Meet RAY (Robo for Yield)

VeradiVerdict - Issue #52

TL;DR:

  • Decentralized finance, or DeFi, is basically traditional finance hosted on a decentralized blockchain; assets take the form of cryptocurrency. DeFi has become incredibly popular in recent years as another vehicle for trading and investing.

  • Staked just announced RAY, or Robo-Advisor for Yield. It’s a smart contract that automatically allocates a Staked user’s ETH, DAI, or USDC assets as collateral for three different lending markets (Compound, dYdX, and Fulcrum) optimally.

  • Prior to RAY, investors would have to constantly monitor the market manually, which is highly unlikely––meaning most investors just hold onto their cryptocurrency without profiting much. RAY finds the most profitable allocation strategy using smart contracts and helps investors maximize their returns.

  • When users deposit into RAY, they receive a non-fungible token (NFT) for the assets they invest. RAY then invests Staked’s collective pool of that asset in the optimal way to maximize returns; when a user wants to redeem their assets, they can exchange the NFT for the assets they invested, plus their fraction of the returns.

  • Users don’t have to pay additional for the RAY service; Staked profits by taking a share of the returns that RAY makes. Users only have to cover the gas for the investing.

  • Ultimately, RAY represents a major step forward in maturing the DeFi ecosystem and presents a very promising tool to help maximize investors’ returns on crypto lending.

What’s all this hype about DeFi, and what is it anyways?

DeFi stands for decentralized finance––essentially, everything you can think of in the traditional financial sphere but hosted on a decentralized blockchain. DeFi broadly covers when individuals invest in, trade, and hold cryptocurrency assets to make a profit or maintain value.

In recent years, DeFi has become increasingly popular as cryptocurrency and blockchain technologies become notably more mainstream; not everyone sees it as a replacement for the current system, but a good share at least see DeFi as a vehicle to make a profit, since you can trade and invest cryptocurrencies like any other financial asset. Thus currently, the biggest use case for DeFi is investing.

Cool. So basically, you can trade cryptocurrencies and make a profit, just like conventional financial assets?

Exactly! There’s a huge market for individuals who use DeFi as an infrastructure for trading and arbitrage. Admittedly, the landscape for this isn’t as mature as traditional financial assets like stocks, ETFs, bonds, etc. but there’s a lot of customer- and company-interest in this space so naturally, it’ll evolve soon.

So what’s the next big thing for DeFi investing and trading?

Staked is an institutional investing platform that allows investors to stake (essentially, use their own assets to fuel to activities of the blockchain) and lend their crypto assets to maximize their returns. It’s received a lot of attention among the DeFi community for being one of the premier platforms of its kind.

Staked just announced a new tool called the Robo-Advisor for Yield, or RAY. In a traditional financial sense, robo-advisors are what the name would suggest; automatic, software agents that help advise investments to maximize desired outcomes. RAY is just that, but specifically for yield-generating opportunities presented by DeFi.

How does it work?

When an investor puts funds into Staked, they might put any given number of units of a single cryptocurrency into a specific lending market. A lending market in this case is a DeFi app – like Compound or dYdX. Before RAY, the investor could leave their assets in that market and hold onto it without paying much attention; this might be a relatively stable and low-effort way to manage crypto but doesn’t necessarily optimize for the most profitable outcomes.

RAY runs a network of smart contracts that are constantly polling various markets to see where assets might produce the most return. So, if the investor puts $10,000 of ETH into a specific market, but later a different market might provide a higher return, RAY uses smart contracts to identify that discrepancy and move the assets to the most profitable place. Ultimately, a user can just dump their assets into Staked and trust that RAY will provide them with at least non-negative returns. It’s low management and has pretty good payoffs.

Currently, RAY supports lending for ETH, DAI, and USDC through the DeFi platforms Compound, dYdX, and Fulcrum. In the future, they hope to support staking, arbitrage, market-making, DAI savings, and anything else the DeFi ecosystem can come up with.

Awesome! But how does it really, really work?

From the user’s side, it’s not too complicated. Essentially, a user gets a non-fungible token (NFT) whenever they make an investment on Staked; the NFT allows the user to redeem their assets and any returns that RAY was able to make with it. The NFT token Staked uses is a standard ERC-721. The token allows RAY to be non-custodial in the way that it manages the user’s assets; it ensures that the assets can only be transferred back to the wallet from which they originated.

From Staked’s side, they have their own pool of assets, comprised of what investors put in and a bit of their own, which RAY algorithmically allocates in the most profitable way. Right now, that algorithm is essentially seeking out the highest return rates and moving assets; as RAY matures and more people start using the platform, this algorithm will likely mature as well and hopefully generate even higher returns. When users redeem their token, they essentially redeem the quantity of Staked’s assets that they invested plus their fractional share of the returns. The token itself doesn’t touch RAY, but rather serves just as a point of exchange between Staked’s larger asset pool and the amount that a specific user invests.

This technology is all open-source and is heavily based on smart contracts that are monitoring the different markets every 30 minutes and making decisions based on pricing metrics and various baselines. These smart contracts are openly available on Ethereum for anyone that wants to take a look, or maybe even play with them. It’s also all been reviewed for security and stability by several external auditors, meaning that RAY theoretically has a good, stable start, technically speaking.

What does it cost the investor?

Investors must pay for gas to help mobilize all of these transactions. But RAY itself doesn’t necessarily cost the investor anything; Staked makes profit by taking 20% share of the alpha (essentially, added return) generated by RAY. It’s a win-win situation.

Final Thoughts

The hype around DeFi is growing day-by-day, and cryptocurrency is becoming more and more popular as a vehicle for investing and trading. It’s time that tools for managing crypto assets caught up with the traditional financial sector.

RAY is an important step forward in creating tools to help investors optimize returns on crypto. By algorithmically allocating assets across different lending markets, RAY both provides higher returns to investors, but also increases the viability of crypto lending as a highly profitable modem of investing. It represents the start of an ecosystem where investors can track and use real-time market data to make informed and optimized decisions about their crypto assets.


DIGESTS

LivePeer:A 10-MINUTE PRIMER

How Blockchain Will Fix Internet Communications

With 70% of data being created by individuals and 80% of data managed by companies, the frustration over how our data is managed is becoming untenable.


IN THE TWEETS


NEWS

Staked Automates the Best DeFi Returns With Launch of Robo Advisor

Investors in decentralized finance (DeFi) have a new way to generate the best possible returns.

Exclusive: From CryptoKitties To Cardi B: Warner Music Joins $11 Million Investment In Ethereum Replacement

Now that Warner Music Group has mastered streaming, generating $2 billion in revenue from the technology, the music giant behind Cardi B, Ed Sheeran and Bruno Mars have set its sights on blockchain, joining an $11.2 million investment in Dapper Labs, best known for making the viral blockchain game, CryptoKitties.


REGULATIONS

Facebook’s David Marcus Responds to Critics Over Libra ‘Threat’

The head of Facebook’s Calibra – the entity created by Facebook to provide financial services including a digital wallet for the planned Libra cryptocurrency – has spoken out in response to claims from authorities that the project poses a threat to nations’ “monetary sovereignty.”

OKEX Korea Drops 5 Privacy Cryptocurrencies Citing FATF Rules

Regulatory pressure on cryptocurrency exchanges to stop providing users with access to so-called privacy coins is growing.


NEW PRODUCTS AND HOT DEALS

Sparkswap Desktop Lets Users Deposit Bitcoin Directly Into Their Lightning Wallets

Lightning service provider Sparkswap now features a desktop application with a first-of-its-kind killer feature: USD-to-bitcoin purchases that deposit sats directly into a user’s Lightning wallet.

You Can Now Buy Lightning-Powered Bitcoin With a Credit Card

Payments startup Breez has unveiled a new feature allowing lightning-based bitcoin purchases directly from its mobile app.


MEET WITH ME

Montreal, September 27-29

London, September 30

Osaka, Devcon 5, October 8-11

Tokyo, October 15-17


ADDITIONAL INFO

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. The firm invests in equity, pre-sales/IEO rounds, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.

👋 Working on building new technologies? I’d love to hear about it, shoot me an email

🙏 I’d appreciate it if you forwarded this email to someone who would benefit from it

💡If you have any content you want to share on this newsletter, please send it to me and we can make it happen

Please click here to help me improve this newsletter and your experience by filling out this NEW survey!

The Scoop Podcast

VeradiVerdict - Issue #51

Last week, I visited NYC and was able to catch up with some of our portfolio companies in the area, Staked, Bakkt, and Tagomi. They all work with institutional investors but offer different products.

Another portfolio company that I caught up with was The Block. The company recently expanded their product line to include The Block Daily, which provides daily premium content, and a podcast called The Scoop.

Since I was in town, I swung by The Block office and was able to chat with Frank Chaparro and Matteo Liebowitz on The Scoop Podcast about investment trends, certain blockchain projects, and our philosophy. Check it out in the below link.

The Scoop Podcast - A Conversation with Paul Veradittakit, Partner, Pantera Capital


DIGESTS

Salad: Coin-Mixing with Enigma

A full demonstration (with video) of how Enigma’s protocol can enable transactional privacy on Ethereum.

The Scoop Podcast

A Conversation with Charles Cascarilla, CEO & Co-Founder at Paxos

a16z Podcast: From the Internet's Past to the Future of Crypto

What can we learn from the history of the i nternet for the future of crypto?


IN THE TWEETS


NEWS

Offchain Labs announces Coinbase investment and alpha launch of Ethereum scaling software

Offchain Labs has released the alpha version of its software, compatible with any Ethereum application to allow each smart contract to process more than 500 transactions per second. This comes coupled with its latest funding announcement – the company has nabbed an investment from Coinbase Ventures, the VC arm of the exchange. 

The Bakkt Warehouse Is Open for Business

With the launch of the Bakkt Warehouse last week, I’m reminded of the role that innovation and technology play in shaping the financial industry.

Pantera Capital presents: Designing for Traction with IDEO CoLab

Learn and discuss with IDEO CoLab and other Pantera portfolio companies about the challenges of designing for traction.


REGULATIONS

A most peaceful revolution

Make no mistake, Bitcoiners are revolutionaries.

VanEck, SolidX to Offer Bitcoin ETF-Like Product to Institutions

While the U.S. Securities and Exchange Commission (SEC) has so far blocked a number of proposed bitcoin ETFs, two firms aim to launch a more limited option this week.


NEW PRODUCTS AND HOT DEALS

SAP and Chronicled Announce Blockchain Solution to Verify Prescription Drug Authenticity

In this partnership, Chronicled’s MediLedger solution will serve as an integral part of SAP Information Collaboration Hub for Life Sciences, helping ensure patient safety and security for SAP’s customers in the pharmaceutical supply chain.

Binance launching its own USD-pegged stablecoin ‘BUSD,’ with Paxos as custodian

Binance, the world’s largest cryptocurrency exchange by trading volumes, is  launching its native stablecoin.


MEET WITH ME

Shanghai, Shanghai Blockchain Week, September 16-18

Montreal, September 27-29

London, September 30

Osaka, Devcon 5, October 8-11

Tokyo, October 15-17


ADDITIONAL INFO

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. The firm invests in equity, pre-sales/IEO rounds, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.

👋 Working on building new technologies? I’d love to hear about it, shoot me an email

🙏 I’d appreciate it if you forwarded this email to someone who would might benefit from it

💡If you have any content you want to share on this newsletter, please send it to me and we can make it happen

Please click hereto help me improve this newsletter and your experience by filling out this NEW survey!

China’s Digital Currency

VeradiVerdict - Issue #50

TL;DR:

  • China will soon launch a digital currency (informally called DC/EP) supplied by its central bank and distributed through several major Chinese institutions including huge banks and tech companies, like Alibaba.

  • Though dubbed a “cryptocurrency,” many have doubts whether DC/EP truly is a cryptocurrency. Its release through the government and established institutions prevent it from being truly decentralized. Many also suspect the Chinese government will use the digital currency as a means to aggregate financial data about its population since it has purview over all the transactions, unlike the pseudonymity traditionally afforded with crypto.

  • DC/EP seems intended for widespread commercial use; Chinese banking executives clarify that the currency can and will be circulated as easily as cash. A future global release is also in the works in hopes of creating more avenues for more financial transactions between China and the rest of the world.

  • China’s centralized currency differs in many key ways from popular cryptocurrencies like BTC and ETH, but ultimately, its launch will reveal some key information about the feasibility of widespread adoption of digital currencies in industrializing nations. It may not have all the boxes checked, but it still represents a major step towards a digital model for finances.

What’s up with crypto in China?

Last week, news released stating that the People’s Republic of China intends to launch a government-backed cryptocurrency through the country’s central bank. At launch, the cryptocurrency will be issued to seven major Chinese financial institutions: the Industrial and Commercial Bank of China, the Bank of China, the Agricultural Bank of China, Alibaba, Tencent, and Union Pay; the government hopes to use these financial institutions as a vector to release the currency to the Chinese population.

Sources have briefly named the Chinese digital currency as DC/EP (digital currency/electronic payments). The news of DC/EP aptly coincides with ongoing trade tensions between China and U.S. that have drastically devalued China’s fiat currency, the renminbi (the Chinese Yuan), and right before China’s largest retail day––Singles Day on November 11.

What really is DC/EP?

Many crypto experts have notable doubts that China’s DC/EP is not truly a cryptocurrency––but rather a digital currency launching with the intention of stabilizing and appreciating China’s renminbi.

Cryptocurrency is literally defined as a digital asset that uses cryptography to power financial transactions, but since the onset of Bitcoin in 2010 and the growing market of cryptocurrencies, particularly in the West, it’s gained some other key defining characteristics. Critics of China’s “cryptocurrency” note how DC/EP fails to meet these requirements.

First, cryptocurrencies are generally decentralized. The currency itself is not released from one central organization but is rather processed on top of a protocol that is orchestrated by an organization. For example, with Ethereum, the Ethereum Foundation itself does not issue ETH or any value preserved in ETH, but rather supports the technological infrastructure necessary to allow individual users to hold and trade ETH.

China’s DC/EP protocol is being launched by China’s central bank––and being distributed through major established financial institutions in the country. These institutions not only have control over the infrastructure for the distribution and trade of DC/EP but are the agents that release the currency to the public. The supply of the currency is also not algorithmically controlled, as it is with Bitcoin, but rather under complete control of China’s central bank.

DC/EP is fundamentally centralized and tied to China’s government.

Second, cryptocurrency transactions are tracked pseudonymously and privately; one of the key values of blockchain protocols is that they aggressively encrypt user information to ensure that privacy is almost-perfectly maintained, and users have total control over their assets and public knowledge of their assets. China’s DC/EP is processed on a network fundamentally tied to the government, the central bank, and the financial institutions that distribute the currency. All these agents have access to the entire transaction history of DC/EP units, meaning that privacy is not maintained the same way for DC/EP as it is on more canonical cryptocurrencies like BTC or ETH.

Ultimately, the debate on whether China’s DC/EP is a true cryptocurrency is highly debatable. It is entirely digital and presumably runs on a protocol that depends on strong cryptographic encryption, but its centralized nature prevents it from fitting into the model with which most experts and enthusiasts view cryptocurrency. DC/EP is more of an analog for China’s renminbi than a decentralized financial system designed to give users more agency over assets and information. Many argue that the digital, not physical presence, of DC/EP is the only factor that truly qualifies the currency as a cryptocurrency.

Why go crypto?

Mu Changchun, head of the Paying Division at the People’s Bank of China, offered a public explanation for China’s intentions behind DC/EP at the China Finance 40 Forum. Digital currency is no new concept to China, especially in the wake of its rapid industrialization and technology growth; much of Chinese renminbi is stored digitally in accounts held by both Chinese nationals and banks. Mu clarified that DC/EP is not designed to replace the digital renminbi in these established accounts; rather, it’s more of a fast-moving, accessible vehicle to replace physical units of China’s currency that are still in market circulation.

By design, DC/EP seems intended for widespread commercial and retail use. Because DC/EP is centrally maintained, China’s protocol can handle 300,000 transactions per second––300-fold as much as Facebook’s digital currency in-development, Libra. Mu hopes that DC/EP can and will be circulated as easy as fiat; it’s created for mainstream users for day-to-day payments, not niche crypto communities.

China also eventually plans to release DC/EP globally, with hopes that it provides an additional channel for international trade with China. Global confidence in Chinese currency, however, has not been promising––particularly in recent months; US-Chinese trade tensions have driven the Chinese renminbi to its lowest value ever at 6.93 renminbi per USD in early August. Poor global confidence in China’s money market might throw a wrench in future Chinese globalist trade agendas with DC/EP.

Why China?

China has been both an Asian and a global leader in blockchain infrastructures and cryptocurrencies; east Asia is one of the hottest markets for crypto innovation and trading. It’s no surprise that a widespread launch of a digital currency might occur in China before any other Western nation or financial superpower. China is also no stranger to digital finances––WePay (by WeChat) and AliPay (by Alibaba) are both mobile payments platforms with huge user bases in China.

Other key factors are at play, too. Namely, the centralized nature of DC/EP makes it significantly easier to launch, as it fits right into China’s standing financial system. DC/EP is supplied by the central bank and distributed through existing financial institutions––a model fairly parallel to how they regulate fiat currency, too. In the US, decentralized cryptocurrencies face resistance from the US Government and large banks which are not designed handle a decentralized financial infrastructure. Centralization reduces the barriers for widespread adoption, making it exceedingly easier for the Chinese government to orchestrate a successful launch and integrate it with existing institutions.

Many also theorize that DC/EP signals more aggressive Chinese surveillance of financial transactions. A centralized digital currency can literally be tracked to highly specific accounts, users, and payments. Some suspect that widespread adoption of DC/EP provides an added incentive for the Chinese government to spy on the people’s transactions and aggregate more financial data. Ironically, many of these suspicions parallel concerns raised with Facebook’s Libra; Facebook is notorious for aggressively harvesting user data, and Libra may be little more than a vehicle to aggregate financial information.

Final Thoughts

Ultimately, China’s new digital currency is not a cryptocurrency in the way that it’s conventionally conceived. DC/EP is a centralized currency issued in digital form, not a decentralized financial asset designed to uphold user ownership and privacy over their finances.

Still, the eventual launch of DC/EP and the financial aftermath might reveal some key signals about digital and decentralized currencies, particularly in East Asia; if China is able to successfully drive widespread adoption of DC/EP, it might serve as an effective starting model for other institutions and governments looking to move towards a more digital financial system. Issues with the protocol’s centralization might also drive key developments in decentralized infrastructures for finances.


DIGESTS

The 2019 Leaders in Crypto Education

In this year’s report, we outline findings about rising student interest in crypto, and an increasing number of courses focused on blockchain, cryptocurrencies, or bitcoin that are being taught across a range of disciplines. 

Big Four and Blockchain: Are Auditing Giants Adopting Yet?

At this point, all of the Big Four companies have at least demonstrated some interest in blockchain, albeit their approaches tend to differ. 


IN THE TWEETS


NEWS

Alibaba, Tencent, Five Others To Receive First Chinese Government Cryptocurrency

China’s central bank will launch a state-backed cryptocurrency and issue it to seven institutions in the coming months, according to a former employee of one of the institutions who is now an independent researcher. 

Should Crypto Stay Decentralized or Are CBDCs Better? Experts Answer

There are several countries around the world that are developing national blockchain-based digital currencies — such as Venezuela and its state-owned Petro (PTR), China and its plans to issue a government-backed digital currency, etc.


REGULATIONS

US Congress Urged to Regulate Crypto Sector Under Bank Secrecy Act

The Financial Integrity Network (FIN) — a Washington D.C.-based advisory firm — has urged the United States Congress to regulate firms in the cryptocurrency sector under the Bank Secrecy Act (BSA).

Andreessen Horowitz Co-Founder: Crypto a Solution to Web's Challenges

Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, has said that cryptocurrencies could solve some of the internet’s biggest challenges.


NEW PRODUCTS AND HOT DEALS

Binance Acquires Cryptoasset Trading Platform JEX

Binance is pleased to announce the acquisition of JEX, a crypto-asset trading platform offering spot and derivatives trading services. 

Crypto Lender Dharma Pivots to Stablecoin Savings Accounts

On Thursday, Dharma Labs announced it would be relaunching its services in closed beta beginning with a new savings product.

South Korea’s Kakao May List Its Klay Token on Chinese Exchange

South Korean internet giant Kakao is reportedly planning to list its cryptocurrency Klay on a Chinese crypto exchange and one local exchange.


MEET WITH ME

New York City, September 3-6

Shanghai, Shanghai Blockchain Week, September 16-18

Montreal, September 27-29

London, September 30

Edinburgh, October 1-4

Osaka, Ethereum DevCon5, October 7-11

Tokyo, October 15-18


ADDITIONAL INFO

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. The firm invests in equity, pre-sales/IEO rounds, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.

👋 Working on building new technologies? I’d love to hear about it, shoot me an email

🙏 I’d appreciate it if you forwarded this email to someone who would might benefit from it

💡If you have any content you want to share on this newsletter, please send it to me and we can make it happen

Please click hereto help me improve this newsletter and your experience by filling out this NEW survey!

About Berlin

VeradiVerdict - Issue #50

I spent most of last week in Berlin for the Web3 Summit and the city might be the most developer-centric ecosystem outside of Silicon Valley.

I still remember some of the earliest equity deals in Berlin being funded were Ascribe (digital art on the blockchain) and Bitbond (p2p loans using Bitcoin). Since then, Ascribe changed their focus and name to BigchainDB and now Ocean Protocol, a decentralized data exchange protocol. Bruce and Trent really helped spearhead the community in Berlin. The deep tech and cypherpunk background of the city help gravitate folks to crypto. Bitbond on the other hand recently performed the first German STO (security token offering).

One of our portfolio companies Polkadot has a strong base in Berlin while other startups can enjoy working in a blockchain co-working space called Full Node. Investors in the city ranged from traditional VC funds like Earlybird VC and Blueyard Capital to more crypto-native ones like 1kx and Greenfield One.

What I really noticed during the meetups that I attended was that the majority of the attendees were developers. I believe that there are a wealth of developers interested in working on blockchain-related projects in Berlin. Companies like Celo and Kraken have seen this and even set up remote offices in Berlin. I think more companies in the US should look to Berlin to hire developers and possibly set up a remote office, as the talent and cost-benefits are apparent. A lot of capital has gone into open-source projects in Berlin but I’m looking forward to more commercial blockchain companies/projects emerging from the city. Overall, strong community and lots of promise.

After a long week in Europe, the trip ended with a lovely dinner hosted by the folks at Vega, picture below:


DIGESTS

Overstock CEO Patrick M. Byrne Resigns

 "Already far too controversial to serve as CEO"

2019 Crypto Hedge Fund Report

This report provides an overview of the global crypto hedge fund landscape and offers insights into quantitative elements such as liquidity terms and performance, as well as qualitative aspects such as best practice with respect to custody and governance.


IN THE TWEETS


NEWS

Bitcoin’s reported market dominance is approaching 70%, but in reality it is above 90%

An analysis by Arcane Research shows how the real market dominance of bitcoin is way higher than what is traditionally reported.

Amazon Cloud Outage Caused Major Issues at Some Crypto Exchanges

Problems with Amazon’s cloud service, AWS, are disrupting services at some cryptocurrency exchanges on Friday.


REGULATIONS

Bank of England Governor suggests a Libra-like currency should become the world’s reserve currency

Mark Carney, the current governor of the Bank of England, has offered a proposal that would replace the U.S. dollar with a digital currency similar to Facebook's Libra, according to a report by Bloomberg.


Facebook Libra Already Facing an EU Antitrust Probe: Report

Facebook is reportedly already under investigation by the EU over antitrust issues related to its Libra cryptocurrency project.


NEW PRODUCTS AND HOT DEALS


Crypto Futures Exchange Deribit Launching Bulk Derivatives Trading

Deribit claims it’s becoming the first crypto futures and options exchange to provide large-volume trades of bitcoin and ether derivatives.


Korean Banks Back $7.4 Million Funding Round for Blocko

Blocko, a South Korean blockchain firm working on enterprise applications of the tech, says it’s raised 9 billion Korean won (around $7.44 million) in an Series B+ round.


MEET WITH ME

New York City, September 3-6

Shanghai, Shanghai Blockchain Week, September 16-18

Montreal, September 27-29


ADDITIONAL INFO

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. The firm invests in equity, pre-sales/IEO rounds, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.

👋 Working on building new technologies? I’d love to hear about it, shoot me an email

🙏 I’d appreciate it if you forwarded this email to someone who would might benefit from it

💡If you have any content you want to share on this newsletter, please send it to me and we can make it happen

Please click here to help me improve this newsletter and your experience by filling out this NEW survey!

London Recap

VeradiVerdict - Issue #49

Last week, I was in London meeting with companies and investors. I was able to meet a few friends for drinks on the rooftop of The Ned on a clear day!

International trips are very insightful, as you really get to learn/get updated on a different ecosystem.

Did you know that London ranks just behind San Francisco in terms of FinTech unicorns? Check out this article which says that San Francisco has 9 unicorns while London has 7. London is the FinTech hub of Europe and theoretically should have the characteristics for a lively blockchain startup ecosystem.

Yet while London is closing in on San Francisco on the traditional FinTech side, it seems farther away on the blockchain side. Pitchbook has San Francisco with more than 3x as many VC-backed blockchain startups as London. The two London startups that have most of their team members in the city and are achieving scale are Blockchain (which just launched their exchange) and Elliptic (which has been doing fraud analytics on the blockchain for a while and is expanding its team).

There are a few different challenges that London crypto faces:

  • Banking - Getting a UK bank account is extremely tough for companies, as funds and companies have to resort to getting banks that are outside of the country. For example, Coinbase just had their Barclays bank account shut down.

  • Regulations - The equivalent of the SEC in the UK is the FCA, and while they have been progressing on their framework regarding licensing of crypto companies, the process currently still takes quite a while.

  • Funding - Institutional limited partners in Europe are pretty conservative and have not started investing into crypto funds yet. The crypto funds that exist are smaller in AUM size. The legacy traditional VC funds might have one person on their team dedicated to crypto and have barely scratched the surface in terms of deals. Some of these dedicated crypto folks end up leaving due to the inactivity in the space.

What can be done to change this?

  • More education on the conference level, either separate tracks or even a large-scale industry conference. Early this year, Fabric Ventures organized the Web3 Track at CogX.

  • Accelerators or blockchain verticals within accelerators or co-working spaces dedicated to the space should exist. I think these will happen sooner rather than later

  • University participation in conferences and hackathons would help. The ChainSpace team was from UCL while the upcoming DeFi Summit London is going to be at Imperial College. What about Cambridge and Oxford?

Once there are more quality blockchain startups in London, it will drive traditional VC and crypto fund activity into the ecosystem, create use-cases that will educate the local LP base, and then drive more LP capital into local funds, completing the flywheel.

Thanks to all the folks in London for the inspiration.

DIGESTS

Cleared to Launch

Bakkt’s bitcoin futures and warehouse to debut in September

Startup Success Outside Silicon Valley: Data from Over 200 Exits in 17 Cities

The Bay Area has been the best place to build a startup for the last two decades. Some experts are questioning if that’s still true, but it’s clearly not the only place an entrepreneur can create a transformative company.


IN THE TWEETS


NEWS

Ethereum Coders Approve 6 Changes for Upcoming Istanbul Hard Fork

Ethereum core developers finalized late Thursday a list of six different code changes to be activated for ethereum’s next system-wide upgrade, Istanbul.

Bitcoin Price Spikes in Argentina, Hong Kong

Data gathered by Bloomberg reveals that, despite a recent global drop-off in cryptocurrency price, bitcoin is attracting investment from Argentina and Hong Kong.


REGULATIONS

Bakkt confirms September launch date after getting green light from regulators

Bakkt says it will launch its physically-delivered bitcoin futures product in September – months after its initial planned deadline.

IRS Sends Warnings to Crypto Investors Over Misreported Trades

The U.S. Internal Revenue Service (IRS) is stepping up a campaign to send warning letters to cryptocurrency investors, urging them to make sure that they have accurately reported all transactions for tax purposes.


NEW PRODUCTS AND HOT DEALS

Coinbase Custody acquires Xapo’s institutional business, becoming the world’s largest crypto custodian

Crossing $7 billion in assets under custody, Coinbase Custody is now the most popular and trusted choice for institutions to store cryptocurrency.


MEET WITH ME

Berlin, Web3 Summit, August 19-21

Los Angeles, August 23

New York City, September 3-6

Shanghai, Shanghai Blockchain Week, September 16-18

Montreal, September 27-29


ADDITIONAL INFO

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. The firm invests in equity, pre-sales/IEO rounds, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.

👋 Working on building new technologies? I’d love to hear about it, shoot me an email

🙏 I’d appreciate it if you forwarded this email to someone who would might benefit from it

💡If you have any content you want to share on this newsletter, please send it to me and we can make it happen

Please click here to help me improve this newsletter and your experience by filling out this NEW survey!

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