Blockchain Confidential - 7 January 2022
Bitcoin marks its Genesis Day anniversary, Samsung enters the metaverse
The Week
It was a quiet start to 2022 in blockchain & DeFi news, even though it was not at all quiet in digital asset markets. January 3rd marked the 13th Genesis Day for Bitcoin, the anniversary of the first block being created. In that time the network has grown dramatically, and the start of the year also marked a new all-time high in Bitcoin’s hashrate of 203.5 exahashes per second, up 49% from a year ago despite the mass migration of mining businesses out of China. For the newer generation blockchains, Solana witnessed degraded performance once again.
In DeFi, Aave launched its Aave Arc permissioned pools for institutional investors, and Fireblocks announced it had 30 institutions lined up to participate. This mechanism gives institutional investors confidence that all funds participating in the pool originated from parties who have passed appropriate KYC/AML checks. In the virtual world, Samsung announced two pushes into NFT’s and the metaverse, a smart TV marketplace for NFT’s and a virtual storefront in Decentraland.
Airbnb polled their community and the top request for 2022 improvements was support for crypto payments. And finally, while numbers are notoriously hard to pin down based on how you define a crypto asset manager or fund, this week Cointelegraph reported accelerating inflows in 2021 of $9.3B, up from $6.8B in 2020, as institutional investors increased their exposure to digital assets.
The Good Read
There are many research outfits releasing 2021 reviews and 2022 forecasts for the digital asset market. One worth a read is from Arcane Research; you can find a digest of it from Coindesk (who have their own report here) and the whole report online. Two interesting highlights: the growth in Bitcoin’s Lightning Network, whose capacity grew 213% in 2021, and the charts of the widening performance gap between ETH and BTC, and even greater gaps with newer Layer-1’s.
From the Research Desk
Head of Research Ilya Kulyatin is back with the new year, breaking down a paper by da Cunha and da Silva. Read Relevant Stylized Facts About Bitcoin.
Regulator Radar
At a recent panel, former CFTC chair J. Christopher Giancarlo proposed an interesting middle ground for unifying U.S. crypto regulation across the SEC and CFTC without necessarily creating a brand-new regulator. The prediction market Polymarket agreed to pay a $1.4M fine to the CFTC, in what was taken as a sign of how U.S. regulators might proceed with securities law enforcement with regards to DeFi — e.g. many DeFi derivatives protocols share similarities with Polymarket. There is another coming crypto hearing in the U.S. Congress, this time focusing on the environmental footprint of mining.
In China the e-CNY CBDC (a.k.a. digital yuan) continues it rollout, releasing a digital wallet on the Apple and Android app stores. A report from Chainalysis showed the notional value of criminal crypto transactions increased to an all-time-high of $14B in 2021, even as the percentage of illicit transactions continues to fall — the fraction attributed to the Dark Web, hacks, frauds, etc. is down 96% in the last two years.
At the Office
We continued getting both NYC & Singapore companies ready for first employee hires and are doing the first internal-only demo of basic digital asset data pipelines this evening. Ilya is doing a wide-ranging literature review in digital asset risk space, some of which we are sharing with you this week in the newsletter.