Wednesday, 20 April 2022

Market Summary

Market Summary 20 April 2022

Bitcoin Price: US$ 41,493.18 (+1.70 %)
Ethereum Price: US$ 3,101.77 (+1.51%)


Aurora’s Growth, GNO Supply Reduction, AI in Gaming

  • Aurora is an EVM-chain built on Near Protocol that utilizes sharding to split the responsibility of processing transactions and allowing for high throughput of its blockchain.
  • The Near ecosystem has been gaining traction on Twitter recently due to the rumors surrounding $USN, a decentralized stablecoin on NEAR, which might be based on a similar model to how LUNA and UST work. The full documentation of how $USN will work has yet to be released but it seems like an attentive user has already found the deployed $USN contract. The launch of USN will likely bring demand to NEAR as it is likely to use NEAR to mint USN algorithmically.
  • TVL on Aurora has seen a significant increase even despite uncertain market conditions, hitting a new high of $911M. With $USN integrated, it’ll likely bring in more traction to both NEAR and AURORA projects.
  • As highlighted in our previous Daily, NEAR was the best performing L1 in March. April has been no different as NEAR continues to outperform other major L1 peers. Time will tell whether $USN can gain serious traction, and whether said adoption will continue fueling NEAR’s recent momentum.


An Alternative Implementation of veToken Economics

  • The rise of crypto and tokenization has blown the design space for protocol economics wide open, allowing projects to incentivize specific behaviors. Yet, many DeFi protocols reward all token holders equally, independent of the value they add to the project. More often than not, this involves little to no lockups in exchange for receiving governance power and protocol revenues. We believe the optimal design aims to dilute mercenary capital and speculators, while rewarding value additive and long-term oriented participants.
  • One such model we feel encourages this behavior is the vote-escrowed implementation introduced by Curve. This model allows CRV holders to lock up their tokens as vote-escrowed CRV (veCRV) for up to 4 years. The longer a user locks their CRV for, the more veCRV they receive. In exchange for taking on liquidity risk and removing CRV supply from the market (showing their long-term commitment to the platform), veCRV holders are entitled to 3 main benefits:
    • A prorated share of fees generated by Curve.
    • Boosted CRV rewards on liquidity provider positions (up to 2.5x).
    • Governance and gauge weight voting power. Importantly, the gauge weight dictates how Curve’s future emissions are distributed.
  • The above set of incentives generates a positive flywheel. The more long-term oriented a user is (measured by their veCRV), the more rewards they will receive. This flywheel is one of the most important dynamics of the veToken model.
  • The long-term value proposition of Curve is for it to be the deepest, most liquid place to trade stable assets. The goal isn’t necessarily to be the main DEX for everyday swaps, but to empower stablecoin projects to build large liquidity reserves. This means their main users on the supply side are liquidity providers.


Australia’s first Bitcoin ETF could attract $1 billion after launch next week

  • Financial regulators have greenlit Australia’s first Bitcoin ETF to begin trading on April 27 and the Australian Financial Review reports it could see up to $1 billion in inflows.
  • An ETF is a regulated exchange traded fund that allows investors to benefit from the price of Bitcoin (BTC) without needing to own any coins themselves directly.
  • Cosmos Asset Management beat out local contenders VanEck, BetaShares, and EFT Securities to issue Australia’s first Bitcoin ETF. Each firm has been in the running to close out regulatory approvals since at least March, according to the Sydney Morning Herald.
  • The Cosmos Asset Management Bitcoin ETF will be listed on CBOE Australia with approval from the Australia Securities Exchange (ASX) Clear capital markets clearinghouse. Approval was made after Cosmos landed the minimum four market participants to support the 42% margin requirements needed to cover risk according to an April 19 article by the AFR.
  • The Cosmos Bitcoin ETF offers indirect exposure to spot Bitcoin investing through the Canadian Purpose Bitcoin ETF.


400 new projects and 100K new wallets in a month on Cardano

  • Activity on the Cardano blockchain is starting to heat up, with 400 new projects in the works along with 100,000 new wallets being created over the past month.
  • According to a Tuesday Twitter post from Cardano creators Input Output (IOHK), there are nearly 900 projects in development on the network. The figure has grown by roughly 400 since March 11, after IOHK Vice President Tim Harrison stated that the total stood at around 500 via Linkedin post.
  • One new project getting considerable attention is the AGIX ERC-20 Converter Bride, which was developed in collaboration with SingularityNET.
  • The tool went live this week and it enables users to bridge over Ethereum-based ERC-20 Tokens for use on Cardano, with the network’s DeFi sector expected to be a significant beneficiary.
  • Despite increasing numbers of projects in development, the number of decentralized applications (DApps) up and running on Cardano appears to be limited, with DefiLlama listing just 10 different platforms accounting for $224.96 worth of total value locked (TVL). Notably, four of those platforms have $0 TVL also outside of their native tokens.
  • One area of strong growth at the moment is wallet activity on Cardano, with data from Cardano Blockchain insights showing that the number of ADA wallets has increased by 100,000 since March 22. The total figure as of April 19 stands at 3.268 million.


Framework Ventures allocates half of $400M fund to Web3 gaming

  • Crypto-focused venture firm Framework Ventures has raised $400 million in new funding to invest in early-stage companies across the Web3, blockchain gaming and decentralized finance (DeFi) industries. 
  • The completed funds raised will go toward “FVIII,” an oversubscribed fund worth $400 million, the company announced on Tuesday. Approximately $200 million of that total will be allocated to the emerging blockchain gaming industry.
  • The venture firm, which had early exposure to DeFi, now has over $1.4 billion in assets under management. Framework Ventures was an early investor in projects such as Chainlink, Aave and The Graph.
  • Like DeFi in 2020, gaming and Web3 have been identified as the next major growth plays for the blockchain industry. Axie Infinity — a popular play-to-earn (P2E) game constructed around collecting digital pet avatars called Axies —has provided a solid use case for this emerging paradigm. According to blockchain analytics platform Nansen, there are currently 2.8 million unique addresses holding 11.1 million Axies.


IMF global financial stability report sees complex roles for cryptocurrency, DeFi

  • According to the International Monetary Fund’s Global Financial Stability report released Tuesday, the war in Ukraine — following hard on the heels of the coronavirus pandemic — has led to a tightening of global financial conditions. Rapid changes in fintech and the uses and misuses of cryptocurrency play into the jumble of challenges facing the global economy.
  • According to the report, the pandemic and war have led to an accelerated “cryptoization” in emerging markets due to increased speculative interest during the pandemic and then attempts to evade sanctions. Given compliance within the crypto industry, the use of cryptocurrency to evade sanctions is impractical, the report found. The use of mixers, decentralized exchanges and privacy coins may allow some circumvention, but it would be restricted by limited liquidity.
  • A related risk is the use by sanctioned countries of excess energy — possibly built up because of sanctions — to mine proof-of-work cryptocurrencies, although financial flows from that activity would also be relatively contained. Countries concerned about coming under sanctions in the future may come to find crypto more attractive as reserve currency — and major fiat currencies less so — thanks to the greater difficulty in immobilizing crypto.
  • All of those issues point to the need for a coordinated regulatory approach to crypto for maintaining effective control of capital flows. Improving non-blockchain payment technologies would also help maintain that control.


Solana’s STEPN hits record high as GMT price skyrockets 34,000% in over a month

  • STEPN (GMT), a so-called “move-to-earn” token using the Solana (SOL) blockchain, has soared incredibly since its market debut in March.
  • GMT’s price jumped from $0.01 on March 9 to a record high of $3.45 on April 19 — a 34,000% upside move in just 41 days (data from Binance). Its massive uptrend appeared primarily due to the hype surrounding decentralized finance (DeFi) projects that reward users in tokens for staying active.
  • For instance, the prices of GMT and its top rivals, including Genopets (GENE) and dotmoovs (MOOV), exploded massively on a 24-hour adjusted timeframe, data on CoinGecko shows.
  • Nonetheless, STEPN remained the most valuable move-to-earn (M2E) project, with its market capitalization closing in on $2 billion. 


Merit Circle partners with first of its kind play-to-earn game, Cryptobots

  • The blockchain and gaming space have undergone a great deal of transformation and development in recent years. While many find it important to focus on the future of the industry, we think it’s also important to remind ourselves of how we got to where we are today. With that in mind, we would like to announce our partnership with Cryptobots, a modern take on a first-of-its kind play-to-earn game. As part of our partnership, Merit Circle has invested $300,000.
  • Cryptobots was created in 2017 with a vision of bringing ownership to gamers. Just as the landscape of the play-to-earn space has changed and expanded, so has the vision of the team at Playneta.

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