Blockchain Confidential - 8 April 2022

Neutrino de-pegs, TradFi keeps aping in, and Jamie Dimon stops gaslighting us

The Week

This week’s big theme is surely TradFi-DeFi crossovers and partnerships. FTX is investing in IEX, the exchange made famous by Flash Boys. Tesla leveraged a MakerDAO-based lender for a real estate financing deal, while Huntingdon Valley Bank is looking to use MakerDAO for loan syndication. Blockchain.com is launching an asset management arm to target family offices, high net worth individuals and other institutions, as part of that exchange’s efforts to expand its institutional offering. Worldpay’s payment rails will support USDC settlement via a partnership with Circle, while Block’s Cash app now offers an option to receive Bitcoin via the Lightning Network. Hot on the heels of its first OTC Bitcoin derivative trade, Goldman Sachs announced it will offer OTC Ethereum options as well, and market-making firm Wintermute will join the party with its own OTC offering. CME Group, not to be left out, announced 11 new crypto reference rates.

Intel launched a new Bitcoin mining chip this week with a focus on maximizing energy efficiency. The DeFi protocol yearn.finance is pushing a new tokenized vault standard called ERC-4626 which is worth watching; multiple ERC standards have helped propel innovation in the space. Could this be another building block like the NFT standard, this time for yield protocols? Ledger is offering a hardware wallet for NFT holders. And while you cannot yet get a Jay and Silent Bob NFT, Secret Network is collaborating with Kevin Smith on an NFT-linked horror film.

Finally, we were relieved to hear that Jamie Dimon believes DeFi and blockchain is real, just in case you had any doubts on that point based on past statements.

The Good Read

This week’s Good Read relates to the Neutrino de-peg and the scandal around the Waves protocol. Read The Neutrino Depeg in Three Analytics.

Regulator Radar

SEC Chair Gensler is looking to collaborate with the CFTC to establish a unified regulatory framework for crypto exchanges, reflecting the cross-over between tokens potentially classed as securities and others classed as commodities. Separately, he also called for greater separation between crypto custody and exchange trading functions, and exchanges as stablecoin issuers. Are Chinese walls coming to crypto? Senator Toomey put forward another proposal for stablecoin regulation., while the U.K. government similarly announced a push to fold stablecoins into its regulatory regime for payments. The FDIC asked all U.S. banks to report on crypto activities. The CEO of FTX US provided an interesting perspective on their approach to regulation and in particular their conservative approach to token listing. The Crypto Market Integrity Coalition, a new self-regulatory body, gained 13 new members this week. Singapore is pushing for licensing of exchanges that only offer services offshore but that are based in the city-state, closing a loophole. Finally, Sweden’s central bank is conducting tests of the E-Krona CBDC.

At the Office

We are about to close our next three hires across DevSecOps and Research, and we are sprinting to build up R&D capacity as quickly as possible. Although we plan to keep our address at 40 Wall Street, as the company grows our space needs are changing and so this week we signed up at the Rise Barclays fintech co-working space on 23rd Street. Among other things this gives us access to a great event space, which we will be using for our new Blockchain Alpha event series this summer. Together with Blockchain NYC we will be running panels on digital asset quant, risk and regulatory issues. For Serenity product development our CPO Bob Guzman has been pushing forward specification of our coming risk scenario API, and we are also looking into various options for derivatives analytics. We also continued the build-out of our first market risk models, integrating them into the larger Serenity platform.