Blockchain Confidential - 18 March 2022
Aave V3, a major Coinbase lawsuit, and MiCA moves forward
The Week
LayerZero, a new protocol to connect blockchains, prepared to launch its Stargate protocol, which will allow swaps across seven EVM-compatible blockchains. Aave launched V3 of its protocol, including exposure limits for newly-launched tokens. The Ethereum development team successfully executed an Eth2 merge on the Kiln testnet, the last such test before merging the public testnets in advance of mainnet launch. Kiln is now 100% proof-of-stake, reducing energy consumption more than 99%.
Market making giant Virtu will be moving big-time into digital assets, offering wholesale services to crypto brokers. Zodia is partnering with Standard Chartered and Northern Trust to offer yield products like staking along with custody services. HSBC followed JPMorgan into the metaverse, acquiring a plot of land in The Sandbox. Jack Dorsey’s Block will offer a hardware wallet with fingerprint recognition for security. In Big Tech, eBay will be offering a digital wallet later this year, though a lot of details are still unclear. Job openings at Spotify hint at a push into Web3, while NFT’s are eventually coming to Instagram according to Meta CEO Mark Zuckerberg.
The Good Read
For those interested in DAO governance, you may want to read this: Quadratic Voting and DeFi Governance. Balancing the economic and other interests of many stakeholders is not easy to get right, and DeFi offers an opportunity to rethink this.
Regulator Radar
The week’s big news was a class action lawsuit against Coinbase on the basis of not disclosing the risks of trading in what the suit asserts are unregistered securities. Senator Warren continued to push for tighter controls on crypto with a new bill to allow the U.S. to sanction foreign exchanges who facilitate sanctions evasion. On the state level in the U.S., New Hampshire’s legislature passed its bill which creates a regulatory sandbox for digital assets so developers are not deemed issuers of securities.
The EU’s landmark Markets in Crypto Assets (MiCA) legislation, which establishes a regulatory framework for digital assets, passed a key committee vote. Japan set penalties for crypto exchanges if they fail to guard against sanctions evasion. Binance obtained an operating license in Dubai, following FTX. Against the backdrop of the war and significant crypto-driven donations, Ukraine established a digital asset regulatory framework, while Sberbank, the country’s largest retail bank, received a digital asset license from the Bank of Russia.
At the Office
We continued adding to and refining the data platform that supports the Research team, while Boris and Ilya pressed forward with development of our first market risk model. Barry and Tanya worked together to implement Bob’s vision for the Serenity front-end, expanding the range of products we can present and putting in placeholders for the coming risk model integration. Jia Yng, Bob and Kyle continued with client outreach in both U.S. and Asia, and we have started gearing up for the next wave of quant and developer hiring in both NYC and Singapore.