Wednesday, 29 December 2021

Market Summary

Market Summary 29 December 2021

Bitcoin Price: U$47,543.74  (-6.23%)
Ethereum Price: U$3,792.75 (-6.06%)


$770 billion defense bill signed by Biden calls for emerging technology strategy

  • The newly-signed $770 billion defense bill directs the Department of Defense to develop a digital health strategy for emerging technologies, including distributed ledgers.
  • President Joe Biden signed the National Defense Authorization Act for Fiscal Year 2022 on Monday after the bill passed the House and the Senate this month.
  • It contains little mention of blockchain or crypto-related efforts. However, it directs the Secretary of Defense to develop a means of incorporating emerging technologies, including distributed ledger technologies, by April 1, 2022. 
  • It also includes distributed ledger technologies under the skills expected of so-called “digital talent” hires. The bill directs the Secretary of Defense to provide a “chief digital recruiting officer” with the resources to hire those with these skills.


Crypto ‘starts to eat the world’: Peter Johnson of Jump Capital’s 2022 predictions

  • At Jump Capital, we have been longtime believers in stablecoin adoption and included the rise of stablecoins in both our 2020 and 2021 predictions when stablecoin supply was at ~$6 billion and ~$30 billion, respectively. Now with supply greater than $140 billion, we see no signs of stablecoin adoption slowing, and believe there will eventually be several trillion dollars in stablecoins.
  • In 2022, we are particularly excited about the growth of stablecoins for non-trading use cases. Historically, stablecoins have primarily been used for trading, but 2022 will be the year that their usage for cross-border payments and as a safe-haven asset in countries with unstable currencies becomes more apparent and a larger driver of growth.
  • Decentralized autonomous organizations (DAOs) enable global coordination of individuals utilizing blockchain-based governance. DAOs can serve many purposes, including managing the operations and capital of blockchain projects (MakerDAO), managing capital for investments (The LAO), managing the usage of gaming assets (YGG DAOs), coordinating cultural groups (Friends With Benefits), or coordinating to purchase assets (Constitution DAO).
  • We believe that the Constitution DAO was a watershed moment for DAOs as its raise of over $40 million showed the ability for thousands of people to coordinate their capital and efforts for a joint goal. In 2022, we believe DAOs will gain significant traction as the next-generation way of coordinating global investments and communities. Trying to buy the Constitution was just the start; In 2022, there will be multiple $100 million-plus DAO capital raises, and they will set their sights on even bigger objectives.
  • 2021 saw the rise of fast, low-cost blockchains such as Solana, Terra, and Avalanche, Ethereum sidechains such as Polygon, and the early rollout of Ethereum L2 scaling solutions using optimistic and Zk rollups.
  • We are bullish on all these solutions, as transactions increasingly migrate off L1 Ethereum and an exponentially growing pie creates room for a variety of winners (at least in the near term). The enhanced user experience from these fast chains and L2s is a key piece of enabling mainstream adoption and will be a critical part of crypto’s narrative in 2022. Eventually, winners (and losers) will be sorted out between these, but in 2022 we’re betting on strong growth across the board.
  • 2021 saw the rise of crypto-based “play-to-earn” gaming led by Axie Infinity where players can earn real economic value from their in-game activities. The success of Axie and other blockchain-based games has led to a flood of crypto games – many of which are not very good games and are unlikely to have staying power.
  • However, we believe the concept of games that enable true ownership will become foundational to the future of gaming. In 2022, we expect traditional game studios to move into crypto gaming, launching the next generation of crypto games that offer not just economic incentives and true ownership, but also first-rate gameplay.
  • During 2022, we expect to see a significant increase in venture dollars going into crypto, as traditional VC funds both rush to allocate to crypto-native projects and get pulled in by the convergence of crypto and a variety of other industries. This increase in crypto VC funding will also be powered by multiple $1 billion-plus crypto funds that have recently been announced, and several more that will be announced soon. In this industry awash in capital, the most successful investors will be those that provide much more than just money – helping to build products, provide liquidity, recruit talent, scale organizations, develop communities, attract users, and participate in governance.


DeFi wallet DeBank raises $25 million in equity funding round

  • DeBank, a crypto wallet that provides access to decentralized finance (DeFi) services such as token swapping and portfolio tracking, has raised $25 million in an equity funding round.
  • The round was led by Sequoia China and saw participation from Dragonfly Capital, Youbi Capital, Coinbase Ventures, Capital, Circle, and Ledger.
  • Founded in 2018, China-based DeBank is now valued at $200 million. Its total funding to date is unclear as the startup has previously raised two funding rounds of undisclosed amounts.


Speed, scaling, regulation to play key role for crypto in 2022: FTX CEO

  • FTX founder and CEO Sam Bankman-Fried, also known as “SBF,” rounded off 2021 on an optimistic note. SBF waxed lyrical about the crypto market’s state in 2021 while revealing the roadmap for FTX in 2022 in a Twitter flood.
  • In his view, there are three keystones to industry progress in 2022: regulation, scaling and transaction speeds. He proposes solutions to each puzzle piece, referencing his exchange’s involvement.
  • On regulation, SBF states stablecoins could be better reported and audited. In line with FTX stablecoin policies, he said more transparency would solve “80% of the problems while allowing stablecoins to thrive onshore.” Meanwhile, better markets oversight and an anti-fraud-based regime for token issuances could address other regulatory gaps.
  • Secondly, while crypto users number somewhere around 200 million, “punching way above their weight,” more blockchain network effects are needed to achieve wider mainstream adoption.
  • Fortunately, FTX is leading the charge. It doubled its user count in the fourth quarter, cementing itself as one of the top exchanges in crypto at a $25-billion valuation. SBF explained that while smart contracts have paved the way for metaverses, decentralized finance and Web 3.0 developments, video games could be the path to massive scaling.

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