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Eterna's Insights - February 2024

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Key Takeaways:

  • Demand for Spot Bitcoin ETFs is leading to a surge in price

  • The Restaking narrative is gaining significant momentum

  • Telegram will distribute 50% of ad-generated revenue to channel owners

Portfolio Spotlight: Superfluid announced their strategic funding round and the launch of Distribution Pools


ETFs Paving The Way

The past month has marked an extraordinary period for Bitcoin, coming close to reaching a new all-time high at the time of writing. This surge has been fuelled largely by the demand for Spot BTC ETFs. The nine newly introduced BTC ETFs have exceeded 300,000 BTC in holdings in just under two months. A significant highlight was a record-breaking daily inflow of $673m, spearheaded by BlackRock's ETF with $612m. To put these achievements into perspective, these new ETFs now hold close to 1.5% of the total Bitcoin supply, which is capped at 21 million BTC. This surge has prompted major financial institutions, including Bank of America’s Merrill Lynch and Wells Fargo, to begin offering Bitcoin ETF products to their clients, signalling a significant shift in the financial landscape towards embracing Bitcoin.

The anticipation around a potential Spot Ethereum ETF has been mounting, especially following the success of the Spot BTC ETF. A range of leading financial institutions, including BlackRock, Fidelity, Ark, 21Shares, Grayscale, VanEck, Invesco, Galaxy, and most recently Franklin Templeton, have submitted applications to the SEC for approval. Despite the flurry of applications, the SEC has yet to greenlight an Ethereum ETF, a move that industry experts had anticipated. JP Morgan analysts currently estimate the odds of such an approval happening before May at below 50%.

The Restaking Narrative

Over the past month, one of the standout narratives has been the burgeoning interest in Restaking, significantly propelled by Eigenlayer. Eigenlayer, a provider of restaking and cross-chain security solutions on Ethereum, has experienced exponential growth, quickly rising to become the fifth-largest protocol in the decentralised finance (DeFi) landscape. This impressive ascent was catalysed by an impressive influx of $4.3 billion, following the strategic decision to eliminate its staking cap, thus fostering organic growth.

Eigenlayer's success has paved the way for the emergence of new platforms offering Liquid Restaking Tokens (LRTs). These tokens, which are developed atop Eigenlayer's infrastructure, act as intermediaries between users and Eigenlayer. Essentially, these platforms redelegate user deposits to Eigenlayer, in return, issuing novel LRTs – enabling users to continue engaging in trading activities even while their deposits are committed to Restaking. The LRT market has witnessed substantial growth, with the total value locked (TVL) skyrocketing from $100 million in December to an impressive $5 billion by the end of February. The existing leading players in this space include, Puffer Finance, and Renzo.

New Platform Launches

Telegram, the messaging application with 800m monthly active users, revealed the upcoming launch of its ad platform next month, designed to financially reward channel owners. Utilising Toncoin on the TON blockchain, Telegram will distribute 50% of ad-generated revenue to channel owners, heralding a new era of content monetisation. Despite Telegram channels amassing one trillion views monthly, only a fraction has been monetised. Starting in March, the Telegram Ad Platform will be available in nearly 100 countries. The initiative aims to foster a symbiotic relationship between content creators and the platform, encouraging the use of Toncoin for transactions. Following the announcement, the value of the TON token surged by 40%.

VanEck is advancing its foray into the cryptocurrency space by unveiling its latest digital asset management platform and NFT marketplace, dubbed SegMint. This innovative platform introduces the "Lock & Key" model, a unique approach designed to enable users to safely share access and ownership of assets while maintaining control. The essence of the "Lock & Key" concept allows users to distribute keys to a secure vault, simplifying the process of sharing ownership and access to self-custodied assets. This strategic move by VanEck represents a significant leap forward in ensuring the secure and efficient management of digital assets and NFTs.

Sports x Blockchain

Paris Saint-Germain (PSG) became the first major football club to serve as a blockchain protocol validator, specifically for the fan token blockchain Chiliz. PSG plans to use the revenue generated from this role to repurchase PSG tokens, aiming to foster a self-sustaining digital economy that benefits both the club and its fan base. The Chiliz blockchain powers Socios, a platform that issues and manages fan tokens for over 150 professional football clubs and sports entities. PSG launched its own fan token on Chiliz in September 2018. Additionally, Dapper Labs' NFL All Day brand released promotional NFT packs during the NFL playoffs and Super Bowl, with one NFT featuring Tom Brady selling for over $40,000 and another showcasing Aaron Rodgers fetching $34,000.

Regulation Around Stablecoins Is Upon Us

The UK is poised to advance its cryptocurrency regulation efforts within the year, focusing on stablecoins and crypto staking services. Economic Secretary to the Treasury, Bim Afolami, emphasised the government's dedication to fast-tracking this legislation, aiming for completion in the next six months. This announcement, made at a Coinbase event in London, aligns with previous statements from the Bank of England and the Financial Conduct Authority about a coordinated approach to crypto oversight. The timeline for stablecoin rules indicated a consultation on final rules by mid-2024 and implementation of the stablecoin regime by 2025.

Hong Kong is bolstering its position as a leading crypto hub in Asia with the introduction of a regulatory sandbox for stablecoin issuers. This sandbox will allow companies to pilot stablecoin projects, refine business models, and enhance investor protection and risk management in a secure setting. This move follows the Hong Kong Monetary Authority and the Financial Services and the Treasury Bureau's consultation on stablecoin licensing requirements launched last December. Additionally, Hong Kong's Securities and Futures Commission has mandated crypto trading platforms to apply for licenses by the end of February or cease operations by May.

Eterna Portfolio Company Spotlight:

Superfluid announced their strategic funding round and the launch of Distribution Pools

Superfluid, an Ethereum-based token streaming protocol that enables real-time crypto transfers, announced their recent strategic round which was led by Fabric Ventures, with participation from Multicoin Capital, Circle Ventures, Safe Foundation, The LAO, among others. Superfluid also announced the launch of its “Distribution Pools” which enable the creation of a pool of funds that can be distributed to multiple recipients. “From a sender’s point of view, streaming to a distribution pool is like streaming to a single user,” Francesco Renzi, Co-Founder and CEO of Superfluid said. “This single transaction has the same gas cost, whatever the number of recipients. This means developers can leverage Superfluid to build streaming smart contracts that can scale to millions of users while having totally predictable gas costs.” The team has secured some high-profile clients, including ENS DAO and Optimism where they are powering their grants communities.


Disclaimer: this newsletter was put together for informational purposes only based on our review and analysis. This should not be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment or engage in any transaction.

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