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Crypto analytics platform Dune has entered the unicorn club with its latest $69,420,000 Series B round.

The round was led by hedge fund Coatue and brings Dune Analytics’ valuation to $1 billion, confirming The Block’s reporting from last month. Existing investors, including Multicoin Capital and Dragonfly Capital, also participated in the round.

Dune has big plans in place with fresh capital in hand. It looks to build a community of up to 1 million analysts, support more blockchains, build an API, and massively expand its team, the firm’s co-founder and CEO Fredrik Haga told The Block.

Founded in 2018, Dune lets users create data charts and dashboards on metrics such as DEX and NFT trading volumes. The platform currently has 10,000 analysts and 100,000 pieces of analysis. Dune is accessible to the public for free, but it also has a paid product for customized data, for which it charges $390 per month per user.

Dune calls its community of analysts “Dune Wizards” and pays many of them for creating dashboards, said Haga. The firm plans to bring more analysts to the platform and reward them as there is an ocean of blockchain data still largely underutilized, according to Haga. “We think this open data opportunity will enable a new generation of analysts to find work in and add value in crypto communities,” he said.

Haga went on to say that many non-developers have already learned the SQL programming language, became Dune Wizards, and then got a full-time job in the crypto space.

Dune Wizards get paid in crypto, Haga said. When asked if Dune is looking to launch its native token, he said there are no current plans.

He also declined to comment on whether the Series B round was equity or token round realized via a simple agreement for future tokens (SAFT) sale. Dune’s Series A round announced last July was an equity round worth $8 million. At the time, the startup did not disclose its valuation.

Besides building up a large community of analysts, Dune also plans to support more blockchains to its platform. It currently helps fetch data from Ethereum, Polygon, Optimism, Binance Smart Chain, and xDAI. Haga said all the major Ethereum Virtual Machine (EVM) chains, Solana, and other networks will also be supported.

Dune is also looking to build a “much-requested” API. It is also planning to scale its current team of around 20 people to about 200, said Haga.

Dune is among several crypto startups that have seen its valuation shot up in a short time. Last year, at least 40 crypto firms reached unicorn status, according to The Block Research.

When asked what is causing soaring valuations of crypto startups, especially crypto data startups, Haga said, as more and more financial activity moves to crypto, providing data presents an opportunity that is “many times bigger than any data business or product the world has seen to date.”

The Series B round brings Dune’s total funding to date to $80 million. The firm isn’t looking to raise more funds in the near future, Haga said.

© 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 exchange FTX is set to acquire Japan’s Liquid Group and its operating subsidiaries, one of which runs a licensed crypto exchange in the country.

Liquid Group announced the news on Wednesday, saying that FTX is acquiring Quoine Corporation and Quoine Pte. in Singapore. Quoine was one of the first crypto exchanges registered by Japan’s financial regulator in 2017 and operates under the Liquid brand.

The terms of the deal weren’t disclosed, but Liquid was valued at more than $1 billion in its first investment round in 2019. The deal is expected to close next month, subject to customary closing conditions.

Once the acquisition is completed, Quoine will start integrating FTX’s products and services into its own platform, and FTX’s existing Japanese customers will be migrated to Quoine’s platform.

FTX and Liquid expect to work together to serve retail and institutional customers in Japan and globally.

This is a breaking story and will be updated…

© 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.

MicroStrategy plans to continue investing its free flows into bitcoin, and expects its investors to think of it as a vehicle for crypto exposure.

The firm shared its Q4 earnings report today, noting that it acquired 53,922BTC in 2021 at an average purchase price of $48,710. That brings the firm’s total BTC up to 124,391. 

But those holdings come with impairment charges, a recent concern of the Securities and Exchange Commission (SEC). In accounting, impairment shows how much was lost if the price of the asset on a balance sheet declines compared to when it was first purchased. MicroStrategy has pushed for updates in American accounting practices to accommodate for the volatility of crypto assets. The SEC, however, said it expects the firm to cease adjusting for impairment losses in its accounting practices and use traditional methods.

In Q4, the firm posted $146.6 million in bitcoin impairment expenses. In all of 2021, impairment charges reached $830.6 million compared to 2020’s $70.7 million. In total, the entirety of its holdings carry a value of $2.9 billion compared to the aggregate cost of $3.8 billion, making up the $901 million cumulative impairment charge. 

Still, holding bitcoin on the balance sheet will continue to be a priority for the firm. Just this morning it continued on its buying spree, acquiring an additional 660 BTC for about $25 million in cash. That brings its total to 125,051 BTC.

CEO Michael Saylor said investors may think of MicroStrategy as an alternative to bitcoin futures-based exchange-traded funds, since the firm provides indirect exposure to cryptocurrency without the fees associated with rolling over contracts. 

The firm is also looking into opportunities to utilize its troves of bitcoin, according to Saylor. Saylor pointed out that there are opportunities to use some of the funds not dedicated as collateral to generate yield, but did not commit to any plans.  

© 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.

“Welcome to being in an industry that has arrived,” Darren Soto tells The Block, chuckling about Congress’s pace.

Soto (D-FL), a congressman representing the suburbs of Orlando, is specifically talking about crypto mining. It’s an issue that has been ascendant in public awareness as miners have flooded into the US over the past year. Its political dimension has become especially conspicuous in the aftermath of a hearing before the Oversight Subcommittee of the House Energy and Commerce Committee earlier in January.

Soto, a member of the full Energy Committee and a co-chair of the Blockchain Caucus, rushed from votes to join the subcommittee in its questioning of several leaders in crypto mining. Presiding remotely, subcommittee chair Dianna DeGette (D-CO) almost passed him over. 

As congressional attention on crypto has intensified — particularly in the form of more frequent hearings on the subject — the industry has been at odds trying to come to terms with its new popularity on Capitol Hill.

Effectively, what does it all mean? Is this a prelude to a crackdown? 

Not in the form of legislation, according to Soto. “It could be months but more likely years before there are any statutory moves,” he says. “There is no pending legislation right now.”

Rather than heralding a crackdown, the mining hearing was more in line with the Energy Committee’s work on the energy grid across industries. Other recent hearings have raised questions about the resilience of US oil pipelines and the future of domestic wind energy. 

“There are other industries using far more energy that we’ve been looking at for years,” says Soto. “We’re going down the list of energy users: transportation, manufacturing, utilities.”

It is a mark of the crypto industry’s development that it is on this list, according to Soto. “Crypto has become a more mature industry,” he says. “There’s not a partisan disagreement as to whether mining should happen, it’s more a question of ‘how do we protect the environment’”

In an interview with The Block, Rep. Morgan Griffith (R-VA) tried to illustrate that sense of agreement across the aisle. Energy use is “something we should be concerned about,” Griffith said. “Do we shut the industry down because of that? Absolutely not. We have to figure out ways to do it better.”

For now, legislation at the federal level remains unlikely. As The Block has reported, pending revisions of the Build Back Better Act could target crypto mining within its climate provisions. But it is procedurally limited in new rules that it can put into place. 

As Soto notes, “Grants fit well, because it’s a budget bill, but regulation would in all likelihood have to come primarily in the form of incentives.”

The current oversight of crypto mining is most meaningful in establishing a general spectrum of good and bad actors. Then, Congress can turn up political pressure on miners to act more like the former and less like the latter, which it can do without passing new laws.

However, federal lawmakers will certainly be looking out for responses from states with large mining industries to gauge any prospective nationwide response.

So, if for instance, Bitcoin mining ends up funding the expansion of stranded wind turbine farms in West Texas, that might score points for the industry in DC. But if New York brings its energy and carbon goals into reach by banning mining? Federal policymakers will notice. 

But for now, nobody seems to be in a hurry. 

© 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.

Popular music festival Coachella has partnered with crypto exchange FTX US to launch an NFT collection, according to a tweet from the festival’s official Twitter account. 

The NFTs, a limited number of which will drop this Friday, will be on the Solana blockchain. To be eligible for the initial drop users must have an FTX account. Proceeds from items sold will go to three charities including GiveDirectly, Lideres Campesinos, and Find Food Bank, with a royalty supporting the creators involved.

The NFTs, called Coachella Collectibles, will give consumers the opportunity to unlock festival passes, art prints, photo books, digital collectibles, unique real-life experiences at the festival and physical merchandise, according to the website. 

For example, one of the planned collections, called The Coachella Keys Collection, will consist of just 10 NFTs that serve as “passes to one festival weekend every April and Coachella produced virtual experiences…forever.”

© 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

• The IRS is facing a severe backlog of work after a challenging 2021 tax season.
• Crypto tax experts say an overburdened IRS mostly means that the usual processes will take longer, but that’s not an excuse not to file.

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The market for non-fungible tokens kicked off the year on solid footing, bucking the broader market rout that sent ripples across much of US equities and cryptocurrency markets. 

Blue chip cryptocurrencies like bitcoin are down double-digit percentage points year-to-date, dragged down by the same macro fears that have put much of the stock market under pressure in January. Despite those jitters about a more hawkish US Federal Reserve, NFTs – a market ranging collectibles and digital art – had a strong start to the year. 

My colleague Thomas Bialek illustrated this phenomenon in a recently published research report.

“A look at the floor price performance of the most popular profile picture PFP collections over the last three months reveals a noticeable disparity between these ‘blue chip’ NFTs and the price of ETH and BTC,” Bialek wrote. 

On the flip side, floor prices across NFTs were mixed as cryptocurrencies themselves staged a comeback over the last 24-hours. 

The divergence between the two camps illustrates the degree to which the crypto ecosystem is becoming more dynamic with certain segments experiencing bullish regimes whilst others get stuck in the doldrums. But what exactly has spared NFTs from being grasped by the rout?

A lot of it has to do with human psychology, according to FTX founder Sam Bankman-Fried, who admittedly was surprised at the degree to which NFTs have held up since the beginning of the year. 

“The fact that they’re non fungible makes them less liquid,” he told The Block, referring to the ease at which a trader can move in and out of an NFT position.

In Bankman-Fried’s view, the public-facing nature of NFTs makes them harder to sell compared to the coins someone holds within a brokerage firm like Coinbase. 

“But I have also been a bit surprised about how much they’ve been out performing recently. The fact that you’re public about owning one makes it harder to sell because it is a public giving up on something versus a private rebalancing of your portfolio.”

Furthermore, NFTs are better thought of as being akin to a luxury good, which, similarly to NFTs, are purchased to flex. 

“People are less inclined to sell their NFTs at a loss,” relative to more liquid assets like tokens themselves, according to DeFinance Capital’s Arthur Cheong. 

“The whole psychology is also very interesting.”

© 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

• Total adjusted on-chain volume decreased by 20.3% to $626 billion.
• A total of 398,062 Ethereum, equivalent to $1.2 billion, was burned in January.
  
• NFT marketplace volume saw an all-time high with $7 billion in monthly volume.
• Centralized exchange spot trading volumes decreased by 20% to $833.5 billion.

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members of The Block Genesis.
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this Genesis research on The Block.

Amber Group, a digital asset platform, has announced the acquisition of DeCurret Inc., a Japanese-licensed crypto exchange, the company announced on Tuesday. The acquisition is under Amber Group’s WhaleFin Japan subsidiary.

According to the announcement, the acquisition marks Amber Group’s maiden foray into the Japanese digital asset market. The company says its plans leverage on DeCurret’s regulatory standing in the country to “unlock Japan’s crypto market potential.”

With over $5 billion in assets under management (AUM), the company also stated that it plans to “catalyze” the adoption of crypto assets in Japan beyond the gains recorded in 2021.

DeCurret is one of 30 licensed crypto-asset exchange service providers (CAESP) by Japan’s Financial Services Agency (FSA). Launched back in 2018, DeCurret is backed by leading financial and technology-based corporations in the country including the Internet Initiative of Japan (IIJ). The company is also part of Japan’s central bank digital currency (CBDC) design project.

Amber’s acquisition of DeCurret also comes as Japanese crypto exchanges continue to deal with the cost of compliance associated with regulatory protocols in the country. In April last year, the FSA stated that it planned to begin enforcing the Financial Action Task Force (FATF) travel rule by April 2022.

© 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

• Squeeth (a derivative developed by Opyn) is a power perpetual indexed to the price of ETH raised to the second power. 
• Power perpetuals are an iteration on everlasting options, which attempt to consolidate options market liquidity similar to perpetual futures.
• Composable perpetual options-like exposure has the potential to be a useful lego in the DeFi stack, specifically structured derivatives products, while also supporting the development of novel volatility-based on-chain derivatives.

This research piece is available to
members of The Block Genesis.
You can continue reading
this Genesis research on The Block.