the cryptocurrency market.
In the derivatives market, the total open interest for BTC and ETH remained relatively stable last week, with no significant influx of new capital. Market activity peaked around the 7th, leading to brief upward movements in the prices of $BTC and $ETH. It’s noteworthy that the liquidation dynamics for $BTC and $ETH were not identical during the past week. In the $ETH market, long and short liquidations occurred at similar rates, while $BTC saw a shift from a substantial number of long liquidations to short liquidations. This further underscores the potential impact of recent Spot Ether ETF applications on market dynamics.
In the DeFi market, the TVL experienced a slight increase last week, reaching $37.9 billion. The seven-day trading volume for DEXs amounted to $9.2B, marking a 21.73% decrease compared to the previous week. This further indicates a reduction in recent market activity. DEX VS CEX dominance has declined to 8.92%. Among the top 10 blockchain platforms ranked by TVL, Tron saw a significant growth of 6.71% in the past seven days, while Base’s growth rate has notably slowed down, with a 7-day increase of 0.17%.
The NFT market saw a decline last week, with a decrease of 2.02%, bringing the total market cap to $4.79 billion. Additionally, trading volumes continued to drop significantly, decreasing by 23.6% to $33.3M. Furthermore, this week, the floor prices of top-tier blue-chip projects all experienced declines. BAYC and MAYC both dropped by over 6%, while Milady saw a substantial decrease of 17%. This reflects how the overall market conditions have also impacted investor sentiment in the NFT sector.
LBank Labs’ Recap
Last week, we witnessed a sense of restlessness within the altcoin sector, while the price of BTC remained confined to a narrow trading range. The dynamics of these alternative tokens are predominantly steered by influential whales and institutional investors, resulting in a high degree of concentration among token holders. An illustrative case is observed in the turnover graph, where we discern a significant accumulation of $UNFI tokens by large holders prior to a notable price surge. This strategic accumulation empowers these whales to exert a considerable influence on the token’s price movements. The resurgence of speculative interest is evident, with the recent 3x pump of $CYBER, attracting speculators back into the market. Nonetheless, it is noteworthy that the trading volume of these altcoins has exhibited a deceleration.
In the upcoming week, we anticipate an increased emphasis on trading activities involving high market capitalization tokens. This shift is expected as the FTX lawsuit unfolds, alongside the release of multiple economic data points that could sway market sentiment.
Of paramount significance is the forthcoming approval for FTX to commence liquidation of a range of assets, set to commence on September 13th. The liquidation is projected to encompass crypto assets with a cumulative value of up to $200 million weekly. It is unlikely that this operation will be executed in large, singular batches. However, the prevailing low liquidity in the market may lead traders to experience substantial selling pressure, particularly considering that most of these tokens possess a significant market capitalization.
Price Range
- BTC price optimistic: $26800 — $29500
- BTC price neutral: $24800-$26800
- BTC price pessimistic: $22800 — $24800
3 Major Project News
[Ethereum] Ethereum’s proto-danksharding to make rollups 10x cheaper. Proto-danksharding, also known by its Ethereum Improvement Proposal (EIP) identifier EIP-4844, is the centerpiece of the upcoming Cancun upgrade. It is aimed at reducing the cost of rollups, which typically batch transactions and data off-chain and submit computational proof to the Ethereum blockchain. Consensys’ zkEVM Linea head Nicolas Liochon said proto-danksharding is expected to drastically reduce the cost of rollups, and estimated that proto-danksharding could further reduce rollup costs by 10 times. The Ethereum Foundation has yet to nail down an expected launch date for proto-danksharding, but development and testing are still ongoing.
In addition, the Ethereum Foundation has announced the recipients of the Account Abstraction grant round. A total of 18 teams have already started developing various projects centered around ERC-4337.
[Layer2] Blockframe Joins as a Core Development Team to Decentralize the zkSync Network. zkSync has announced on the X platform that Blockframe has joined the zkSync network, becoming the latest core development team outside of Matter Labs to assist in building, maintaining, and upgrading the zkSync protocol and ZK Stack. Blockframe is an NFT marketplace and creator platform, and they have recently introduced Bulk Semaphore, a protocol that supports scalable anonymous messaging and signaling.
Furthermore, zkSync announced last week the initiation of a mainnet upgrade plan for block.numbers, block.timestamp, and blockhash, which will return the respective values for L2 blocks after the upgrade. Additionally, Binance has completed the integration of $ETH into the zkSync Era network. Users can now deposit and withdraw $ETH tokens on the zkSync Era network.
[Layer2] The Starknet community has initiated a proposal for simplifying decentralized protocols. Starknet has initiated the “Simple Decentralized Protocol Proposal,” proposed by community member Ilia Volokh. The proposal aims to enable the community to initiate a simple and comprehensive decentralized Starknet protocol candidate, allowing for a maximum level of protocol simplification under the assumption that over 2/3 of the staked participants are honest actors.
In addition, Starknet has announced the deployment of version V0.12.2 on the mainnet. This version includes several crucial upgrades aimed at enhancing the network’s performance and reliability. Furthermore, Starknet has announced on X that its core stack has been fully open-sourced, including the Full Node, Execution Engine, Sequencer, and Prover.
[Layer2] Base Ecosystem Fund announces first six investments. The Base Ecosystem Fund, led by Coinbase Ventures, aims to invest in the next generation of onchain projects building on Base. They received over 800 applications for their Base Ecosystem Fund and are excited to announce their first six investments today: Avantis, BSX, Onboard, OpenCover, Paragraph, and Truflation. Their support encompasses four main areas, including stablecoins that can track inflation rates (flatcoins), onchain reputation platforms, onchain limit order book (LOB) trading platforms, and more secure DeFi solutions. This marks a significant step forward in fostering innovation and growth within the Base ecosystem.
Furthermore, Base has joined the Tokenized Asset Coalition (TAC), alongside industry leaders such as Coinbase, Aave, Circle, and others. The coalition’s mission is to drive the adoption of tokenized real-world assets through education, advocacy, and innovation.
[Layer2] Circle has brought native $USDC to OP Mainnet and Base. Optimism has announced that after launching native $USDC on the OP mainnet, Circle, a stablecoin issuer, has also introduced it on Base. In other stablecoin-related news, Binance has enabled deposits for native $USDC on the OP Mainnet. Furthermore, another project, Lyra Chain, will utilize the modular and open-source OP Stack codebase for their own OP Chain.
Last week, Optimism also revealed collaborations with several projects, including the ability for OP Stack developers to harness the decentralization, speed, and scale of the Espresso shared sequencer network, and unified API provider Covalent has added testnet $ETH to their faucet on OP Goerli, with support for OP Sepolia coming soon.
[Polygon] With SPN, Developers Can Now Find and Connect with Any Solution Provider on the Polygon Protocols. Polygon Labs has announced the launch of the Solution Provider Network (SPN). SPN, in its revamped form, serves as a collaborative discovery platform that connects developers and solution providers (SPs) in real-time in one centralized hub.
SPN assists developers in discovering, evaluating, and connecting with the most suitable SPs for their projects across the Polygon network, which currently includes PoS and zkEVM. This includes RPC providers, oracles, account abstraction tool providers, and more. Each Polygon solution provider maintains their own profile, allowing developers to directly engage with SPs.
4 Key Fundraising Data
Last week witnessed a total of 18 financing events, raising a substantial amount of over $111.7 million*. The activity in fundraising has shown a weekly increase, with both the total funding amount and the number of fundraising events on the rise. The Social and DeFi sectors have garnered significant attention, accounting for 6 out of the total fundraising events, representing 33.33% of the total. The total funding amount reached $78.1M, constituting 69.92% of the total raised funds. The largest fundraising projects last week were led by two projects in the Social sector, ZEEBU and Story Protocol, each raising $25M. Further details are provided below.
*4 events of unknown amount are included, which have been excluded from the remaining data.
Below, we listed the most noteworthy fundraising deals for you:
Zeebu, the innovative blockchain-based settlement platform for the telecom carrier industry, has successfully raised $25M in a presale funding round, surpassing its hard cap target of $15M. The round saw participation from several strategic investors, including Bankai Ventures.
The market’s enthusiasm for Zeebu’s groundbreaking on-chain invoice settlement platform and loyalty token, which aims to revolutionize the telecom carrier industry, is reflected in the overwhelming response from investors.
- Official Link: https://www.zeebu.com/
2. [Social] Story Protocol has completed a $25 million Series A funding round led by a16z.
The blockchain-based intellectual property protocol, Story Protocol, has announced the completion of a $25M Series A funding round, led by a16z crypto. Combined with the $29.3M raised in May this year, Story Protocol’s total funding exceeds $54M. Other participating investors include Hashed, Endeavor, Samsung Next, Foresight Ventures, Dao5, Insignia Venture Partners, Alliance DAO, Mirana Ventures, as well as angel investors such as TPG Capital founder and chairman David Bonderman and Dapper Labs founder and CEO Roham Gharegozlou.
Story Protocol is a protocol that aims to create, manage, and license new intellectual property on blockchain. It seeks to democratize intellectual property creation through a global, scalable library of intellectual property.
- Official Link: https://www.storyprotocol.xyz/
3. [DeFi] Pantera Capital Leads $16.5M Investment in ZK-Powered DEX Brine Fi at $100M Valuation.
DEX Brine Fi has raised $16.5M at a valuation of $100M in an investment round led by Pantera Capital, the company said Thursday in a press release. Elevation Capital, StarkWare Ltd, Spartan Group, Goodwater Capital, Upsparks Ventures, Protofund Ventures were among those also participating in the fundraising round.
The fresh funding is notable given that venture capital for digital asset firms has mostly dried up, with cryptocurrency and blockchain startups receiving 76% less investment in Q2 2023 than the same period one year earlier, Crunchbase reported in July.
- Official Link: https://www.brine.fi/
4. [CeFi] Former Coinbase execs raise $8 million for fresh take on crypto lending.
Trident Digital Group, a newly launched startup founded by former Coinbase executives, raised $8M for its “next generation” crypto lending business. The launch comes after a period of utter carnage in crypto lending markets. At least half a dozen lenders and borrowers — ranging from the hedge fund Three Arrows Capital to lenders like BlockFi, Celsius Network and Voyager Digital — collapsed into bankruptcy last year.
Trident hopes to restore some of the liquidity that has drained out of the lending market, according to an announcement last week.
- Official Link: https://www.tridig.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.
