Crypto Research

THE PROBABILITY OF ETF APPROVAL As emphasized in previous notes, we view BlackRock's application for a spot ETF as substantial. Regardless of whether an actual spot ETF garners approval in the near term, its “narrative” significance is undeniable. _YET, OUR FUNDAMENTAL ASSUMPTION IS THAT THIS APPLICATION INDICATES NEW UNDISCLOSED INSIGHTS THAT LARRY FINK AND HIS COLLEAGUES ARE PRIVY TO, WHICH THE PUBLIC MAY NOT BE, AND THEIR APPLICATION WILL ULTIMATELY...

Funding declined slightly this week from $105M last week to $82M this week. Interestingly, the vast majority of funding this week came from the Web3 & NFTs vertical, which saw funding increase from just $3M last week to $56M this week, with five of the fourteen deals this week. Infrastructure had the second highest funding at $25M, while other sectors such as DeFi and CeFi received no funding. Most deals...

INVESTMENT THESIS While Level initially gained prominence by becoming the _first GMX fork on BNB Smart Chain_, it has since grown to differentiate itself from other perpetual decentralized exchanges, or ‘perp DEXes,’ via multiple proprietary improvements from TradFi and DeFi. For a recap on, perp DEXes, check out our piece here. The first improvement implemented by Level Finance is tranched risk management for liquidity providers. Drawing inspiration from Mortgaged-Backed Securities...

EARLY PROOF OF “CATCH-UP” TRADE Last week witnessed a significant development as traditional market participants, most notably BlackRock, entered the cryptocurrency space with a spot-based ETF application. This move not only carried implications for market structure but also sparked a noteworthy narrative shift. Despite Bitcoin's relative resilience to regulatory pressures compared to other cryptoassets, it still faced some performance drag. However, the entry of BlackRock, Citadel, and other prominent players...

Crypto funding rose on a weekly basis to $103 million compared to $81 million last week. Metaverse & Gaming and CeFi were the two strongest categories this week, accounting for 47% and 32% of total funding, respectively. This week’s average deal size was $7.9 million, exceeding the previous two weeks and ending the month on a strong note. Metaverse & Gaming also led the week in deal count, with six...

INTRODUCTION Ethereum’s shift from proof-of-work to proof-of-stake enabled ETH holders to stake their tokens and help secure the blockchain network. As compensation for securing the network, stakers are rewarded with additional ETH tokens. At first, stakers were required to post 32 ETH (the minimum amount to run a node), and the user’s ETH tokens were to be locked until the Shapella upgrade was completed (successfully completed in March). Due to...

Funding decreased this week to the lowest levels all month, declining from $142M to $96M. While funding decreased, the total number of deals remained the same at 22. Web3 & NFTs had the most funding this week, with six deals totaling $34M, including digital asset wallet Galaxy Finance, the largest deal of the week at $30M. Infrastructure had the second most funding at $31M. Each other sector lagged behind, with...

A WEEK OF TABLE-TURNING DEVELOPMENTS _ETF SUMMER_ Over the last five years, there have been numerous calls for traditional financial institutions to enter the crypto industry. Once total crypto market cap surpassed the $1 trillion mark for the first time, the industry’s investors, developers, and followers began to discuss how crypto had transformed into an investable asset class and projected a significant influx of institutional investors. Until recently, several signs...

Crypto funding dropped sharply this week, falling to $129 million from $373 million. To no surprise, Infrastructure deals once again garnered the largest amount of funding, equating to $78 million. Web3 & NFTs were the second largest category by funding ($35 million) and tied Infrastructure with the highest deal count (7). The average deal size across all categories was $8.1 million - a considerable decline from last week’s $25 million...

COINS FACE ADDITIONAL TURBULENCE Last week, we seized the opportunity to "buy the fear" in response to the SEC lawsuits targeting major crypto platforms Coinbase and Binance. In our Core Strategy, we decreased our allocation to stablecoins to 10% and lowered our allocation to alts from 17.5% to 7.5%. This turned out to be fortunate timing on our part, as altcoins continued to face significant losses over the weekend. Moreover,...

WHAT IS MEV? MEV or Maximal Extractable Value (MEV) is a topic of crypto that has had a massive uptick in activity and debate in recent years. It occurs when the block producers in a blockchain (miners or validators) extract value by reordering, including, or excluding transactions within a block, often at the expense of users. In other words, block producers can determine the order in which transactions are processed...