Translated by elcreto

Xangle’s Take on the Market This Week

• The crypto market swirled around the marquee event of the week—the FOMC meeting. After the Fed further dialed back the rate hike to 25 bps, expectation for Fed’s dovish pivot has translated into another bumper week for crypto.

Top Stories & Takeaways

Testnet for Ethereum Shanghai Upgrade Goes Live

• The Shanghai upgrade of the Ethereum network, the first major upgrade since the Merge, is slated for March. The upgrade famously includes EIP-4895 allowing users to withdraw staked ETH.
• The Zhejiang public testnet went live on Feb 1, 15:00 UTC (or Feb 2, 00:00 KST).
• Users will be able to simulate the withdrawal once the Shanghai and Capella (consensus layer for withdrawals) testnets are launched at epoch 1350 six days after the Zhejiang launch.

Xangle’s Take: The risk of a run on deposits after Ethereum’s Shanghai upgrade and completion of the staking service is considered very limited. Instead, most expect to see higher institutional demand. The withdrawal appears to be a stringent process and will thus take more than 100 days even if all 500,000 validators request withdrawals. Sell pressure is not strong as most of the validators are not making significant returns and deemed to have participated from longer-term perspectives. 1) Staking services for institutional investors and 2) derivatives services leveraging staked ETH will benefit from the Shanghai upgrade. CEXs and protocols worth a look include Coinbase (+142% MoM) and Binance and Lido (+150% MoM) and Rocketpool (+96% MoM), respectively. Much like what happened with Danksharding and rollups, expectation for the scalability roadmap for the post-Shanghai upgrade Ethereum is getting priced in in advance.

Link: U.Today report | Testnet endpoint | Announcement on Twitter

Fed Downshifts to 0.25%

• The U.S. Federal Reserve raised its benchmark interest rate a quarter point on Feb 1 following the Federal Open Market Committee (FOMC) meeting, chiming with the consensus.
• The Fed’s statement continued to include the language of “ongoing increases,” suggesting additional hikes by the end of this year.
• Fed Chairman Jerome Powell acknowledged at a news conference that the inflation has “eased somewhat.”

Xangle’s Take: Markets don’t appear to believe that the Fed will stick with continued rate hikes. There are mounting expectations for the Fed pivot. Considering that 1) the market projection for rate cuts and declining long-term interest rates will very likely loosen up the credit environment at the cost of a flareup of inflation and that 2) service prices keep rising as opposed to the dwindling goods and housing prices, it seems premature to expect a rate cut even if the March rate hike may be the last one.

Link: CME FedWatch Tool

Mainnet

Cardano Launches Stablecoin Djed

Cardano has launched stablecoin $Djed in collaboration with COTI.

Link: COTI Medium post | Djed supply | Xangle’s research report

DeFi

Tether Ownership Controlled by a Few People: WSJ

Four individuals held an 86% stake in Tether Holdings Limited as of 2018, according to documents viewed by the Wall Street Journal.

Link: Coindesk report

Circle’s CCTP Enables USDC Cross-Chain Transfer

USDC issuer Circle’s CCTP (Cross-Chain Transfer Protocol) will allow users to burn and mint USDCs during the process of asset transfer to other chains.

Link: crypto.com report

Games/Metaverse

Seoul Administrative Court Dismisses Natris’ Lawsuit Seeking to Overturn P2E Rating Rejection

The Seoul Administrative Court dismissed the lawsuit Natris had filed against South Korea’s Game Rating and Administration Committee to revoke the committee’s refusal to classify the game developer’s P2E game, Infinite Breakthrough: Three Kingdoms Reverse.

WeMade’s Official Global Launch of MIR M: Vanguard and Vagabond

WeMade’s blockchain game, MIR M: Vanguard and Vagabond, hit the global market on the 31st, making an official debut in around 170 countries.

Link: Concurrent users (real-time data)

Regulatory Landscape

S. Korea’s Financial Regulator Set to Issue Security Token Guidelines

South Korea's Financial Services Commission (FSC) will soon publish the principles to determine which tokens are securities and guidelines on issuance and distribution of security tokens on Feb 6.

Link: Coindesk report

Macro/Industry/Corporate

Meta Releases 4Q22 Earnings

Meta reported a $727M revenue and $4.28B operating loss in its metaverse division, Reality Labs, in its earnings announcement for the fourth quarter, 2022.

Link: CNBC report

Rally Shuts Down

Rally, the fan token platform, announced its closure as of Feb 1.

Link: Decrypt report | Events (Xangle)

Blockchain SNS Damus Officially Registered on App Store

Damus, a service that aims to provide open protocols, has shot up to the 10th spot in iOS social networking category in the U.S. in less than a day after the app’s debut.

Link: Ground report

Research

Ordinal Theory

A new NFT project called “Ordinals” has launched on the Bitcoin blockchain. It is stirring heated controversy by allowing data of up to 4MB to be uploaded on the chain.

Link: Illegitimate bitcoin transactions | WTF are Ordinal NFTs, Inscriptions, and Digital Artifacts? | Ordinal Theory Handbook

Previous Xangle Weekly Reports

• [Weekly Xangle] Uniswap v3 Deployment on BNB Chain, Marblex Membership NFT, and Doodles 2 Debuting on Flow
• [NFT Weekly] Doodles 2 Debuting on Flow, Porsche 911’s Dramatic Upturn, and Mablex Membership NFT
• [On-chain Weekly] Ethereum Node Distribution by ISP, Market Share of Lending Platforms