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Quick Take

• In this weekly series, we dive into some of the most interesting data and developments across the Layer 1 blockchain landscape, from DeFi and bridges to network activity and funding
• Emerging L1 DeFi ecosystems are starting to contend with unique technical challenges related to performance and scalability while more established chains deal with the fallout of recent network outages and developer scandals
• This week, we take a look at Cardano, Harmony, Fantom, and Solana

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HitPiece had a simple business model: sell non-fungible tokens (NFT) of music. The problem? Musical artists didn’t know that their work was being sold on HitPiece.

This caused a huge outcry of artists and music fans alike. While the music NFT platform appears to have started out with the intention to help artists perpetually earn revenue from their sales, it has now been denigrated so hard that it pulled its marketplace off its site. This begs the question: how did we get here? 

HitPiece was originally launched in 2020 by Rory Felton, a music producer who co-founded the indie record label The Militia Group which was later acquired by Sony Music, along with Jeff Birmingham, an early investor in Spotify. In January, Felton announced that the startup raised $5 million in seed funding on the podcast Business Builders.

The two intended for HitPiece to be “the place for music NFTs online,” Felton said on the podcast. In the beta version of HitPiece, users could collect 1/1 edition NFTs for every song in the world that was built on top of Spotify’s API. 

“The idea is that you show off to your friends or people around the world that you own the greatest HitList you can create of all your favorite songs,” Felton explained on the podcast. “The artist gets royalties from not only the initial auction but also every time it’s traded, so it becomes a perpetual revenue stream for artists and rights holders.” 

However, it seems that HitPiece did not notify artists that NFTs of their work were being sold on the platform, nor did they confirm that these artists wanted NFTs of their music in the first place — which appears to be at the core of most user’s backlash. 

“Yo @joinhitpiece. Someone has minted my work as NFTs on your website without my approval. Please remove these immediately. I did not mint these, I would never mint my work as an NFT, and this was done without my permission,” wrote a Twitter user named Jeremy Blake. 

Users also claimed that, since HitPiece only accepted debit or credit cards as opposed to cryptocurrency for NFT payments, there would be no transaction on the blockchain stating that buyers owned a HitPiece NFT. 

After immense backlash, HitPiece apologized to its users on February 2 and promised to regroup. “Clearly we have struck a nerve and are very eager to create the ideal experience for music fans,” HitPiece wrote on Twitter. “To be clear, artists get paid when digital goods are sold on HitPiece. Like all beta products, we are continuing to listen to all user feedback and are committed to evolving the product to fit the needs of the artists, labels and fans alike.” 

HitPiece did not respond in time to clarify how artists would be compensated for their work. 

It’s unclear where the platform will go from here. But users hope that, with the controversy surrounding HitPiece’s business model, more focus will be put on the artists affected by the platform.

“i hope the h*tpiece discourse can pivot away from giving the site attention and a platform, and move towards giving an example to the masses to why directly supporting artists is so important, and that shit like this isn’t uncommon at all cuz we’re all constantly being exploited,” a Twitter user wrote.

© 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.

Quick Take

• While Jump Trading has built its name and reputation in the traditional finance world being one of the largest traders by volume, its been involved with the crypto sector in some capacity since 2015
• Throughout 2021, Crypto trading firms, including Jump ramped up their venture investing in early-stage startups and projects
• In total, the firm has deployed capital to at least 99 startups and protocols across 15 verticals, which The Block has mapped out.

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According to a series of etherscan transaction records, an attacker has just exploited Wormhole, a bridge between the Ethereum and Solana blockchains, for close to $256 million in ETH.

Wormhole is a bridging protocol that enables assets to move across various blockchain protocols. When a user sends assets from one chain to another, the bridge locks the assets and mints a wrapped version of the funds on the destination chain. It is not yet clear how the attacker executed the exploit, but it resulted in the theft of 93,750 ETH, worth about $256 million at current prices.

This is one of the largest exploits of a decentralized finance protocol to date.

Wormhole tweeted that the platform is down for maintenance as it investigates the attack and will provide updates via its Twitter account. An address associated with the Wormhole deployer sent an on-chain message offering the attacker a whitehat agreement with a bug bounty of $10 million for the details of the exploit and return of the wETH minted in the attack. 

© 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.

Quick Take

• January saw a considerable amount of C-suite hires in the crypto industry.
• Plus, there are a lot of new faces on the crypto company boards.

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Hearings on stablecoins before both the House and Senate in the next two weeks are scheduled to feature just one witness: The Treasury official spearheading recent work on stablecoins, sources tell The Block. 

Nellie Liang, the Treasury’s undersecretary for domestic finance, is slated to appear before the House Financial Services Committee on February 8 and before the Senate Banking Committee will host Liang on February 15, according to four staffers and sources with knowledge of the matter.

In both cases, Liang is likely to be the sole witness, though sources indicate that the plan for the Senate hearing remains more malleable. 

Neither committee has published their witness lists as of press time. The Financial Services Committee only includes the hearing title: “Digital Assets and the Future of Finance: The President’s Working Group on Financial Markets’ Report on Stablecoins.” 

The Banking Committee, meanwhile, had not yet added the hearing to its schedule, only including it in an email to press that mentions a hearing called “Examining the President’s Working Group on Financial Markets Report on Stablecoins.”

In both cases, the committees are planning on a deep dive into the report itself.

While the crypto industry may be displeased with not having a seat at the table, they have been at a number of other recent hearings, including another focused on stablecoins before the Banking Committee in December. 

Liang’s centrality to the conversation makes sense. The President’s Working Group is a joint effort involving the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission. However, the Treasury Secretary — currently Janet Yellen — chairs the President’s Working Group (PWG). 

Given that the PWG’s stablecoin concerns focused on prudential risk — specifically, whether these tokens are verifiably backed by appropriate funding — Yellen delegated the report to Liang. 

Beyond summarizing the stablecoin market for policymakers, the report made recommendations for more transparency in stablecoin reserves and redemption practices. Most controversially, the PWG report advised Congress to pass new law limiting stablecoin issuance to insured depository institutions.

That effectively limits the field to banks, though stablecoin issuer Circle has said it is seeking that registration while also denying that it should be required of future issuers. 

Limiting issuance has proved controversial with lawmakers on both sides of the aisle, as it seems to lock in incumbents, whether they be established crypto firms like Circle or traditional giants of finance like JPMorgan Chase, and lock out potential newcomers. The Treasury has, however, seemed to maintain its support for the restriction, a push that Liang is still spearheading. 

The report subsequently leveled the threat of action by the Financial Stability Oversight Council in the absence of new legislation on stablecoins. However, speaking with Politico’s Victoria Guida shortly after the report’s November release, Liang said “in the absence of legislation, FSOC can try to take some actions. But it’s not a full substitute.”

The Treasury’s press office did not respond to a request for comment as of publication time. 

© 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.

Pixel Vault, a decentralized crypto media group, announced Thursday that it raised $100 million in funding from the venture capital firms Velvet Sea Ventures and 01A. 

Pixel Vault intends to use the funding to help launch a multi-franchise non-fungible token platform for individuals to own digital content in movies, television, comics, video games and other media. 

PUNKS Comic Issue #1 from Pixel Vault.

Pixel Vault is the creator of PUNKS Comics, an NFT project in which token holders receive access to a web comic. The PUNKS Comic Issue #1 involved the fictionalized life of the crypto influencer Beanie while Issue #2, spurred from a collaboration with the popular NFT project Bored Ape Yacht Club, features eight Elite Apes fighting a bad guy to win a bounty. 

Since releasing its tokenized comics in May of 2021, Pixel Vault has raised over 100,000 ETH in sales, according to a press release. 

Pixel Vault also has partnerships with Fractional.art, a platform that breaks down expensive NFTs into affordable sub-tokens, as well as the sportswear brand Adidas Originals.

© 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.

Grayscale Investments has launched the Grayscale Future of Finance ETF, according to an announcement issued on Wednesday. The move marks the crypto investment giant’s maiden foray into the exchange-traded fund market.

Grayscale’s new ETF will trade under the GFOF ticker and track the Bloomberg Grayscale Future of Finance Index. Launched in January, the GFOF index tracks 22 companies associated with several U.S. and non-U.S. digital asset-linked equities.

Details of the ETF show that America’s fifth-largest commercial lender U.S. Bank will act as the fund’s service provider and administrator while broker-dealer Foreside will be the distributor of the fund.

According to the announcement, these companies represent important sectors of the emerging digital economy including exchanges, asset managers, technology providers, and crypto mining companies among others.

GFOF will, however, not include companies that hold bitcoin treasuries as well as firms that manufacture chips for crypto miners. Digital payment processors will also not be captured by Grayscale’s new ETF.

GFOF now joins a growing list of funds that track crypto-linked securities including. Some of the current players in the field include the NFT-tracking index fund launched by Bitwise and Valkyrie’s innovative balance sheet ETF.

Before launching this ETF, Grayscale had also stated plans to convert its flagship Bitcoin Trust to a bitcoin ETF.

© 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.

Nischal Shetty, founder and CEO of Indian crypto exchange WazirX, has an ambitious goal of building an “infinitely scalable” blockchain and serving billions of users.

To that end, Shetty has unveiled his new project named Shardeum, in collaboration with former NASA engineer Omar Syed. Shardeum is building an Ethereum Virtual Machine-compatible blockchain using the sharding technique.

Sharding, as the name suggests, helps split blockchain infrastructure into smaller pieces in an attempt to scale the network. Sharding essentially helps increase block space for more transactions and reduces gas fees.

Several blockchain projects, including Ethereum 2.0, NEAR, Harmony One, and Zilliqa, are working on implementing or have implemented sharding techniques for their networks.

Shetty told The Block in an interview that Shardeum’s unique advantage is that its base protocol layer has already been built, and now a smart contract platform is getting developed. Shardus, where Syed works as a blockchain architect, has built the base protocol.

Shardeum’s alphanet is scheduled to launch by April, betanet in the third quarter of this year, and mainnet towards the end of the fourth quarter of this year.

Shetty further said that Shardeum will be an open project; anyone can join as a validator and help decentralize the network. Shardeum aims to support a million transactions per second, said Shetty, as opposed to thousands of transactions per second by current fast blockchains.

But the layer-1 blockchain space is already competitive, so how will Shardeum attract developers and users? Shetty said the project’s open-source approach, tokenomics, and technology will help build a strong community.

Shardeum plans to keep a majority of its native token SHARD (SHM) for the community, including validators and developers, said Shetty. The project also looks to raise funds from venture firms, but those investors or the Shardeum team won’t hold a large amount of tokens, Shetty added.

He declined to share how much Shardeum is looking to raise but said it intends to raise enough to be competitive. Earlier this month, the NEAR Foundation raised $150 million in a private token sale from high-profile investors, including Three Arrows Capital, Andreessen Horowitz (a16z), Jump Capital, and Alameda Research.

Shardeum’s immediate priorities include setting up a foundation, releasing a whitepaper, raising funds, and expanding its team. There are currently around 20 people working for Shardeum in the US and India, and Shetty plans to increase the team size to around 75.

© 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.

SINGAPORE, Jan 18, 2022 — Atlas Technology Management Pte. Ltd (Atlas) theSingapore headquartered technology group and one of the world’s largest companies application specific computing has said in its year end note that it expects aggressive growth from its bitcoin mining operations in 2022 and that it sees an abundance of opportunities to expand its services in the face of a Web 3.0 future. 

“Atlas is looking to roar into the Year of the Tiger on the back of a successful and transformative 2021. Despite some headwinds and the persistent uncertainty withtheCOVID pandemic, the investments and partnerships that were made over the past 12months have, in our minds, uniquely positioned us to seize on opportunities in 2022for unprecedented growth.” 

Built for growth 

Atlas has full confidence in the long-term growth of the high-performance and application specific computing market. Based on this long-term view, Atlas has designed an aggressive investment strategy across facilities, hardware, and people. 

To date, Atlas is operating across multiple countries and regions. Quarterbacks from Singapore, it has built a distributed computing network with operation and management teams in North America, Central Asia (Commonwealth of independent states), and northern Europe. 

Atlas has planned to further accelerate its expansion to other regions and markets to be truly a global enterprise. “We are immensely proud of the impact that our operations are having on the communities that we are located. We have catalyzed conversations with the public and private sectors for further investment in alternative energy production and infrastructure. And we have hired exceptional talent, and continue to offer local job opportunities in these communities.” 

The backbone of Atlas’ success is the secure supply chain of hardware and understanding of its inventory life cycle to keep its fleet optimized. By 2021, Atlas purchased more than 300,000 ASIC computing servers which will allow it to continue to increase its computershare within the BTC network.

This is not the extent of Atlas’ growth, as it pursues plans to acquire more servers over the next two years, as the demand for ASICs and distributed computing services intensifies. As a major player in the server supply chain, Atlas has close relationships with server manufacturers and suppliers, and plans further investment into the supply chain. 

Sustainable future 

Over the course of 2021 much was spoken about the impact that bitcoin and bitcoin mining are having on the environment. Whilst some of these myths have largely been debunked, there remain bad actors that try to take advantage of opportunities. Atlas believes it has a responsibility to lead the industry towards a more sustainable and positive future, and to be an ESG compliant company. 

Atlas has been steadily increasing the usage of green energy to power our global computing network and continue to explore alternatives and new technologies to increase the ratio of green energy in our overall energy consumption mix. 

Its acceptance into the Blockchain Mining Council in late 2021, was a strong endorsement from our peers of the influence that we hold. With Texas as its home for US-based operations, the company has established a fruitful relationship with the Texas BlockchainAssociation and as a member of the Blockchain Association of Singapore Atlas is committed to working together with its peers around the world to improve the industry. 

In 2022, Atlas plans to collaborate with a leading consulting firm and research institution, to build up a systematic and adaptive carbon footprint monitoring standard. Standard The company intends to share with the high-performance computing industry. Atlas upholds the belief in “tech for good” and will be making further ESG investments. 

Atlas is planning to collaborate with leading research institutions on cutting-edge cooling technology (i.e. immersion cooling), and server placement mechanisms. “We believe the outcomes of this collaboration can materially reduce the cost of related new cooling technology, and improve the technology’s availability and feasibility. We have also initiated high-level discussions and remain open to engage prospective partners to explore advanced server placement mechanisms (i.e. submarine data centers). It is our ambition to set up the first submarine data center within two years.” 

Insights of Bitcoin Mining 

1. In essence, BTC is a distributed computing network which can support more applications beyond only “mining” and “asset transfer” purposes

BTC is often considered to be a highly liquid asset or a “currency”, but essentially it is a distributed computing network. As technology evolves, the underlying network of bitcoin can provide more than just computing services of “asset transfer”. Its gigantic scale of computing power, robustness, and decentralized nature allow it to provide secure verification services for a wider range of applications. For example, there are many start-ups, working on establishing decentralized internet browsers, data storage applications on top of the computing network. 

2. BTC mining is a prototype for the future distributed computing network and it is the basis of Web 3.0 infrastructure. 

In addition to supporting a wider range of applications, BTC mining, more importantly, shall be seen as a viable prototype of future distributed computing networks. For example, future applications of the Metaverse are unlikely to be built on current cloud computing networks – which are more vulnerable to cyber-attacks and by their very centralized nature are controlled by a select group of companies. Distributed computing networks are an extension of distributed ledger technology, which enables a multi-vs-multi economic relationship. The security robustness and stability of the BTC network has been proven sound over the past few years. Atlas believes such a network is an important building block of Web 3.0 and moreover will inspire more distributed computing networks to be built. 

3. The BTC network is in fact a highly energy efficient network, far exceeding the energy efficiency of traditional financial networks

BTC has often been criticized for consuming too much energy, but this assessment is often misguided. When compared with traditional finance payment networks which are still operating on legacy infrastructure. We can see that traditional finance remains insecure and extraordinarily inefficient. For instance, to process the same number of transactions, the BTC network can retain more copies of transaction records, hold a longer transaction history, and complete the transactions in a fraction of the time, all the while consuming less energy in the process. 

4. BTC Mining is an accelerator of innovation and emerging technologies, stimulating new chip design, and renewable energy technology

BTC mining, as a dedicated computing application for fixed algorithms, has all participants committed to a common goal – to seek for extreme efficiency – due to its incentive mechanism and business model. The direct consequence of extreme efficiency has been to drive the development of chip technology. In fact, BTC mining has been the first large-

scale adopter of advanced semiconductor processors, whether form 16 nm to 7nm, 7nmto 5nm and possibly in the future to 3nm or even more advanced processes. 

In addition to this, as BTC mining’s computing is continuously running, it is not only in great demand for energy companies but is also able to use energy consistently. This means miners are valuable customers for energy companies. An interesting fact is that BTC mining, because of its flexibility, has the option to briefly turn off some of its servers during peak grid hours, thus releasing a large supply of electricity back to the grid. This enhances stability of the electricity system and increases BTC miners’ profitability. 

As visionary as these outlooks may appear, they are in fact very current in their potential. Atlas is working in-house and with external partners to better understand the values that we can provide the BTC network. 2022 will be the year that we tackle these purposes and conviction to grow the market and our market share at the same time. 

About Atlas 

Atlas is a Singapore headquartered technology group offering a broad range of value added services including high-performance computing, application specific computing, hosting and cloud services, hardware distribution, and associated consulting services. 

The company’s main revenue stream comes from maintaining and supplying computing capacity across blockchain networks. Currently, Atlas operates high-performance computing facilities in North America and Central Asia, with plans to expand operations in northern Europe and/or South America. Atlas is one of the largest companies in application specific computing (ASIC). 

Contact: Ian Stirling (ian.stirling@atlasmining.com)

© 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.