LBank Labs Weekly Digest #36

Author: LBank Labs Research team - Hanze, Johnny

*All on-chain data is dated as of 12:00 a.m. EST on Sunday, March 10th

 

Federal Reserve Chair Jerome Powell said the central bank is still on track to cut interest rates this year. PHOTO: BONNIE CASH/REUTERS

1. Macro Market Overview

Stocks Fall After February Jobs Report. According to WSJ, stocks dropped to end the week after the latest U.S. jobs report offered mixed signals on the economy and the run-up in tech shares took a breather. Friday’s jobs report showed U.S. employers added 275,000 jobs in February, topping the 198,000 expected by economists polled by The Wall Street Journal. The unemployment rate ticked up to 3.9%, and wage growth slowed. Some strong readouts from recent months were revised downward. Analysts were mostly encouraged by the report, arguing that robust new job numbers combined with slowing wage growth shows the Federal Reserve can curb inflation without tipping the economy into a downturn.

Traders have been focused on Federal Reserve Chair Jerome Powell’s testimony to lawmakers this week. On Thursday, he rekindled hopes that the Fed may shift its policy stance soon when he said that the central bank was “not far” from being able to cut interest rates. Furthermore, Stocks bounced back Wednesday after Federal Reserve Chairman Jerome Powell told lawmakers that the central bank is still on track to cut interest rates this year. Major indexes started the day higher after Powell’s prepared remarks were released before the opening bell. They gained steam as he testified before the House Financial Services Committee but drifted down into the close.

Last week, the three major U.S. stock indices experienced slight pullbacks, with the technology-heavy Nasdaq Composite Index declining by 1.2%. The Dow Jones Industrial Average and the S&P 500 also saw decreases of 0.9% and 0.2%, respectively. However, web3-related stocks continued to perform well overall last week. Apart from MARA, which dropped by 13%, COIN and MSRT surged by as much as 25% and 32%, respectively

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

Macro indexes

Last week, the U.S. Dollar Index (DXY) experienced continued downward movement following Federal Reserve Chairman Jerome Powell's testimony before the House Financial Services Committee on Wednesday. It ultimately closed at 102.741 on Friday, down from around 103.900 on Monday.

DXY (Source: TradingView)

According to data from the Chicago Mercantile Exchange (CME) Group, interest rate futures indicate that only about 4% of investors currently believe that the Federal Reserve might cut interest rates at its March meeting. This proportion has remained stable at a low level compared to last week.

Left: EFFR, Right: Target Rate Probabilities for March 2024 Fed Meeting
(Source: Federal Reserve Bank of New York, CME FedWatch Tool)

After investors gained confidence in potential future interest rate cuts from Federal Reserve Chairman Powell's public remarks last week, the yield on benchmark 10-year Treasury bonds (US10Y) declined, closing at 4.079% on Friday.

US10Y (Source: TradingView)

As of last week, the cumulative net inflows into Bitcoin spot ETFs reached a total of $9.6 billion. In just the past seven days, the net inflows into Bitcoin spot ETFs exceeded $2.2 billion. Currently, BlackRock's IBIT ETF has a total historical net inflow of $10 billion, closely followed by Fidelity's FBTC ETF, with a total historical net inflow of $6.2 billion. Grayscale's GBTC ETF has a total historical net outflow of $1.1 billion.

Bitcoin Spot ETF Overview (Source: SoSo Value)

2. Crypto Market Pulse

Market Data

Last week, the total market capitalization of the cryptocurrency market experienced another sustained growth, increasing by nearly $300 billion within a 7-day period to reach the current $2.64 trillion. Bitcoin and Ethereum prices underwent short-term volatility on Monday of last week, with Bitcoin initially dropping after reaching a historical high of $69,000 and briefly falling below the $59,000 mark. However, it quickly recovered and surpassed its previous high. As of the early morning of March 10th, the spot price of Bitcoin reached $69,810, marking a 12% increase over the past 7 days. Ethereum, as the second-largest cryptocurrency, is currently priced at $3,947, with a growth of over 15% in the past 7 days. Additionally, the market capitalizations of Bitcoin and Ethereum are approximately $1.4 trillion and $470 billion, respectively, accounting for approximately 53% and 18% of the total market capitalization.

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

$FLOKI, $PEPE, and $GALA emerged as Top 3 gainers, while $KAS, $BCH, and $FLR were Top 3 losers. In the top 100 cryptocurrencies by market capitalization, MEME coin continued to shine brightly last week, reflecting the bullish sentiment in the cryptocurrency market. $FLOKI emerged as the biggest winner with a surge of over 76%. $FLOKI is a meme cryptocurrency based on the Ethereum blockchain and is a community-driven decentralized finance (DeFi) project. Floki DAO decided to burn over 19 billion tokens, which could be one of the reasons for this astounding surge. The burn occurred on March 9, 2024. Significantly reducing the number of assets in circulation may increase the price of FLOKI as it makes the asset scarcer and more valuable. In the second position, $PEPE is a deflationary meme coin launched on Ethereum, inspired by the iconic Pepe the Frog internet meme. Recent breakthroughs in all-time highs indicate growing market confidence in $PEPE, potentially attracting more investors. Additionally, the overall sentiment in the cryptocurrency market is optimistic, which is favorable for meme coins to rise. In the third position, $GALA is an Ethereum-based token used for value exchange among Gala game players. $GALA can be used for peer-to-peer (C2C) payments, rewarding nodes participating in network operations, and participating in Gala game governance and voting systems. The rise of $GALA indicates increasing investor favoritism towards the gaming sector as the cryptocurrency market heats up.

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

Last week, the total supply of stablecoins continued to rise, reaching a new high of $138 billion. Over the past seven days, the net position change in stablecoin supply has maintained a positive growth trend, with the net growth rate steadily increasing. This indicates a significant increase in demand for stablecoins in the cryptocurrency market over the past week. Furthermore, observing the net position data of stablecoins on exchanges over the past week, there has been a gradual shift from net outflows to net inflows, especially around the 9th, where net inflows exceeded $2 billion. This indicates a high level of activity in current cryptocurrency asset trading and suggests positive prospects for the future market.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the open interest of perpetual contracts for Bitcoin and Ethereum experienced another significant decrease over the past seven days. The open interest in the futures market was influenced by the short-term price fluctuations of Bitcoin and Ethereum, significantly decreasing after last Monday, with a large number of positions being liquidated. Liquidation data further indicates that the short-term declines in Bitcoin and Ethereum last week resulted in liquidations of long positions exceeding $100 million. Various data sources suggest that the current cryptocurrency market is experiencing an increase in volatility.

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

 In the decentralized finance (DeFi) market, the total value locked (TVL) continued to increase last week, surpassing $100 billion to reach $101 billion. Over the past seven days, the trading volume on decentralized exchanges (DEXs) rose to $659 billion, marking a 40% increase compared to the previous week. The market share gap between decentralized exchanges (DEXs) and centralized exchanges (CEXs) has relatively narrowed, with DEXs now accounting for 23% of the total CEX trading volume. In the past week, due to the recent bull market in the cryptocurrency market, the TVL of the top ten ranked blockchains has all increased. After the launch of its mainnet, Blast entered the top ten with a seven-day increase of over 200%, while Solana continued to lead as the top gainer with a 24% increase.

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

 Last week, the market capitalization of non-fungible tokens (NFTs) continued to grow, reaching $13 billion. Meanwhile, the total trading volume continued to rise, reaching $267 million. However, among the top-ranking NFT collections, most floor prices and average prices experienced downward fluctuations. The floor price and average price of CryptoPunks decreased by 12% and 6%, respectively. The floor price of Bored Ape Yacht Club (BAYC) dropped by 18%, while the average price fell by 19%. On the other hand, the floor price of Mutant Ape Yacht Club (MAYC) decreased by 30%, and the average price dropped by 25%. The blue-chip index priced in tokens dropped from 5381 to 5001.

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

3. Major Project News

[Ethereum] Ethereum All Core Developers Consensus Call #129 Writeup. Last week, Christine Kim, the Vice President of Research at Galaxy, summarized the 129th Ethereum All Core Developers' Call (ACDC). This week, developers shared their last-minute preparations for the Dencun upgrade, scheduled to launch on the mainnet on March 13th (Wednesday). They also discussed the scope of the next Ethereum upgrade, Pectra, and various research topics, including standardizing block values among consensus layer (CL) clients.

Some client teams mentioned that they would be releasing new recommended software versions for the Dencun upgrade in the coming days. Prysm, Lighthouse, and Teku teams aim to release new versions by the end of this weekend or early next week. Chris Hager from the Flashbots team stated that the MEV-Boost 1.7 version released last week is stable and available for validator node operators. Software for Flashbots tailored for Deneb is currently in progress and is expected to be completed and merged sometime this week. Additionally, about 50% of validators connected to Flashbots' relays are using the latest MEV-Boost version v1.7. Beiko added that overall, around 50% of Ethereum nodes seem to be ready for the Dencun upgrade. Beiko also expressed a desire for a data tool that could track the upgrade readiness of validator nodes rather than all Ethereum nodes.

(Source: galaxy.com)

[Layer2] Scroll has added support for Cosmos IBC through the interoperability layer Union. According to the official announcement, Cosmos IBC has been integrated with the Ethereum L2 Scroll. This functionality is achieved through the interoperability layer Union, which leverages its trustless and decentralized zkIBC bridge to allow assets and messages to move from any chain supporting IBC to Scroll. This collaboration makes Union the IBC gateway for Scroll's Type 2 zkEVM on and off-ramp. In the coming months, developers building on Scroll will be able to seamlessly integrate IBC into their applications through Union, enabling trustless, efficient, and fast asset transfers.

(Source: Twitter@Scroll_ZKP)

[Layer2] Injective inEVM Layer 2 launches on mainnet, targeting more Ethereum, Cosmos and Solana collaboration. Injective announced the launch of its second layer Rollup solution inEVM on the mainnet to enhance the on-chain composability of Ethereum, Cosmos, and Solana. inEVM enables Ethereum developers to deploy applications on Injective without changing their code. Projects currently released on the inEVM mainnet of Injective include Celestia, Pyth, TimeSwap, and Thetanauts.

Additionally, Injective has collaborated with the Injective ecosystem AMM DEX DojoSwap to release the CW20 reflection standard. This standard allows for the creation of tokens with customizable protocol fee-sharing parameters, including both pure tax tokens and reflection tokens. Pure tax tokens involve a tax fee generated with every token transfer, which can be burned or sent to a treasury contract for withdrawal. On the other hand, reflection tokens collect tax fees and use them to acquire the target token, which is then distributed to holders of the reflection token. The standard also supports customizable tax parameters, is compatible with the CW20 standard, and can prevent tax fees from occurring during token transfers through a whitelist mechanism.

(Source: Twitter@injective)

[Layer2] Polygon Lands Astar Network as First User of New 'AggLayer'. Astar, a blockchain network prominent in the Japanese Web3 community, said that its Astar zkEVM will be the first network to fully integrate into Polygon’s new AggLayer, a solution that connects blockchains with zero-knowledge proofs to other networks in Polygon’s ecosystem, to provide unified liquidity.

Astar zkEVM is powered by Polygon’s Chain Development Kit (CDK), a customizable framework that lets users build their own zero-knowledge blockchains using Polygon’s technology. By plugging into the AggLayer, Astar users will have access to the liquidity in the Polygon ecosystem, allowing cross-chain transactions between Astar and Polygon zkEVM, making the experience feel like a single chain.

(Source: Twitter@AstarNetwork)

[Avalanche] Avalanche releases Durango upgrade, unveils 'Teleporter' to boost subnet interoperability. On March 7th, the Avalanche development team released the Durango upgrade and introduced "Teleporter" to enhance interoperability within its subnet ecosystem. Teleporter aims to unify Avalanche's specific application chain networks and solve network fragmentation issues. It is built on Avalanche Warp Messaging (AWM) and supports EVM-compatible subnets, especially C Chain.

Patrick O'Grady, Vice President of Platform Engineering at Ava Labs, said, "With the activation of the Durango upgrade on the Avalanche mainnet, subnets can now communicate locally with C Chain using AWM. Teleporter encapsulates this new feature in an EVM-compatible interface, allowing Solidity developers to trigger arbitrary contract calls in any Avalanche subnet."

(Source: Twitter@avax)

4. Key Fundraising Data

Last week witnessed a total of 32 financing events, raising a substantial amount of over $185.2 million*. Compared to last week, financing activities continue to remain active in terms of both trading volume and total funding. The blockchain service sector leads with the highest number of funding events, totaling up to six. The blockchain service sector also recorded the highest total funding amount, raising a total of 102.2 million dollars, representing 55% of the overall funding. The largest funding event was led by Zama, successfully raising 73 million dollars. Zama is a cryptography company dedicated to developing open-source homomorphic encryption tools for developers. More detailed information is provided below.

* 17 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: Cryptorank, Foresights, LBank Labs)

Below, we listed the most noteworthy fundraising deals for you: 

1. [Service] Cryptography company Zama raises $73 million in Series A funding from Multicoin Capital and others.

Zama, an open-source cryptography company that helps developers build privacy-preserving applications, has raised $73 million in a Series A funding round. Multicoin Capital and Protocol Labs, the company behind the decentralized file storage network Filecoin, co-led the round, Zama said Thursday. Other investors in the round included Metaplanet, Blockchange Ventures, Vsquared Ventures and Stake Capital. Angel investors, including Filecoin founder Juan Benet, Solana co-founder Anatoly Yakovenko and Ethereum co-founder and Polkadot co-creator Gavin Wood, also joined the round.

As part of the Series A round, Filecoin's Benet and Multicoin's Kyle Samani, among others, have joined Zama's board of directors, said Hindi. He added that this Series A funding round is one of the largest ever for a French company across all sectors, not just in crypto. Zama delayed the announcement of the funding round until its technology was ready for the production stage.

• Official Link: https://www.zama.ai/

2. [Infra] Decentralized computing network io.net raises $30 million in Series A funding from Hack VC and others.

io.net is a decentralized computing network that enables the development, execution, and scaling of machine learning applications on the Solana blockchain. Last week, io.net announced it had raised $30 million to build the world's largest decentralized GPU network and address the shortage of AI computing.

The Series A funding was led by Hack VC, with participation from Multicoin Capital, 6th Man Ventures, M13, Delphi Digital, Solana Labs, Aptos Labs, Foresight, Amber, LongHash, SevenX, ArkStream, Animoca Brands, Continue Capital, MH Ventures, and Sandbox Games.

• Official Link: https://io.net/

3. [CeFi] Crypto Payments Specialist Baanx Raises $20M Funding Round.

Baanx, a cryptocurrency payments specialist authorized by the U.K.’s Financial Conduct Authority (FCA), has raised a $20 million Series A funding round, the company said on last Tuesday. The investment round, which included Ledger, Tezos Foundation, Chiron and British Business Bank, brings the crypto payment enabler’s total funding to over $30 million. London-based Baanx, which runs the Ledger card product, recently signed a three-year partnership with Mastercard for the U.K. and Europe.

“Over the past 12 months, we have been building out a series of non-custodial, on-chain products, creating a whole new type of crypto payment,” Chief Commercial Officer Simon Jones said in an interview. “Allowing the user full control of their funds whilst enabling real-world spend, we hope to power the next generation of crypto payments.” Jones said the funding will help the firm introduce its services in the U.S. and Latin America later this year. The company, which has over 150,000 users, also has a native BXX token.

• Official Link: https://baanx.com/

4. [Service] Utila Raises $11.5 M in Seed Funding.

Utila, an enterprise-grade crypto operations platform, today announced $11.5M in seed funding from NFX, Wing VC, Framework Ventures, and other leading web3 and fintech VC funds and prolific angel investors including Balaji Srinivasan, Charlie Songhurst and Surojit Chatterjee. Utila allows institutions and developers to manage their digital assets with its non-custodial, secure, and chain-agnostic wallet. Utila’s platform is already used by dozens of leading institutional investors and crypto-native firms to store and transact billions of dollars.

Other investors include Fansanara Digital Ventures, North Island Ventures, Republic Capital, Liquid2, Inspired Capital, Lyrik Ventures, DCG Expeditions, Launchpad Capital, Shima Capita, K5 Global, Big Brain Holdings, Impatient, and leading angel investors from a16z, Coinbase, and other organizations.

• Official Link: https://utila.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.