Is the Crypto Bottom In?

ETH up 73% since Jun 18 bottom with move to Proof of Stake on track for Sep, The List of 3AC Creditors, a $1.2B hole in Celsius' Balance Sheet, plus someone finally defines the Metaverse

July 20, 2022

Issue Summary: Welcome back to Coinstack, your favorite weekly newsletter for institutional crypto investors. In this issue we’ll be covering the top news and stats for the week, giving an update on the ETH merge to PoS, sharing an update on the 3AC/Celsius fallout, and discussing whether the crypto bottom is in for 2022 or if it’s just a dead cat bounce (a trading term for a fake recovery). Let’s jump in…

In This Week’s Issue:

  1. This Week in Crypto

    1. 🗞️ Top Weekly Crypto News - Celsius Has $1.2B Hole in Balance Sheet, Genesis lent 3AC $2.4B, US Treasury Open to Nonbanks Issuing Stablecoins, Putin Outlaws Crypto in Russia

    2. 💵 Weekly Fundraises - 5ire ($100M), Halborn ($90M), Zebedee ($35M)

    3. 📊 Key Stats - ETH, NFTs, Celsius, Token Terminal

    4. 💊 Vitamin3 of the Week: The Definition of the Metaverse

    5. 📝 Report Highlights - Messari: Revisiting Art Blocks

    6. 🎧 Best Crypto Podcasts - Coinstack, Bankless, Delphi Media

    7. 📈 Top 10 Tokens of the Week - YFII, RAMP, BOND

  2. Coinstack Podcast Episodes

  3. Join Our Telegram Group

  4. Who We’re Following on Crypto Twitter

  5. How to Get Started in Crypto Learning

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🗞️ Crypto News Recap: The Top 10 Stories

Welcome back to This Week in Crypto… everything you need to know in one scannable format. Here are the top 10 stories of the week…

  1. 🔥 Celsius Faces Heat for at $1.2B Balance Sheet Hole, Customers Owed $4.7B - As of July 13, the company had $5.5 billion in total liabilities and $4.3 billion in assets, according to a declaration made by CEO Alex Mashinsky in a bankruptcy court filing.

  2. 😢 Crypto Lenders Lent More Than $3.5 Billion to 3AC - The largest lender, Genesis, owned by Digital Currency Group, lent $2.4 billion to collapsed hedge fund Three Arrows Capital (3AC). Fortunately, this was partially collateralized, so Genesis’ losses are estimated at around $1.1B and have been fully covered by the stronger DCG balance sheet.Adding up the total 3AC loan book at the time of their bankruptcy filing, we get to around $3.5 Billion, begging the question, how did 3AC get lent so much money and were these lenders even aware of each other?

  3. ✨ NEAR Partners With BitGo As It Enters World of Institutional Investments - Digital asset company BitGo will support the NEAR Foundation protocol and its assets with qualified custody services. Institutions holding NEAR tokens will be able to custody and stake them via hot and qualified custody wallets on BitGo.

  4. 💸 Dubai’s Metaverse Strategy Plans To Add $4 Billion to Economy by 2027 - Dubai's crown prince, Hamdan bin Mohammed bin Rashid Al Maktoum, announced on Monday that the emirate would look to use the metaverse to create 40,000 "virtual jobs" and add $4 billion to its economy over the next five years.

  5. 🗞️ US Rep. Brad Sherman Urges SEC To ‘Go After’ Crypto Exchanges That Traded in XRP - The division has determined that XRP is a security and is going after XRP but has not gone after the exchanges where tens of thousands of illegal securities transactions were occurring. Of course, there is still an active suit and Ripple may yet prevail.

  6. 💎 CFTC Cracks Down on Crypto’s ‘Pump-and-Dump’ Schemes - A New York judge ordered Jimmy Gale Watson, Jr., an associate of the late John McAfee, to pay $144,736 in ill-gotten gains he allegedly received from the scheme.

  7. 🇮🇹 Crypto.com Secures Regulatory License in Italy - Digital asset exchange Crypto.com has received approval from Italian regulators to offer its services in the Mediterranean country — a move the company says aligns with its vision of “building lasting growth in the region.”

  8. NFTWorlds, a Top Metaverse Platform, Blindsided by Minecraft’s Announcement That It Won’t Be Support Web3 Tech. Minecraft announces it won’t be supporting NFTs or blockchain technology inside its app, opting for a closed world. Perhaps a better idea for Minecraft would be to support and encourage NFTWorlds, or even attempt to acquire them.

  9. Coinbase Announces No Exposure To UST, 3AC, Celsius, Voyager. The leading U.S. crypto exchange, Coinbase, announces it had good risk management in place and thankfully has no exposure to 2022’s “Three Horseman of the Apocalypse” of Terra, 3AC, and Celsius.

  10. 🚫 Putin Signs Bill Outlawing Crypto Payments in Russia - Russian President Vladimir Putin signed a bill on Thursday amending the country’s existing ban on cryptocurrency payments to specify additional types of tokens. The amendment — submitted by ​​Anatoly Aksakov, a member of the Russian State Duma, on June 7 — will prohibit the use of any security tokens, utility tokens and non-fungible tokens (NFTs) as forms of payment for goods and services in the country.Share Coinstack

💬 Tweet of the Week - ETH Merge Date Proposed for September 19

💵 Weekly Crypto Fundraises & Deals

Here are all the crypto fundraises we heard about this week, ranked by size…

📊 Key Stats of the Week

Here are the most important and interesting stats in crypto this week...

1. The Value of Celsius’ Balance Sheet Cratered 80% During April-July from $22.1B to $4.3B

2. Top Crypto Projects By Revenue Last 30 Days Are Ethereum, Uniswap, BSC, Convex, Lido, dYdX, and Sythetix. Bitcoin falls to #9

3. Binance Smart Chain, Polygon, and Ethereum Have Become Market Leaders in Transaction Activity With More Than 1M Daily Transactions and 100K Daily Active Wallets

4. Daily NFT Buyers on Ethereum Jump 50% Since the ETH’s Price Drop in Mid-June

5. Crypto Lender Celsius Has Half a Million Creditors Owed More Than $5 Billion, 77% of Which Are Depositors From Their Earn Program

6. Magic Eden Is the Leading NFT Marketplace on Solana. The Project Recently Crossed 400k YTD Users, Tracking at ~425k

7. ArtBlocks, the Leading Generative Art Platform, Recently Surpassed $1.3B (412,526 ETH) in Total Secondary Sales

8. Ethereum Remains Top Revenue Producing Blockchain, By Far

9. Uniswap Surpasses Temporarily Passes Ethereum for Top Revenues in the Crypto Space, But $0 of these Fees Flow to UNI Token Holders, Yet

Vitamin of the Week: The Definition of the Metaverse

About this Section: Our friends at Vitamin3 have launched a free daily SMS covering web3 topics. You can subscribe free by sending HELLO to 305-614-9440. Here’s an excerpt from their SMS earlier this week on the Metaverse.

1/3) Let's talk about the buzzword of the year: metaverse. What's a metaverse? "No one knows, but it's provocative, it gets the people [and hype/PR/investor funding] going." Facebook rebranded into Meta as it leans into its virtual reality work. Many use the word to describe any virtual world or digital experience. We like a much tighter definition offered by Tim Sweeney, the founder of Fortnite:

(2/3) "Metaverse is a real time 3D social medium where people can create and engage in shared experience as equal participants in an open economy with societal impact." In a way, it's a successor of the Internet as we know it today, as metaverse interconnects physical, digital, and virtual worlds into a single interaction sphere and layers an economic/monetization engine on top of it.

(3/3) Every part of this definition matters:

  • real time = live & persistent (unlike video games)

  • user creation = users as active creators rather than passive consumers

  • shared experience = social & community-oriented (global multiplayer mode)

  • open economy = users are free to monetize creations & trade assets

  • societal impact = true metaverse has societal scale vs niche/single brand offering

📝 Highlights from the Top Crypto Reports

Here are the top highlights from the best crypto research reports this week…

About this Article: Messari brings transparency to the crypto economy. Messari wants to help investors, regulators, and the public make sense of this revolutionary new asset class and is building data tools to drive informed decision-making and investment. This is an excerpt from the full article, which you can find here.

Art Blocks has experienced serious price volatility since Messari first covered the NFT collection in August 2021:

  • 24,000% growth by the end of August 2021;

  • A 1,800 ETH sale to Three Arrows Capital through their affiliated fund, Starry Night Capital;

  • A multimillion dollar sale at Christies;

  • And a 99% decline in transaction volumes over the ten months that followed.

Art Blocks bulls will draw parallels to similar times in the early days of new asset classes – BTC in 2013 comes to mind – and claim that on-chain, generative art is a “new paradigm” that has only undergone the first of many parabolic cycles to come.

Bears will point to the seemingly absurd proposition of spending thousands if not millions of fiat bucks on an ERC-721 token that links to a URL of “art” on a blockchain.

Most people just want to know – what even is Art Blocks? Moreover, why should I pay attention to it?

Art Blocks?

Art Blocks was founded in late 2020 by Erick “Snowfro” Calderon. The platform allows creative coders (in this case, artists who leverage code to create art) to create and store content on the Ethereum blockchain. Artists write scripts, typically in p5js, that define what their content could look and/or sound like. When users mint an artwork from a particular collection, the script generates content based on the parameters defined by the artist within the script – hence the name “generative art.”

All content is generated at the time of mint – nobody, not even the artists themselves, knows precisely what the script will generate beforehand. This is different compared to almost all other NFTs, where outputs are predefined by the team and then minted in randomized order.

To ensure these scripts always recreate the same content, scripts are stored on-chain alongside a “seed.” A seed is a string of data that, when combined with a given script, always recreates the same output. Any artist, collector, or user can recreate existing outputs by running the stored script with the seed data as an input.

🎧 Top Crypto Podcasts of The Week

Here are the crypto podcasts that are worth listening to this week...

📈 Top Performers This Week

Here are the top 15 performers in the last week from all tokens with a market cap of $20M+.

The Top Performers This Month from the Top 100: DFI.Money is a Farming Aggregator, and Ramp is a Cross-chain Liquidity Protocol, BarnBridge is a Derivatives Protocol, Burger Swap is a DEX

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📚 How To Get Started With Crypto Learning

📰 The Coinstack Newsletter:

Tracking the most important blockchain stories of the 2020s, including a decentralized internet and the creation of a new open global monetary system that works for everyone. As always, published for informational purposes only. Please do your own research. Just our opinions. Not intended as financial advice as we are not financial advisors. We may belong on many of the digital assets we write about as we believe strongly in the sector. Please do your own research. Published and written weekly by Ryan Allis and Mike Gavela.

The Coinstack Newsletter" to "We are a news and analysis newsletter for the digital asset industry. None of the information here is a recommendation to invest in any securities or other types of investments. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All investments involve risk and may result in loss.

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