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Quick Take

• Capital is pouring into crypto companies, particularly exchanges, propelling them to unicorn status
• Two in-progress fundraises — Gemini and BinanceUS — speak to the state of interest in the market today

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U.S. Senator Cynthia Lummis took to the Senate floor on Wednesday to explain her views on a prospective U.S. central bank digital currency. 

Highlighting the role of a CBDC in the next era of finance, Lummis said: “America’s leadership in global financial services is a heritage our country can rightly be proud of.”

The Wyoming senator went on to outline a vision for a CBDC that is a direct debt instrument with the Federal Reserve, as opposed to stablecoins, which are a claim on commercial bank money or other assets. She was especially concerned with the importance of programmability, which she highlighted as a key distinction between existing digitized versions of the dollar and a true CBDC. 

“Programmability focuses on the characteristics of money, including the identity of the owner, the amount of money being transferred and the conditions in which the outside world can interact with that money,” Lummis explained. She further insisted on the importance of continued privacy, saying: “We cannot allow a CBDC to become a panopticon.”

These concerns have cropped up often in discussions of a CBDC, but this is the first time a Senator has spoken at length on a positive vision for such a development on the shared Senate floor. 

A digital dollar has been the subject of a great deal of interest, especially in light of a coming report from the Federal Reserve, which Lummis mentioned as background to her remarks. 

Lummis also brought up private stablecoins. Legislators and regulators, including at the Fed, have taken to presenting CBDCs and private stablecoins as likely to operate in contention. Lummis denied the comparison to “wildcat banks” of the 19th century — a comparison that Securities and Exchange Commission Chairman Gary Gensler made at a hearing before the Senate Banking Committee in mid-September. She did, however, say: 

“Stablecoins also present certain novel risks to the united states economy. In particular, stablecoins should be 100% backed by cash or cash equivalents and should be audited regularly.”

© 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 capacity of the Bitcoin Lightning Network has reached an all-time high, nearing 3,000 bitcoin, according to The Block’s Data Dashboard.

The Lightning Network is the main Layer-2 solution for Bitcoin, designed in an effort to make small bitcoin transfers cheaper and faster. The current capacity of the network stands at around 2,955 bitcoin (over $123 million at current prices), meaning its users can move (send and receive) this much worth of amount via the network.

The Lightning Network has been growing at a rapid pace since January of this year. Several factors appear to have led to that growth, including Twitter’s recent announcement that said the company has rolled out its tips function worldwide via the Lightning Network. El Salvador’s official bitcoin wallet, Chivo, also supports the network for transfers.

© 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.

This week, the world’s largest auction house cracked $100 million in NFT sales. Christie’s Noah Davis says they’re just getting started.

On this episode of The Scoop, Davis, an associate vice president and head of digital sales at the auction house, joined Frank Chaparro to discuss Christie’s view of the 2021 rise in NFT sales and how the traditional art market and this brave new one are converging and bolstering adoption of a possible blockchain future.

“It’s incredible that it continues to gather speed and that interest continues to pour in from new corners of the world,” said Davis, a Specialist in post-war and contemporary art. He highlighted a recent uptick in interest in NFT sales with buyers in Asia.

“Like that traditional art market that I talked about they’re starting to line up on the sidelines if not dive in,” he added. 

Still, that is running up against what could be described as a lull in the NFT market. As per data from The Block, weekly NFT transactions have fallen from highs near 2 million to 315,000 last week. 

Davis even observed an inverse correlation to NFTs and Ethereum’s price movements. “A lot of people will panic, sell their NFT’s when ETH is mooning and then they collect when ETH is kind of in a lull,” he remarked.

NFT sales are just the first taste for auction houses like Christie’s to possibly one day also move onto the blockchain, which Davis believes could have specific applications for the company. “It would solve for authenticity testing, keeping track of exhibition history, literature references, title disputes, restoration, you name it.” Said Davis, “As far as financials are concerned and deals are concerned, it just is such a better, more democratic way to do business.”

Christie’s recently announced that on October 1st they will auction off an NFT set of CurioCards that it is putting up in what will be the world’s first major auction with live bids taken in the form of ETH. Christie’s has planned more such NFT auctions in the coming months.

© 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.

XDEFI Wallet, a multi-chain crypto wallet that comes in the form of a browser extension, has raised $6 million in a new funding round.

It was a Series A funding round and was realized via a mix of token and equity sales, XDEFI co-founder Emile Dubie told The Block. Mechanism Capital led the round, with participation from DeFiance Capital, Alameda Research, Sino Global Capital, Animoca Brands, and CoinGecko, among others.

With fresh capital at hand, XDEFI plans to expand its current team of 27 by hiring more engineers and a head of growth, said Dubie. The wallet also plans to improve its swap functionality between Layer-1 and Layer-2 blockchain networks.

XDEFI says it is blockchain agnostic as opposed to MetaMask, which is solely focused on Ethereum and Ethereum-compatible chains. It’s also different from other crypto wallets that are chain-specific, such as Phantom for Solana and Terra Station for Terra.

XDEFI currently supports nine blockchains, including Ethereum, Polygon, Binance Smart Chain, Terra, THORChain, and Bitcoin, and it is working on adding support for Avalanche, Arbitrum, and Solana, said Dubie.  The wallet is currently in an invite-only beta mode and is expected to be released publicly early next month.

When asked how XDEFI plans to take away users from established wallets such as MetaMask, Dubie said XDEFI wallet is faster than MetaMask when it comes to processing transactions and switching between one network to another. “We have also created an ‘Ape mode’ for DeFi users, so they have an edge when jumping into a farm or minting NFTs compared to users dealing with different wallets,” he said.

Notably, XDEFI will launch with its native token, said Dubie. The token design was made by Delphi Digital, he added, but declined to comment on how the token will be used.

The Series A round brings XDEFI’s total funding to date to $7.2 million. Earlier this year, the project raised $1.2. million in seed funding. XDEFI also plans to hold a public token sale in the near future, said Dubie.

© 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 Bank of England said Wednesday that it has staffed up a pair of third-party working groups that will collectively provide input as the U.K. central bank pursues initiatives related to central bank digital currency (CBDC).

The central bank’s published lists include notables from the neobank and payments worlds, as well as several companies associated with the crypto space. Specific members of note in either the Engagement Forum and Technology Forum include PayPal, Monzo, Starling, Checkout.com, ConsenSys, R3, Visa and Mastercard, among others.

Per the BoE’s release, the purpose of the Engagement Forum is to “gather strategic input on policy considerations and functional requirements pertaining to CBDC.” Conversely, the Technology Forum will “help the Bank to understand the technological challenges of designing, implementing and operating a CBDC.”

Whether the Bank of England will definitively pursue a CBDC remains an unsettled question, though the central bank has indicated through staff statements and papers that the subject is being seriously weighed. This past spring, the BoE formed a task force with HM Treasury focused on CBDC.

In a sense, the new forums will serve as a way for the BoE to gather input from the types of companies and stakeholders that might one day serve as a private-sector ecosystem of sorts in support of it.

In May, Sir Jon Cunliffe, deputy governor of the Bank of England for stability, said that it “looks probable” that a U.K. CBDC would be launched, in the context of promoting the survival of so-called “public money” in the face of private competitors — a nod to the notion that stablecoins could see broader use among the public.

© 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.

R3, developer of the enterprise blockchain Corda, is exploring the launch of a DeFi network with a corresponding token.

The news, first reported by Ledger Insights, was announced at yesterday’s CordaCon 2021 conference.

A spokesperson for R3 said the company is working on a proof-of-concept project that will pair transparency for external authorities with a decentralized, permissionless network that has privacy features and a corresponding token.

The project is named Obscuro and R3 hopes it will be ready, from a technological standpoint at least, in 2022. But no launch will take place until R3 is given the go-ahead by regulators, and the company has indicated that existing regulations leave “unanswered questions” that would need to be answered before a formal launch.

“Everything we do is in lockstep with the regulators, but we do want to be ahead and in a position to move on this from a technological standpoint when the regulatory side is clear,” said R3’s spokesperson.

The company, which began as a bank consortium and has to date raised around $119 million from a bevy of global banks, believes Obscuro could offer a more secure form of DeFi — reducing malpractice like front-running, for example.

“R3 is looking at the question of how we bring traditional finance and DeFi together, and we believe we are uniquely positioned to deliver this connectivity. Neither one will win out. We believe the future of these two worlds will be hybrid,” said the spokesperson. “We believe that DeFi needs to be made safer from a consumer perspective before it can achieve widespread adoption. It also needs to preserve privacy of individuals.”

© 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.

A body formed to drive the growth of Metaplex, an open-source platform for building NFT storefronts, has named former Citadel and Google executive Adam Jeffries as CEO, according to a press release.

Jeffries is joined by a new board of strategic advisors that includes music streaming service Audius; CoinShares chief strategy officer Meltem Demirors; Cultur3 Capital co-founders Alex Yamashita, Mark Streeter and Rolf Hoefer; Dylan Macalinao, co-founder of Saber Labs; and Steve ‘Sweatpants’ Irby, co-founder at Street Dreams Magazine.

Built on Solana, Metaplex is an open-source protocol that aims to help creatives mint and auction NFTs. The project aims to cut out the fees charged by centralized platforms in the NFT space. 

“Someone like OpenSea, they’re going to take a cut, and that’s because they provide additional services on top of that decentralization,” said Jeffries. “We control nothing. We set up the ecosystem to empower others.”

Since June this year, Metaplex has supported more than $385 million in NFT sales. There are 1,800 developer teams building tools on the protocol, according to the press release.

The studio aims to boost the Metaplex protocol’s community, steer the development of new tools and making them available on an open-source basis.

“The structure right now is there are two arms to it – the foundation and studios. The foundation’s job is essentially the goal of growing the ecosystem, handling grants, setting up advisors and dealing with fundraising,” said Jeffries. Metaplex Studios, on the other hand, will act as “evangelists” for the protocol, he added.

Solana power

One of the studio’s main selling points is the fact that Metaplex runs on Solana, a proof-of-stake blockchain that has experienced tremendous growth in recent months.

Most NFT projects run on Ethereum, but heavy congestion and spiralling transaction costs on the network have proven difficult for smaller, lower-priced collections to navigate. “Running on Solana has the benefit of very, very low transaction costs as well as high speeds,” said Jeffries.  

But he added that different blockchains have different purposes and that porting assets between them, in the future, will boost the entire ecosystem.

“Maybe you have a super, super high value NFT and your client just feels more comfortable being on Ethereum, you bridge and you send it over,” he explained.

© 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.

Ripple wants to bring the NFT hype to the XRP ledger. The company announced Wednesday a “creator fund” worth $250 million to support non-fungible token (NFT) projects building on the XRP Ledger.

Ripple said it will provide NFT artists and marketplaces with financial, creative, and technical support. To that end, the company has partnered with creative agency VSA Partners and NFT marketplaces mintNFT and Mintable (in which Ripple is an investor, along with Mark Cuban and others).

Minting NFTs on the XRP Ledger will be a cost-efficient process and drive utility through use cases such as “interactive experiences and fractional ownership,” said Ripple. The blockchain also has an in-built decentralized exchange where users can trade tokens for XRP or each other, said the company.

Companies rewarding projects building on their native blockchains has become a common trend, as The Block reported recently. In recent months, Ethereum challengers, including Avalanche and Terra, have rolled out rewards programs to attract decentralized finance (DeFi) projects on their blockchains. Often these challengers set aside funds in their native tokens. As for Ripple, it is unclear whether the company’s creator fund is denominated in dollars or XRP. The Block will update this story should we hear back.

© 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.

Quick take

• After massive inflows last summer, liquidity in on-chain DEX’s has struggled to sustain further growth. 
• AMM’s are currently in a state where passive strategies aren’t sufficiently profitable to attract additional liquidity, and on-chain bandwidth remains prohibitive for traditional order books.  
• The space between basic AMM’s and central limit order books remains largely unexplored and could contain an avenue to further enhance on-chain liquidity.

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