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Crypto prices traded in a narrow range throughout February after a rip-roaring January saw some coins rally 40%, as Bernstein analysts say the Ethereum network could be set to explode. 

Ether was trading over $1,600 by 9:30 a.m. EST, down about 0.25% over the past 24 hours, according to TradingView data. The second largest cryptocurrency by market cap will benefit from several catalysts in the next few months, Bernstein said. 

“Never in Ethereum’s eight-year history have the stars aligned so perfectly, in our view, for its competitive dominance, growth momentum, and clear market leadership,” Bernstein Analysts Gautam Chhugani and Manas Agrawal wrote in a Feb. 28 note. While the bear market has struck competitors, Ethereum’s network has shown resilience.

The Shanghai upgrade due in the first quarter will see ether undergo its first test of supply. The wealth manager said this will be a “further catalyst for increased staking and building one of the largest financial staking markets.” The upgrade will let stakers withdraw staked tokens. Despite a potential supply overhang in the short-term, this is a step “towards higher steady-state staking, which helps the demand-supply dynamics.”

Following the Shanghai upgrade, the EIP-4844 upgrade will look to deliver “proto-dank-sharding.” This upgrade will “reduce transaction costs for rollups by at least 10x,” Chhugani and Agrawal wrote, alluding to reduced fees for Layer 2 networks.

Liquid staking potential

Proto-dank-sharding could reduce fees on Layer 2 networks between 10-100 times current levels, Jesse Pollack, Coinbase’s senior director of engineering, said recently. EIP-4844 would then reduce the cost of posting data to the mainnet (which accounts for 4% of total gas used) and creates a separate blockspace/fee market for Layer 2’s, the upgrade is expected to be delivered in the next calendar year.

Chhugani and Agrawal also note that “2023 will be the year of Layer-2 launches.” The pair note 90% lower ether emission, possible negative inflation, and 5% staking yields as key factors of the Ethereum network’s economic model. Staking is of particular interest, liquid staking in particular. 

Liquid staking could potentially be a $60 billion dollar opportunity.

“The proof of stake model has created a 5% staking yield on Ethereum post-Merge,” the note read. Assuming 30% staking post-Shanghai, which would be comparable to other proof-of-stake chains, this “creates a $60 billion (or more) liquid staking market for Lido Finance, RocketPool, Frax, Ankr.”

© 2023 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.

Deloitte and Sinclair Broadcast Group said they’ll be launching a new metaverse sports fan community experience leveraging Epic Games’ Unreal Engine to “enhance the ways in which fans and audiences can build connections and engage with the content they love.”

“The community is poised to redefine sports viewership and experiences through the metaverse,” Deloitte said in a statement. “Sinclair’s sports community goes beyond game time, providing a metaverse experience to engage fans during post-season, pre-game, post-game and eventually, during the game.”

The experience, which launches the week of March 6, was built by Deloitte’s Unlimited Reality practice, which brings together 3D computing, artificial intelligence, web3, immersive experiences and advanced connectivity to help clients create business value.

The community makes use of Epic’s Unreal Engine, a 3D creation tool that robust experiences to life in real time.

2023 outlook

According to Deloitte’s recently published “2023 Sports Industry Outlook,” this year could see advancement in the sports NFT market.

“Simple digital collectibles, originally seen as curiosities, are becoming advanced digital assets that can be used to improve fan engagement and loyalty and create new business models and even more new revenue streams,” Deloitte wrote, noting some barriers involving a continued lack of understanding about NFTs and broader concerns about market immaturity and sustainability. 

“Sports organizations and their technology partners should consider making it as easy as possible for the average fan to set up a wallet and purchase digital assets,” Deloitte continued. “These challenges will likely have to be addressed if sports organizations want new revenue sources, better fan engagement, and more knowledge of their audience.”

© 2023 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 regulated decentralized finance (DeFi) platform for institutions, Hashnote, launched after a $5 million incubation with early stage blockchain investor Cumberland Labs.

“We are kind of a funnel into DeFi for institutional investors,” Hashnote founder and CEO Leo Mizuhara told The Block in an interview. “Think of us almost like an on-ramp.”

Hashnote is a compliance driven DeFi platform on the Ethereum blockchain that conforms to Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) standards and offers clients exposure to crypto-based investments such as yield generation, downside protection and leveraged upside products, the company said.

“Our ecosystem is a walled garden, whitelisted ecosystem,” said Mizuhara, noting that if customers want to bring their own wallets, they must follow KYC procedures that he thinks are “important for being regulated in the U.S. as well as really regulated anywhere else in the world.”

Three ways to interact

With respect to an institutional market sector that may not be familiar with web3 interfaces, Hashnote is taking a multi-pronged approach to onboarding newcomers into the DeFi ecosystem, according to Mizuhara.

One approach allows clients to wire cash directly to Hashnote, with the option to track transactions on the blockchain.

A second option allows traders to send a wire transaction but opt for Hashnote to create an empty wallet which receives assets but requires both Hashnote and the recipient to sign a transaction, which Mizuhara referred to as a “safe way” to approach DeFi.

The third option allows knowledgeable web3 traders to practice self custody and interact with Hashnote via MetaMask or any other blockchain wallet, said Mizuhara.

Mounting demand for DeFi

Institutions are seeking a fully regulated KYC platform to access DeFi, according to Mizuhara, who added Hashnote is “getting a ton of interest” and that financial products of this nature are “in demand right now.”

“We should be looking at trillions, not billions,” Mizuhara said. “And I think the way forward is onboarding all these people who are in the traditional finance space and bridging that gap between what we call traditional finance and DeFi.”

“I think we’ll be able to onboard the next couple billion–trillion dollars into the crypto space,” he added.

© 2023 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 company called Homebase listed a property-backed NFT on Solana, allowing consumers to invest in a tokenized house. 

Buying a share of the three-bed house in McAllen, Texas — the first on the platform — will set you back $100. There are 2,468 tokens on offer, worth a total $246,800.

Users can invest in single family rental properties through the program. Each home is held in a limited liability company whose ownership is associated with Homebase NFTs. After investment, they will begin to receive rent monthly in the form of USDC, according to a company release. 

The idea, the company says, is to give better access to wealth-building via real estate on-chain. 

The NFTs that are issued via a security token offering and are registered as securities with the SEC, filed under Regulation D. “We decided to take one of the most conservative legal approaches with our home offerings and thus decided to register them as securities from day one,” said Alex Kim, co-founder of Homebase, in the release.

This isn’t the first time real estate has been touted for sale on the blockchain. This time last year, Vesta Equity set out to sell fractionalized shares of houses on Algorand. It seems this failed to take hold, though, as the platform suggests that none of the houses listed have managed to attract any investment. Roofstock onChain, a marketplace for real estate NFTs had more luck in October, when a South Carolina house was sold via an NFT for $175,000. 

© 2023 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.

While the UK government and Bank of England are pushing forward their exploration of a retail digital pound, work on a wholesale solution is also a priority — and a far more certain one.

“The question is not should we try and exploit the new technologies for wholesale. We should, and we’re looking at how to do that […] and what’s the quickest way,” Bank of England Deputy Governor Jon Cunliffe told the Treasury Committee on Tuesday.

When it comes to a retail solution, the government will only make a decision on whether to implement a central bank digital currency around 2025, with the potential to launch it further down the line. However, Cunliffe said that “it’s more likely than not” that the digital pound will move forward as the central bank looks to fill the gap as the use of physical cash declines.

After publishing a consultation paper on the digital pound earlier in February, the Bank of England and HM Treasury are looking to hear public feedback on design choices — including topics of security, resiliency and privacy.

While the consultation focuses on the kind of CBDC that private individuals may be able to use on a day-to-day basis, Cunliffe reminded the UK Parliament that a wholesale CBDC is “not on the back burner.”

He highlighted the Financial Markets Sandbox, proposed under the Financial Services and Markets bill currently making its way through Parliament, will play a significant role. Work with the Bank of International Settlements’ Innovation Hub also focuses on building rails to tokenize assets. 

“At the moment, we see the needs of wholesale and retail as separate,” the central banker added. “It is a much bigger change — societal and economic — than wholesale.”

The UK is on track 

Central banks are racing to study and design possibilities for a central bank digital currency. For the UK, the government is looking to achieve global financial hub status.

The committee quizzed Cunliffe on whether the rollout of a CBDC is taking too long compared to other global competitors in Europe and Asia. “I don’t think we are behind other advanced economies,” the deputy governor assured.

The Bank of England is renewing its Real-Time Gross Settlement, allowing financial institutions to settle payments. A wholesale CBDC based on decentralized ledger technology may have a link to the renewed RTGS in the future. However, policymakers worry this may slow down the wholesale CBDC rollout process.

“We do have to balance speed against getting it right, and there are some really big things at stake here,” Cunliffe said. 

© 2023 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 wallet associated with last year’s TerraUSD (UST) depeg might belong to trading firm Jane Street, Wintermute Head of Research Igor Igamberdiev said in Twitter thread on Tuesday.

Based on transaction analysis, Igamberdiev said there is a “good chance” the wallet is related to Jane Street. Clearpool announced on May 3 of last year that Jane Street borrowed 25 million USDC from BlockTower using its permissioned lending pool — based on this, he identified three addresses belonging to the trading firm; one was of particular interest, dubbed Wallet A.

The same wallet borrowed $25 million again two weeks later before depositing it into a Coinbase wallet. The wallet in question received 84.5 million USDC from the UST de-pegger, Igamberdiev noted, before adding, the wallet didn’t have any other interactions other than these deposits, meaning its “highly likely to belong to the same entity.”

Jane Street did not immediately respond to an email requesting comment. A person who answered a call placed to the firm’s UK office said they would pass on our message. 

Igamberdiev noted the wallet held UST on Anchor for a month, adding that “it wouldn’t necessarily mean that Jane Street had malicious intent.”

The TerraUSD stablecoin, often known by its ticker UST, collapsed in May 2022, wiping out tens of billions of dollars for investors.

© 2023 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.

Mastercard and Visa are holding off on their crypto integration plans in the wake of several turbulent events that have rocked the cryptocurrency space in the last year, according to Reuters.

“Recent high-profile failures in the crypto sector are an important reminder that we have a long way to go before crypto becomes a part of mainstream payments and financial services,” Reuters quoted a Visa spokesperson who added that the company is still interested in the crypto space.

Both card payment firms have previously announced plans to integrate crypto into their network. Visa proposed a plan to use StarkNet for automatic recurring payments in late 2022.

However, last year’s Terra ecosystem collapse and FTX bankruptcy appear to have dampened enthusiasm from both firms. Visa ended its crypto debit card partnership with FTX after the collapse of the exchange. The initial plan would have seen FTX using Visa’s crypto debit cards in over 40 countries across the globe.

Visa and Mastercard halting their crypto plans are the latest in a growing trend of mainstream businesses limiting their crypto exposure. Several banks in the U.S. have begun to withdraw services to crypto businesses. Even the major accounting firms have so far chosen not to audit the books of cryptocurrency exchanges in the wake of the FTX collapse.

The regulatory environment for crypto in the U.S. may also be another issue for companies like Visa and Mastercard. The U.S. Securities and Exchanges Commission has been on the offensive against the sector since the start of the year.

© 2023 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.

Illuvium DAO, the community behind the NFT gaming project Illuvium, is voting to block a planned crypto gaming session between its CEO Kieran Warwick and Su Zhu, co-founder of the bankrupt crypto hedge fund Three Arrows Capital.

Data from Snapshot show unanimous support for the proposal, with four wallets so far casting their lots in favor. Voting began on Feb. 26 and will end on March 1.

An Illuvium council member known as Deraji submitted the proposal, arguing against the project having any dealings with Zhu.

“While Zhu Su is a well-known figure in the web3 community and does have a larger follower count than Illuvium, direct association with him risks the reputation that the DAO has worked to curate,” the proposal stated.

Canceling the gaming session would help the project avoid the risk of “scam by association,” Deraji argued. Zhu didn’t immediately respond to a request for comment. 

3AC bankruptcy

Three Arrows Capital, the high-flying crypto investment firm also known as 3AC, filed for Chapter 15 bankruptcy protection in July after its bets turned sour. It owes billions of dollars to creditors. While Zhu and his co-founder Kyle Davies initially went to ground following the collapse, they have recently emerged with plans for a new marketplace to trade claims on bankrupt crypto firms.  

The Illuvium game under debate, dubbed Illuvitars D1sk Battles, functions as an NFT-style one-on-one contest. It involves crypto personalities opening special NFT packs called d1sks which are used to do battle in the game.

The contest between Warwick and Zhu is billed to take place on March 8. Several Illuvium community members faulted the advertised gaming session even before the creation of the DAO poll, citing similar reasoning to Deraji. 

© 2023 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.

Liquid staking protocol Ether.Fi raised a $5.3 million round led by North Island Ventures and Chapter One. 

The round, which closed this month after beginning the raising process earlier this year, featured participation from a total of 35 investors, said founder Mike Silagadze in an interview with The Block. Other participating investors include Node Capital, Arrington Capital, Maelstrom, Version One Ventures and Purpose Investments. 

Previously the co-founder of edtech Top Hat, Silagadze decided to trade in making courseware for crypto in 2021 to run an ether staking fund named Gadze Finance. 

“I’d actually been investing in and I guess you know, playing around with the crypto space since, since 2011, I mean literally before there were even any exchanges,” he said in an interview with The Block. 

His next venture Ether.Fi aims to build a decentralized non-custodial staking solution. The protocol allows stakers to retain control of their keys while delegating validator operation to a node operator, said the release announcing the funding round. Silagadze said that the majority of the current providers are custodial and centralized. 

Ethereum stakers that use Ether.Fi are also granted an NFT representation of every validator generated. Those NFTs allow for the storage of metadata, which Ether.Fi hopes developers will use to build out further staking infrastructure. 

The funding will be used to hire more engineers for the team and pursue further partnerships in addition to its current relationships with node operators such as Kiln and Finoa. The protocol is set to launch on March 4 at ETHDenver.

© 2023 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.

At around 4:04 a.m. UTC, Ethereum core developers triggered the upgrade at epoch 56832, which took approximately 13 minutes to finalize. The Sepolia test network is one of three testnets on which the Shanghai-Capella upgrade, also called Shapella, is being tested. Its deployment is seen as a milestone towards the upgrade’s  full launch on the mainnet in March.

With today’s launch, developers have successfully replicated the main feature of the Shapella upgrade — which is named Ethereum Improvement Proposal (EIP) 4895 — on Sepolia. This proposal aims to enable validator staking withdrawals on the network.

During Ethereum’s transition to proof-of-stake consensus in September 2022, also known as The Merge, ETH withdrawals from validators were not enabled. Now, that is set to change.

Developers have finalized three additional improvements aimed at optimizing gas costs for certain activities, in addition to enabling validator withdrawals, through the Shapella upgrade.

Multiple phases of public testing for Shapella have been planned by developers, and the Sepolia testnet is the second public testnet to deploy the upgrade, following the earlier simulation on the Zhejiang testnet this month.

The next step for developers will be to deploy Shapella on the Goerli testnet in early March, which will serve as the final dress rehearsal before the mainnet launch.

© 2023 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.