Weekly Attestations #1

Without further ado, welcome to ‘Weekly Attestation’, a crypto newsletter that’ll appear in your inbox Monday nights and will be archived on our website shortly thereafter. It'll cover the topics that we look at internally using the sources we trust, spanning from regulation to token specific news to the filling in between. As an aside, since inception, ‘Weekly Attestations’ (previously known as “the Plug”), has been a lighthearted way that we internally consume news + keep up to date, so I hope you enjoy reading it as much as I do writing it. 

In tonight's installment; I break down what Biden’s latest crypto spat could mean, we take a bird’s-eye view to Elon’s twitter plans + other Blockchain IRL use cases, Eth updates, and more!

“At the end of the game the king and the pawn go back in the same box” - Italian Proverb

Token Specific News

Moody’s Is Working on Scoring System for Crypto Stablecoins

• Moody's Corporation, a risk assessment firm, is rumored to be creating a rating system for stablecoins, which will analyze up to 20 digital assets. The system, still in the early stages of development, will assess the quality of stablecoin reserve attestations, though it will not be considered an official credit rating. Third parties usually verify that a company's claims are accurate and validate that stablecoins are backed 1:1 by their reserves. Stablecoin reserves have come under increased scrutiny recently due to the bear market and the collapse of crypto firms in 2022. In May, the Terra ecosystem suffered when its algorithmic stablecoin, TerraUSD (UST), lost its dollar peg, plummeting to around $0.30.

Be Careful Following the ARK to Sanctity; ARK BTC Targets Redefine Bull

• Cathie Wood was once one of Wall Street’s favorite tech/growth analysts. She seemingly couldn’t miss and her ETFs were through the roof as software valuations broke their glass ceilings. Skip ahead a few months, the market downturn compounded with some poor investment choices has put her directly on the hot seat catching falling knife after knife. Her most recent hot take: bitcoin prices will hit $1 million by 2030, a price prediction that will make even the diehard DeFi investor cower in his/her boots. ARK notes, fundamentals are sound despite a turbulent 2022. “Contagion caused by centralized counterparties has elevated Bitcoin’s value propositions: decentralization, auditability, and transparency,” writes Cathie Wood and team. ARK backs up this claim by pointing to a higher hash rate, long-term holder supply, and addresses with a non-zero balance compared to the prior downturns. The note comes in their “Big Ideas 2023 Report”, released shortly after the U.S. Securities and Exchange Commission rejected the fund (and 21Shares’s) filed spot bitcoin exchange-traded fund (ETF) application – for the second time in the wake of GBTC ETF struggles.

Celsius Continues to Plummet

• Bankrupt crypto lender Celsius Network used new customer funds to pay for other customers’ withdrawals, the definition of a Ponzi scheme, an independent examiner for the U.S. Bankruptcy Court in New York said i. “In every key respect – from how Celsius described its contract with its customers to the risks it took with their crypto assets –how Celsius ran its business differed significantly from what Celsius told its customers,” the independent examiner wrote. This news was released shortly after Celsius Hinted at New Token Launch as Part of Restructuring Plan and declined up to $67mm for its assets to repay creditors.

Gains Network Gaining Traction on Arbitrum; DEX volume crosses $1.5B

• The transaction activity on the Polygon network has increased in part due to the Gains Network DEX, which was released on the network and later deployed on the Arbitrum blockchain. The Gains Network DEX allows traders to trade financial derivatives, including crypto, US stocks, and indices, through smart contracts. Stakers can also earn up to 10% interest on their GNS tokens. The DEX provides an opportunity for global traders to trade US-listed instruments without relying on banks and has processed over $25 million in trading volume. A recent trading contest with rewards totaling $100,000 may have contributed to the spike in trading volume.
  

Ethereum's Zhejiang public testnet, launched on Feb. 1, 2023, at 15:00 UTC, as the first public testnet to allow withdrawals. The withdrawal functionality will trigger six days later at epoch 1350 on both the execution and consensus layers allowing validators to test partial and full withdrawals. Users can also attempt to convert 0x00 credentials to 0x01 and set a withdrawal address

• Ethereum will undergo its first major upgrade, known as "Shanghai," in March since its transition to proof-of-stake (PoS) in September. The upgrade will unlock 16 million staked ether (ETH) for validators and also reduce gas fees for developers. The main focus of the upgrade is Ethereum Improvement Proposal-4895 (EIP-4895), which allows validators to withdraw the staked ETH and cash out rewards earned over the past two years. With EIP-4895, the full functionality of the PoS blockchain will finally come to life, allowing stakers to have control over their funds.
  

Elon Musk looks back to his PayPal days, developing an in-app payments function that will first support fiat (and could be used for crypto transactions)

• Elon Musk wants to turn Twitter into a comprehensive "everything app" with messaging, commerce, and payments capabilities. He's seeking VC funding to hire engineers and develop payment software. Twitter aims to generate $1.3B in payment revenue by 2028 as it seeks alternative sources of income after its ad business struggled. The plan is to secure all necessary regulations within a year before expanding internationally. Twitter has a massive user base of 240 million daily users, far outpacing the number of users on Jack Dorsey's Cash App / when he was CEO, foreshadowing a massive TAM should the platform make the switch to crypto. See similar: Jack Dorsey-backed Web3 App Aims To Disrupt Twitter
  

Blockchain IRL

• The California DMV is testing the use of blockchain technology to digitalize vehicle titles. They're working with Tezos blockchain and Oxhead Alpha to create a private blockchain called a "shadow ledger," which will serve as a blockchain copy of the agency's database. A proof-of-concept has been completed successfully, using smart contracts to secure the transfer of vehicle titles and improve compliance and processing time. The DMV aims to have the shadow ledger up and running in the next three months and also plans to introduce digital wallet apps for NFT-based vehicle titles, with the DMV as the mediator.
• Lowes is using blockchain technology in "Project Unlock" to combat retail theft by inserting RFID chips into power tools and using IoT sensors for activation at point of purchase. Transactions are recorded on the Ethereum network for transparency and tamper-proof record keeping. Each physical product also has a corresponding NFT which changes status upon purchase.
• BMW is partnering with BNB blockchain and Coinweb to use blockchain technology to improve efficiency and create a new customer loyalty program. The project will be split into two phases: phase 1 will automate manual processes and streamline financing services, while phase 2 will create a blockchain-based rewards program to incentivize customers.
• Amazon retail is entering the digital assets market with a planned NFT initiative. The launch is expected to occur in the spring with an announcement planned for April. Amazon is exploring Layer 1 blockchains, developers, digital asset exchanges, and particularly blockchain gaming startups. One possible application is to encourage Amazon customers to play crypto games and earn free NFTs. The digital assets operation will be part of the broader Amazon unit and not AWS.

Regulation

To regulate or not to regulate… wait, who’s in charge here?

• Four Biden administration officials have called for faster creation of a national crypto regulation framework in a letter to lawmakers. The White House blamed Congress for delays and suggested measures to tackle fraud in the crypto industry, including empowering regulatory bodies, improving transparency, supporting law enforcement, increasing penalties for financial crimes, and regulating stablecoins. The letter appears to target the newly formed House Republican Subcommittee on Digital Assets, Financial Technology and Inclusion. The statement opened with a brief summary of “a tough year” for crypto, referencing the collapse of Luna and FTX but noting there did not appear to be any contagion from the crypto industry to the broader financial ecosystem. While MJL Capital feels strongly that recent collapses (and resulting domino effect) has removed certain bad actors and is a net-positive to the ecosystem, the strife has created short-term headwinds. Perhaps the sharpest double-edge sword is the seemingly unavoidable incoming regulation, strongly juxtaposing true decentralized aficionados with the less faithful. While we believe that regulation will generally be a tailwind for the ecosystem (especially in terms of motivating the dubious adopters), we will be watching closely to see any counter cyclical regulatory moves.

In an unanticipated legal maneuver, Sen. Ted Cruz (R-TX) has proposed requiring vendors on Capitol Hill to accept crypto as payment. 

• Ted Cruz has introduced a resolution that would require food service contractors and vending machine operators in the Capitol complex in Washington D.C. to accept cryptocurrencies as payment. Cruz is a known supporter of the cryptocurrency industry, specifically the crypto mining industry in Texas. He is also an advocate for increased education in cryptocurrency for members of Congress and has even disclosed his own cryptocurrency holdings. If the resolution from the Texas senator gets the green light, all the politicians in Congress and guests visiting Capitol Hill can treat themselves to a salty snack using Bitcoin while they burn the midnight oil. 
  

Other Domestic Regulation Updates

• Argo Blockchain is facing a class-action lawsuit for alleged misleading statements made during the initial public offering of its U.S. unit. The lawsuit claims that the company failed to disclose important information such as its capital constraints, electricity costs, and network difficulties, potentially giving an overstated representation of its business viability
• An attempt by defunct crypto trading firm Alameda Research to regain $446 million it transferred in loan repayments to bankrupt Voyager Digital has been rejected by both the creditors’ committee and Voyager itself
• Moody’s Corp. Working on Stablecoin Scoring Project
• U.S. Justice, Treasury Departments Charge Bitzlato with Money Laundering 
• US Federal Reserve Board Makes Policy Statement Limiting Banks’ Crypto Activities
• White House Publishes “Roadmap to Mitigate Cryptocurrencies’ Risks”
  

Other International Regulation Updates

• Bithumb's offices were raided on Thursday as part of an investigation into alleged price manipulation of an unknown coin listed on the exchange. The raid occurred while Bithumb, one of only five crypto exchanges permitted to operate in South Korea after a crackdown in 2021, is also under investigation by South Korean tax authorities
• See similar: South Korea's Ministry of Justice intends to monitor cryptocurrency transactions to prevent money laundering, according to a report released on Thursday. The ministry will first use third-party software to track transaction history, gather information on transactions and verify the source of funds. The Ministry aims to build its own system, which will be operational in the latter half of the year
• FBI Confirms North Korean Hacker Group as Culprit in $100M Heist 
• EU Committee Votes to Impose Backing Rules on Banks’ Crypto Holdings
• German lender DekaBank is developing a digital asset offering for institutional clients. Like Societe Generale and Citibank, Switzerland's Metaco will provide custodial services for the platform pending regulatory approval
• Hong Kong could enact its stablecoin licensing regime as early as this year, which would ban algorithmic stablecoins such as terraUSD. 
• UK Crypto Proposal Would Tighten Screws on Crypto Even Harder

Pain & Gain

Misc. Pain

• ETFlop: First NFT ETF set to wind down after failing to take hold. The product, which went live at the end of 2021, failed to catch fire, according to its founders. Its assets will be liquidated later this month.
• Microsoft announced it will be shutting down AltspaceVR on March 10. It was a metaverse for social events like clubbing, fashion shows, church meetings, stand-up comedy, etc. Instead, Microsoft will go all-in on Mesh - a business-oriented metaverse.
• Celsius Was Using QuickBooks for Its Accounting—Just Like FTX
• Kraken is shuttering its office in Abu Dhabi as part of a regional pullback
• Why Proof of Innocence Won’t Work for US Tornado Cash Users
• Grayscale Slapped With Another GBTC Lawsuit – This Time From Osprey
  

Misc. Gain

• SWOOSH Studio, a new Web3 platform, was just launched by Nike. Some lucky members will get a chance to collaborate with Nike designers to build a 1:1 new virtual creation of the Air Force 1’s
• US Air Force Pumps $30M Into Blockchain for Supply Chains
• BNY Mellon Names Digital Assets CEO
• AVAX surges on Thursday as the protocol launched its network update “Banff 8.”
• Binance, Mastercard issuing prepaid card in Brazil as regional crypto interest grows

The Week in Charts

• Bitcoin (BTC) experienced a decrease in momentum towards the end of the week, resulting in a reversal of its earlier gains. It saw a 5.4% drop from its weekly high, due to the influence of bearish regular divergence on price action. Despite this, the interim resistance target remains at $24.2k, with a breach of $25,212 as a technical sign that the bear thesis is incorrect. Additionally, BTC is forming a golden cross (50-day moving average crossing above the 200-day moving average), which has previously preceded bull runs in 2020 and 2021. Historically, after a golden cross print, BTC has experienced a 22% increase within 60 days.

• Ethereum (ETH) was unable to regain its $1.7k level last week and currently trades slightly lower at $1,632, where it faces resistance from investors. Despite a similar bearish regular divergence to BTC, ETH has not yet seen a significant impact on its price. ETH has gained 2.5% from its support at 0.0679, potentially due to traders shifting their focus towards ETH as they anticipate the Shanghai event in March.

• Global crypto market cap ($1.01T), has declined 5.4% from its 2023 high, following the trend of the broader stock market. The bearish regular divergence has not yet fully manifested in the daily index, as it rebounded from its $1T resistance level.

• The aggregate funding rates for Bitcoin (BTC) and Ethereum (ETH) continue to be positive at +0.007%, reflecting a bullish sentiment among traders. Open interest, or the total number of outstanding derivative contracts, has reached new highs since November 2022. The open interest for BTC, denominated in USD, has risen to $9.97B, while Ethereum's has increased to $5.5B.

Top Gainers (Market Cap > $50M)

• Augur +50.40%
• Ren +13.35%
• OMG Network +12.90%
• Power Ledger +12.60%
• Huobi Token +10.45%

Top Fundamental Trends

Revenue (7d trend)

• The Graph (+552.7%)
• Polygon (+147.7%)
• Nexus Mutual (+132.6%)
• 1inch (+130.8%)
• IDEX (+116.8%)

Earnings (7d trend)

• 1inch (+234.8%)
• Trader Joe (+234.8%)
• Ethereum (+179.9%)
• dYdX (+119.1%)
• Mycelium (+107.7%)