Markets wrapped

This Week in Crypto Wrapped: What is Off The Chain

3 min read

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Even though most investors would agree this week was fairly tragic when it came to market performance (sideways only) there was still plenty of good news to be found. For those of you who weren’t tuned in, the past seven days have been monumental for the blockchain industry and not just because of The Merge.

Shitloads of money piled into the cryptosphere from all directions and exciting new figures from Chainalysis pointed to some light on the horizon. Solana-based NFTs firmly bucked the NFT bear market and Web3 music got a $10M nudge in the right direction.

First let’s kick this weekly wrap up off with a look at where businesses put their money this week.

This week: Biggest market movers

From token platforms to VC funds, all manner of investments have ploughed into Web3. The most recent highlight being a mammoth US$1 billion fundraise by a UK-based firm.

Among the most recent fundraises making headlines, these include:

  • US$50 million by crypto market maker Portofino to support high-frequency traders;
  • US$30 million by Diamond Standard, a blockchain startup tokenising diamonds;
  • US$15 million in seed capital by Magna, a token management platform; and
  • US$4 million by Sherlock, a crypto auditing and security platform.

Don’t worry, people still like crypto

In an exciting revelation, Chainalysis dropped their 2022 Global Adoption Index which looked at 154 different countries to analyse where investors are adopting digital assets the most.

The Index found that emerging markets in South East Asia, Eastern Europe and Latin America have been the primary drivers in global crypto adoption, with Vietnam, the Philippines, Ukraine and India leading the charge in ‘grassroots’ adoption.

Governments around the world also piled into their own experiments with blockchain technology. Norway released the open-source version of its code for the country’s Central Bank Digital Currency (CBDC) which it revealed will be built on the Ethereum network.

The Reserve Bank of India started chatting with domestic fintech companies and state-run banks concerning its own CBDC trial program. Meanwhile, Nigeria began a conversation with Binance about implementing a ‘crypto-friendly zone’. A few weeks earlier, the country’s CBDC, eNaira entered phase two of its deployment program.

Meanwhile the US government chose to go the other way, opting instead to trial a payment system called FedNow that will allegedly “reduce the need for a CBDC”.

This week in crypto: Oh yeah, The Merge happened

In what’s being called the “biggest upgrade of any blockchain ever”, at least by Lachlan Feeney, founder and CEO of Labrys, the Ethereum network finally made its transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS).

The network is now 99% energy efficient with multiple reports claiming its new environmentally-friendly status will make it more attractive to institutional investors.

Now that we’re officially living in a post-Merge world, we get to look forward to the Surge, the Verge, the Purge and finally the Splurge.

The Surge will see an increased number of Layer-2 scaling solutions jump onto the network, while the Verge will get rid of the pesky storage (approx 1TB of data) requirements that are necessary to be a validator, making it easier for more people to secure the network. The Purge reduces data requirements even further while the Splurge is “all of the other fun stuff” according to Vitalik.

But what about the price action?

Unfortunately this week wasn’t exactly what you’d call a great one for crypto investors. On Monday, Bitcoin dipped below US$19,000 for the first time in 2 months and even though The Merge went off without a hitch, Ethereum is down 23% for the month.

At the time of writing Bitcoin (BTC) is changing hands for US$19,795 up 2.5% for the week and Ethereum (ETH) is trading at US$1,475, down a brutal 10% in the last 7 days.

But it wasn’t just crypto that felt the heat, the entirety of global markets experienced a fairly devastating sell-off as investor confidence was tested by news of increased inflation, impending rate hikes and growing hostility from Russia.

We also finally got to see who was right on the great ‘up vs. down’ post-Merge debate. Turns out ETH bulls were definitely overexcited, as the second-largest cryptocurrency experienced a significant tumble in price immediately following a successful Merge.

This is most likely due to the fact that many of the stated benefits, namely reduced transactions fees and higher network speeds won’t kick in until the Shanghai upgrade, which Ethereum developer Marius Van Der Wijden says is scheduled tentatively for the next six to nine months.

Anyways, that’s all the important stuff that happened in the increasingly wild world of crypto and Web3 this week. Enjoy your weekend from the crew here at The Chainsaw.