Crypto Fundamentals #027

🌞 Jane Street and Jump, two of the largest crypto market makers, reduce US operations

As regulatory scrutiny continues to ramp up from the US, news broke around top crypto market makers Jane Street and Jump scaling back US operations, notching another win for the SEC in its attempt to rein in the crypto ecosystem.

Per Bloomberg, Jane Street is actually considering scaling down the scope of its global crypto operations. The lack of regulatory clarity associated with digital assets has apparently made it difficult for the company to meet its internal standards, and thus the firm plans to reduce operations across the board. Meanwhile, Jump Crypto plans to scale back US operations but will continue to grow its global, ex-US practice.

Market liquidity for some of the largest assets such as BTC has declined meaningfully since the collapse of crypto platforms Terra and FTX. Per Kaiko, aggregated 2% market depth the BTC-USDT pair on the 10 most liquid exchanges has declined from ~$200mm+ to less than ~$150mm since the collapse of FTX.

Meanwhile, twitterer ThiccyThot provided a time-series snapshot of Binance’s BTC futures liquidity overlayed with regulatory events such as the recent CFTC charge. The picture shows that liquidity began to dry up meaningfully even before regulatory actions were taken by the US government.

💫 Sam Altman’s crypto project launches World App and joins the Optimism SuperChain

Sam Altman, founder of OpenAI, rolled out the World App to over 80 countries this week. Per TheBlock, the app has accrued ~1.5mm users and logs ~60k transactions per day. The purpose of the World App is to create a platform that will allow individuals to “prove personhood” online. In a world of broad adoption of artificial intelligence technologies, distinguishing between online content generated by humans and artificial intelligence can become impossible. WorldCoin’s ambitious plan to scan human eyeballs to determine “proof of humanity” is intended to allow humans to understand when they are interacting and transacting with other humans in virtual spaces.

The current World App serves as a minimalist wallet, allowing for basic transactions such as sending / receiving cryptocurrencies. Tiago Sada, head of product at Tools for Humanity, noted that “financial services” is a prominent area he expects WorldCoin to be helpful for in the future. Regarding his product, Sada stated: “For example, there are things like undercollateralized lending in DeFi that really haven’t been possible because there is no sense of identity.”

Sam Altman also announced that WorldCoin would be joining the Optimism SuperChain program and moving away from Polygon, where the project had initially started. Per Optimism, the “Superchain is a proposed network of Layer 2s that share security and communication layers and the common OP Stack.” A number of other institutional blockchain projects have also begun building on the OP stack including Coinbase’s BASE and a16z’s Magi.

🤝 Trends to Look out for on the Artemis Blockchain Activity Monitor: Memecoins and PendleFi

Memecoins were all the rage this week, with a huge inflow of new active addresses coming in to interact with Memecoin contracts such as Pepe, Bob and Turbo. The Memecoin category saw ~18k new addresses interact with the ERC-20 contracts on both May 5th and May 6th.

Meanwhile, ~$1.2mm of gas was expended on Ethereum during those two days to consummate the purchase of said Memecoins.

PendleFi also saw active addresses grow by ~500% this week! After investigation by Paddy the Pirate, we discovered that the increase was related to the introduction of Pool 三, which launched this week. We can see from the activity monitor that the vast amount of activity came from new addresses interacting with the Pendle Router contract. Will Pendle be able to retain liquidity from its new PENDLE / ETH pool? We shall see

that’s all folks

Detailed L1 dashboard for people who love more numbers in smaller font:

Note: Revenue represents fees that go to the protocol’s treasury or are returned to tokenholders via a burn mechanism (source: Token Terminal). Weekly commits and weekly dev activity as of 4/29/23.

The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments.