Market Summary

Bitcoin Price: US$ 39,235.72 (+2.95%)
Ethereum Price: US$ 2,888.96 (+2.82%)

ENS Soars, Whirlpool Farms, & Valuing L1s

• Ethereum Name Service (ENS) is a protocol for decentralized domain names on Ethereum. Users typically have an ENS for human-readable crypto addresses that is usually a set of random alphanumeric characters. Every ENS address is unique and there are no duplicates.
• Over the past few days, ENS registrations soared to a yearly high of 10k daily registrations. This comes as users start to sweep ENS addresses of numerical digits under 10,000, behind a theory that users of popular NFTs like BAYC might want to own an ENS number of their NFTs. As one anon mentioned: “There are multiple PFP projects with 10k NFTs, but there are only ever going to be 10,000 ENS addresses under 10,000.”
• This generated revenues of $1.1m in daily revenue on April 26th as ENS registrations soar. Each ENS address typically costs $5 for a year (ex. transaction fee) and increases as your registration duration becomes longer. This will likely not last for long and normalize once-popular names are minted.
• Fees accrue to stakers or burn (benefitting all holders). They directly improve overall tokenomics in either case.
• Reduced to a formula, Net Token Value Capture = (% staked x real staking yield) – (% unstaked x inflation rate).
• In other words, nominal yields are headline rates, and real yields are net of inflation accounting for tokens burned. This formula then captures the weighted average real yield across all token holders accounting for stakers and non-stakers. The first half weights the real yield of stakers. The second half weights the real yield of holders not staking (i.e., they lose inflation or gain deflation).
• Real staking yields capture fees and MEV accruing to validators (only in proof of stake), as well as token burning which also benefits all holders (beneficial in both PoS and PoW).
• If you’re buying a token for a long-term investment, you will logically intend to stake it and value it as such. So a higher block reward should not directly hurt any valuation methodology. The maturation of liquid staking derivatives will also make staking even more ubiquitous. Most L1s already have the significant majority of their supply staked (ETH is currently the outlier for obvious reasons), and this should increase over time. As a thought experiment, if 100% of a token is staked, I don’t really care if the inflation rate is 5% or 10%. It’s all just moving value around and I’m breaking even.

Otherside Land Sale, Treasure DAO Update & OpenSea Buys Gem

•  There has been a modest rise in total NFT sales volume this week, partially due to the continued spillover of the “Moonbirds effect”. Overall, it appears that the NFT market is in a consolidation pattern with OS weekly sales volumes hovering around the $1B mark. A breakout of this pattern would suggest that we are transitioning into the next phase of the cycle.
• Coinbase finally launched the beta version of its NFT marketplace this week with select members for the beta receiving an email invite. Besides the usual marketplace functions, it includes social elements with a comment system and an algorithmic discovery feed. Once in full swing, this could be a catalyst for a wave of new users and capital into NFTs given that Coinbase has >80M users today. We will track its adoption and usage in the coming weeks.
• A major shakeup this week is OpenSea’s acquisition of Gem, with the intention to bring Gem’s key features to OpenSea in the future. OS has stated that Gem will continue to operate independently as a stand-alone product & brand after the acquisition. But this begs the question — will Gem face pressure to reduce support for other competitor marketplaces as time goes on? It is a shrewd move since Gem is the market leader in the aggregator space and has been consistently beating out Genie in transaction volumes and new users. Genie is not going down without a fight and has dropped hints of a token soon, possibly as a means to incentivize usage.
• With Coinbase NFT’s launch and OS’s acquisition of Gem, LooksRare (LR) is also heating up. Even though wash trading on LR is still rampant due to trading incentives, we can see that the real transaction volumes on LR have been rising through April and hit new highs. LR also announced a new listing rewards program: you can earn $LOOKS by listing NFTs in the top 25 collections on LR as long as they are priced within 1.5X of the global floor price. The qualifying collections change dynamically so this requires some active management. If you own qualifying NFTs, it is a way to obtain free tokens so it’s well worth looking into.
• These are speculative rumors and not confirmed, some are based on the leaked Yuga Labs pitch deck:
• There will be 100,000 lands for sale in this phase, with a future sale of another 100,000 planned several months down the road.
  • There will be multiple types of land and BAYC owners will receive the most valuable type of land. The land type received may also be based on parent BAYC/MAYC traits.
  • Lands will have different natural resources, rare artifacts and lucky ones will have a Koda.
  • Approximately 140,000 people have KYCed for the Dutch Auction on Saturday.

Synthetix (SNX) rallies in anticipation of L2 Curve Wars and Optimism airdrop announcement

• One project that has benefitted from the growth of the L2 scaling solutions is Synthetix (SNX), a decentralized finance (DeFi) protocol that enables the creation of synthetic assets and offers exposure to derivatives and futures trading on the blockchain.
• One of the biggest developments for the Synthetix protocol was its launch on Optimism, an L2 network that is making waves this week, thanks to an airdrop announcement. SNX staking began on Jan. 16 and as the network grows, speculators are giddy at the prospect of future airdrops and staking incentives.
• Most recently, Synthetix used its launch on Optimism to get more involved in the “Curve Wars” and currently, it is offering the highest bribe to get veCRV voters to incentivize voting for the sUSD Curve pool.
• A second reason the price of SNX has the potential to see further appreciation is traders’ expectation that an airdrop season for L2 protocols could occur.

Dragonfly Capital raises $650M in tertiary funding round

• Dragonfly Capital, a prominent venture capital corporation operating in the cryptocurrency sector, has announced its third funding round, valued at $650 million. The figure surpasses its two prior rounds of $100 million in October 2018 and $200 million in December 2020.
• The $650 million raise saw participation from Tiger Global, KKR, Sequoia China and Invesco, among others, and arrived at slightly higher than the $500 million initially declared to the Securities and Exchange Commission in a Form D filing in January.
• The introduction of Dragonfly Fund III was coupled with a pledge to distribute financial support to projects at seed to Series B funding levels within the sectors of decentralized finance, crypto gaming and the metaverse, among others.

Here’s why Bitcoin bears aim to pin BTC under $39K ahead of Friday’s $1.9B options expiry

• Up until April 25, Bitcoin (BTC) bulls had been defending the $38,000 level, but bulls were caught off-guard by the recent drop. As Bitcoin plunged from $46,700 to $37,700 between April 5 and 26, most of the bullish bets for the upcoming $1.96 billion monthly options expiry became worthless.
• Regulatory concerns continue to pose a threat to Bitcoin and on April 26, the New York State Assembly passed a bill banning new proof-of-work (PoW) cryptocurrency carbon-based mining facilities in the state. Fortunately for Bitcoin, mining equipment is portable so there’s no real risk to the Bitcoin network’s security but the steady threat of anti-crypto legislation can have an impact on price.
• Geopolitical tension in Europe also led investors to avoid riskier assets and many are seeking protection in U.S. dollar-denominated assets. CNBC reported that the impact of Russian state energy firm Gazprom’s decision to halt natural gas supplies to Poland and Bulgaria created concerns about a deeper economic slowdown in the Eurozone region.
• Investors are also obsessed with the potential U.S. Federal Reserve 250 basis point rate hike planned throughout 2022. The maneuver aims to contain inflationary pressure but it could spin global economies into a recession and this is another reason why investors are avoiding highly-volatile assets like cryptocurrencies.
• Bitcoin bears need to pressure the price below $39,000 on April 29 to secure a $350 million profit. On the other hand, the bulls’ best case scenario requires a 6% price push above $41,000 to cut their losses to $30 million.

Central African Republic will adopt Bitcoin as legal tender: Report

• The roughly five million residents of the Central African Republic, or CAR, will now reportedly be able to use Bitcoin in addition to the country’s franc as legal tender. 
• According to a Wednesday report from news outlet Agence France-Presse, Central African Republic President Faustin-Archange Touadéra has signed a bill into law establishing a regulatory framework for the use of cryptocurrency in the country as well as adopting Bitcoin (BTC) as legal tender. Obed Namsio, the president’s chief of staff, said the move was aimed at making the CAR one of the “boldest and most visionary” in the world.
• Earlier reports on the CAR legalizing the use of crypto in the country’s financial markets did not include adopting BTC as legal tender. Lawmakers reportedly unanimously approved the crypto bill, which was introduced by the country’s Minister of Digital Economy, Post and Telecommunications Justin Gourna Zacko.

Purpose Bitcoin ETF adds 1.1K BTC as data hints investors want to ‘buy the dip’

• The world’s first Bitcoin (BTC) spot price exchange-traded fund (ETF) is buying BTC again after a month of selling.
• Data from on-chain monitoring resource Coinglass confirms that on April 27, Canada’s Purpose Bitcoin ETF added 1,132 BTC to its holdings.
• Despite fears that Bitcoin is not yet done with its sell-off, an about-turn at Purpose hints at increasing institutional demand.
• The move coincides with figures from statistics firm Santiment showing that interest in “buying the dip” on both Bitcoin and altcoins is also increasing.

21Shares launches hybrid Bitcoin and gold ETP to enable inflation hedge

• 21Shares, a major issuer of cryptocurrency exchange-traded products (ETP), is launching a new ETP tracking a mix of Bitcoin (BTC) and gold.
• The Switzerland-based firm on Wednesday announced the launch of the 21Shares ByteTree BOLD ETP (BOLD), a new product aimed at providing inflation protection by tracking an index providing risk-adjusted exposure to both BTC and gold.
• Listed on the SIX Swiss Exchange, the new hybrid ETP is subject to monthly rebalances, according to the inverse historic volatility of each asset. At launch, BOLD comprises 18.5% of BTC and 81.5% of gold.
• The new ETP was developed in collaboration with the United Kingdom-based alternative investment provider, ByteTree Asset Management. The product is positioned as the world’s first combined BTC and gold ETP.

Cuban central bank makes it official: VASP licensing coming in May

• In a move that could potentially foster the growth of Cuba’s nascent tech industry, the Banco Central de Cuba (BCC), the country’s central bank, will begin issuing licenses for Bitcoin (BTC) and other virtual asset services providers, or VASPs.
• According to the Official Gazette No. 43 published Tuesday, which includes a Central Bank of Cuba resolution, anyone wanting to provide virtual-asset-related services must acquire a license first from the central bank. It reads:
• “The Central Bank of Cuba, when considering the license request, evaluates the legality, opportunity and socioeconomic interest of the initiative, the characteristics of the project, the responsibility of the applicants and their experience in the activity.”
• Furthermore, the document states that those organizations that do not operate under this license and are required to do so must face penalties in line with existing banking and financial rules in the island nation. The Gazette further determines that this decision will enter into force 20 days after its publication, which will be May 16. It also noted that the licenses would be extended for a second year.

Brazil’s Senate approves ‘Bitcoin law’ to regulate cryptocurrencies

• Brazil’s Senate has passed the country’s first bill governing cryptocurrencies in a plenary session, which will set the stage for the creation of a regulatory framework for the country’s crypto industry. 
• The bill must be approved by the Chamber of Deputies and then signed off by President Jair Bolsonaro to become law in the country. This is expected to occur by the end of 2022, according to experts who spoke with Cointelegraph Brasil.
• The session that approved the project was chaired by Senate President Rodrigo Pacheco, who said:
• “I want to congratulate the rapporteur of the project, Senator Irajá, for the approval, here in the Plenary of the Senate, for this important bill.”