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Episode 108 of Season 4 of The Scoop was recorded live with The Block’s Frank Chaparro and Larry Cermak and eGirl Capital Co-Founder, Hedgehog.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests can be sent to podcast@theblockcrypto.com.

Crypto-native venture firm eGirl Capital is a syndicate of pseudonymous individuals who invest in early-stage web3 projects, and provide colorful market commentary on Twitter.

In this special segment of The Scoop, Frank Chaparro is joined by The Block’s VP of Research, Larry Cermak, and eGirl Capital’s Co-Founder, Hedgehog, to discuss how this crypto bear market compares to previous cycles, and to explain how investors can spend this drawdown building an edge for the next bull market.

According to Hedgehog, who is primarily a directional trader, crypto market conditions are suffering because there is less credit in the system. “Less credit leads to less liquidity and less volume,” says Hedgehog, “It’s really a wasteland out there for us at the moment.”

As data from The Block shows, daily crypto exchange volume is close to half of what it was at the start of the year–although have ticked up in recent days.

During this period of reduced market activity, Cermak says it is important not only to be patient, but also to stay engaged:

“A lot of people stay patient, but actually stop paying attention day-to-day. Those people that actually stay engaged… are in the best position for the next cycle, and they’re also the ones that will be able to the most accurately predict when activity starts picking up again.”

During this episode Cermak, Chaparro, and Hedgehog also discuss:

• The pros and cons of crypto conferences
• How some crypto traders are turning to other assets
• Why some recent DeFi ‘exploits’ were likely inside jobs

This episode is brought to you by our sponsors Tron, Ledn, Athletic Greens
About Tron
TRON is dedicated to accelerating the decentralization of the internet via blockchain technology and decentralized applications (dApps). Founded in September 2017 by H.E. Justin Sun, the TRON network has continued to deliver impressive achievements since MainNet launch in May 2018. July 2018 also marked the ecosystem integration of BitTorrent, a pioneer in decentralized web3 services boasting over 100 million monthly active users. The TRON network completed full decentralization in December 2021 and is now a community-governed DAO. | TRONDAO | Twitter | Discord |

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Build a Foundation for Better Health. It’s time to reclaim your health and arm your immune system with convenient, daily nutrition! Fill nutrient gaps, promote gut health, and support whole-body vitality with AG1. One daily serving delivers a potent blend of 9 health products—a multivitamin, minerals, probiotics, adaptogens and more—working together to help you feel like your healthiest self. For more information visit AthleticGreens.com/Scoop

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The European Commission will “soon” come out with a legislative proposal on a digital euro, European Central Bank President Christine Lagarde said in a video statement at the “Towards a legislative framework enabling a digital euro for citizens and businesses” conference.

“The timely adoption of a legal framework for the digital euro would give all stakeholders the necessary legal certainty to prepare for its possible introduction and send a strong signal of political support,” Lagarde said. 

“I’m very much looking forward to the legislative proposal for establishing a digital Euro, which the European Commission will propose shortly,” she added.

The European Central Bank’s digital euro project is centered around making central bank money digitally available. It launched an investigation into developing a central bank digital currency in 2021 and sought external opinions on the development of the digital euro, with public consultations, from April to June. 

The two-year examination of the digital euro will conclude in September 2023, along with an indication of whether the European Central Bank will decide to launch a central bank digital currency.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Meta intends to cut thousands of employees in the second week of November, the Wall Street Journal reported, citing people familiar with the matter.

With over 87,000 employees at Meta, the layoffs could stand to be some of the largest employee reductions at a big tech firm.

These layoffs come two months after Meta implemented a hiring freeze in September. The firm had noted it will whittle costs down 10% in part due to staff reduction.

Meta is not alone in cutting headcount. Bitmex, Dapper Labs and Mythical Games are all web3 firms that laid off employees in the first week of November. Numerous other tech firms have trimmed staff amid a difficult business environment.

Meta has uniquely struggled to make its metaverse-focused business model take off — after doubling down on its metaverse effort since October of 2021. Meta’s metaverse arm Reality Labs saw a loss of $3.7 billion in this year’s third quarter, with a year-to-date loss of $9.4 billion.

The company has also fallen short on user count goals for its flagship Horizon Worlds initiative, according to WSJ. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Alameda Research CEO Caroline Ellison said Sunday that leaked information about the firm’s balance sheet only tells part of the story.

On Nov. 2, CoinDesk reported that a leaked balance sheet from Alameda listed $3.66 billion in “unlocked FTT,” referring to the token of crypto exchange FTX, as well as $2.16 billion worth of “FTT collateral.” The leaked balance sheet showed a total of $14.6 billion in assets and some $8 billion in liabilities, which include $7.4 billion worth of loans.

The leaked balance sheet and the FTT holdings further illustrated the close links between the two companies.

Ellison tweeted earlier today that the leaked information on Alameda’s balance sheet misses billions worth of other assets.

A few notes on the balance sheet info that has been circulating recently:
– that specific balance sheet is for a subset of our corporate entities, we have > $10b of assets that aren’t reflected there

— Caroline (@carolinecapital) November 6, 2022

Ellison continued: “The balance sheet breaks out a few of our biggest long positions; we obviously have hedges that aren’t listed. Given the tightening in the crypto credit space this year, we’ve returned most of our loans by now.”

Binance CEO Changpeng “CZ” Zhao said later that the firm would begin selling off its FTT holdings “due to recent revelations that have came to light.” Zhao didn’t clarify exactly how much of FTT this would entail, though he said Binance previously received about $2.1 billion worth BUSD and FTT “[a]s part of Binance’s exit from FTX equity last year.”

Ellison responded, offering to buy Binance’s FTT holdings at $22 per token.

FTX CEO Sam Bankman-Fried also responded to CZ’s post: “I wish the best to everyone driving the industry forward. I respect the hell out of what y’all have done to build the industry as we see it today, whether or not they reciprocate, and whether or not we use the same methods. Including CZ.”

The public announcements on Sunday sent FTT’s price gyrating, according to TradingView data.

FTTUSD Chart by TradingView

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Marketplace giant OpenSea laid out the first of a suite of tools for its users this weekend, allowing creators of new NFT collections to enforce royalties on-chain. 

Debuting on Nov. 8, the company said it wants to “take a thoughtful, principled approach to this topic,” following a protracted debate among players in the market about the correct course of action on enforcing payments to creators.

The code to which it is giving creators access restricts NFT sales to marketplaces that enforce creator fees. 

“It’s clear that many creators want the ability to enforce fees on-chain & we believe that choice should be theirs–not a marketplace’s–to make,” the company wrote on Twitter. “So we’re building tools we hope will balance the scales by putting more power in creators’ hands to control their business model.”

“We’re interested in making a better system,” OpenSea CEO Devin Finzer said in an interview with The Block shortly after announcing the move. “Our thinking is always to take a step back and think of all the possible solutions to the problem rather than going with a portion of the industry.”

In the coming months, the company will also produce additional tools serving a similar purpose and solicit community feedback on the developments. 

For existing collections wanting options to enforce creator payments, it said that it would wait to roll out any changes until at least Dec. 8.

The company is considering a range of approaches. These may include continuing to enforce off-chain fees for some subsets of collections, allowing optional creator fees or collaborating on other on-chain enforcement options for creators. The smart contracts of some existing collections may already allow OpenSea’s upgrade, which would enforce royalties on-chain, while other contracts will be a bigger challenge to change, Finzer said. 

The moves come as marketplaces across the board are scrambling to set out their stalls as the primary venue for NFT trading. Some marketplaces, such as Solana marketplace Magic Eden, have opted to cut creator fees altogether or make them optional, while others such as Stepn’s new NFT marketplace Mooar, have moved to a subscription model.

OpenSea’s voice on the subject had been conspicuously absent, as the marketplace that clocks the lion’s share of NFT market trading volume. 

“The last few months haven’t felt WAGMI,” OpenSea wrote on the phenomenon.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

BetDEX, a sports betting exchange built on a blockchain, will open on Solana mainnet on Nov. 17.

The sports betting exchange will go live at the beginning of the FIFA World Cup in Qatar, said Varun Sudhakar, the firm’s CEO. Users will be able to place bets on football matches, with no fees for bets placed on World Cup matches.

BetDEX is currently available in countries across Europe, Asia, South America and Africa. The sports exchange is fully licensed and regulated in the Isle of Man under the Online Gambling Regulation Act. 

The FIFA World Cup in Qatar has come under scrutiny in the build-up to the tournament. Concerns have been raised over the conditions workers have had to endure to build the stadiums required to host the tournament, among other issues. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto prices ticked up over the past seven days as some crypto-related stocks gained after earnings. 

Bitcoin was trading at $21,214 today, up about 2% over the past week, while ether gained 0.1% in the same period to trade at $1,621, according to data via CoinGecko. 

Crypto Heatmap chart by TradingView

The U.S. Federal Reserve raised the federal funds rate by 75 basis points for the fourth consecutive time on Wednesday. The target range is now 3.75%-4%, marking the highest point since January 2008. 

Markets whipsawed after the announcement as Fed Chair Jerome Powell said it’s premature to think about pausing rate increases. Still, the Federal Open Market Committee indicated its latest rate hike signaled a possible end in sight.

Coinbase’s third-quarter earnings on Thursday revealed expenses had fallen. Total expenses fell to $1.1 billion from $1.8 billion in the previous quarter.

However, the exchange also reported dwindling volumes of $159 billion — less than estimates of $191 billion. 

Block also reported earnings after the close on Thursday. Jack Dorsey’s company had a net loss of $14.7 million in the third quarter. Bitcoin sales volume was $1.76 billion.

Block’s bitcoin gross profit fell to $37 million during the quarter, down from $41 million in the second quarter. 

Following earnings, both firms’ shares soared on Friday. Coinbase and Block were up 12% shortly after the open, outpacing gains by the S&P 500.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

November kicked off with a flurry of crypto earnings last week and another hawkish Fed news conference. Here’s whats on the docket for the coming week:

Web Summit kicked off in Lisbon last week with a host of crypto-focused events and speakers; this week, Portugal’s capital is the venue for Solana’s Breakpoint. Elsewhere, crypto-related earnings continue and U.S. inflation data for October will be released on Thursday. 

Watch for news from Breakpoint

Solana’s Breakpoint conference continues in Lisbon this week. It began on Friday and will run through Monday.

The event features panels and talks from a host of developers and founders working in the Solana ecosystem. Jump Crypto’s Kanav Kariya joins Igor Ddruzhinin of P2P and Wormhole engineer Csongar Kiss on Monday to debate multi-chain vs. cross-chain.

Crypto Earnings

Coinbase, MicroStrategy, and Block all shared third-quarter earnings last week, and more crypto-related firms are scheduled for this week. 

On Tuesday Marathon Digital shares its earnings after the close. Galaxy Digital delivers its results pre-market on Wednesday with Roblox also coming in then. On Thursday,  Hut 8 and Bakkt will share their third-quarter results. 

Many speculators will be keeping a close eye on crypto miners’ earnings. Miners are increasingly coming under pressure, with several firms facing potential solvency issues. 

U.S. inflation data for October drops on Thursday

CPI figures for October are scheduled for release on Thursday; keep an eye on the data to see if the Fed’s rate hikes are beginning to taper prices.

The Fed has continued its hawkish stance, while allowing that the pace of interest rates may slow. Inflation was hot in September, rising by 0.4% month-on-month and 8.2% year-on-year.  

Americans will have cast their votes in the midterm elections by the time U.S. inflation data drops.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Payments firm Circle is bringing Euro Coin to the Solana blockchain and expanding its cross-chain protocol to Solana in the first half of 2023.

Circle only launched Euro Coin as a European take on its popular stablecoin USDC in June. Euro Coin works in the same way but is pegged to the euro instead of the dollar. It’s currently live on the Ethereum blockchain.

FTX will add support for the Euro Coin when it goes live on Solana, Circle said in a statement. Circle said other decentralized finance protocols have also expressed interest in supporting the stablecoin when it launches.

“The availability of Euro Coin on Solana unlocks new use cases for instant FX, provides optionality for traders with a new base currency, allows for Euro Coin lending and borrowing, and will be available alongside USDC as a payment currency in Solana Pay,” said Sheraz Shere, head of payments at Solana Labs.

Going cross-chain

Circle is also planning to expand its cross-chain transfer protocol — which is yet to launch — to Solana.

This protocol was announced in September and is set to go live in the beginning of 2023 on Ethereum and Avalanche. Circle expects to bring it to Solana in the first half of 2023.

Cross-chain transfer protocol lets crypto projects transfer USDC across different blockchains. It uses versions of the stablecoin native to each chain rather than using wrapped tokens.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Friktion, a Solana-based portfolio management platform, debuted a crypto lending product for institutional clients who are in the market for access to higher yields in the DeFi space.

The company said its crypto lending product will provide access to under-collateralized loans for borrowers. This type of loan does not require the borrower to put up collateral that is equal to or greater than the value of the loan. As such, it can be a capital-efficient form of borrowing.

Friktion’s crypto lending will offer enhanced lender protection, the company said. The lending product will comprise tranched pools ranging from junior tranches to senior tranches. Junior tranches will offer higher annualized yields of between 11% and 17% in return for covering senior lenders against loan defaults. Loan pools will also feature a diverse cast of borrowers to reduce counterparty risks. Lenders in the senior pool can earn annualized yields of between 8% and 10%.

Commenting on its risk-management strategy, the company told The Block that third-party underwriters called “conductors” will do due-diligence checks on borrowers before launching loan pools.

“Throughout the tenure of the loan pool, conductors will also perform real-time risk monitoring of borrowers’ positions both on exchanges and on-chain,” the company told The Block, adding, “In an unlikely event of default, the junior pool serves as first loss capital and provides default protection to the senior pool.”

Under-collateralized loans pose significant risks for lenders, especially when borrowers are unable to repay them. Indeed, under-collateralized lending and the crypto bear market collapse led to bankruptcies of the likes of Celsius and Voyager.

DeFi lending, on the other hand, is primarily over-collateralized. Most of the major DeFi lenders like Aave and Compound require borrowers to put up collateral in excess of the loan amount. According to Friktion, this collateral requirement presents a significant barrier for institutional players in the DeFi lending space amid concerns about capital efficiency. These concerns are further worsened by the current decline in DeFi yield due to the year-long crypto bear market.

Despite these problems, Friktion says there is a growing demand for institutional DeFi credit, especially under-collateralized stablecoin loans that offer capital efficiency for borrowers.

“As adoption from sophisticated market participants continues to grow, there is a natural demand for institutional-grade lending solutions that provide enhanced transparency, risk management, and lender protection,” the company said, adding, “This is a positive signal which not only indicates recovering sentiment but also demonstrates the maturation within the crypto lending market.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.