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Writer's pictureAsis Primo de Rivera

Web3 Trends by Calea Digital - Week 44 - 2024


Web3 trends Calea


Calea Digital meticulously selects news that we believe has the most significant impact on the Blockchain & Web3 trends ecosystem based on a set of well-defined criteria. Our aim is to highlight developments that not only demonstrate the innovative strides being made within the space but also to provide insights into how these advancements can redefine the technological, economic, and social landscapes. We prioritize stories that showcase groundbreaking applications of blockchain technology, notable shifts in tokenomics and governance models, and major regulatory or legal milestones that might influence the framework within which these technologies operate. By focusing on these key areas, we ensure our audience is informed about the most consequential changes shaping the future of decentralized systems and digital assets.


Below, we summarize the most important news from the blockchain and cryptocurrency sector over the past week, explaining the news, highlighting the key points and outlining conclusions and next steps.




General Web3 Trends


2024 State of Crypto Report Released by a16z


The latest annual report from a16z, the 2024 State of Crypto, highlights significant growth and changes in the cryptocurrency landscape over the past two years. It focuses on technological advancements and the increasing political relevance of crypto.


Key Points:


  • Record Crypto Activity: Over 220 million active crypto addresses in 2024, tripling since 2023, led by Solana.


  • Political Influence: Crypto's growing importance in U.S. elections, with significant interest in swing states.


  • Stablecoins’ Importance: Stablecoins have cemented their role in global payments, with Q2 2024 transactions surpassing $8.5 trillion.


  • Infrastructure Advances: Major upgrades like Ethereum’s move to proof-of-stake lowered transaction costs by over 99%.


  • DeFi Growth: Continued expansion with $169 billion in assets locked and a rise in Ethereum’s proof-of-stake adoption.


  • Crypto and AI: Initiatives to democratize AI computing and authenticate digital content using blockchain.


  • Emergence of New Applications: Reduced costs encourage innovations such as NFTs and blockchain-based games.


The report suggests continued monitoring of crypto's growth, policy impact, and technological innovations, which could lead the way for further breakthroughs and adoption in various sectors.



Russia Launches BRICS Mining Infrastructure Project


BRICS

Russia's largest data center operator, BitRiver, alongside the Russian Direct Investment Fund (RDIF), plans to build AI and cryptocurrency mining facilities across BRICS countries to enhance Russia's global computing market share and reduce Western technology dependence.


Key Points:


  • The partnership was announced at the BRICS Business Forum in Moscow.


  • BRICS includes Brazil, Russia, India, China, and South Africa, now joined by Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE.


  • The expansion is driven by a global shortage of energy-intensive data center capacity.


  • It follows Russia's August 2024 mining regulation law.


  • Bitcoin's hash rate increased by 55% in October 2024, indicating institutional growth in crypto mining.


The partnership between BitRiver and RDIF involves building AI and cryptocurrency mining facilities across BRICS nations to increase Russia's share in the global computing market, following the country's recent mining regulation law, amid a significant rise in Bitcoin's hash rate by 55% in October 2024.




BTC, ETH and Crypto


SEC approves NYSE, CBOE listings of Bitcoin options ETFs


SEC NYSE

The SEC has approved applications from the NYSE and CBOE to list options for Bitcoin exchange-traded funds (ETFs), impacting 11 approved ETF providers. This move is expected to enhance market liquidity and could trigger short squeezes, leading to increased price action.


Key Points:


  • Approval allows options trading for 11 Bitcoin ETF providers, including major names like Fidelity and BlackRock.


  • The Chicago Board Options Exchange's application aligns Bitcoin ETF options with other commodity-based ETFs.


  • Market impacts include potential increased liquidity and reduced volatility.


The approval is anticipated to significantly boost Bitcoin market liquidity, potentially acting as a catalyst for price increases and stabilization.




Web3 Companies


Microsoft Urges Shareholders to Vote Against a Proposal to Assess Bitcoin as a Diversification Investment


Microsoft BTC

Microsoft's board is advising shareholders to vote against a proposal urging the company to consider investing in Bitcoin as an inflation hedge. This proposal, made by the National Center for Public Policy Research, suggests that Bitcoin could be an effective hedge against macroeconomic factors.


Key Points:


  • The proposal seeks Microsoft’s investment of 1% of assets in Bitcoin.


  • Microsoft’s board opposes the proposal due to Bitcoin's volatility and existing internal strategies for asset diversification.


  • Top shareholders like Vanguard and BlackRock have influence.


Microsoft’s shareholders will vote on the proposal at the annual meeting in December. The board will continue to monitor cryptocurrency trends while recommending against the Bitcoin investment proposal.



Meli Dólar, Stablecoin by Mercado Libre, Revolutionizes E-commerce


Meli Dolar Stablecoin

Meli Dólar, the stablecoin launched by Latin American e-commerce giant Mercado Libre, is reshaping online payments rapidly. Just two months after its launch, the stablecoin is significantly impacting how purchases are made through Mercado Libre, benefiting from the company’s loyalty program and direct user purchases.


Key Points:


  • Meli Dólar is available in Brazil and Mexico and is part of the loyalty rewards program, Meli Plus.


  • It is a stablecoin issued on Ethereum, backed 1:1 by the US dollar, with reserves in cash deposits, interest-bearing accounts, and short-term US Treasury bonds.


  • Mercado Pago integrates Meli Dólar into its payment platform, where users receive it as cashback or buy/sell it without fees using local currencies.


  • There are plans to expand Meli Dólar to more countries, pending regulatory compliance.


Mercado Libre aims to introduce Meli Dólar across countries where it operates but must first navigate regulatory challenges, particularly in Argentina.



Tesla Bitcoin Moves May No Longer Shake The Market


Tesla BTC

Tesla's transfer of 11,509 BTC ($776.9M) to new wallets, after two years, was identified by Arkham Intelligence as an internal reorganization rather than a precursor to sales. These movements have had no impact on Bitcoin's price.




Key Points:


  • Tesla transferred its Bitcoin holdings to seven new wallets, initially causing market speculation.


  • Arkham Intelligence confirmed the transfers were internal, not indicative of sales.


  • Possible reasons include internal audits, security management, and reducing transaction costs.


  • Tesla's Q3 2024 report showed strong financials ($25.2B revenue, $2.2B net income).


  • The stock price rose 21% following the earnings report.


  • Tesla's Bitcoin represents 0.055% of the total supply and is a minor part of its total assets.


Despite Tesla's large internal Bitcoin movement, regulatory clarity remains a more significant influence on the market than corporate actions, suggesting the need for better-regulated frameworks to boost market confidence.



Coinbase Paves the Way Toward Full Decentralization of Its Platform


Coinbase DEFI

Coinbase, a leading centralized cryptocurrency exchange, is making a significant move towards decentralization with a groundbreaking innovation on the Base mainnet, set to launch on October 30. This marks a major milestone in the platform's evolution towards enhanced transparency and security.


Key Points:


  • The introduction of "fault proofs" allows anyone to monitor and challenge invalid withdrawals, eliminating the need for a trusted third party.


  • In collaboration with Optimism, this initiative aims to improve the platform’s security, reliability, and community participation.


  • Unauthorized exit proposals and challenges will enable a more decentralized validation process.


  • Withdrawals from L2 to L1 will involve a 7-day challenge period for validation, with the new system being implemented.


Users withdrawing funds will encounter a 7-day challenge period before finalization, and withdrawals will follow the new fault-proof system. Base mainnet bridge operators must inform their users and update the transition logic to adopt the new L1 contracts, with these updates occurring atomically.



Kraken to Launch Ink Blockchain for DeFi in Early 2025


Kraken DFI

Explanation of the News: Kraken, a centralized cryptocurrency exchange, is set to launch its own blockchain called "Ink" in early 2025, aiming to enhance decentralized finance (DeFi) accessibility. Ink will offer trading, lending, and borrowing services without intermediaries, transitioning Kraken further into the DeFi space.


Key Points:


  • Ink will simplify DeFi processes to make them more user-friendly and cost-effective.


  • Kraken will integrate DeFi tools like decentralized exchanges (DEXs) in its wallet app.


  • Ink will not have a native token but will start as a sequencer for transaction revenue.


  • A developer testnet will be available later in 2024 to support DApp experimentation.


Kraken will initially manage the Ink blockchain as the sequencer, launching with several DApps to improve the user experience and capitalize on growing DeFi demand.




Web3 Investments (VCs, Startups...)


Stripe acquires stablecoin platform Bridge for $1.1 billion


Stripe Bridge

Payments giant Stripe acquired the stablecoin platform Bridge for $1.1 billion, significantly exceeding its $200 million valuation. This move is part of Stripe's strategy to enter the stablecoin market to enhance global money movement, storage, and spending.


Key Points:


  • Stripe paid more than 5x Bridge's valuation.


  • Bridge provides infrastructure for tokenized money on various blockchains and counts SpaceX, Coinbase, and Stellar among its clients.


  • Stripe processed over $1 trillion in payment volume in 2023, growing by 25% and holding 17% of the market share.


  • Stablecoins are increasingly important in mainstream finance, with significant transaction volumes.


Stripe plans to integrate Bridge’s technology to expand its stablecoin capabilities, potentially accelerating global stablecoin adoption.



Hack VC Leads $3.4 Million Seed Round for Web3 Health Accountability App Moonwalk Fitness


Moonwalk Fitness, a blockchain-based fitness accountability app, raised $3.4 million in seed funding, led by Hack VC.


Key Points:


  • $3.4 million seed funding round led by Hack VC.


  • Additional investment from Reciprocal Ventures, Binance Labs, CMS, Flowdesk, and others.


  • The app incentivizes fitness goals with cryptocurrency, leveraging the "move-to-earn" trend.


  • Users deposit crypto; successful completion earns rewards; failure redistributes funds to successful users.


The company aims to promote healthier lifestyles by merging fitness with financial incentives, showcasing blockchain's real-world utility.



80% of Web3 Startups Launch on Ethereum and Solana


web3 startups

A recent report by Alliance reveals that the majority of new Web3 startups are choosing to build on Ethereum and Solana. Despite Ethereum's dominant position, Solana is rapidly gaining traction. The analysis highlights the shifting preferences among developers and the impact of recent technological advancements and market dynamics.


Key Points:


  • Ethereum's Dominance: 62% of startups are joining the Ethereum ecosystem, with a strong preference for optimistic rollups like Base, Optimism, and Arbitrum.


  • Solana's Growth: Solana now accounts for 18% of new projects, showing strong momentum despite setbacks from the FTX collapse.


  • Bitcoin's Emerging Role: The Bitcoin ecosystem is attracting 5% of new projects, driven by the introduction of tokens and efforts to enhance Bitcoin's programmability.


  • Sector Trends: DeFi remains stable while the NFT segment has declined significantly since 2022.


  • VC Funding: Venture capital investments have increased in 2024, with $8 billion invested in early-stage crypto projects so far.


Solana's upward trend suggests it will continue to attract startups in the near future. Meanwhile, developers might explore opportunities within the expanding Bitcoin ecosystem, leveraging new technologies to overcome its technical limitations.




Regulation


MiCA Europe Regulations

European Central Bank Successfully Tests Wholesale CBDC with Bank of France


News Explanation: The European Central Bank (ECB) has successfully tested a wholesale central bank digital currency (CBDC) in collaboration with the Bank of France. These tests aimed to assess the feasibility of distributed ledger technology (DLT) for wholesale money transactions, with a focus on central-clearing repurchase agreements and intraday margin calls.


Key Points:


  • Collaboration involved Eurex Clearing, the Bank of France, and other European central banks.


  • Tests were conducted on October 22-23 at Deutsche Börse Group headquarters.


  • Evaluation of digital commercial paper issued by ABN Amro.


  • Aim to modernize financial infrastructure and improve settlement efficiency.


  • Counterparty credit risk remains constant across different technologies.


The ECB and participating institutions plan to continue modernizing financial systems by integrating DLT, highlighting its potential to transform financial operations and enhance efficiency in financial markets.



Netherlands Seeks Input on Crypto Tax Monitoring Laws to Align with EU


The Dutch government is soliciting public feedback on proposed legislation mandating crypto service providers to collect and share user data with tax authorities, in line with EU DAC8 regulations, to enhance tax transparency and combat avoidance and evasion.


Key Points:


  • Aims to increase transparency in cryptocurrency ownership.


  • Aligns with EU's DAC8 and OECD's CARF.


  • Data sharing with EU and CARF nations.


  • No changes for Dutch crypto owners who already file tax returns.


  • Limits reporting burden to the crypto provider's registered EU state.


The Dutch government will assess public input by November 21, 2024, with plans to present the bill to Parliament by the second quarter of 2025.



Gensler Defends SEC Crypto Crackdown and 90-Year-Old Securities Laws


SEC Gensler


SEC Chair Gary Gensler asserts that existing securities laws, originating from the 1920s, remain applicable to the modern Web3 sector. He emphasizes that compliance is essential for maintaining trust in the crypto market. This stance is highlighted by the ongoing legal challenges, such as the SEC's actions against Ripple Labs, and differences in regulatory viewpoints between the SEC and CFTC.


Key Points:


  • Gensler supports using old securities laws for regulating the Web3 sector.


  • Emphasizes compliance as vital for investor trust.


  • Discusses Ripple Labs case and the SEC’s decision to appeal.


  • Different perspectives from SEC and CFTC Chairs on crypto regulation.


  • CFTC Chair Rostin Behnam's frustration over stalled regulatory progress.


The SEC plans to continue its regulatory actions, and the appeal in the Ripple case will influence future crypto regulation in the U.S. The ongoing lack of legislative consensus and varying opinions among regulatory bodies will likely further impact the crypto market.






Bibliography


General Web3 trends





BTC, ETH and crypto



Web3 companies










Investments Web3 (VCs, startups...)






Regulation











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