Happy Friday Everyone! š
Thereās no telling when Crypto Winter will be over but the weather for crypto prices over the last week has been bright & sunny.
Weāre also seeing signs of continued investments in the space as compressed valuations attract money from unusual sources.
One example is Christieāsāthe auction houseāwhich launched its own venture capital arm that will be investing in crypto and Web3 companies.
And despite the rumors, the VC funds are still out thereātheyāre just pickier.
Blockchain security Halborn represents just one of many crypto startups that have managed to raise capital despite the downturn. The firm raised $90M this week.
Of course, it wouldnāt be a complete newsletter without at least a mention of the latest on Three Arrows Capital. Court documents this week revealed crypto lender Genesis lent $2.4B to the now defunct hedge fund.
Yikes!
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Solana (CRYPTO: SOL) is gaining ground
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Polygon (CRYPTO: MATIC) launches new Ethereum (CRYPTO: ETH) scaling solution
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The death of the margin call?
1. Solana is gaining ground
Weāve noted several times in this newsletter that we are keeping an eye on the projects that keep building amid the Crypto Winter.
One such project has been Solana.Ā
The blockchain has been showing consistent growth in its user base throughout the bear market. In fact, itās the only major layer-1 to do so.
New Daily Addresses are indicators of growth and adoption. This year Solana has grown its new network participants by nearly 60%.
For comparison, rivals Ethereum and BNB Chain, have watched their new daily addresses figures tumble by 51.8% and 17.9%, respectively.
The increase in users hasnāt necessarily translated into inflows, but as weāve said before, the name of the game in this market is toĀ keep building.
Solana is doing that.
2. Polygon launches new Ethereum scaling solution
Polygon zkEVM (zero-knowledge Ethereum Virtual Machine) promises to deliver the āHoly Grailā of Web3 infrastructure: scalability, security, and Ethereum compatibility.
Itās the first scaling solution to use zero-knowledge proofs which cut days-long validity processes down to minutes.
The Polygon team estimates ekEVM will reduce current layer-1 Ethereum network costs by ~90% while not just maintaining the blockchainās security, but also significantly increasing its throughput capabilities.
The goal for throughput is ~2,000 TPS (transactions per second), which would one-up the capabilities of establishment processors like Visa, who process ~1,700 TPS.
The zkEVM is set for mainnet launch in early 2023 (after a run on the public testnet later this summer).
Polygonās token, $MATIC, is up nearly 100% this month (above).
3. The death of the margin call?
Sam Bankman-Friedās FTX (CRYPTO: FTT)Ā is looking to shake up a 40-year-old process in the US derivatives markets.
The crypto giant is seeking regulatory approval from the US Commodity Futures Trading Commission (CFTC) to offer Bitcoin (CRYPTO: BTC) futures that would render both margin calls and brokers obsolete.
At the heart of the suggested processāand the proposed replacement for margin callsālies the concept of automatic liquidation.
In a nutshell: using a 24/7/365 monitoring system, an investorās position would be automatically unwound accordingly if margin falls below a pre-determined level.
While this could protect investors from overnight/off-hours wipeouts that have become commonplace due to cryptoās extremely volatile nature, critics say it would eliminate the ābreathing roomā provided by margin calls.
Given the implications of the proposalāwhich would affect not only investors but also farmers hedging against price fluctuations and other such market participantsāthe CFTC is not likely to arrive at its decision until next year.
In any case, Iām staying away from crypto derivatives. Leverage and crypto are like Jim Cramer and stock-pickingāthe combination can very often lead to disaster (just ask 3AC).
Ā
Disclaimer: Not financial advice