Blockchain Confidential - 11 February 2022

Aave's shot across Meta's bow, an NFT for your luxury SUV, and exploring the diversification benefits of digital assets

The Week

DeFi blue chip Aave launched its Lens Protocol decentralized social media platform this week; such moves in Web3 help explain the intense interest from the Web2 incumbents around this space. If mainstream users buy into the argument that a model where content creators own their audiences and people own their data, it could be massively disruptive for Big Tech business models.

At this weekend’s Superbowl there will be commemorative NFT’s for the tickets, though as a companion item and not as the ticket itself; a read up on applications of semi-fungible tokens (SFT’s) is worthwhile here to see where this could go. In another novel application, the new Alfa Romeo SUV will memorialize its service record as an NFT, creating an immutable service log. Kelly’s Blue Book: the blockchain is coming for you. Zygna will offer an NFT-enabled game later this year, perhaps with a play-to-earn angle. But sometimes you just want an old-school picture of a punk, and Sotheby’s got you covered, with a live auction for 104 CryptoPunks later this month.

In a mix of high and low culture, you may soon be able to go from a Gucci store in the metaverse to a McDonald’s or Panera restaurant; as an aside, we are still trying to get our heads around the idea that Gucci has an employee dedicated to managing their Discord server. Do the ladies who lunch now trash-talk on Discord? And just in time for Valentine’s Day, we saw the first wedding in the metaverse, as an Arizona couple got married in Decentraland, although not without technical issues or skeptics.

From the Research Desk

In his most recent post, Cloudwall Capital Head of Research Ilya Kulyatin reviews a paper from 2020 on the diversification value of digital assets in a multi-asset portfolio. Read To diversify, or not to diversify, that is the question.

The Good Read

Amber Group did a deep dive into the NEAR Protocol on Medium which is worth reading to learn about one of the emerging Layer 1 blockchains. Read An Introduction to NEAR.

Regulator Radar

Senator Pat Toomey called out the geopolitical ramifications of CBDC’s, warning about the digital yuan, and given that there were reportedly more digital yuan transactions at the Bird’s Nest Stadium on the first day of the Beijing Winter Olympics than Visa swipes, he could be onto something. The NY Fed’s researchers threw some shade on stablecoins with a paper suggesting tokenized bank deposits could be a superior basis for payments systems. The House pushed back on a Treasury proposal to regulate stablecoins like banks, with concerns about limiting competition and taking an overly heavyweight approach. Regardless, the FDIC has added evaluating and reporting on crypto risks to its TODO list for 2022. In a move that could lead to yet another SEC vs. CFTC Twitter spat, CFTC Chair Behnam asked Congress for the authority to supervise crypto spot markets. Oh, and he wants an extra $100 million. Avanti Bank, Caitlin Long’s Wyoming-chartered crypto bank, is one step closer to having an account at the Fed.

Russia seems to be backing down from a China-like ban and moving toward regulating and taxing crypto. Legislation authorizing a digital euro could be on the way in 2023, but don’t hold your breath waiting for a digital pound retail CBDC wallet, as the Bank of England is opposed to the idea. In both cases the ETA for launch would be no earlier than 2025. Finally, in the self-regulatory arena, crypto firms launched a coalition to crack down on market manipulation, in an attempt to address rising concerns about retail investor protection from global regulators.

At the Office

This week we onboarded the team from AquaQ to bolster our Python development resources; Pat and team will be focused on our real-time feed handlers. Barry continues fine-tuning the front end for several early customer “sneak preview” demos next week, and we also made good progress on standing up our data pipelines for loading reference data and historical prices. The Research team has been working on our first digital asset risk models, while Ilya is continuing literature review and academic outreach. We assembled an initial sales pipeline of more than 30 asset managers, got introductions at multiple digital asset hedge funds and continued our customer development interviews to get laser-focused on our customer needs.