Crypto News Bites 2022/12/2
NFP Friday / CFTC wants crypto authority / Apple blocks Coinbase wallet NFT upgrade to collect 30% on gas fees / TraderJoe launching on Arbitrum
Top News Summaries
Non-Farm Payrolls Friday. CFTC wants new authority to oversee crypto.
Apple blocks Coinbase Wallet upgrade for NFTs, wants to collect 30% gas fee. Stripe creates onramp widget.
Trader Joe launching on Arbitrum. Magic Eden launching tool to protect creator royalties.
Kraken lays off 1100 employees. Crypto layoffs hit 26k.
More details, news and analysis below! Also follow me on Twitter!
Market Overview
Crypto markets pulled back slightly, same as broader traditional markets, after Powell’s dovish speech on Wednesday ignited a strong rally across all risk-on assets. Overall volumes yesterday were light, as investors digested the rally/news, and await Friday’s US November Non-Farm Payrolls to provide further data for the 50bps December hike, after 4 consecutive 75bps hikes. Let’s hope for the Santa rally to close out an extremely challenging year.
Regulation
CFTC chairman Behnam wants new authority to oversee cryptocurrency after FTX filed for bankruptcy protection, during Congress’ first FTX hearing. I’m not sure how this even works as FTX was headquartered in Bahamas, not the US.
Rise of Layer 2s
Trader Joe JOE, the leading decentralized exchange (DEX) on Avalanche, is going multi chain and launching on Ethereum scaling platform Arbitrum. Disclaimer I have a big bag of JOE cuz that’s how I roll. Trader Joe’s selection of the layer 2 solution as their first foray onto a new blockchain shows the confidence in Arbitrum compared to other scaling solutions such as Optimism. This also continues the trend of layer 1 protocols such as Uniswap, Aave, Curve etc deploying onto layer 2s.
Adoption
Coinbase says Apple blocked its last app release on NFTs in wallet. Apple charges a 30% fees on all transactions through its app store, and Coinbase says Apple wanted to also collect 30% of the gas fee, the transaction cost for sending assets on the blockchain. Even if Coinbase was willing to comply, Apple doesn’t support crypto. Coinbase compares this to Apple charging fees on every email. This policy change from Apple restricts iPhone users from transfering NFTs and quite anti-adoptive.
Stripe creates an fiat-to-crypto onramp widget, rolling out to US users first. Stripe is a huge payments processing company, having processed $640b last year, . Onramping allows users to easily convert their fiat into crypto, and providing a widget allows websites to simply copy & paste a few lines of code onto their website to enable Stripe’s services, which is huge for wider adoption.
Infrastructure
In the wake of Tornado Cash sanctions, 72% of Ethereum blocks produced are now OFAC compliant. GnosisDAO and Ultrasound Money announced that they are providing permissionless and neutral MEV block relays as a counter to this. Guide to changing this in Metamask (largest non-custodial wallet) here.
Fleek Network raised $25m in series A led by Polychain. Fleek is a hosting, storage and delivery service for Web3. This is exciting as (to my knowledge) the bulk of content delivery networks (CDNs) that crypto websites use like Cloudflare, GoDaddy, Amazon etc are centralized. When Cloudflare goes down, vast swathes of website go down too. Flask uses decentralized storage providers like IPFS, Filecoin and Arweave.
Follow the Money
Unfortunately I can’t use tags. This news like Fleek above is both about capital flows and infrastructure. Cyvers raised $8m in a seed round led by Elron Ventures. Similar to what I personally saw at recent crypto conferences, a large number of cyber security firms are raising capital, meeting the demand of clients with all the hacks that have occurred this year.
NFTs
NFT marketplace Magic Eden like a few other marketplaces made creator royalties optional a few months ago. That is, users can decide whether to pay a fee to the NFT creator for any secondary transactions. As expected, many users did not. Magic Eden then reversed their decision to honor royalties, and now they are launching a tool to protect and enforce them.
Speaking of creator royalties, data shows that supporting them costs the marketplace to lose market share. At the start of the year OpenSea who supports creator fees had 96% market share, dropping to 45% by end of November. Marketplaces like X2Y2, Sudoswap and Blur took large chunks of market share. Magic Eden saw similar on the Solana blockchain until it switched to optional royalties in Oct. With new tools and measures to enforce creator royalties, we shall see how this plays out.
Dark Side of Crypto
Kraken exchange cuts 1100 people, 30% of workforce, due to crypto winter. About 26k crypto jobs have been lost, which compares to 85k fintech workers in the US who have been laid off. Question now is which industry will absorb these skilled workers?
Ongoing Trends
Bankruptcy of 2nd largest crypto exchange FTX causes contagion risks. How many funds & protocols have yet to announce their exposure? Learn to self-Custody!
Decentralization no longer just a tagline. Centralized to decentralized movement for remaining crypto traders & investors.
Global crypto adoption and increased regulation, launches of Centralized Bank Digital Currencies.
Bitcoin mining industry consolidation as margin squeezed on low BTC prices and higher costs (electricity, funding, hashrate difficulty etc).
Macro: US CPI peaking & potential slowing of Fed rate hikes / Russia Ukraine war may be thawing / China pivoting from zero-Covid policy
Tokens Mentioned Today
BTC ETH JOE SOL