LBank Labs Weekly Digest #37

Author: LBank Labs Research team - Hanze, Johnny

All on-chain data is dated as of 12:00 a.m. EST on Sunday, March 17th

Keywords: #CPI #PPI #ETHE #Layer2

 

Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Mar.10-Mar.16).

 

Traders are looking to the next Federal Reserve meeting for details about when the central bank could begin lowering rates. PHOTO: SPENCER PLATT/GETTY IMAGES

1. Macro Market Overview

U.S. Stocks experience weekly loss due to inflation worries.. According to WSJ, stocks fell Friday, closing out another weekly loss after hotter-than-expected inflation data rattled markets. Reports on consumer and producer prices released earlier this week reflected higher inflation than economists anticipated, undercutting investors’ hopes that the Federal Reserve could soon begin cutting interest rates. Fed Chair Jerome Powell has said the central bank was looking for greater confidence that inflation was returning to its 2% target. Meanwhile, U.S. consumers appeared a little less optimistic. The University of Michigan’s monthly measure of U.S. consumer sentiment released Friday came in lower than economists anticipated. Furthermore, U.S. Stocks fell Thursday after another round of inflation data came in hotter than expected. Producer prices rose 0.6% in February from the prior month, more than the 0.3% increase economists had projected. That was after data Tuesday showed consumer prices climbing more than forecast over the past year.
Last week, the three major US stock indices experienced declines over the seven-day period. The tech-heavy Nasdaq Composite Index fell by 0.7%, the Dow Jones Industrial Average remained flat, and the S&P 500 declined by 0.1%. Overall, web3-related stocks had mixed performance, with COIN dropping by 5.6%, MARA decreasing by 17.8%, while MSTR surged by 25.0%.

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

 

Macro indexes

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in February on a seasonally adjusted basis, after rising 0.3 percent in January, the U.S. Bureau of Labor Statistics reported last week. Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment.

(Source: Bureau of Economic Analysis)

 

The Producer Price Index for final demand rose 0.6 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported last week. Final demand prices increased 0.3 percent in January and edged down 0.1 percent in December 2023. On an unadjusted basis, the final demand index advanced 1.6 percent for the 12 months ended in February, the largest rise since moving up 1.8 percent for the 12 months ended September 2023.

(Source: Bureau of Economic Analysis)

Last week, the US Dollar Index (DXY) continued to climb following the release of inflation data that surpassed expectations. Ultimately, the closing price on Friday was 103.446, showing an increase from the previous week's 102.741.

DXY (Source: TradingView)

Last week, the US inflation indicators, CPI & PPI, were both higher than expected, dampening market expectations for the Fed's first interest rate cut. This week, the Fed will announce its interest rate decision, and currently, the market widely believes that rates will remain unchanged. Though Fed officials are broadly expected to keep interest rates unchanged at their policy meeting next week, investors are looking to the meeting for more clarity about when the central bank could begin lowering rates. Traders are pricing in a roughly 6% chance of a rate cut in May, down from about 36% a week ago, according to CME’s FedWatch Tool.

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

Bond yields climbed. The yield on the 10-year U.S. Treasury note (US10Y) —a benchmark for borrowing costs on everything from mortgages to corporate loans—jumped to 4.310%, from 4.088% the week prior.

US10Y (Source: TradingView)

 

Grayscale has submitted an amended Form 19b-4 to the U.S. SEC for the Ethereum Trust. Grayscale's Chief Legal Officer, Craig Salm, posted on the X platform, stating that Grayscale has submitted an amended version of Form 19b-4 to the U.S. SEC for the Ethereum Trust (ETHE). This is an important step towards listing ETHE on NYSE Arca.

Additionally, last week, Grayscale submitted an S-1 form to the U.S. Securities and Exchange Commission (SEC) to register its new Grayscale Bitcoin Mini Trust (GBTC), named "Grayscale Bitcoin Mini Trust," with the ticker symbol "BTC." The trust is intended to be a split of GBTC, and the mini version of GBTC is expected to provide holders with additional exposure to Bitcoin without incurring additional taxes.

(Source: Twitter@CraigSalm)

 

As of last week, the cumulative net inflows into Bitcoin spot ETFs reached a total of $12.2 billion. In just the past seven days, net inflows into Bitcoin spot ETFs exceeded $2.6 billion. Currently, BlackRock's IBIT ETF has accumulated historical net inflows totaling $12.5 billion, with inflows of $2.5 billion in the past seven days. Following closely is Fidelity's FBTC ETF, with accumulated historical net inflows totaling $6.9 billion and inflows of $700 million in the past seven days. Grayscale's GBTC ETF saw an expansion of its accumulated historical net outflows to $11.8 billion, with outflows of $1.3 billion in the past seven days.

Bitcoin Spot ETF Overview (Source: SoSo Value)

 

2. Crypto Market Pulse

Market Data

Last week, the cryptocurrency market saw an outflow of assets, with the total market capitalization currently standing at $2.52 trillion, a decrease of $120 billion over the seven-day period. After reaching an all-time high last Wednesday, the price of Bitcoin experienced a pullback, with a roughly 10% retracement. Ethereum followed a similar trend. As of the early morning of March 17th, the spot price of Bitcoin retreated to $68,140, representing a 2% decrease over the past 7 days. As the second-largest cryptocurrency, Ethereum is currently priced at $3,632, experiencing an 8% pullback over the past 7 days. Additionally, the market capitalizations of Bitcoin and Ethereum are approximately $1.3 trillion and $440 billion, respectively, accounting for approximately 52% and 17% of the total market capitalization.

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

 

$ZRX, $JUP, and $TON emerged as Top 3 gainers, while $BSV, $OP, and $FLOKI were Top 3 losers. In the top 100 cryptocurrencies by market capitalization, $ZRX surged by over 67% weekly, securing the top position. $ZRX, the full name being 0x Protocol Token, is the governance token of the 0x protocol on the Ethereum platform, used to support and manage the development and operation of the 0x protocol. The recent rise in token value is attributed to its high activity on-chain as a DeFi trading aggregator product, as well as positive investor sentiment following technical sharing during the ETH Denver event.

$JUP is one of the largest DeFi protocols in the Solana ecosystem and serves as the governance token on Jupiter. A recent surge in trading volume on Jupiter has set a new record, a key factor driving its uptrend. The significant increase in trading volume indicates intensified market activity, with more buyers and sellers participating, thereby enhancing liquidity. Additionally, the uptrend is supported by its staking empowerment activity, attracting attention.

$TON is the native cryptocurrency of the Telegram Open Network (TON), used for paying fees for executing smart contracts, using dApps, and participating in governance. The recent impressive gains are influenced by the news that the Telegram advertising platform will utilize the TON blockchain for payments and withdrawals. This surge brings $TON closer to its previous all-time high.

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

 

Last week, the total supply of stablecoins continued to rise, reaching a new high of $141 billion. Over the past seven days, the net position changes in stablecoin supply have maintained a positive growth trend, with the net growth rate steadily increasing. This indicates that the investment demand in the crypto market is still experiencing continuous growth. Additionally, observing the net position data of stablecoins on exchanges over the past week reveals a stable and high net inflow trend. This suggests that the current market is in an upward correction phase, with some short-term selling pressure on crypto assets. However, overall data indicates that the crypto market is still in a positive growth phase.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the open interest of Bitcoin and Ethereum perpetual contracts has increased over the past seven days. The open interest in the futures market has been influenced by the volatility during the short-term price pullback of Bitcoin and Ethereum, increasing since last Monday. The open interest of Bitcoin futures decreased significantly as the price retraced, while Ethereum showed the opposite trend. Liquidation data further indicates that the liquidations of long and short positions were roughly similar last week, suggesting that market sentiment is evenly split between bullish and bearish. This indicates that the current cryptocurrency market is in an upward correction phase with increased 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) experienced a slight pullback last week, currently standing at $968 billion. Over the past seven days, influenced by the meme coin frenzy on Solana, decentralized exchanges (DEXs) saw their trading volume increase to $708 billion, marking an 8% growth compared to the previous week. The market share gap between decentralized exchanges (DEXs) and centralized exchanges (CEXs) has narrowed, with DEXs now accounting for 36% of the total CEX trading volume. In the past week, most of the top ten blockchain projects in terms of TVL experience decreased. Blast surpassed Optimism to become the ninth-largest with a seven-day growth rate exceeding 38%, while Solana continued to outpace Arbitrum with a growth rate of 22%, securing the fourth position.

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

 

Last week, the market capitalization of non-fungible tokens (NFTs) experienced a significant retreat of over 25%, dropping to $9.6 billion. Simultaneously, the total trading volume decreased to $220 million. Among the top-ranking blue-chip NFT collections on Ethereum, most floor prices and average prices witnessed downward fluctuations. The floor price and average price of CryptoPunks decreased by 4% and 10%, respectively. Bored Ape Yacht Club (BAYC) saw its floor price drop by 15%, while the average price fell by 22%. On the other hand, Mutant Ape Yacht Club (MAYC) experienced a 15% decrease in floor price and a 21% decrease in average price. The blue-chip index priced in tokens declined from 4978 to 4047.

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

 

LBank Labs Recap

BTC is still the top dog when it comes to its value in the crypto world. But there's a new player on the block. In just three days, a token called $BOME has almost caught up to Bitcoin in terms of how much of it is being traded. Originating from a humble public sale with an initial cap of no more than $2 million, $BOME swiftly surged to an impressive $800 million market cap within just 48 hours, securing a listing on the Binance spot exchange. This phenomenon has not only impacted the Solana blockchain, but also spurred significant wealth creation across DEXs and other projects within the Solana ecosystem, including $PYTH and $JUP. Turns out Solana was also getting upgraded last week.

Meanwhile, Bitcoin's price trajectory witnessed a sharp downturn on Thursday, coinciding with the cessation of large TWAP transactions. This decline hints at potential exhaustion in buying pressure from tradfi channels. Moreover, the persistent selling pressure from GBTC, which retains a substantial amount of BTC on its balance sheet, exacerbates market dynamics. Moreover, whales have been constantly selling on Bitfinex exchange since earlier this week, where there were a lot of buying happen just when BTC is at $55000 level. We still see a 30% correction happening around the halving.

$JUP, exhibiting price dynamics reminiscent of Uniswap's nascent stages, presents a compelling case for potential appreciation, with a projected 6x increase relative to the ATH of $UNI at current price levels.

In the realm of altcoins, $SSV experienced noteworthy price fluctuations following strategic announcements and changes in market-making strategies. Despite a transient dip induced by the BTC downturn on Thursday, $SSV swiftly rebounded to levels surpassing the forties.

Meanwhile, the $APT ecosystem demonstrates burgeoning development and marketing activities, catalyzing community enthusiasm and fostering positive sentiment, which in turn contributed to price growth over the past week.

 

• BTC price optimistic: $69000 - $73000

• BTC price neutral: $65000-$69000

• BTC price pessimistic: $61000 - $65000

 

3. Major Project News

[Ethereum] Ethereum All Core Developers Execution Call #183 Writeup. Christine Kim, Vice President of Research at Galaxy, summarized the 183rd Ethereum All Core Developers' Execution Layer meeting (ACDE), where developers discussed the retrospective of the Dencun upgrade and potential code changes included in the next major Ethereum upgrade, called Pectra. Regarding the retrospective of the Dencun upgrade, the network did not experience any interruptions or block processing delays. Terence Tsao, a developer from Prysm, mentioned that the network's processing speed for new transactions and blobs seemed faster than initially expected. However, Tsao noted that his nodes experienced approximately three to four single-block reorgs more per day than before the upgrade, an issue that has not yet been addressed. With the completion of the Dencun upgrade, developers have now updated the status of the nine Ethereum Improvement Proposals (EIPs) included in the upgrade to "final."

Regarding the Pectra EIP, the meeting discussed the inclusion of EIP 2537, which introduces new cryptographic primitives to Ethereum. Smart contract developers can use these primitives to build more secure and high-performance dApps. This EIP introduces these primitives in the form of nine new precompiles. The meeting discussed whether to create additional precompiles to allow "point decompression" and proposed changes to the gas cost of the proposal to accurately price these new operations. Additionally, the meeting discussed EIP 3074, which introduces the AUTH and AUTHCALL opcodes aimed at introducing greater programmability and flexibility for user-controlled accounts.

(Source: galaxy)

 

[Layer2] OP Labs: will upgrade OP Sepolia to support a fully functional OP Stack fault proofing system on March 19th. OP Labs announced that it will upgrade the OP Sepolia testnet on March 19th to support a fully functional OP Stack fault proofing system. This upgrade will introduce some groundbreaking changes that will impact cross-chain bridges, centralized exchanges (CEX), and custom withdrawal solutions.

The team is requesting relevant developers to update their logic to support fault proofing, update withdrawal monitors, and update dispute monitors. The proposed fault proofing upgrade requires developers to update withdrawal logic before the release of OP Sepolia to enable these fault proofing changes. It's important to note that withdrawals between OP Sepolia and Sepolia will no longer be instant, as they will use the fault proofing mechanism.

(Source: Twitter@OPLabsPBC)

 

[Layer2] Starknet optimizes code for cost savings following Dencun upgrade. The Starknet Foundation has announced that the Starknet mainnet will undergo the Starknet 0.13.1 upgrade during the Ethereum Dencun upgrade. The Starknet 0.13.1 upgrade includes support for EIP4844 to reduce DA (Data Availability) costs and optimizations related to the shared prover SHARP to lower computational costs. With the Starknet 0.13.1 update, Starknet will transition from using the expensive "calldata" method to the more cost-effective "blobs" transaction type when sending data to Ethereum, significantly reducing costs. Currently, Calldata accounts for 85% to 90% of the gas fees paid for transactions on the Starknet network.

Additionally, Starknet plans to support Dynamic Layouts technology by the end of the third quarter, optimizing space within transaction proofs to substantially reduce costs and thus user fees. Starknet also intends to introduce the Volition feature by the end of 2024 or early 2025 to further reduce costs, allowing developers to choose whether to store data directly on the blockchain or off-chain based on cost and security requirements.

(Source: Twitter@Starknet)

 

[Layer2] Metis launches alpha version of its decentralized sequencer. Ethereum Layer2 network Metis has launched the decentralized sequencer Alpha version, where sequencer nodes will be rewarded with METIS tokens to incentivize their participation in block generation and transaction processing on the network.

In the first year, all sequencer nodes will receive a mining reward rate of 20%. The Metis development team stated that this is the first Ethereum Rollup to support decentralized sequencers.

(Source: Twitter@MetisL2)

 

[BNB Chain] BNB Chain introduces rollup-as-a-service solution to expand its Layer 2 ecosystem. BNB Chain has unveiled a rollup-as-a-service (RaaS) solution to enable the expansion of custom Layer 2 networks in its ecosystem. The RaaS will provide dapp projects with the infrastructure required to build cost-effective dedicated rollups on the BNB Smart Chain (BSC), including no-code deployment options.

Furthermore, BSC has announced the launch of the BEP-336 upgrade, inspired by EIP-4844, aimed at optimizing the storage and processing of data on the blockchain to significantly reduce transaction costs and enhance network performance. BEP-336 introduces the concept of "Blob Carrying Transactions" (BlobTx). A Blob is a temporary and economically efficient memory segment designed to capture large data blocks (up to 128 KB per block). These blobs are carefully crafted to simplify the transaction verification process of the network. Instead of individually validating each transaction in a block, the network only needs to verify whether the attached blob contains accurate data.

(Source: Twitter@BNBCHAIN)

 

[Sei] Blockchain startup Sei Labs creates an interesting solution to make Ethereum faster. Sei Labs, a startup co-founded by a former Robinhood engineer and a former VC from Coatue, has launched a new open sourced project that offers a novel and exciting approach to make Ethereum faster and less expensive for developers. Last Wednesday, Sei launched The Parallel Stack, a public good project — meaning free for any crypto developers to use. It aims to improve the performance of transactions per second (TPS) of Ethereum Virtual Machine (EVM)-based layer-2 blockchains through the tried-and-true computer science concept of parallel processing, TechCrunch learned exclusively.

By default, EVMs process transactions sequentially, one after another, a slow and inefficient method that doesn’t scale well. “The biggest limitation of the EVM is the lack of throughput,” Jay Jog, co-founder of Sei Labs, formerly of Robinhood, told TechCrunch. Ethereum’s throughput can’t go beyond 50 TPS, which is limiting growth of its ecosystem and results in high so-called gas fees, the fees charged to transact on Ethereum blockchains. These fees make Ethereum unaffordable for “99.9% of normal users,” Jog added. Aside from The Parallel Stack, Sei Labs has also been working on upgrading its blockchain to Sei V2, a parallelized EVM, which processes multiple transactions simultaneously and would make it accessible to a “global base of EVM developers,” according to a November 2023 blog post. “We’ve been working on scaling EVM for a long time and doing it by parallelizing,” Jog said.

(Source: Twitter@SeiNetwork)

 

4. Key Fundraising Data

Last week witnessed a total of 35 financing events, raising a substantial amount of over $183 million*. Compared to the previous week, financing activities remained active both in terms of transaction volume and total funding amount. The blockchain services sector led with the highest number of financing events, totaling 4. The blockchain infrastructure sector recorded the highest total funding amount, raising a total of $70 million, accounting for 38% of the overall financing. The largest financing event was led by Eclipse, successfully raising $50 million. Eclipse is a versatile rollup provider offering customizable solutions compatible with various layer-1 blockchains. More detailed information is provided below.

* 15 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. [Infra] Blockchain Infrastructure Project Eclipse Raises $15m To Build ‘Universal Layer-2’.

Eclipse, a blockchain scaling project, has raised $15 million in pre-seed and seed funding at a nine-figure valuation. Eclipse’s $9 million seed round was co-led by Tribe Capital and Tabiya, a crypto venture capital firm started by former Binance executives. Other participants in the round included Infinity Ventures Crypto, Soma Capital, Struck Crypto and CoinList. The platform’s earlier $6 million pre-seed round was led by Polychain Capital and included participation from Tribe Capital, Tabiya, Galileo, Polygon Ventures, The House Fund, and Accel. Eclipse plans to launch a public testnet on the Cosmos ecosystem in early 2023, and also has plans to support Aptos’ Move language in the future.

• Official Link: https://www.eclipse.xyz/

 

2. [GameFi] MMORPGM blockchain game MetaCene has successfully completed a $10 million Series A funding round.

MMORPGM blockchain game MetaCene has successfully completed a $10 million Series A funding round, with Folius Ventures and SevenX Ventures leading the investment. The round also saw participation from The Spartan Group, Mantle Network, Animoca Ventures, Longling Capital, Comma3 Ventures, and IGG, among others. The raised funds will be utilized to expand the team and drive user acquisition initiatives.

MetaCene conducted two rounds of Alpha testing in 2023, with the number of participating players growing from 2961 to 5000+. The average daily gameplay time per player increased from 2.5 hours to 4 hours. MetaCene is set to launch its third round of Alpha testing in March 2024, which will include both desktop and mobile platforms.

• Official Link: https://metacene.io/

 

3. [CeFi] ClearToken Raises $10M From Institutional Investors Including Nomura’s Laser Digital.

Cleartoken, a cryptocurrency clearing house, has received over $10 million in seed investment from institutional investors, the company said Wednesday. Investment came from firms including Laser Digital, the digital assets subsidiary of Nomura, liquidity providers including Flow Traders and GSR and from digital asset companies LMAX Digital and Zodia Custody. Clearing houses reduces counterparty risk by acting as the buyer to every seller and seller to every buyer. ClearToken will offer the benefits of horizontal clearing and settlement for digital assets, the firm said.

ClearToken plans to be fully regulated in the U.K. and has started the process of obtaining clearing house recognition from the Bank of England. The company plans to offer preliminary settlement services this year and central counterparty clearing (CCP) services in the next 12-18 months.

• Official Link: https://cleartoken.io/

 

4. [Infra] Polyhedra Network Closes $20M Round at $1B Valuation.

Polyhedra Network, the Web 3 infrastructure provider behind the zero-knowledge protocol zkBridge, has closed a $20 million round valuing the company at $1 billion, the firm said in a press release last Thursday. The Singapore-based company said the round was led by Polychain Capital, along with participation from Animoca Brands, Emirates Consortium, Mapleblock Capital, Hashkey Capital, UoB Ventures, Symbolic Capital, Longhash Ventures, MH Ventures, Arkstream Capital and Web3Port Foundation.

Polyhedra Network uses zero-knowledge proofs as the foundation of its products, giving users increased security and scalability. Zero-knowledge proofs are protocols that help prove the validity of statements on blockchains without offering any identifiable information. The zkBridge protocol facilitates interoperability between networks and has secured over 20 million cross-chain transactions between more than 25 blockchains. It uses unforgeable zero-knowledge proofs to validate the state and consensus of the sender chain, which can then be verified at the destination.

• Official Link: https://polyhedra.network/

 

See you next week! 🙌