Hong Kong BTC & ETH ETFs Debut

Hong Kong became the first in Asia to offer retail investors he ability to trade the cryptocurrencies at spot prices. Plus the top news, stats, and funding rounds of the week in crypto.

Author

Ryan Allis
May 01, 2024

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Issue Summary: Welcome back to Coinstack, the weekly newsletter for institutional crypto investors and industry insiders. We review the top news, stats, and reports in the digital asset ecosystem for our 250k weekly subscribers. This week Hong Kong’s crypto ETFs launched, the SEC charged a Texas mining firm for fraud, Celsius Loan creditors planned their legal appeal, and big new venture rounds came in for Blackrock Neurotech ($200M) and Aligned Layer ($20M). 

Price performance since we began writing Coinstack in January 2021

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đź’µ Weekly Crypto Fundraises & Deals

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

🗞️ Crypto News Recap: The Top 5 Stories

Welcome back to This Week in Crypto… everything you need to know in one scannable format. Here are the top 5 stories of the week… 

  1. 🇭🇰 Hong Kong's six spot bitcoin and ether ETFs see $11 million in volume on first trading day: When the 11 spot bitcoin ETFs in the U.S. began trading in January, their first-day volume reached about $4.6 billion.

  1. ⚖️ SEC charges Texas mining firm and co-founders for $5.6 million fraud scheme: The U.S. Securities and Exchange Commission has filed fraud charges against Texas-based crypto mining and hosting company Geosyn and its two co-founders Caleb Ward and Jeremy McNutt for alleged engagement in a $5.6 million fraud case. 

  1. ⚖️ Celsius Loan creditors plan appeal of Celsius' reorganization plan amid frustrations over recoveries: Creditors who borrowed from Celsius are consulting with "several" lawyers to see if they can appeal the reorganization plan, a source told The Block. The creditors want to recover some of the funds they used as collateral on the now-defunct platform, according to the same source, who is a Loan creditor.

  2. ⚖️Co-founders of Samourai Wallet arrested and charged with money laundering: Co-founders of the crypto mixing service Samourai Wallet were arrested and prosecutors say they were involved in laundering $100 million from the Silk Road and other illicit markets.

  1. ⚖️ US DOJ sought 36 months’ imprisonment for Binance founder Changpeng Zhao, but the sentence came back at 4 months: U.S. prosecutors sought 36 months of imprisonment for Changpeng Zhao, founder and former chief executive of Binance.

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đź’¬ Tweet of the Week

Source: @mdudas

đź“Š Key Stats of the Week

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

1.  Blackrock's BUIDL has surpassed Franklin Templeton's BENJI (FOBXX) in AUM and became the largest On-Chain Money Market Fund

Source: @tomwanhh

2. New all-time high for monthly Base volume on Uniswap. Last month: $9.42. This month: $13.97B

Source: @Uniswap

3. Base is onboarding 50k-100k new crypto users a day. Approaching 9m users total. 

Source: @dunleavy89

4.  In the space of 6 years, stables have gone from ~0 to near parity with Visa.

Source: @dunleavy89

5. Polygon ranks number 3 by DeFi transactions, just slightly behind Base.

Source: @polygonstats

6. Top Moving Coins From the Top 100

đź“ť Highlights from the Top Crypto Reports

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

About the Author: Ishraq Alim and Mihai Grigore, are researchers at Messari, a crypto new terminal and media outlet trusted by hundreds of institutional and retail crypto investors. This is an excerpt from the full article, which you can find here.

Key Insights

  • In Q1’24, omnichain transfer volume on LayerZero surpassed $6.7 billion in assets, up 91% QoQ. Messages sent on LayerZero reached 29.6 million, up 60% QoQ.

  • Smart contract deployment on LayerZero grew 92% QoQ in Q1’24, indicating strong developer ecosystem growth.

  • In Q1’24, LayerZero Decentralized Verifier Networks (DVNs) and Executors accrued over $11 million from fees, up 31% QoQ. Simultaneously, average fees on LayerZero decreased by 20% QoQ.

  • LayerZero V2 went live in January 2024, aiming to standardize communication and scale supported networks. After adding support for nine networks in Q1’24, LayerZero now supports over 60 networks. Also, LayerZero’s token launch is expected in the first half of 2024.

  • Introduced in V2, DVNs allow applications building on LayerZero to select any verification method for security purposes. DVNs are a permissionless role. As of Q1’24, over 30 DVNs are live, including DVN Adapters for CCIP and Axelar.

Primer

Though blockchains are designed to be secure, it is difficult to communicate securely between networks. LayerZero is an interoperability protocol that allows secure communication between over 60 networks.

It sends and receives messages via a permissionless set of Executors and decentralized verifier networks (DVNs). Executors carry out a message's instructions in the destination chain, while DVNs ensure end-to-end accuracy. The security stack, including executors and DVNs, can be configured depending on the level of security required for sending and receiving messages.

LayerZero uses a standardized communication protocol, allowing omnichain applications to communicate on distinct networks. Its primary use case is transferring assets between distinct networks. Other use cases include gaming, NFTs, cross-chain governance, identity solutions, and reward and fee distribution.

LayerZero V2 went live in January 2024, aiming to standardize communication across networks with different security models. V2 features a common messaging system and common security properties to simplify cross-network communication and improve the developer experience.

LayerZero Labs is the initial developer and core contributor to the LayerZero protocol. In April 2023, it raised a $120 million Series B. LayerZero recently announced the launch of a native token in the first half of 2024.

Key Metrics

Performance Analysis

Financial Overview

Revenue

LayerZero protocol collects fees at the source chain. These fees are collected in the native token of the source chain and are used in two ways:

  • To distribute to DVNs and Executors

  • To pay for gas on the destination chain

Revenue generated by DVNs and Executors incentivizes protocol security and usually scales with the increased value of assets transferred. Simultaneously, accrued revenue further incentivizes DVNs and Executors to deliver messages accurately, which is critical when transferring high-value assets. DVNs may have additional features such as native slashing (e.g., Axelar), which would impact revenue.

Revenue from fees collected by LayerZero DVNs and Executors grew 32% QoQ to over $11.5 million in Q1’24. The top source chains for revenue were Arbitrum ($3.4 million), BNB Chain ($2.4 million), Optimism ($2.1 million), and Polygon ($2.1 million). The 32% revenue increase in Q1’24 came after a decrease in revenue in Q4’23 that corresponded to an overall drop in asset transfer across all bridges. The decrease was notably driven by Stargate, currently the largest bridge by volume transferred on LayerZero.

🎧 Top Crypto Podcasts of The Week

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

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đź“° 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 own some 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. 

Coinstack is 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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