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CyberConnect, a crypto startup developing tools for Web3 social media, gaming, and metaverse applications, has raised $10 million in a seed funding round.

Sharing the news exclusively with The Block on Tuesday, CyberConnect said Multicoin Capital and Sky9 Capital co-led the round. Animoca Brands, Draper Dragon, Hashed, Zoo Capital, Smrti Lab, and Mask Network also participated in the round, among other investors.

This was an equity + SAFT (simple agreement for future tokens) round, CyberConnect founder Wilson Wei told The Block. It will help the firm double its current team of 15, grow the community of Web3 developers, and launch its protocol later this month, said Wei.

CyberConnect is launching a “decentralized social graph protocol” that it says will help Web3 developers to build applications such as social media, gaming, and metaverse more easily.

Social graphs are people’s social relations on platforms such as Twitter, Facebook, and Instagram. Wei said social graphs are one of the hardest aspects of developing Web3 applications. “Cyberconnect streamlines the development process,” he said. With CyberConnect, Web3 developers can mobilize social graphs data, such as following and followers lists, saving them the cost and difficulty rebuilding a social graph every time when launching a new app, explained Wei.

As for end users, they will be able to own their social graphs data and port that data to new applications, said Wei.

Letting users own their social graph and switch applications while taking their network with themselves is one of the core public services web3 can deliver, a16z general partner Chris Dixon tweeted recently. “This is how email works and there is no reason all social services can’t work this way,” he wrote.

CyberConnect has also developed an app called CyberChat to demonstrate how social graph data can be utilized. The app will integrate with the CyberConnect protocol.

The protocol is scheduled to launch later this month with support for Ethereum. It plans to support other blockchain chains “as early as later this year.”

© 2021 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.

Texas Senator Ted Cruz is seeking to strip language defining who is a crypto “broker” from a multibillion-dollar infrastructure package that was just signed into law. 

According to a statement from Cruz’s office, the proposed legislation would, if passed, remove language aimed at tightening reporting requirements for “brokers” in the digital asset space. The legislation mirrors an earlier attempt by Cruz to eliminate the language from the infrastructure package in August, as previously reported. 

The original inclusion triggered a raft of efforts by crypto industry advocates to either amend or remove the language, though these efforts ultimately failed. The infrastructure package was signed into law Monday by US president Joe Biden. Supporters of the definitions have said the expanded definition would help provide funding for the infrastructure package. 

Notably, some of the other senators involved in the pushback have proposed their own legislation that would revise some of those rules. 

By contrast, Cruz is once again trying to cut the provisions entirely.

“As a deliberative body, the Senate should have done its job and held hearings to properly understand the consequences of legislating on this emerging industry before we risked the livelihoods and privacy of participating Americans,” Cruz said in a statement. “I urge my colleagues in the Senate to repeal this harmful language that will create regulatory uncertainty and in turn an unnecessary barrier to innovation.”

© 2021 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.

Professional services firm Deloitte announced Tuesday a partnership with Ava Labs to create a blockchain-based disaster recovery platform. 

The new platform, called Close as You Go (CAYG), aims to streamline disaster reimbursement applications to the Federal Emergency Management Agency (FEMA), with the goal of saving these agencies millions of dollars typically lost to noncompliance with federal procurement requirements, benefit duplications and missing documentation. 

“By guiding local government users through workflows and immutably documenting all these items upfront, these users minimize the risk of deobligations, adverse findings, and clawbacks that often result later in the process from these common issues,” John Wu, CEO of Ava Labs, told The Block.

CAYG went live on November 16 and is being piloted in the natural disaster-prone southeastern United States. “Counties can move faster when the time comes to submit those requests, since all the documentation has been pre-validated, immutably stored and reviewed in advance,” Wu says.

Deloitte’s partnership with Ava Labs follows other organizations trying to use distributed tools like blockchains to augment natural disaster relief.

In April, the Danish Red Cross opted to put its volcano catastrophe bond —  insurance-based relief for volcanic natural disasters — on a blockchain, also citing increased speed and lower costs as its motivations.

© 2021 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.

Brian Quintenz, formerly of the Commodity Futures Trading Commission, has joined Kalshi’s board of directors.

Kalshi announced Quintenz’s hiring on November 16. Kalshi is an events market, allowing users to bet on the outcome of future events, including everything from future mortgage rates to rain in various cities to Jerome Powell’s replacement. 

It is the first of its kind to receive CFTC oversight as a designated contract market, a status that the commission granted it last November.

Quintenz stepped down as commissioner of the CFTC this summer following a tenure during which he emerged as a notable advocate for the cryptocurrency industry.

Kalshi’s announcement called Quintenz “a leading advocate for sensible and risk-calibrated regulation that ensured safety and stability, but also encouraged innovation and growth. In particular, Brian authored a tour de force analysis of prediction markets and their treatment within the CFTC’s regulatory ecosystem.”

Regarding the team that Quintenz will be joining, a representative for the firm told The Block “we’re not disclosing other members of the exchange’s board.”

Shortly after leaving the commission, Quintenz also joined the advisory board for the crypto-focused venture capital firm a16z.

© 2021 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.

StarkWare, an Ethereum Layer 2 developer using ZK-rollups technology, has raised $50 million in a Series C funding round and is now valued at $2 billion.

Sharing the news exclusively with The Block on Tuesday, Israel-based StarkWare said the round was led by Sequoia Capital, with participation from existing investors, including Paradigm, Three Arrows Capital, Alameda Research, and Founders Fund.

This was an “opportunistic” fundraise, StarkWare co-founder and CEO Uri Kolodny told The Block in an interview, meaning that the company is already profitable but secured new funds to grow its team and ecosystem as fast as possible.

What is StarkWare?

StarkWare is one of a few blockchain startups that have built Ethereum scaling products using rollups technology.

There are mainly two types of rollups — ZK-rollups and Optimistic rollups — that allow executing Ethereum transactions off-chain and storing only transaction data on-chain, thereby reducing the network congestion, increasing its speed, and reducing gas fees.

StarkWare uses ZK-rollups for its scaling technology. As opposed to Optimistic rollups, ZK-rollups generate zero-knowledge proofs for validating transactions.

StarkEx and StarkNet

StarkWare’s Ethereum scaling engine StarkEx is used by several crypto projects, including dYdX, Sorare, and Immutable. Kolodny said StarkEx has settled over $200 billion worth of trades, facilitating about 50 million transactions and serving hundreds of thousands of users at “dramatically cheaper” gas costs.

StarkWare is now set to launch StarkNet Alpha on mainnet Ethereum by the end of this month, said Kolodny. The key difference between StarkEx and StarkNet is that the former is a permissioned tailor-made scaling engine, while the latter is a permissionless decentralized ZK-Rollup that supports independent deployment of smart contracts. That means with StarkNet, any developer can write and deploy their smart contracts permissionlessly.

StarkWare hopes to bring “crypto apps for all” with StarkNet. StarkWare’s other co-founder Eli Ben-Sasson said in the interview that StarkNet will help make blockchain technology “usable by a much wider population.”

Several projects have committed to building on StarkNet, including MakerDAO, Aave, and Argent, said Kolodny.

When asked whether Uniswap is looking to partner with StarkWare, Ben-Sasson said, “we’re very hopeful that Uniswap will join us, but that’s up to their governance process to do that.” Uniswap currently uses Ethereum Layer 2 scaling solutions from Optimism and Arbitrum that use optimistic rollups.

When token?

StarkWare’s Series C round comes just seven months after its $75 million Series B round in March. The firm did not share its valuation then, but Kolodny said all rounds to date have been equity rounds.

He declined to comment when asked if StarkWare is looking to launch its own token.

The Series C round brings StarkWare’s total funding to date to $162 million. Kolodny said the firm could raise more funds in the near future if opportunities arise.

© 2021 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.

Valkyrie Investments, the firm behind one of the market’s bitcoin futures-tied exchange-traded funds, is launching a new hedge fund that aims to profit from dislocations in the fast-growing decentralized finance ecosystem. 

Housed under Valkyrie’s crypto division, the new fund will be led by Will McDonough, a Wall Street veteran who is best known for being Tom Brady’s “handler” and business manager. The so-called On-Chain DeFi Fund will actively move in and out over hundreds of coins in the DeFi market based on the firm’s own proprietary systems, according to McDonough, who is also a vice-chairman at Valkyrie.

The fund is expected to go live later this month. “We’ve built an unbelievable interface that gives us real-time data across 13 different blockchains for 250 tokens,” McDonough said. 

McDonough said of the firm’s strategy: “We find a dislocation, take an exposure to the token, wait for the dislocation to close. While we are waiting, we are going to stake.”

McDonough has been active in the crypto market since 2017. His career spans several industries and startup efforts, including a crypto project known as iCash as well as Atlas Mara, a company McDonough founded with former Barclays CEO Bob Diamond. Atlas Mara is a holding company with numerous positions in banking and financial services operations across Africa.

Prior to Atlas, McDonough worked with an investment team within Goldman Sachs that managed $17 billion. The Boston native is also known for his management company MMG, which worked with Tom Brady, Nelson Mandela’s estate and Gisele Bundchen. 

In a sense, the new fund represents an expansion of Valkyrie’s suite of products, which offer passive exposure to cryptocurrencies like Polkadot, Bitcoin, Tron, and Algorand. The firm’s bitcoin ETF began trading on Nasdaq at the end of October. 

Across the market, crypto firms are expanding their presence in asset management with giants such as Fidelity eyeing the launch of a spot bitcoin ETF. Galaxy, meanwhile, manages more than $3 billion through its asset management arm. In July, its Vision Hill units closed its venture fund of funds, which manages more than $30 million. 

As for Valkyrie’s new fund, McDonough said the firm has raised tens of millions thus far from Valkyrie’s executives and other accredited investors. In total, he expects to raise $100 million. 

© 2021 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.

China-based Bitcoin mining hardware manufacturer Canaan is set to increase its self-mining hash rate to 1.8 exahashes per second, which would account for 1% of the network’s current total.

The scaling plan positions Canaan to become a major Bitcoin mining company as it seeks to adjust the balance between the sales of its spot and future orders and proprietary mining capacity.

Nangeng Zhang, founder and chairman of Canaan, said in the firm’s Q3 earnings call on Tuesday that its current operating hash rate has been kept at 0.032 EH/s since the inception of its self-mining business in Q2 in its bid to sort out operation, compliance and taxation issues. 

Another batch of Canaan’s Avalon miners with a total computing power of 0.85 EH/s have already arrived in the facility of its hosting partners in Kazakhstan, waiting to be deployed, Zhang added.

He said Canaan has also signed additional contracts to host another 1 EH/s of proprietary hash rate and the scheduled shipments will start by the end of January. In comparison, Canaan said in its Q3 earnings report that it sold 6 EH/s of computing power over the past three months.

Meanwhile, the firm is holding negotiations on hosting deals with North American facilities for around 200 megawatts of power capacity, Zhang said.

The self-mining business – with a gross margin of 61% – has so far generated 23.86 BTC for Canaan’s balance sheet as of Q3, worth about $1.4 million at BTC’s current prices.

“Our current strategy is to hold our Bitcoin and we will not trade them in the short term,” Zhang said in the earnings call. “However, we do not rule out the possibility of trading them in the future.”

Record quarter again

Prior to the earnings call, Canaan also released its Q3 financial results, which featured the largest quarterly revenue in its history. 

Canaan booked $204.5 million in net revenues for Q3, up 21.8% from the previous record high in Q2. The net income for the period has also increased to $75 million. 

That figure also reflects the increasing purchasing volume coming from institutional investors into the Bitcoin mining sector.

As of the end of Q3, Canaan said it had contract liabilities of $159.3 million, which represented the down payments made by institutional investors for the pre-orders of its Avalon miners to be delivered in the coming quarters. 

Zhang said during the call that the delivery schedule for pre-orders has lined up until the second half of next year, a similar situation seen by other manufacturers like Bitmain and MicroBT.

Price bump

Perhaps expectedly, Zhang said that next year, an increase in mining hardware prices as a result of the global chip shortage and supply chain constraint might be inevitable.

“We have to recognize that the continued industry-wide supply chain constraint has created a seller’s market [for foundries]. Consequently, increasing wafer prices is natural and inevitable,” said Zhang. “Against this backdrop of unstable wafer supply, we are discussing a series of flexible strategies that include accepting price increases under certain conditions to ensure our supply.”

As The Block reported previously, the world’s biggest Bitcoin mining hardware maker Bitmain also faced the same issue of the cost increase of raw materials due to the global chip shortage.

© 2021 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.

In our last article on Kava, we covered its origins and explored the suite of high-yield DeFi protocols that make up the Kava Platform. In the second article of our three-part series, we dive deeper into the Kava network and take a look at the ecosystem of best-in-class DeFi, NFT, and GameFi services that are being built on top of it. 

The Kava Network

Originally built to support the Kava Platform, the Kava network is a highly secure and scalable Layer-1 blockchain. Built using the Cosmos SDK, the Kava network is interoperable, lightning fast, and has been tested and refined over the course of two years. In that time, it has supported the successful launch and operation of three DeFi protocols totaling over $500M in TVL and over $2.1B in on-chain assets.

After optimizing the speed and security of the Kava network in the controlled environment of the Kava Platform, Kava is opening up to the public and welcoming other projects and protocols into its ecosystem. 

A Trusted Ecosystem

Kava’s mission has always been to provide users with secure, trusted access to the earning potential of DeFi. Over the past two years, the utility of distributed ledgers has expanded to include NFTs, GameFi, Metaverse projects, and beyond. This shift has prompted Kava to open its network to other projects to give users access to a more expansive ecosystem of top-tier decentralized services. 

To ensure that Kava’s rigorous standards for security and UX are maintained as it grows, Kava is taking a somewhat unique approach to onboarding new projects to its network. Other Layer-1 blockchains have shown time and again the risks of onboarding projects without proper vetting. Ethereum-based protocols alone have racked up losses in the hundred of millions to hacks and scams. For DeFi to mature and service a wider market, people need to trust that their life savings are secure. This is where Kava Airlock comes in.

Air-Tight Onboarding

Where most Layer-1 blockchains like Ethereum allow anyone to launch a token or protocol on them, Kava is implementing a filtration process to ensure the quality of projects in the ecosystem. This filtration will be handled in a completely decentralized way via the Kava DAO. Projects will be able to build and test on a public testnet (Kava Airlock) before submitting a proposal to launch on the mainnet. $KAVA token holders will then be able to vote on which protocols are accepted and become part of the Kava ecosystem. 

Kava 9

The first major step toward making the Kava ecosystem a reality is coming with the Kava 9 mainnet upgrade in Q1, 2022. This will lay the foundation for easily onboarding cross-chain projects by implementing Comsos’ Inter Blockchain Communication Protocol (IBC) and preparing the network for the launch of an ETH bridge shortly after. In our next article, we will examine what these will mean for the Kava ecosystem and take a look at what is in store for the Kava network in the rest of 2022. 

© 2021 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.

pSTAKE, a liquid staking protocol from blockchain startup Persistence, has raised $10 million in a seed funding round.

Three Arrows Capital, Galaxy Digital, Sequoia Capital India, and DeFiance Capital co-led the round, with Coinbase Ventures, Tendermint Ventures, Kraken Ventures, Alameda Research, and Sino Global Capital also participating.

Several angel investors, including Aave’s Ajit Tripathi, Terra founder Do Kwon and Alpha Finance co-founder Tascha Punyaneramitdee, also backed the round.

Crypto staking infrastructure providers, including Stake.fish, Figment Fund, Everstake, and Chorus One, also joined the round.

This was pSTAKE’s first fundraise and was realized via a private token sale, Persistence founder and CEO Tushar Aggarwal told The Block. Investors purchased PSTAKE tokens in the sale, said Aggarwal, adding that they also received some Persistence (XPRT) tokens “as an additional benefit.”

Cosmos liquid staking 

pSTAKE can be compared with the liquid staking platform Lido, the largest Ethereum 2.0 staking platform with 1.4 million ETH in deposits, worth over $9 billion at current prices. While Lido has focused on Eth2, pSTAKE will focus on Cosmos (ATOM), among other blockchains, said Aggarwal.

pSTAKE has a “first-mover advantage” in Cosmos, according to Aggarwal, who says it is the first liquid staking platform for the Cosmos network.

Liquid staking is a way to get extra utility from assets that are currently being staked. How it works is when you stake tokens via a platform like Lido or pSTAKE, you receive tokens equivalent in value to the tokens that you have staked in the protocol. This means while your tokens are locked up and earning staking rewards, you can also use that same value elsewhere in other DeFi protocols — earning additional yield.

Notably, the Persistence team has expertise in Cosmos. It was involved in the launch of Cosmos Hub and also operates validator nodes on multiple Tendermint and non-Tendermint based proof-of-stake networks through its validation arm Audit.one, said Aggarwal.

“pSTAKE is strategically positioned to grow the DeFi ecosystem in the Cosmos ecosystem while maintaining the security of the Cosmos ecosystem and other chains,” said Kyle Davis, co-founder of Three Arrows Capital.

Current TVL 

pSTAKE publicly launched its platform in September and has reached over $30 million in total value locked (TVL) for Cosmos and Persistence staking deposits. Persistence has its own proof-of-stake blockchain as well, which is built on the Tendermint consensus engine.

Besides pSTAKE and Audit.one, Persistence offers two more products: Asset Mantle, an NFT marketplace framework, and Comdex, a synthetic assets trading platform. Comdex, however, is a third-party offering, i.e., powered by Persistence, and not an in-house offering, said Aggarwal.

With seed capital at hand, pSTAKE looks to support more Tendermint-based blockchains for liquid staking, including Terra (LUNA), as well as Ethereum and Solana networks, said Aggarwal.

To that end, Persistence also plans to expand its current team of 35, Aggarwal added.

© 2021 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 price of bitcoin has declined nearly 10% in the last 24 hours, dipping significantly below $60,000 before bouncing back.

The drop seems to be triggered by the infrastructure bill signed by U.S. President Joe Biden yesterday, Darius Sit, co-founder of crypto trading firm QCP Capital told The Block. The bill includes tax reporting provisions that require crypto exchanges to report information to both the Internal Revenue Service (IRS) and to their customers, including capital gains.

Sit said the market is using the infrastructure bill news “as an excuse to take profit after trading all-time highs across the board.” The action wasn’t unexpected, Sit added, because “leverage levels were pretty high as well.”

Bitcoin is currently trading at around $60,400, according to TradingView. It hit a high of over $66,000 yesterday. The price of ether (ETH), the second-largest cryptocurrency, has also dropped over 7% in the last 24 hours and is currently trading at around $4,200.

Overall, the market cap of the entire crypto market has fallen around 10% in the last 24 hours to around $2.72 trillion, according to CoinGecko.

The macro-environment also looks “a little shakey” with high levels of inflation, according to Sit. U.S. inflation hit a three-decade high last month as prices surged to 6.2%.

© 2021 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.