Author: LBank Labs Research team - Hanze, Johnny

*All on-chain data is dated as of 12:00 a.m. EST on Sunday, March 24th

Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Mar.17-Mar.23).

Keywords: #FOMC #Layer2

Markets rushed to new heights in recent sessions, pushed by hopes of lower borrowing costs ahead. PHOTO: CRAIG RUTTLE/ASSOCIATED PRESS

1. Macro Market Overview

U.S. Stocks Hit New Highs Again, Boosted by Hopes for Rate Cuts. According to WSJ, markets rushed to new heights in recent sessions, pushed by hopes that the era of high borrowing costs is coming to an end. The Federal Reserve on Wednesday kept its benchmark fed-funds rate at 23-year highs between 5.25% and 5.5%, though a narrow majority of Fed officials reaffirmed projections for three rate cuts this year. That sent U.S. stock indexes to simultaneous records for the first time since November 2021, before the central bank began raising rates. All three major U.S. stock indexes rose to new records Thursday, boosted by investors’ growing conviction that the post-Covid surge in borrowing costs is coming to an end soon. Stock indexes in Europe and Japan also notched all-time highs Thursday. The Bank of England held its key interest rate steady, and Switzerland became the first rich country to reduce interest rates since central banks mounted a historic campaign two years ago to tame inflation
Last week, the three major US stock indices hit new highs, with all of them closing higher. The tech-heavy Nasdaq Composite Index rose by 2.8%, while the Dow Jones Industrial Average and the S&P 500 increased by 1.9% and 2.3% respectively. On the other hand, web3-related stocks had mixed performance last week, with MSTR falling by 14.5%, while COIN and MARA rose by 5.4% and 8.0% respectively. In addition, with MicroStrategy's disclosure of purchasing an additional 9,245 bitcoins, its latest bitcoin holdings have reached 214,246 BTC, surpassing 1% of the total supply of 21 million bitcoins.

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

Macro indexes

The US Dollar Index (DXY) experienced a strong week, closing at a high of 104.430 last Friday. Despite the dovish comments on interest rate policy from the Federal Reserve on Wednesday, which briefly caused a dip in the DXY, it ultimately resumed its upward trajectory, showing a sustained increase from the 103.446 level a week earlier.

DXY (Source: TradingView)

Last Wednesday, the Federal Reserve announced its decision to maintain the interest rate within the range of 5.25-5.50%, as widely expected by investors. According to the current data from the CME FedWatch Tool, approximately 12% of investors anticipate the first interest rate cut to occur at the May FOMC meeting this year, while a larger percentage believe that the Fed will keep the rate unchanged at its current level.

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

The yield on the 10-year U.S. Treasury note (US10Y) experienced a decline last week, closing at 4.202% on Friday. Similar to the trend of the US Dollar Index, it began to decrease following the impact of interest rate policy comments received on Wednesday, sliding from the previous week's level of 4.310%.

US10Y (Source: TradingView)

Last week, Bitcoin spot ETFs experienced net outflows for four consecutive days, with a total net inflow of $11.27 billion. After experiencing net inflows for as long as 11 consecutive trading days, Bitcoin spot ETFs have seen net outflows for four consecutive days as of midnight on March 24th. On Friday, net outflows amounted to $51.6 million, with Total Net Assets totaling $52.54 billion, representing 4.21% of the Bitcoin market share. Among them, Grayscale's GBTC saw net outflows of $169.94 million in a single day, with total net outflows reaching $13.8 billion. IBIT by BlackRock had net inflows of $18.89 million in a single day, totaling net inflows of $13.34 billion. Fidelity's FBTC saw net inflows of $18.13 million in a single day, totaling net inflows of $6.95 billion.

Bitcoin Spot ETF Overview (Source: SoSo Value)

BlackRock Enters Asset Tokenization Race With New Fund on the Ethereum Network. BlackRock has officially launched its tokenized asset fund on the Ethereum network and has made a strategic investment in asset tokenization company Securitize. The fund is called the BlackRock USD Institutional Digital Liquidity Fund and is represented by blockchain-based BUIDL tokens. It is fully backed by cash, US Treasury bonds, and repurchase agreements and will distribute daily returns to token holders through blockchain. Securitize will serve as the transfer agent and tokenization platform, while BNY Mellon will act as the custodian for the fund's assets.

(Source: CoinDesk)

2. Crypto Market Pulse

Market Data

Last week, the cryptocurrency market experienced outflows, with the total market capitalization currently standing at $2.47 trillion, a decrease of $50 billion over the past seven days. Both Bitcoin and Ethereum continued their corrective trends last week, despite a boost in cryptocurrency prices in the short term following dovish comments from the Federal Reserve on Wednesday. However, they are still in a period of oscillation and correction. As of the morning of March 24th, the spot price of Bitcoin has retreated to $65,000, representing a 5% decline over the past 7 days. As the second-largest cryptocurrency, Ethereum is currently priced at $3,369, down 7% over the past 7 days. Additionally, the market capitalizations of Bitcoin and Ethereum are approximately $1.3 trillion and $406 billion, respectively, accounting for approximately 52% and 16% of the total market capitalization.

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

$ONDO, $TON, and $STX emerged as Top 3 gainers, while $INJ, $NEAR, and $BONK were Top 3 losers. In the top 100 cryptocurrencies by market capitalization, $ONDO surged by over 64% weekly, securing the top position. Ondo is a DeFi protocol based on Ethereum, representing RWA (Real World Asset) projects that aim to bridge the gap between crypto assets and the real economy through innovative financial products. The recent surge in $ONDO is influenced by widespread investor optimism towards RWAs, particularly after the CEO of BlackRock expressed favorable views on RWAs last week. $ONDO is the largest tokenization provider for BlackRock's ETF products and another major product of Ondo is $OUSG, a tokenized short-term US Treasury bond.

Open Network ($TON) is a fully decentralized Layer 1 blockchain designed by Telegram. It is scalable, sharded, and facilitates fast, low-cost, and energy-efficient blockchain transactions. Toncoin's continuous growth is primarily driven by two positive factors. Firstly, Telegram and Toncoin's founder Durov has hinted at the possibility of leading Telegram into an IPO. An IPO could greatly support the Toncoin ecosystem from a value-capturing perspective. Secondly, Durov has proposed a solution to address the centralization impact and investment returns within $TON. Users have expressed concerns about Telegram holding too much $TON after Telegram designated $TON as payment tokens for advertising.

$STX represents the Stacks token and is the native token of the Stacks 2.0 blockchain network. Stacks is an open, programmable blockchain designed to make Bitcoin a global computer. $STX tokens play a crucial role in the Stacks network, used for paying network fees, rewarding miners, and more. A recent major upgrade to the Stacks network has attracted investor attention.

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

Last week, the total supply of stablecoins continued to rise, reaching a new high of $142 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 steadily growing. Additionally, observing the net position data of stablecoins on exchanges over the past week shows a stable and significant trend of net inflows. This suggests that current cryptocurrency assets are facing some short-term selling pressure, with on-chain transaction activity decreasing. However, overall data indicates that the cryptocurrency market is still in a phase of positive growth.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the open interest in Bitcoin perpetual contracts remained relatively unchanged over the past seven days, while Ethereum saw a significant increase. The open interest in Bitcoin futures market was affected by the volatility during the short-term price pullback, remaining at relatively low levels since last Monday, whereas Ethereum exhibited the opposite trend. Liquidation data further indicates that last week's liquidations were mainly dominated by long positions, with both Bitcoin and Ethereum liquidation amounts exceeding $100 million. This suggests that the current cryptocurrency market is experiencing a period of correction with increased volatility.

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

In the decentralized finance (DeFi) market, the total locked value (TVL) experienced a slight decline last week, currently standing at $913 billion. Over the past seven days, locking capacities on most chains decreased, with decentralized exchanges (DEXs) trading volume decreasing to $599 billion, a 17% decrease from the previous week. The market share gap between decentralized exchanges (DEXs) and centralized exchanges (CEXs) remains significant, with DEXs now accounting for 18% of the total CEX trading volume. In terms of TVL, the rankings of most of the top ten blockchain projects experienced declines over the past week. However, Base showed impressive on-chain activity performance last week, with a 23% increase in TVL over seven days, currently ranking tenth.

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

Last week, the market capitalization of Ethereum's non-fungible tokens (NFTs) experienced a decline, dropping by over 8% to $8.7 billion. Meanwhile, the total trading volume decreased by 27% to $160 million. However, among the leading blue-chip NFT collections, most minimum and average prices saw increases when calculated in terms of cryptocurrency. The floor price and average price of CryptoPunks rose by 1.7% and 0.4% respectively. The floor price of Pudgy Penguins increased by 22.6%, with the average price rising by 15.3%. On the other hand, Mutant Ape Yacht Club (MAYC) saw increases of 9.0% and 4.7% in floor price and average price respectively. The blue-chip index priced in cryptocurrency rose from 4012 to 4099.

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

3. Major Project News

[Ethereum] Ethereum All Core Developers Consensus Call #130 Writeup. Galaxy Research Vice President Christine Kim summarized the 130th Ethereum Core Developers Consensus (ACDC) conference call, where developers discussed and coordinated changes to the Ethereum consensus layer (CL). This week, developers discussed prominent action items related to the Dencun upgrade, the Pectra upgrade proposal, and improvements to the Ethereum network layer. Developers agreed to include EIP 7251 (adding max_effective_balance) in Pectra and continue researching EIP 7547 (include lists) for possible inclusion in the upgrade. It is noted that EIP 7251 proposes increasing the maximum effective balance for validators from 32 ETH to 2048 ETH.

Furthermore, according to Cointelegraph, Ethereum developers have launched a new initiative in a bid to raise the blockchain network’s long-static gas limit, arguing that the change can be used to help scale Ethereum.

(Source: galaxy)

[Layer2] OP Mainnet tests 'fault proofs' in bid to strengthen network security. OP Labs, the core developer of Optimism, released fault proofs on the OP Sepolia testnet before their upcoming implementation on the OP Mainnet. “Open-source, feature-complete fault proofs are live on OP Sepolia. With permissionless validation, anyone can participate in the system without an allowlist,” the firm stated. Fault proofs serve as security mechanism for Ethereum Layer 2 networks, enabling users to contest transactions that may be fraudulent or incorrect. They are critical in ensuring that off-chain transaction processing remains free from manipulation.

The OP Mainnet currently lacks fault proofs, a cause for concern regarding the network’s security and decentralization. This implies that within the network, users are required to place their trust in block producers to submit accurate Layer 1 state roots. Additionally, the network depends on a security council of members for backups. Now, the project is also moving toward implementing them, having already used them on its Sepolia testnet.

(Source: blog.oplabs.co)

[Layer2] Arbitrum: ArbOS Atlas Phase 2 is now live. Arbitrum posted on the X platform that the second phase of ArbOS Atlas is now online, and the gas cost of Arbitrum One has been further reduced. With the arrival of blobs, ArbOS Atlas also introduces significant execution gas fee reductions for Arbitrum One phase 2: - L1 surplus fee: reduces the surplus fee per compressed byte from 32 gwei to 0; - L2 base fee: reduced minimum from 0.1 gwei to 0.01 gwei.

(Source: Twitter@arbitrum)

[Layer2] Starknet, an Ethereum Layer 2, Plans 'Parallel Execution' to Mimic Solana's Speed Feature. The developers behind Starknet, the Ethereum layer-2 network whose $2.3 billion $STRK token airdrop last month captivated crypto markets, plan to add a design feature known as "parallelization" – one of the factors that reportedly makes rival blockchain Solana popular as a venue for fast, cheap transactions.

The feature will go live as part of an upgrade set for the second quarter, allowing Starknet to "process a greater number of transactions simultaneously, resulting in improved throughput and faster L2 finality," according to a press release distributed by a representative of the developer StarkWare. It is part of the 2024 road map released last Wednesday.

(Source: Twitter@Starknet)

[Polygon] Polygon Labs has launched a dApp Launchpad to simplify the dApp development process. According to official sources, Polygon Labs has announced the release of a Command Line Interface (CLI) tool called dApp Launchpad, which allows for the rapid initialization of dApp projects compatible with the Ethereum Virtual Machine (EVM). From setting up the development environment to deploying the application to production, dApp Launchpad streamlines every step of the development process.

Additionally, Polygon announced last week that it has completed the Napoli hard fork upgrade. Polygon PoS has become the first chain to activate the Rollup Improvement Proposal (RIP) 7212, providing new precompiled support for the secp256r1 curve.

(Source: polygon.technology)

[Interoperability] Polyhedra Network (ZK) Presents: Empowering Interoperability and Computation via ZK. Polyhedra Network has released a video on the X platform, introducing the achievements and future vision of the project. They mentioned that their engineering team has developed multiple protocols, including Libra, Virgo, deVirgo, Pianist, Marlin, Gemini, and Orion. These protocols significantly improve proof speed while maintaining proof size and verification costs constant.

Additionally, Polyhedra has collaborated with projects such as zkEVM, zkML, ZKID for secure identity verification, ZKP solutions for the financial sector, and zkOracle to make these solutions more practical and efficient. The foundational layer of Polyhedra includes zkCompiler and PWS (Proof Generation Service). zkCompiler simplifies the process of writing high-performance ZK proof circuits, while PWS allows developers to deploy their ZK circuits or code to their infrastructure. Polyhedra's flagship project, zkBridge, has seamlessly integrated with over 25 mainstream blockchain networks and processed over 18 million transactions. Polyhedra is committed to introducing zero-knowledge proof technology to Bitcoin to enable smart contract functionality and high-speed cross-chain bridging. This will further expand the applications of zkBridge and provide more possibilities for interoperability in the blockchain ecosystem.

(Source: Twitter@PolyhedraZK)

4. Key Fundraising Data

Last week witnessed a total of 38 financing events, raising a substantial amount of over $237.3 million*. Compared to the previous week, financing activities remained active both in terms of transaction volume and total funding amount. The DeFi services sector led with the highest number of financing events, totaling 7. The blockchain infrastructure sector recorded the highest total funding amount, raising a total of $73 million, accounting for 31% of the overall financing. The largest financing event was led by Figure Markets, successfully raising $60 million. Figure Markets seamlessly merges the liquidity of traditional finance with decentralized asset control. More detailed information is provided below.

* 14 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] Figure launches new blockchain-focused entity after raising $60 million in Series A.

U.S.-based fintech firm Figure Technologies announced last week that it is launching a separate company named Figure Markets, a “first step” in developing a single platform for investors to trade a wide array of blockchain-native assets including crypto, stocks and alternative investments. Prior to the launch, Figure Markets raised over $60 million in a Series A funding round led by Jump Crypto, Pantera Capital and Lightspeed Faction, according to its press release. Other participants included Distributed Global, Ribbit Capital and CMT Digital.

“Our goal is to extend the benefits of blockchain to a broader range of assets — including crypto and securities,” said Figure Markets CEO Mike Cagney in the statement. “It’s ironic that the largest crypto exchanges aren’t on blockchain — we aim to change that.” Figure said the new trading platform will leverage the Provenance blockchain, a network that has accumulated a total value locked of $13 billion, according to its website.

•               Official Link: https://www.figuremarkets.com/

2. [Chain] Morph announced the completion of a $20 million seed and angel funding round, led by Dragonfly Capital.

Focused on establishing a value-driven DApp ecosystem on Ethereum L2, Morph successfully closed a $19 million seed round with Dragonfly Capital leading the investment. Other participants in the round include Pantera Capital, Foresight Ventures, The Spartan Group, MEXC Ventures, Symbolic Capital, Public Works, MH Ventures, and Everyrealm. Additionally, Morph secured $1 million in angel funding from investors, including founders of projects like Polygon, Manta, Galxe, Sei, Nansen, Story Protocol, as well as KOLs like Icebergy, MoonOverlord, NaniXBT, and Dingaling.

Morph plans to utilize this funding round to accelerate team development, enhance developer incentives, expand marketing efforts, and further strengthen its presence in the L2 ecosystem while improving its technical infrastructure.

• Official Link: https://www.morphl2.io/

3. [Chain] The Web3 privacy system Espresso has completed a $28 million Series B funding round, with a16z crypto leading the investment.

The Web3 privacy system Espresso has announced the completion of a $28 million Series B funding round, with a16z crypto leading the investment. Polygon, Taiko, o1Labs, StarkWare, Offchain Labs, as well as core contributors and strategic investors from over 30 prominent ecosystem projects (covering Rollups, L2 infrastructure, interoperability, etc.) also participated in this funding round. Reportedly, the new funds will be used to continue product development, expand investments in the rollup ecosystem, and scale the Espresso Systems team. According to data from the crypto analytics platform RootData, in March 2022, Espresso Systems raised $32 million in funding, with Greylock Partners and Electric Capital leading the round, and participation from Sequoia Capital, Blockchain Capital, and Slow Ventures.

• Official Link: https://www.espressosys.com/

4. [Infra] Web3 infrastructure company Succinct has completed a $55 million funding round.

Web3 infrastructure company Succinct has secured $55 million in funding, with Paradigm leading the investment. Other participants include Robot Ventures, Bankless Ventures, Geometry, ZK Validator, as well as angel investors such as Sreeram Kannan from Eigenlayer, Sandeep Nailwal and Daniel Lubarov from Polygon, and Elad Gil. Succinct's Prover Network and SP1 enable high-performance general-purpose ZK (Zero-Knowledge) with easy deployment without the need for complex infrastructure.

• Official Link: https://succinct.xyz/

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.