Weekly Crypto Digest: A Week of Wins: Ripple’s Legal Victory and the Launch of Arkham Intel Exchange

2023.07.10–2023.07.16

Dear Reader,

Welcome to the June issue of Gryphsis Academy’s weekly Crypto Digest. We bring you pivotal market trends, insights into emerging protocols, and fresh industry updates, all designed to enhance your crypto and Web3 expertise.

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Market and Sector Snapshot:

Layer 2 Overview:

The Layer 2 sector witnessed a positive week, with an overall rise in Total Value Locked. Starknet led the charge, posting a 21% increase in its 7-day TVL growth, continuing its forward momentum. A few standout protocols, including Rysk Finance, Swapsicle, Pinnako, and StarkEx, experienced the highest TVL growth over the week.

Meanwhile, zkSync has shown significant strides, surpassing Arbitrum in terms of Daily Active Addresses and Daily Transactions this week.

LSD Sector Overview:

This week, the LSD sector has shown robust growth, with the total percentage of staked ETH rising to 18%. Among the various platforms, Lido’s market share of LSDs has been steadily increasing, further cementing its prominence in the sector. However, it’s worth noting that the market share of cbETH is on a downward trend, reflecting shifts in stakeholder preference within the LSD market.

AI Sector Overview:

In the AI sector this week, we’ve seen an encouraging uptick in performance. The total market cap has increased by 4.3% over the past seven days. Leading the charge are $WALV, $ROKO, and $ARCONA, each posting significant gains. On the other end of the spectrum, $AIM, $ALBT, and $TURBO saw the most substantial declines. It’s noteworthy that $TURBO appears to be on a downward streak, finding itself among the top losers for the second week in a row.

Main Topics

Macro Overview:

Big Story:

Protocol Spotlight:

VC Funding Highlight:

Alpha Threads:

Macro Overview

This week, the stock market delivered a positive performance, with the S&P 500 and NASDAQ posting notable gains. Looking ahead, key market events include the release of the Core Retail Sales, Building Permits, Philadelphia Fed Manufacturing Index, and Existing Home Sales.

Turning to the crypto market, volatility persisted throughout the week. The thrilling news around $XRP provided a temporary boost to the market, only to be followed by a swift downturn, erasing most of the gains. Both $BTC and $ETH felt the pinch, with $ETH showing slightly stronger resilience. Notably, BTC dominance has further receded, currently hovering below the 50% mark.

Story of the Week

On-Chain Sleuthing Sparks Debate: Arkham Intelligence’s New Bounty Marketplace

Arkham Intelligence, a pioneer in blockchain intelligence, has stirred up controversy with the launch of the world’s first on-chain intelligence exchange, and the introduction of a new token, ARKM, on Binance’s Launchpad service. The platform employs a bounty mechanism enabling users to anonymously request and offer information relating to blockchain transactions, paid for with ARKM tokens. Despite intentions to curb crypto hacks by incentivizing blockchain research, the initiative has been met with backlash over privacy concerns. Critics have dubbed the service as “snitch-to-earn” or “snitching-as-a-service,” voicing apprehension over potential misuse, such as tracking whale wallets. Compounding the controversy, Arkham has faced accusations of leaking users’ email addresses who signed up for their waitlist. The platform is scheduled to go live on July 18, 2023. While the crypto community awaits the launch with bated breath, the debate on privacy versus security continues to rage on.

Arkham on Twitter: "Announcing The World's First On-Chain Intelligence ExchangeBuy and sell information on the owner of any blockchain wallet address-anonymously, via smart contract. pic.twitter.com/4xr7dLvOjp / Twitter"

Announcing The World's First On-Chain Intelligence ExchangeBuy and sell information on the owner of any blockchain wallet address-anonymously, via smart contract. pic.twitter.com/4xr7dLvOjp

Our Take

The launch of Arkham Intel Exchange has sent waves throughout the crypto community. With the power of on-chain analysis already demonstrated in various scenarios, such as spotting early opportunities through whale watching and identifying potential scams, the Intel Exchange could unlock even more potential. Its bounty mechanism could draw substantial participation. However, concerns have been raised over the potential exposure of user information, contradicting the principles of decentralization. Some critics have even suggested a governmental connection, pointing to the similarity between Arkham’s logo and the Pentagon.

The Pentagon:

Arkham CEO Miguel Morel has addressed these concerns on Twitter, stating that the email tracking system was implemented during the beta stage to reward user recommendations. He assures that, aside from communication and referral tracking, user data won’t be used for any other purposes. From our vantage point, the Intel Exchange appears to have strong product-market fit, being the first of its kind and targeting a large potential market. The concern over information leakage is a risk users will need to evaluate for themselves — don’t use it if it feels too risky, but accept the potential risk if the platform’s utility is of value. No matter what, the development of the Intel Exchange will certainly be an intriguing story to follow.

Miguel Morel | Arkham on Twitter: "On Ref LinksBecause of our upcoming launch, we've had millions of people engage with our platform and hundreds of thousands sign up. Understandably, there's been a lot of attention on our project, the majority of it positive, along with some legitimate criticisms of how we've... pic.twitter.com/0VZFchBg7h / Twitter"

On Ref LinksBecause of our upcoming launch, we've had millions of people engage with our platform and hundreds of thousands sign up. Understandably, there's been a lot of attention on our project, the majority of it positive, along with some legitimate criticisms of how we've... pic.twitter.com/0VZFchBg7h

A Regulatory Milestone: XRP Case Sheds New Light on Crypto Regulation

In a landmark ruling on July 13, 2023, U.S. District Judge Analisa Torres of the Southern District of New York handed down a mixed judgment in the long-running legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). Torres concluded that Ripple’s XRP token is not a security when it comes to programmatic sales on digital asset exchanges, a significant victory for Ripple. This decision is anticipated to provide clarity on XRP’s status and has the potential to set a precedent for the classification of digital assets in future cases.

However, the judge also granted a partial victory to the SEC by ruling that XRP is indeed a security when sold to institutional investors. This conclusion was made on the grounds that such sales meet the criteria of the Howey Test — a legal test for determining whether certain transactions can be classified as investment contracts. The ruling therefore allows the SEC to regulate these specific transactions under securities laws.

Following the announcement of the ruling, there was a swift and significant reaction in the crypto market. The price of XRP, which had been trading around $0.45, surged to $0.61 within minutes of the news. Ripple’s CEO, Brad Garlinghouse, responded positively to the court’s decision on Twitter, expressing confidence that Ripple is “on the right side of the law, and will be on the right side of history.” The mixed decision underscores the complexity and evolving nature of regulatory oversight in the digital asset space.

Ripple on Twitter: "XRP is not a security.This victory for @Ripple is a win for the entire industry and a step toward regulatory clarity in the U.S.A huge thank you to @bgarlinghouse, @chrislarsensf, and @s_alderoty for their leadership and the #XRPCommunity for their continued support. / Twitter"

XRP is not a security.This victory for @Ripple is a win for the entire industry and a step toward regulatory clarity in the U.S.A huge thank you to @bgarlinghouse, @chrislarsensf, and @s_alderoty for their leadership and the #XRPCommunity for their continued support.

Our Take

The recent ruling in the XRP case is a significant victory for the crypto community. This verdict, coming amidst a period of SEC pressure, provides a morale boost to the market and offers clear regulatory guidance for future reference. The judgment suggests that if a token is sold or distributed through an exchange or the protocol itself, rather than through private sales or OTC transactions to institutions, then it is not considered a security. This is a major development in addressing the ongoing concerns about the securities status of cryptocurrencies.

The news has significantly impacted market sentiment, with XRP rising 30% and other tokens previously considered as securities, such as SOL and ADA, also recording substantial gains. However, these prices have since experienced varying degrees of correction. For investors seeking to capitalize on this positive news, the current situation may not represent the best entry point as the initial hype appears to be subsiding. Nevertheless, it’s worth keeping an eye on whether the “not a security” narrative continues to gain traction. Given that the crypto market is largely sentiment-driven, it wouldn’t be surprising to see a news-driven rally occur again.

Weekly Protocol Pick

Welcome to our “Weekly Protocol Pick” — where we spotlight a protocol that’s making waves in the crypto space. This week, we’ve picked Aave, a DeFi blue-chip money market protocol.

This week, decentralized lending protocol Aave made significant strides as it launched its multi-collateral stablecoin, GHO, on the Ethereum mainnet. This move materialized following the approval of a governance vote by the Aave DAO, with overwhelming support from the community. Originally debuted on the Goerli testnet back in February 2023, GHO is now live on Aave V3 on Ethereum.

The stablecoin, GHO, which is backed by crypto assets such as ETH, is issued as an overcollateralized loan by the Aave protocol. This means users need to deposit crypto assets exceeding the value of the amount they intend to borrow. GHO operates via the Ethereum Facilitator smart contract system, enabling users to deposit collateral and lend out GHO, with all collateral stored in the Ethereum mainnet pool.

Source: Aave

As part of this arrangement, ‘facilitators’ approved by the DAO are granted the authority to issue GHO, with Aave V3 Ethereum platform being the first confirmed facilitator. Interestingly, all interest accrued from loans will be funneled directly to the Aave DAO treasury, which will regulate decisions such as acceptable collateral assets for GHO and risk parameters. This significant step elevates Aave’s presence in the evolving stablecoin arena and marks a significant leap towards decentralized finance’s ideal of a fully decentralized, robust stablecoin ecosystem.

Aave on Twitter: "The Aave DAO has successfully launched @GHOAave on the Ethereum Mainnet. Congrats to the Aave community on this historic moment! pic.twitter.com/Br3QGqMU8X / Twitter"

The Aave DAO has successfully launched @GHOAave on the Ethereum Mainnet. Congrats to the Aave community on this historic moment! pic.twitter.com/Br3QGqMU8X

Our Insights

Stablecoins constitute one of the largest sectors in the crypto space, boasting a market cap of $127B, which accounts for over 10% of the total crypto market cap. Moreover, the profitability associated with stablecoins is noteworthy, as evidenced by the success of Tether.

Over the years, a multitude of stablecoins have emerged and vanished, yet efforts continue to create stablecoins that strike an optimal balance between capital efficiency, stability, and decentralization. However, this quest has proven challenging due to what’s termed the “stablecoin trilemma,” a conundrum akin to the blockchain trilemma.

Aave’s $GHO serves as an example of an overcollateralized stablecoin. Such a design sacrifices some measure of capital efficiency. The GHO/crvUSD pool has already been launched on Curve, currently comprising 70% $GHO and 30% $crvUSD. This allocation indicates that, as of now, the demand for $crvUSD is somewhat higher.

From a trading perspective, the launch of $GHO could have a positive long-term impact on the price of $AAVE. Since $GHO was just launched this week, it will take time for its true market demand to materialize and grow. If this model proves to be successful, a significant inflow of fees could boost the demand for $AAVE as it can accrue a portion of these fees.

Beyond these long-term expectations, $AAVE has already been performing quite well recently. This demonstrates the inefficiencies within the crypto market, as the public has been aware of $GHO for a considerable time. This reminds us that trading news can still be profitable in the crypto market, even when the news isn’t exactly new.

VC Highlights: Top Funded Crypto Protocols This Week

Welcome to our weekly Investment Spotlight, where we shine a light on the most significant venture capital moves in the crypto space. Each week, we’ll focus on protocols that have attracted the most funding.

Sound.xyz

This week, Sound.xyz, an innovative on-chain music startup, has announced a successful $20 million Series A funding round led by Andreessen Horowitz and featuring celebrity participants like Snoop Dogg and OneDirection’s Ryan Tedder. Since its beta launch in 2022, the platform has empowered artists to sell music directly to fans as NFTs, generating $5.5 million in revenue for its musicians from 1,600 songs. As Sound.xyz opens to the public, it’s expected to disrupt traditional music streaming platforms by offering artists full ownership and immediate payment for their work. The new funds will be instrumental in bolstering the company’s artist relations, engineering, and marketing efforts.

sound.xyz (🎧,🎧) on Twitter: "It's time.We're now open to all artists!Sound was built to create a new model for music and help artists make a living.Today it's open to all, and we've raised a $20m Series A to turn this into a reality.Artists, here's how to get started 👇 pic.twitter.com/5n1mn5UyhN / Twitter"

It's time.We're now open to all artists!Sound was built to create a new model for music and help artists make a living.Today it's open to all, and we've raised a $20m Series A to turn this into a reality.Artists, here's how to get started 👇 pic.twitter.com/5n1mn5UyhN

Alluvial

On July 11, Alluvial, the firm behind the Liquid Collective liquid staking protocol, has secured $12 million in a Series A funding round, led by Ethereal Ventures and Variant, with contributions from several prominent investors. The raised capital is earmarked for the expansion of their high-level liquid staking solution that bolsters liquidity and capital efficiency by offering on-chain receipts of staked positions on proof-of-stake networks. Alluvial CEO, Mara Schmiedt, is optimistic that this funding will accelerate the team expansion and promote mass adoption of Liquid Collective, effectively bridging the gap between DeFi and traditional finance.

Alluvial on Twitter: "We're proud to announce our $12m Series A round, co-led by @etherealvc and @variantfund to enable mainstream adoption of liquid staking on a global scale by furthering @liquid_col: the first enterprise-grade liquid staking solution in the market.https://t.co/1LVIo6d2a7 / Twitter"

We're proud to announce our $12m Series A round, co-led by @etherealvc and @variantfund to enable mainstream adoption of liquid staking on a global scale by furthering @liquid_col: the first enterprise-grade liquid staking solution in the market.https://t.co/1LVIo6d2a7

Protocol News

EigenLayer restaking cap increased.

Rodeo Finance post exploit.

Ribbon Finance proposal to merge with Aevo.

Mantle introduced Manta Pacific.

rwa.xyz launched tokenized treasuries analytics.

Curve proposal to collect fees from tricrypto-ng pools.

BAYC released teaser for licensing.

Starknet v0.12.0 deployed on Goeril testnet.

Industry Updates

Google Play allows uses to earn crypto.

Celsius sues Stakehound.

Dubai crypto regulator suspends BitOasis’s license.

Hong Kong government will introduce stablecoin regulation.

Argentina’s first BTC futures contract lived.

Celsius’s founder Alex Mashinsky arrested.

Alpha Threads

Alpha is abundant on Crypto Twitter, but navigating thousands of threads in Twitter can be hard. Each week, we spend serveral hours researching, handpick threads packed with insights, and curate a list of weekly selection for you. Let’s dive in!

Minty on Twitter: "In Crypto, many lose money because they don't understand market cycles. Let's look at how market cycles work and how you can best position yourself in case of a bull market. 🧵 pic.twitter.com/7eMQ2vecyH / Twitter"

In Crypto, many lose money because they don't understand market cycles. Let's look at how market cycles work and how you can best position yourself in case of a bull market. 🧵 pic.twitter.com/7eMQ2vecyH

Viktor DeFi 🛡🦇🔊 on Twitter: "The on-chain options market is grossly underrated!With the recent increasing volume of $BTC & $ETH options, this trend is set to peak as the bull market sets in.Here's a new options protocol that could disrupt the market (plus airdrop hint) 🧵👇 pic.twitter.com/UX7nxRN2Az / Twitter"

The on-chain options market is grossly underrated!With the recent increasing volume of $BTC & $ETH options, this trend is set to peak as the bull market sets in.Here's a new options protocol that could disrupt the market (plus airdrop hint) 🧵👇 pic.twitter.com/UX7nxRN2Az

DeFI Saint 🦇🔊 on Twitter: "Few days ago before $XRP pump, over $50M stables were deployed to Uni V3, with over $13M flowing to $SHIB, $DOGE, & $PEPE 2.0You could have spotted this earlier, but you missed it.Only one tool that lets you do that easily.Here's a normie's guide to this tool: pic.twitter.com/6IQ8syRe47 / Twitter"

Few days ago before $XRP pump, over $50M stables were deployed to Uni V3, with over $13M flowing to $SHIB, $DOGE, & $PEPE 2.0You could have spotted this earlier, but you missed it.Only one tool that lets you do that easily.Here's a normie's guide to this tool: pic.twitter.com/6IQ8syRe47

Cyril - DeFi on Twitter: "Decentralized applications face roadblocks like scalability and user experience@VenomFoundation aims to solve that for #crypto projectsThey have recently launched $1 billion venture funds to invest in Web 3.Here's everything you need to know 🧵 👇 pic.twitter.com/J5PJLNQts2 / Twitter"

Decentralized applications face roadblocks like scalability and user experience@VenomFoundation aims to solve that for #crypto projectsThey have recently launched $1 billion venture funds to invest in Web 3.Here's everything you need to know 🧵 👇 pic.twitter.com/J5PJLNQts2

NFT God on Twitter: "The 21 biggest lies fed to you in Web 3:1. "I'm an Ordinals expert. Always been a big believer in Bitcoin"2. Floor price doesn't matter3. It's not a rug pull it's a meme coin(Click to continue): pic.twitter.com/ZJw4gKoWec / Twitter"

The 21 biggest lies fed to you in Web 3:1. "I'm an Ordinals expert. Always been a big believer in Bitcoin"2. Floor price doesn't matter3. It's not a rug pull it's a meme coin(Click to continue): pic.twitter.com/ZJw4gKoWec

Upcoming Events

That’s it for this week. Thank you for reading this week’s edition of our Gryphsis Academy Newsletter. We hope you found our insights helpful and our updates informative.

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This newsletter is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research, and consult an independent financial, tax, or legal advisor before making any investment decisions. The past performance of any asset is not indicative of future results.