Hello everyone and welcome to the seventh entry of our What’s New In The Crypto World article series, with some good news coming from multiple directions, some guidelines for this year and some news from the DeFi markets.
Some of the most rapidly developing sectors in our field.
The world of finance is evolving rapidly, driven by advances in technology and changing consumer behaviours, and as humanity moves into the digital age, several emerging trends are reshaping the financial services landscape at large.
If you have already followed us for a while, you will be aware that the provision of financial services has been revolutionised by the disruptive movement known as ‘open banking’, which involves the secure transfer of consumer financial data between financial organisations with the permission of customers.
Open banking allows external developers to create cutting-edge programmes and services that use this information to offer specialised financial services thus giving customers more control over their financial data and greater access to a wider choice of services from various providers, promoting competition and accelerating industry innovation.
Another challenge for the traditional banking market comes in the form of Digital Wallets.
They are rapidly emerging as fast, secure and convenient alternatives to traditional payment methods and thanks to the proliferation of mobile payment applications such as Apple Pay, Google Pay and Samsung Pay, consumers can securely store their payment card data on their smartphones and make purchases by simply tapping their phones on contactless payment terminals.
These digital wallets reduce the risk of fraud, increasing ease of use and security by replacing sensitive card data with encrypted tokens.
In recent years, cryptocurrencies such as Bitcoin and Ether have attracted a lot of attention. Blockchains are the basis of these digital assets, and while they have been around for a while, the real logistical benefits brought by blockchain tech are only now being recognized by major players.
Although the use of cryptocurrencies for regular transactions is still in its infancy, they can disrupt established financial systems by enabling faster, cheaper and borderless peer-to-peer exchanges.
In addition to cryptocurrencies, blockchain technology is being explored for use in fields such as supply chain management, identity verification and smart contracts. These applications promise to increase the efficiency and transparency of many financial transactions while slashing costs.
One more incredible trend that we have seen rise in the market is the introduction of Robo advisors as automated investment platforms that offer customised financial planning and wealth management services using algorithms and artificial intelligence.
These platforms build customised investment portfolios for clients by analysing huge amounts of data, including risk tolerance, financial goals and market patterns, and are touted to be more consistent and risk-averse than even the most savvy investor.
Robo advisors appeal to technology-loving investors who prefer a digital-first strategy and charge lower fees than traditional human advisors. Other financial services, such as fraud detection, credit scoring and chatbot-based customer support, are now using AI-based solutions to streamline operations and improve the consumer experience.
And last but not least, we need to talk about Integrated finance as the integration of financial services into non-financial software and systems.
This sector-wide development enables companies in various fields, including e-commerce, ride-sharing and retail, to provide their customers with financial goods and services.
For example, a ride-sharing service could give users access to insurance or microloans directly within the app, while an e-commerce platform could offer the ability to make instalment payments.
Using current user populations and data, integrated finance enables companies to strengthen their value propositions, increase consumer engagement and develop new sources of revenue. It also dissolves distinctions between conventional financial institutions and other sectors, stimulating innovation and competition.
MetaMask adds Layer2 solutions to its decentralized model.
Consensys, a leading developer of blockchain technologies, has announced a breakthrough regarding its revolutionary layer 2 solutions, called ‘Linea’, after a long media silence.
The company has officially launched the alpha version of the Linea mainnet, marking a significant step in its evolution, with the launch coming after a meticulous three-month testing period on Ethereum’s Goerli testnet which confirmed the security of the solutions for all parties involved.
The test results were very positive demonstrating brisk activity with over 5.5 million wallets created and well over 46 million transactions processed in just under three months, and thanks to these figures, Linea has positioned itself as one of the most dynamic and active projects within the testnet, thus catching the attention of an already established giant in the wallet market.
MetaMask, the renowned decentralized solution will soon enough enrich its range of services by introducing Linea’s Layer 2 solution and Linea’s long-awaited mainnet promises major improvements in user experience and ecosystem expansion.
Highlights include the integration of zkEVM rollups technology, which guarantees faster transactions and lower fees than the Ethereum mainnet ever provided.
Thanks to the implementation of a new dynamic fee system and the introduction of batch trading, transactions on Linea will be up to 15 times cheaper than on Ethereum.
This event marks an important milestone in the development of Layer 2 solutions, which aim to provide greater scalability and efficiency to blockchain applications and thanks to the integration with Linea, MetaMask wallet users can take advantage of their bridge, swap and purchase services.
This integration will allow them to take full advantage of the benefits of Layer 2 technology, including faster transactions and reduced costs, greatly enhancing the overall customer experience.
The partnership between Consensys and MetaMask aims to take the adoption of blockchain technology to new heights, opening up new possibilities for users seeking more efficient access to blockchain applications.
By integrating Linea’s services into MetaMask, users will experience significant improvements in the scalability and cost-effectiveness of their operations when interacting with the Ethereum blockchain.
But how did ETH actually perform in 2023?
The first half of 2023 was positive for Ethereum, which is growing in terms of market cap despite the many market fluctuations experienced by both retail and institutional investors.
ETH’s burning rate and interest in token staking are also on the rise alongside its market cap increase.
The period under review presented a challenge for Ethereum, which experienced considerable fluctuations and high volatility, and yet the network has held up well and Ethereum has shown good resilience while also managing to attract new users to its ecosystem.
Ethereum’s performance has been affected in particular by the lack of clear legislation and the crippling interventions of market regulators, with our already well-known SEC standing at the forefront of many cases led towards exchanges such as Coinbase and Binance, which have raised doubts as to whether digital assets should be classified as securities.
Despite the difficulties and challenges, over the past six months, ETH has managed to grow its market dominance even over competing platforms.
The entry into force of the European digital asset guidelines, the Markets in Crypto Assets regulations, could further boost Ethereum’s market dominance with a further increase in the adoption rate.
The MiCA is part of a broader EU package aimed at updating the bloc’s approach to various digital financial issues.
The MiCA focuses mainly on crypto-asset providers and the obligations they have to declare, and we will look towards covering what the MiCA means for us in Europe very soon, in an article fully dedicated to covering the matter.
The introduction of the latest updates of token transaction fee burning from ETH has resulted in the elimination of 380,000 tokens. In the last quarter, the burning rate that reduced tokens increased by 58%, while the total number of tokens cancelled increased from 80,000 to around 230,000.
Another key aspect of the ETH network’s continued growth comes in the form of gas commissions and rewards for validators, which also increased in response to the overwhelming enthusiasm that the PEPE meme attracted. Real returns for validators grew to a record 6.1 per cent.
Another aspect responsible for the rise in token prices is the growth in demand, particularly for staking services.
During the semester, the first round of staked tokens was released for the first time. Yields met expectations and there was new demand for staking.
In May and June, net staking flows were the highest ever, with 3 million and 1.9 million ETH respectively, further contributing to the growth and engagement of staking within the Ethereum network.
At the same time, the number of validators on the Ethereum network also increased. According to Staking Rewards data, with the number of validators growing by a whopping 8.81% in the last month.
Tesla is willing to back up their statements.
Tesla’s Q2 FY2023 earnings report was released last night, revealing surprisingly positive results despite the current economic environment.
The carmaker reported healthy margins and set new records for both production and deliveries in Q2 FY2023. In addition, it generated the highest revenue of all quarters so far, reaching a remarkable figure of USD 24.9 billion.
This represents a 47% year-on-year increase in profits, demonstrating the company’s solid performance as a car maker, but today, our focus is on another crucial aspect of the Tesla Industries.
Despite going through a difficult period in the past, as Tesla publicly stated in the second quarter of 2022, when the effects of the global economic crisis were being felt, the company overcame the difficulties and recorded significant growth.
A key decision made during that period was Elon Musk’s decision to sell around 75 per cent of Tesla’s Bitcoin holdings, resulting in approximately $936 million at the time.
However, Musk emphasised that the sale was not related to a pump-and-dump scheme, but was taken because of the need for liquidity. At the same time, he maintained his holdings in Dogecoin.
Since then, Tesla has recovered and achieved a stronger financial position, allowing Musk to keep his promise not to sell any more Bitcoin stocks. This has been interpreted as a demonstration of confidence in Bitcoin’s long-term potential, even at a time when many other investors have been uncertain.
The CEO of Microstrategy, Michael Saylor, was an example of using BTCs as a hedge against inflation and claimed to have outperformed his competitors in the enterprise software sector simply by holding large amounts of Bitcoin.
Tesla’s decision to maintain its holdings in Bitcoin indicates that Musk shares a positive outlook on cryptocurrencies. Moreover, it seems to highlight continued confidence in the intrinsic value Bitcoin can bring to the global financial world.
Despite the uncertainties and changes in the cryptocurrency market, Tesla and its CEO, Elon Musk, continue to demonstrate a commitment to the emerging digital sector and its potential future.
Coinbase Mining endeavours are reaching new highs.
Coinbase has offered a $50 million loan to Hut 8, one of the largest Bitcoin mining companies listed on their exchange. It was the latter that broke the news, via a press release.
The $50 million credit offered to Hut 8 was divided into several instalments: $15 million will be paid immediately after the closing of the deal, $20 million between one and two months after the closing, and a further $15 million after the completion of the previously announced merger between Hut 8 and U.S. Data Mining Group, Inc.
The deal with Coinbase comes ahead of Bitcoin’s next halving, scheduled for April 2024 with the reward paid to Bitcoin miners halved from the current 6.25 BTC per block to 3.125 BTC.
According to Hut 8’s press release, the proceeds of the loan will be used for ‘general corporate purposes’.
The credit line will expire 364 days after the first loan. The company also added that the obligations are secured by Hut 8’s interest in Bitcoin held by Coinbase’s professional custody division and stated that the line of credit will be subject to a certain loan-to-value (LTV) ratio.
“This line of credit gives us greater financial flexibility while ensuring that we can maintain our dynamic Bitcoin treasury management strategy ahead of the halving.”
Hut 8 is one of the few large-scale Bitcoin mining companies to follow a ‘hold’ strategy, which essentially means that it chooses to hold as much of the BTC it mines on its balance sheet as possible, rather than selling them for fiat currency.
Although a good move during bullish Bitcoin markets, the ‘hold’ strategy inevitably puts companies like Hut 8 in difficult positions during prolonged market downturns, a likely reason why the company has now accepted the $50 million loan from Coinbase.
Shares of Hut 8, a Toronto-based company listed in both Canada and the United States, have gained more than 200% since the beginning of the year, thanks to improving sentiment in the Bitcoin market.
The mainstream market inches closer and closer to the DeFi world.
Leading video game company Ubisoft has announced its partnership with the Cronos blockchain.
Ubisoft thus officially enters the crypto world by becoming a node validator in the Cronos blockchain ecosystem. This in turn gains the expertise and experience the company has gained over the years as a reference point in the digital sphere.
In all, there are now 28 node validators contributing to the security and stability of the open-source Cronos blockchain.
Ubisoft is taking part in the project by participating in the governance of the blockchain and approving network updates.
Ubisoft is not new to the crypto and blockchain environment, as it is not the first time the French giant has decided to embrace the innovative digital sphere, thanks to the leadership of its Strategic Innovation Lab department.
Other relevant partnerships in this field have been those with Crypto.com, Blockdaemon, Dora Factory and Allnodes among others.
Furthermore, the relationship between Ubisoft and Cronos is a long-standing one, since in the past, Ubisoft mentored a start-up that participated in the Cronos Accelerator programme, but this latest news takes the whole deal a step further and solidifies Ubisoft as one of the most progressive companies concerning crypto adoption.
Ken Timsit, CEO of Cronos Labs, the accelerator dedicated to blockchain start-ups, commented on the partnership.
He expressed optimism about Ubisoft’s contribution, given its understanding of the potential and limitations of blockchain in creating deeper engagement between game creators and gamers
The Cronos ecosystem will be able to benefit from Ubisoft’s expertise, particularly on the technological side to foster gaming-related usage opportunities.
Ubisoft’s Strategic Innovation Lab, the laboratory where new technologies are experimented with and anticipate the future, deals with integrating innovative technologies and will play a key role in this venture, be it for Metaverse or P2E solutions.
For Cronos, this is not the first collaboration in gaming, where it has already participated with Cronos Play, a suite of developer tools and integrations for blockchain-based games developer tools which are now available as plugins in the Unreal Engine Marketplace.
So far, more than 15 games on Web3 have been launched or are being found on the Cronos blockchain.
Cronos is an EVM-compatible layer 1 blockchain network built on the Cosmos SDK, they are supported by Crypto.com, Crypto.org and over 500 app developers and partners with the platform boasting more than 1 million users and supporting an ecosystem of over 80 million users worldwide with the Cronos cryptocurrency CRO.
Ubisoft’s entry into the Cronos ecosystem reinforces the growing interest of leading technology companies in blockchain technology and its myriad applications.
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