Wednesday, 21 December 2022

Market Summary

Market Summary 21 December 2022

Bitcoin Price: US$ 16,895.56 (+2.78%)
Ethereum Price: US$ 1,216.94 (+4.21%) 

 

The State of the Polygon Gaming Ecosystem

  • The past six months within the cryptocurrency industry have been a calamity. From digital asset prices to protocol treasuries, metrics have plummeted. However, transactions within the Polygon network have remained relatively stable despite the turbulent market conditions. The same has been true for DeFi, but not for Polygon’s gaming ecosystem.
  • Gaming transactions within the Polygon network have dropped 40% since late May, from 429k to 255k. Gaming transactions have lost 5% of their market share relative to the Polygon network overall, falling from 15% to 10%. The basic assumption from declining transactions suggests that blockchain gaming is withering. Factors include declining players, unprofitable P2E rewards, and gaming dApps losing treasury runway. Obviously, this is not unique to Polygon.
  • A comparison of unique users portrays an opposing narrative. DeFi users have declined by 18% from May, as plummeting token prices resulted in dying yield farming opportunities and less trading-related activity. Surprisingly, the number of unique users within the gaming sector has remained stable. Gaming users have increased by 1.4%, suggesting successful retention of users. Successful retention strongly correlates with the growth of Polygon users. The number of unique users on the Polygon network has trended upwards, up 72% with users peaking at 5.9M during October. Relative to total Polygon network users, the percentage of gamers dropped by 16% to 23% in November.

 

WBTC Supply Shrinks by Record Amount

  • In November, a total of 30.6K WBTC was redeemed, the highest amount ever since the token was launched. Since then, WBTC supply has shrunk by over 24%. Currently, December is on track to surpass this record with 29.1K WBTC redeemed so far.
  • The largest daily redemption of WBTC took place on Dec. 15, 2022, when 13.6K WBTC (worth $239M) were burned. In fact, three of the four largest daily redemptions ever occurred in December, all of which were carried out by market maker Wintermute.
  • WBTC is an ERC-20 token that is backed on a 1:1 basis by BTC. The collateral backing WBTC is held in custody by BitGo. The minting and redemption of WBTC is carried out by approved merchants that are typically market makers and exchanges.
  • The transparency of WBTC has helped the project gain widespread adoption and confidence. Users can easily verify the supply of WBTC vs. the amount of BTC held in custody with on-chain data.
  • This minimizes the possibility of a “bank run” on WBTC due to a crisis of confidence. Market participants are likely converting WBTC to BTC to sell the tokens or custody the BTC themselves.

 

What Is ‘Web5’ and How Is it Different From Web3?

  • The world is still getting its collective head around Web3 – a suite of decentralized protocols that add a (disputably) censorship-resistant financial layer to the internet. So why did Jack Dorsey, the creator of Web2 platform Twitter, skip right ahead to what he calls “Web5”?
  • It turns out that, despite the name, Web5 does not follow the yet-to-be-created Web4. The Web5 platform, announced in June, 2022 by TBD, the crypto and decentralized finance arm of Dorsey’s payments company, Block (née Square), is firmly based on Web3 tech, but promises “an extra decentralized web platform.”
  • To land on the name Web5, TBD just added Web3 (an internet powered by blockchain-based smart contracts) to Web2 (centralized content platforms, like Twitter or Facebook). Put simply: 3 + 2 = 5.
  • Web5’s core idea is to “put you in control of your data and identity” – a core tenet of Web3’s decentralized identity systems. Instead of inviting users to sign up for an account on a centralized platform (like an Instagram account), Web3 protocols reference users by their crypto wallet addresses. Protocols like the Ethereum Name Service let users turn their wallet’s garbled alphanumeric string into a word or phrase (like jane.eth) similar to how Domain Name Service (DNS) allowed websites to have addresses like coindesk.com rather than a long string of numbers like 54.235.191.121. Decentralized data storage is a concept already in existence and is provided by platforms like Filecoin and IPFS.
  • Dorsey’s Web5 offers similar capabilities. Instead of an internet that relies on accounts provided by companies that hold customer data “captive in app silos,” Web5 pushes for “a new class of decentralized apps and protocols that put individuals at the center.”
  • There are three pillars at Web5’s core: self-owned decentralized identifiers, verifiable credentials and decentralized web nodes for storing data and relaying messages. It sounds a lot like what decentralized identity services have been doing since the Ethereum Name Service launched in May 2017.

 

Decrypt’s 2022 Crypto Project of the Year: Polygon

  • Mainstream brands like Starbucks, Reddit, and Instagram are adopting Polygon, and the Ethereum scaler is building for even broader adoption.
  • Amid a contagion-fueled crypto winter that has sent a chill through VC firms, coin holders, and NFT collectors alike, one project above all has made undeniable strides towards onboarding the masses and having the infrastructure to support them: Polygon, Decrypt’s pick for crypto project of the year.
  • In 2022, Polygon’s perception evolved from one of many Ethereum scaling networks into a platform favored by major household brands and companies looking to harness Web3 tech, powering everything from customer loyalty programs to web and metaverse identity. And it made progress in its plans to support that growth through zero-knowledge proof scaling technology.
  • Over the past several months, despite crumbling confidence in the crypto space due to the collapse of Terra and more recently FTX, Polygon has attracted a wide array of massive, well-established brands that are building applications atop the Ethereum scaler.
  • Wyatt joined Polygon Studios, the business development firm supporting the decentralized blockchain platform, in March after leading YouTube Gaming for several years.

 

Nansen Analyst: On-Chain Data Shows Binance’s Financials Are a ‘Black Box’

  • Binance, the top cryptocurrency exchange by trading volume, may be “tremendously well capitalized,” but its financials are still “very much a black box,” said an analyst at data insights company Nansen.
  • Andrew Thurman told CoinDesk TV’s “First Mover” that although the exchange has published that it holds $55 billion in customer deposits on-chain, “aside from that, we don’t have much on-chain or any kind of financial access or transparency into their entities.”
  • Binance has come under the media microscope after a large sum of funds, amounting to roughly $6 billion, moved out of the exchange last week during a 24-hour period. Jump Trading, a prominent trading firm in the ecosystem, was among the largest entities that moved funds out of Binance, according to Nansen’s analysis.

 

CoinDesk Market Outlook: 4Q Crypto Gloom Spills Into 2023 

 

Joins US Crypto Lobbying Group Chamber of Digital Commerce

  • Binance is stepping up its regulatory efforts in the United States. Today, the world’s largest cryptocurrency exchange by trading volume announced that it has joined the Chamber of Digital Commerce, an American lobbying group, to “help establish policies that benefit and protect users.”
  • In joining the group’s Executive Committee, Binance said that it would work to “educate, advocate, and bring forth solutions” to help shape crypto regulation in the United States.
  • The Chamber of Digital Commerce claims to be the world’s largest such association and engages government officials on the use of digital assets and blockchain-based technologies.

 

FTX Has Over $1B in Cash, Creditor Meeting Told

  • FTX executives are currently trying to claw back hundreds of millions of dollars in cash from hundreds of bank accounts as they seek to resolve the position of the collapsed crypto exchange, its creditors were told Tuesday.
  • The company’s new management, which took over when FTX founder Sam Bankman-Fried resigned Nov. 11, told a procedural hearing on Tuesday that it had over $1 billion in assets identified. The company located about $720 million in cash assets, which the exchange has yet to consolidate, in U.S. financial institutions authorized to hold funds by the U.S. Department of Justice. Another near $500 million is already being held in U.S. institutions.
  • “We are reaching out to all of those banks and changing the signatories on the accounts so that we can get access to the accounts and move the cash as much as we can to authorized depository institutions,” FTX’s new chief financial officer, Mary Cilia, speaking under oath, said during part of bankruptcy proceedings.
  • Around $130 million of cash is locked up in Japan, Cilia said – where local regulations have largely ringfenced funds for local customers.
  • Another $6 million is being kept for operational expenses such as payroll, and most of the remaining $423 million at unauthorized U.S. institutions are mainly at a single broker, she added, though she declined to identify the broker. $485 million are already in an authorized deposit institution, Cilia said.

 

Polygon Founder Unveils Web3 Accelerator Beacon

  • Beacon was created by Polygon co-founder Sandeep Nailwal, and the small management team includes Uri Stav (formerly chief security officer of CoinDesk parent Digital Currency Group), Prateek Sharma (former Sequoia Capital vice president) and Kenzi Wang, who founded venture capital firm Symbolic Capital with Nailwal, among others.
  • “We’re creating Beacon because, as a network of Web3 founders and operators ourselves, we’re 100% committed to this idea of bringing the next one billion users into this space. With everything happening in the news, we know the odds are stacked against us,” Nailwal told CoinDesk in an email. “However, if we can support the best founders and accelerate projects serving real customer needs, adoption will happen – it’s inevitable.”
  • The accelerator’s first remote-first, 12-week cohort kicked off in October with more than 30 founders from 15 companies across decentralized finance (DeFi), infrastructure and consumer applications. Mentors to the cohort included Magic Eden CEO Jack Lu, Yield Guild Games co-founder Beryl Li and CoinFund partner Evan Fang.
  • Beacon hopes to stand out from other accelerators by building in-house software that can connect founders and investors. Beacon has already built a custom platform for potential investors to review projects, learn more about founders, view video pitches and request introductions. On the founder side, Beacon is working on a social network to help founders and alumni stay connected.

 

Nomad Bridge Reopening

  • The Nomad Bridge has been relaunched, and madAsset holders can now access recovered funds via the upgraded bridge, which can be found here. The Nomad team shared additional details about the reopening, adding that accessing recovered funds does not disqualify users from future recovered funds. Any funds recovered after the relaunch will also be made available pro-rata regularly. Bridging of new canonical tokens will not be enabled at this time.

 

Glassnode  NEW DASHBOARD

  • We have released a new #Bitcoin mining dashboard which provides insight into the global ASIC fleet.
  • Here we consider 4x Antminer rigs:
  •  🟣 S9
  •  🔵 S17
  •  🟡 S19 Pro
  •  🔴 S19 XP Hyd
  • Form this we can estimate rig counts needed to produce current hashrate.

 

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