💪 Down but Never Out
This week has been more than turbulent - let’s see what happened, and what the future holds for us crypto enthusiasts. Hop in! ⭐
First and foremost, everyone here at CoinStats sends our heartfelt thoughts to those affected by FTX across the industry. 💞
With that said, let’s get into this week’s edition of the CoinStats Scoop where we’ll cover:
The FTX debacle and how the industry will be stronger as a result
Proof-of-Reserves and exchanges that are providing the necessary transparency
Highlighting DeFi’s importance as a verifiable, global, real-time ledger
SOL’s opportunity to escape the FTX saga as a stronger, more vibrant ecosystem
Reading, reiterating, and thinking through the importance of decentralization
Takeaways of the week & things to watch moving forward
Market Overview
While it was a tough week throughout the industry, the core takeaway should be that FTX once again showed the problems of centralized finance, and proved the need for DeFi and crypto at large.
FTX’s downfall is tragic and impactful to countless participants throughout the space, but it also reiterated the importance of everything we’re building across the crypto ecosystem. “Don’t trust, verify” is a popular saying within crypto and is what separates fraudulent companies such as FTX from open-source, verifiable DeFi protocols built on credibly neutral networks such as Ethereum, Cosmos, Polygon, and others.
There are endless thoughts and feelings to express surrounding the FTX situation, but instead of writing paragraphs on end explaining everything, we highly recommend this succinct video describing everything from @JG_Nuke.
If you prefer reading and threads instead of video, further explanation on this week’s events can be found in a great thread from Jon Wu who currently works on growth at Aztec Network, a zero-knowledge ETH L2 scaling solution.
Alright, with the necessary housekeeping regarding the FTX situation out of the way, there were numerous other non-FTX developments across the space this week which you can find in the News & Developments section below.
Market-wise, the global macro picture improved this week as stocks rallied on continually improving CPI inflation numbers.
The broad macroeconomic situation is slowly improving headlined by those lower CPI numbers. Further highlighting the improvement was a weekly decline in the dollar index (DXY), U.S. Treasury yields continuing to fall, and equity markets worldwide climbing higher all indicate that growth is once again becoming a focus.
Of course, those are all broad macro indicators that you may or may not care about, but they are important for crypto as well as the macro correlations we’ve covered in recent weeks. Growth stocks and risk-on environments across the globe are improving, which is good news for crypto as it usually translates to green charts!
Obviously, nothing happened as predicted as the crypto market was digesting the FTX news, but the overall macroeconomic environment improving is a welcoming sight for crypto markets, and it will begin to translate to improved token prices in the near future! 🤑
Stay Engaged & Informed
One final note before we get to the rest of this week’s developments and discussion: if anyone needs some time away after this week’s developments, it is more than understandable. Take all the time necessary to properly process and digest, but don’t be discouraged and done with the space!
Famously, Cobie, one of the most OG people in the space said that the problem people have is staying engaged during the rough times which leads to them missing the most potential growth. The below clip is Cobie explaining this and the two-minute video is more than worth your time!
As Cobie says better than any of us ever could, all of this will soon pass, and your friends will once again be asking and buying crypto when it eventually recovers and rallies towards new highs. Staying involved between now and then is crucial and the CoinStats Scoop can be your go-to resource for a brief, weekly check-in that keeps you properly informed!
News & Developments
Blockchain intelligence and analytics company raises $70M in series B funding including investor heavyweights of Goldman Sachs, Thoma Bravo, PayPal, Amex, and Citi Ventures among others
Itau Asset, the investment arm of Latin America’s largest bank, is partnering with Galaxy Digital to offer a physically backed crypto ETF listed in Brazil
Aptos (APT), the new L1 protocol that launched recently, partners with Google Cloud as Google continues its push into crypto and will be running Aptos validators
Ramp, a crypto payments infrastructure firm, raises $70M as it continues building its core product of an SDK for crypto purchases through debit, credit, bank transfers, and Apple Pay
A Microsoft-backed Web3 indexing and data protocol, Space and Time, partners with chip-making giant Nvidia and joins their startup accelerator program
London-based digital asset exchange, brokerage, and custodian company Archax raises $28M series A as it continues to expand its operations
Ping, freelancer and gig economy-focused neobank, raises $15M; the company enables fiat on and off ramps to crypto as well as allowing users to buy, sell, and hold BTC, ETH, LTC, USDC, & USDT
ETH zero-knowledge-enabled scaling L2 announces the StarkNet Foundation which will receive 50.1% of the coming StarkNet token to deploy towards furthering development, grants, research, outreach, initiatives, and more
“Twilio for web3” company Notifi raises a $10M seed round as it “provides communication infrastructure and SDKs for decentralized applications on blockchain platforms”
Institutional DeFi wallet and security company Fordefi, raises $18M and launches their initial MPC wallet
Federal Reserve Bank of New York, Citi, Bank of America, BNY Mellon, HSBC, Mastercard, & Swift partner to unveil a proof-of-concept for a “regulated liability networks” — experiment for tracking & transmitting tokenized debt issued by financial institutions
What We Learned
Undoubtedly, this was one of crypto’s toughest weeks since it’s creation, but there are several positive takeaways we can fall back on, including: DeFi’s heightened importance and consistent audit-ability, exchanges committing to provide Proof-of-Reserves moving forward, and SOL’s ability and opportunity to shed itself of FTX’s parasitic value.
Exchanges and protocols across the industry are finally realizing and providing the transparency necessary to continue to push the space forward through Proof-of-Reserves. As a result of FTX’s egregious mishandling of funds, several of the large exchanges left have begun to institute and verify their credibility as seen by:
Exchange Huobi details its holdings in public addresses
Bitfinex publishes details of its reserve assets
Binance publishes wallet addresses for its cold and hot wallets, snapshot of holdings
DeFiLlama releases a centralized exchange transparency dashboard
The ability for customers of exchanges throughout the space to verify their assets are being held properly is a bare-minimum necessity moving forward, and it’s a good step in the correct direction to see several exchanges and companies across the space beginning to provide Proof-of-Reserves.
Speaking of proof, the most important takeaway this week remains the reinforced importance of what proper decentralized protocols and companies are building throughout the space. As Chris Burniske, one of crypto’s OGs, highlights below, FTX and the opacity of centralized institutions, “is a walking advertisement for credibly neutral, decentralized information networks.”
DeFi’s broad impact is still in its earliest stages and the problems we saw over the course of last week remain fundamentally a people problem, not a crypto problem. SBF and the dishonest people at FTX caused this week’s fallout while once again DeFi protocols and their ability to be verified by anyone across the world remained of great importance.
While OHM may not have performed the best over the past year plus, the below tweet showcases the ability of OHM and other DeFi protocols to be audited in real-time by anyone with an internet connection. DeFi’s promise has always been transparency, and this core fact has been reiterated this week as we parse through the failings of another CeFi company.
In addition to the positive developments of Proof-of-Reserves for centralized companies throughout the space and DeFi’s resurgent importance of constant verifiability, one of the other positive takeaways this week applies to Solana. As many know, FTX and Solana were intertwined since their inception, but FTX does not have any barring on the future of SOL as a competing, vibrant L1 ecosystem moving forward.
In fact, many participants throughout the SOL ecosystem are highlighting that FTX’s blowup is a net positive for Solana in the long run. Moving forward, SOL and the numerous protocols built throughout its ecosystem are now judged by their impact and merit alone, and they can operate and bootstrap themselves without predatory involvement from FTX. As the thread below from Kanav suggests, Solana isn’t going anywhere, and there are countless “cool things building on Solana.”
There may be some short-term growing pains for Solana to escape the dark cloud of FTX, but the ecosystem full of vibrant protocols, developers, and enthusiasts isn’t going anywhere. Solana’s future remains brighter today than it was yesterday. 🌞
Read of the Week
“Decentralize, Decentralize, DECENTRALIZE” — 0xKyle
As we’ve noted throughout this week’s newsletter, one of the core takeaways of the week is the growing importance of DeFi and decentralized protocols. In the early days of crypto and smart contracts on ETH, one of the popular sayings was “can’t be evil.”
“Can’t be evil” referred to the code that was written and established across DeFi protocols and the transparency that it provided. DeFi’s importance remains crucial to this day, and the ability of open protocols, unlike centralized exchanges such as FTX, to be audited and verified by anyone across the world reinforced the ability of the code to “can’t be evil”. Kyle agrees with this sentiment and our need to turn back to it as an industry where he says,
“Really, it’s ironic that what killed the industry wasn’t some major hack on a smart contract. No, it was the centralized players…the ones remaining are the ones that will make crypto antifragile…you, me, the people that are still here…the onus is on us to do what’s right - not for money, but for ideology. ”
As we talked about in regards to one of the positives that occurred this week, the pressure for transparency from the large CeFi and exchange players remaining is a net positive result from the events of this week, and Kyle suggests, “reserves have to be continually updated and audited by an objective third party.”
Moving forward, the transparency and communication provided by exchanges and centralized actors in crypto will need to be automated and frequently made available. DeFi and smart contracts across various crypto ecosystems will continue to display their “can’t be evil” nature and CeFi needs to provide greater visibility to their operations if they wish to continue being a part of this space we love. 😤
Tweets & Memes
Someone memeing CZ with his best Elon walking into Twitter impersonation
It’s important to remember that FTX was a people failure, not a crypto failure
DeFi’s importance was once again made clear this week as DeFi > CeFi
Crypto is fundamentally unchanged & the future of permissionless assets remains bright!
Wrapping Up
As the concluding tweet from Jake Chervinsky says, “this week, we grieved. Next week, we build.” Crypto has been through numerous iterations and disastrous events throughout its 12-year history, but it always comes back stronger! 💪 At Coinstats, we’re certain that this will once again be the case and we look forward to continue building and guiding you through every step of the way.
Along that path, this week highlighted the importance of proper decentralization, the necessity of DeFi, SOL’s ability to escape this week’s events as a stronger protocol, and the needed transparency of centralized actors through Proof-of-Reserves. With all of that our focus moving forward, we’ll conclude this week’s edition of CoinStats Scoop! 🍨
As usual, CoinStats will continue to guide you through the world of crypto and DeFi. We’ll see you next week for another edition of CoinStats Scoop.
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