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Eterna's Insights - January 2023

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Developers Flooding into Crypto

Building and innovation is accelerating rapidly. Both Alchemy and Electric Capital released their well-regarded developer reports, which highlighted that despite the turbulence in the markets, developer activity has significantly increased in 2022. Full time developer numbers saw an 8% YoY increase with more than 60,000 new developers joining the industry. While the crypto network value is back to approximately January 2018 levels (the previous crypto winter), the current monthly active developers has increased 297% since then. Furthermore, major ecosystems beyond Bitcoin and Ethereum are emerging, with 72% of monthly active developers now working outside of these ecosystems. Solana, Near, and Polygon have grown 40% YoY and have 500+ total monthly active developers. If you would like to dive deeper into these reports, please find the links below.

BigTech Adoption

Shopify expanded its NFT offering for its merchants by allowing them to begin designing, minting, and selling NFTs. Through using the Venly Shopify merchant app, merchants can now sell NFTs with minimal technical knowledge. Furthermore, it was announced that Ava Labs (developer of the layer 1 Avalanche) will be offering crypto infrastructure through Amazon Web Services (AWS). Through the partnership, AWS will support Avalanche infrastructure and its dApp ecosystem, including one-click node deployment through the AWS marketplace. It has also been reported that Amazon will be launching a digital assets enterprise, with an NFT initiative expected in the spring. Details are yet to be released.

The UK for the Win

London was recently crowned the world’s leading crypto hub according to a study by Recap. The report stated that London has the most people employed in the industry, is home to over 800 crypto-based companies, and hosted the second-highest number of cryptocurrency-related events in 2022. London’s lead aligns with Rishi Sunak’s goal to establish the UK as the world’s crypto hub. The push to achieve this goal has continued over the month, with five UK associations forming a crypto alliance to help steer digital asset regulation, called the UK forum for Digital Currencies. The members include the City of London Corporation, Digital Pound Foundation, The Payments Association and lobby groups, TheCityUK and UK Finance. According to a statement from the group, their goal is to help further the UK’s ambition to be a crypto hub. As such, it plans to mitigate actual risks plus alleviate the perceived risks of crypto through education.

SBF vs The US Government

The FTX saga has continued to be one of the headline stories over the month. Sam Bankman-Fried (SBF) pleaded not guilty to all eight counts of US criminal charges. The US government seized $697m in assets from SBF, which comprised of 56m Robinhood shares worth close to $560m at the time of writing and further $171m in cash. Lawyers of SBF have argued that he should be allowed access to assets held by FTX, claiming that there is no evidence he’s responsible for previous alleged unauthorized transactions. On a more positive note, FTX has found $5bn in liquid assets according to FTX attorney Andy Deitderich. These do not include assets seized by the Securities Commission of the Bahamas. Furthermore, John J. Ray III, the new head of FTX, is exploring the possibility of restarting FTX according to an interview he gave the Wall Street Journal.

The DCG Quandary

The Digital Currency Group (DCG) has continued to be under scrutiny particularly around its subsidiary Genesis Global Trading. Last month, Genesis Global Trading was forced to halt withdrawals after being severely impacted by 2022’s biggest industry collapses. This month Genesis officially filed for Chapter 11 Bankruptcy protection in New York. DCG’s debt to Genesis include loans of $575m due May 2023 and a $1.1bn promissory note due June 2032. It was also discovered that Genesis is FTX’s largest unsecured creditor with $226m in claims. Overall, Genesis has claimed $5.1bn in liabilities in its first-day bankruptcy filing. Genesis has reached an agreement in principle with its primary creditors, including Gemini. The restructuring agreement is still being finalized but will either result in a sale of Genesis or a turnover of its equity to creditors.

International News

The EU has once again delayed the final vote on the Market in Crypto Assets Bill (MiCA), the long-awaited EU crypto regulation. The reasoning for the delay is due to technical issues in translating the document into the 24 official languages of the EU. The final vote is now expected in April. The National Australia Bank (NAB) created a stablecoin called AUDN. It is expected to launch on the layer 1’s Ethereum and Algorand mid-2023 and intends to allow customers to settle transactions on blockchain technology in real time using Australian Dollars. Other potential use cases include carbon credit trading, overseas money transfers, and repurchase agreements. NAB is the second major Australian bank to create a stablecoin following the Australian and New Zealand Banking Group.


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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