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USD stablecoins are created largely outside the dollar system and lack federal deposit guarantees. Investors should be careful.

The price of gas continues to rise on Ethereum, squeezing smaller retail traders using DEXs.

The cryptocurrency was more valuable than all but seven of the world’s publicly traded companies.

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Cryptocurrency and blockchain venture capital firm Castle Island Ventures announced Monday the launch of its second venture fund. 

The Boston-based firm, which has invested in the likes of BlockFi and River Financial, told The Block that the $50 million fund would take on a broader thesis than its first fund, which mainly identified companies building infrastructure around bitcoin. CIV II will have an added focus on firms building in decentralized finance and stablecoins. 

“I learned not to be overly restrictive in my worldview,” Nic Carter, a partner at the firm, told The Block.  “We’ve certainly broadened our view of what is investable. I expected certain regulatory actions to happen that did not happen.”

Carter, a prolific commentator and writer in the crypto space, leads Castle Island with fellow Fidelity Investments alumni Matt Walsh. They launched the firm in 2018. 

The launch of the fund comes at a time when new capital is shifting into the bitcoin market. On Monday, the Elon Musk-run automaker Tesla announced that it allocated a portion of its balance sheet to bitcoin last month. Elsewhere, private equity legend Glenn Hutchins announced the launch of a $72 million venture fund, while Anthony Scaramucci earlier this year revealed his own bitcoin fund for institutional investors. 

Carter said he attracted limited partner interest from mostly family offices and high-net-worth individuals looking for exposure to the market. 

Castle Island plans to invest in around twenty companies through the fund but has yet to deploy any of the $50 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.

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Bitwise, a crypto-focused asset manager and index provider, has filed a prospectus for a new exchange-traded fund tracking the performance of crypto innovators.

The so-called Bitwise Crypto Innovators ETF will track the performance of companies included in the Bitwise Crypto Innovators Index, assembled by Bitwise Index Services. 

The development comes alongside other efforts from Bitwise on crypto-centric products. Bitwise announced on February 2 that it plans to list its bitcoin fund on OTC Markets. If approved, the fund would trade similarly to the $24.4bn Grayscale Bitcoin Trust (GBTC), which is listed on OTC Markets’ OTCQX venue.

In a filing with the Securities and Exchange Commission, dated February 5, Bitwise defines crypto innovators as firms that “service and transact in the segment of the economy dealing with crypto assets and distributed ledger technology.”

This could include a broad range of organizations. Such companies include trading platforms, custodians and wallet providers; financial services firms leveraging these technologies; miners; hardware firms; and “issuers that own a material amount of crypto assets or otherwise generate revenues relating to crypto asset or distributed ledger technology.”

The filing lays out the screening rules of the Innovators Index in detail. 70% of the index will be comprised of companies that derive more than 75% of their revenue from servicing or transacting in the crypto sector or which have more than 75% of their net assets denominated in crypto. Such firms must also have a market capitalization of $100 million.

The rest of the index will be made up of larger firms that a Bitwise committee identifies as crypto innovators on the basis of them having a “dedicated business initiative” in the space, reported on in at least one of their recent quarterly or annual reports. The firms making up this portion of the index must have a minimum market capitalization of $10 billion.

The proposed fund will not invest directly in cryptocurrencies or through derivatives, nor will it invest in initial coin offerings.

© 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.

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A group of developers has set up a new bridging mechanism between the Avalanche and Ethereum blockchain networks.

The bridge will allow users of DeFi tools to transfer their assets between the two ecosystems. Its creation also means that developers of DeFi projects on Ethereum will be able to offer users an alternative platform on which to transact.

Part of the appeal is of Avalanche as a blockchain is its fast transaction times – less than a second – and low fees. Avalanche went live on mainnet last September, as previously reported. The project has raised some $60 million to date through a mix of token sales and venture funding.

“Bridges play a vital role in enabling DeFi to grow beyond the borders of one network to complementary ecosystems,” explained Emin Gün Sirer, chief executive and co-founder of Ava Labs. “This bridge will open the floodgates for hundreds of Ethereum assets, including cornerstone DeFi assets like WBTC, AAVE, and others to flow into Avalanche, fuelling applications like decentralized exchanges, lending protocols, and prediction markets.”

The bridge was constructed by blockchain development group ChainSafe, with Protofire, Hashquark, POA Network, Avascan and Meter.io securing the bridge as “relayers”.

To use it, DeFi users will have to lock either Wrapped ETH (WETH), ERC-20 or ERC-721 tokens in a ChainBridge contract on Ethereum. An equivalent token will then be minted on Avalanche and deposited to the desired address. This newly minted asset can then be used in DeFi applications on Avalanche.

A spokesperson for Ava Labs said that tokens minted in this way on Avalanche will appear the same as the token locked in the ChainBridge contract. For example, LINK, the native token of Chainlink, will look the same on Avalanche as it does on Ethereum.

The Avalanche equivalents are not stablecoins, the spokesperson added. They are simply the same assets migrated onto Avalanche.

© 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.