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Compound Labs, the team behind the decentralized finance (DeFi) lending protocol Compound, released code for a multi-chain lending protocol dubbed Compound III on Tuesday. 

Compound III is intended to be a governable protocol that’s both affordable in capital and transaction fees. One way it’s doing this is by including a single borrowable base asset — with all other assets collateralized — to reduce risk and improve capital efficiency, Compound Labs’ vice president of engineering Jared Flatow wrote in a Wednesday post.

While Compound has released the code to the multi-chain lending protocol, it hasn’t released the actual protocol itself. Still, the released code marks a major step in making cross-chain decentralized lending a reality on Ethereum virtual machine-compatible (EVM) chains.

“Developers can begin planning integrations with Compound III, and auditing or suggesting improvements to the codebase,” wrote Flatow in the post. 

The Compound protocol currently has $3.5 billion in assets accruing interest over 18 markets, according to its website.

© 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.

ZK-rollups are coming to MetaMask and Infura.

According to a Wednesday announcement, the deal between scaling startup StarkWare and development firm ConsenSys announced that the layer-two technology would be integrated with the wallet app and node infrastructure service, respectively.

The integrations are limited in scope as of now; in the case of Infura, the integration is limited to participants in private beta. For MetaMask, the companies said that developers can build with StarkNet via MetaMask Flask, an experimental development feature.

As previously reported by The Block, StarkNet supports the deployment of smart contracts independently. In a broader sense, layer-two protocols like rollups are intended to increase the number of transactions that can occur on the Ethereum network while shaving gas costs.

StarkWare raised $100 million at an $8 billion valuation in May.  

© 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.

Fees on Ethereum’s Layer 2 scaling solution Arbitrum One rose higher than on the underlying Ethereum mainnet for more than five hours on Wednesday. While this was only temporary, it runs counter to the main goal of such a scaling solution, which is to offer cheaper (and faster) transactions.

On Wednesday morning, the transaction fees to perform a token swap on Arbitrum spiked to nearly $10, about double the cost of a swap on Ethereum, per on-chain data. The higher-than-expected fees on Arbitrum were caused by increased user activity. The fees on Arbitrum have since come back down and are now sitting at around the $2 mark.

Per its official blockchain explorer called Arbiscan, the Layer 2 network experienced a 45% increase in daily transactions in the last few weeks. The network also touched a record high of more than 287,000 transactions on Monday.

The heightened activity has, in part, resulted from an incentivized user campaign called Arbitrum Odyssey, a 2-month promotional campaign. In this, Offchain Labs, Arbitrum’s development firm, promised NFT rewards to users who interact with various Arbitrum-based DeFi protocols. Airdrop farmers — those who try to be qualified for future airdrops — are speculating that these NFTs will later give access to an token airdrop, but this is by no means guaranteed.

Arbitrum is a Layer 2 solution that leverages a technology called Optimistic Rollups. This result in an off-chain computation network that lest it achieve faster and cheaper transactions while still deriving security from the main Ethereum blockchain. With over $2 billion in total value locked, Arbitrum leads the Layer 2 market ahead of others like Optimism, Boba and Metis, that all rely on the same scaling technology. 

© 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.

A court in the British Virgin Islands (BVI) has appointed financial advisory firm Teneo to handle the liquidation of troubled crypto lender Three Arrows Capital (3AC), a person with direct knowledge of the matter told The Block.

New York-based Teneo has been appointed on the orders of the Eastern Caribbean Supreme Court in the BVI’s High Court of Justice, said the person. The court order placed 3AC into liquidation on June 27, they said. 3AC didn’t immediately respond to a request for comment from The Block. 

As a liquidation handler, Teneo’s main job is to protect the assets of 3AC and understand who its creditors are, according to the person. Teneo is essentially representing creditors. The person declined to comment on who those creditors are and how specifically the court issued an order.

Troubles for 3AC started last month after the implosion of Terra’s ecosystem and it native luna token, which sank to almost zero. The ensuing crypto market turbulence posed more issues for 3AC and — as the Block previously reported – the hedge fund failed to meet margin calls on several exchanges, including FTX, Deribit and BitMEX.

3AC and its co-founders, Zhu Su and Kyle Davies, have remained almost silent on the firm’s woes. Earlier this month, they told the Wall Street Journal in an interview that the company is considering selling off assets and seeking a possible bailout. Singapore-based law firm Solitaire LLP represents 3AC, per the WSJ report.

3AC operated out of Singapore until last year, when it reportedly relocated to the British Virgin Islands.

The person clarified that Teneo will not manage the “insolvency” of 3AC, as reported by Sky News earlier today. Insolvency is a state in which a company exists while liquidation is what a court orders for a firm, the person explained.

© 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 acquired an additional 480 bitcoin (BTC) worth around $10 million to its balance sheet, it revealed on Wednesday.

Founder and CEO Michael Saylor shared on Twitter that his firm acquired the new bitcoin at an average price of $20,817. The purchases were made between May 3 and June 28 while the cryptocurrency market was experiencing a sell-off.

This is the firm’s first purchase announcement since April when it bought 4,167 bitcoin, worth around $190.5 million at the time. MicroStrategy, and its subsidiaries, now hold approximately 129,699 bitcoins — with an aggregate purchase price of approximately $3.98 billion, according to an 8-K filing with the SEC.

Saylor spoke to The Block in May amid the market downturn. He noted that bitcoin’s near-term volatility was largely irrelevant once people understand the fundamentals of the cryptocurrency. 

At the time MicroStrategy’s bet on bitcoin had fallen into the red as the cryptocurrency dipped below its average purchase price (at the time) of $30,700. The average purchase price of the company’s holdings is now $30,664 per bitcoin, including fees and expenses, according to Wednesday’s filing.

Throughout the market tumult there has been constant speculation that MicroStrategy would face a margin call. Saylor previously dismissed this in comments to The Block, as well as the suggestion that the firm would sell its holdings.

Bitcoin’s price was hovering either side of $20,000 at the time of writing, according to Coinbase data. The leading cryptocurrency by market cap has been steadily declining since the beginning of May for a plethora of reasons. 

A worsening macroeconomic outlook due to rising inflation concerns has set the tone for trading since the beginning of the year, but the decline in crypto prices has accelerated since the beginning of May. 

On May 12 the Terra blockchain ecosystem collapsed after its algorithmic stablecoin, terraUSD, lost its peg to the dollar. The crypto market has been unstable since with lending platforms Celsius and BlockFi both facing significant issues, while crypto hedge fund Three Arrows Capital had its positions liquidated by several lenders.

Despite this MicroStrategy has continued to buy bitcoin as the firm’s bullish stance appears to be unwavering.

© 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.

Beleaguered crypto lender Celsius had an assets-to-equity ratio close to double that of a typical US bank at the time of its last fundraising, the Wall Street Journal reported on Wednesday, citing documents sent to investors. 

The platform, which offered retail investors the opportunity to earn yields of up to 18.6% on deposited crypto assets, last raised funds in October of last year, when it tapped a $400 million round led by growth equity firm WestCap.

Earlier this month, Celsius paused withdrawals and transfers due to market conditions. The firms’s lawyers are now pushing management to file for a Chapter 11 bankruptcy.

According to the investor documents accessed by the Wall Street Journal, the lender took on far more risk than that a traditional bank. Along with issuing large loans backed by little collateral, it had $19 billion of assets and roughly $1 billion of equity as of last summer. This is far more than the median assets-to-equity ratio for all the North American banks in the S&P 1500 Composite index, which is close to 9:1, according to the WSJ.

Regulators typically look at this figure as an indicator of risk, with Celsius’s ratio being typical of a large bank that has access to central bank loans and usually holds much more stable assets, according to the report. 

“It’s just a risky structure,” said University of Chicago economist Eric Budish of Celsius to the Wall Street Journal. “It strikes me as diversified as the same way that portfolios of mortgages were diversified in 2006,” referring to a feature of the 2008 financial crisis. “It was all housing — here it’s all crypto.“

According to the WSJ, Celsius had projected that deposits would grow to exceed $108 billion in 2023. The firm had also forecast that revenue would hit $6.6 billion in 2023 and Ebitda would climb to $2.7 billion. 

Celsius is not alone in its struggle in the current market conditions. Fellow lender in the space BlockFi received a $250 million line of credit from FTX in the face of liquidity issues. The cryptocurrency exchange is also reportedly in talks to acquire the embattled lender.

© 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.

Reciprocal Ventures, the early-stage backers of Solana and The Graph, announced on Wednesday that it has closed a $70 million fund.

The venture capital firm plans to invest both on a traditional equity basis but also via tokens, doubling down on web3 as fellow investors in the space face insolvency issues, it said in a release. 

With the new fund, the firm says it is targeting investing in companies across decentralized finance (DeFi), institutional capital markets and web3 protocols and applications. 

Previously, the company has invested widely in the crypto sector. Along with Solana, the company counts Blockdaemon, The Graph and Protego Trust — the company which quietly raised $70 million and is set to reach a $2 billion valuation — as portfolio companies. Earlier this year, Tiger Global and Sapphire led a $207 million funding round into Blockdaemon, valuing the Reciprocal Ventures portfolio company at $3.25 billion. 

“We have been investing in web3 for over five years and believe the space is hitting an inflection point in terms of developer and user traction.” said Reciprocal Ventures partner Craig Burel. “All founders are unique, and we help them find success with a combination of our direct support and access to our network of more than 60 active advisors.”

The fund announcement comes as investors in the space face precarious market conditions. Earlier this week, The Block reported that crypto app Voyager Digital issued a default notice to hedge fund Three Arrows Capital for failing to repay a loan. Today, a court in the British Virgin Islands ordered the liquidation of the crypto hedge fund, according to a Sky News report.

While the downturn in the market may be a deter some, others, like Reciprocal, are continuing to funnel money into web3 technologies. Last month, a16z announced a $4.5 billion fund for crypto and blockchain startups. It said that $1.5 billion out of the fund will be dedicated to seed investments, while $3 billion will go to venture investments.

© 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.

A court in the British Virgin Islands has ordered the liquidation of Three Arrows Capital, according to a report by Sky News, citing a person familiar with the situation.

A court filing was made on June 27 to liquidate the firm.

According to the report, partners from Teneo Restructuring are handling the firm’s insolvency.

Started by Kyle Davis and Su Zhu, Three Arrows Capital grew to be one of the biggest crypto hedge funds. Yet it was hit hard by the sudden collapse of the Terra blockchain. Then, when the wider crypto market fell substantially, this caused further issues for the fund — and they failed to meet margin calls.

It wasn’t long before crypto exchanges FTX, Deribit and BitMEX liquidated Three Arrows Capital’s positions, according to previous reporting by The Block.

On June 15, Zhu tweeted, “We are in the process of communicating with relevant parties and fully committed to working this out.”

We have reached out to Three Arrows for comment and will update should we hear back.

For more breaking stories like this, make sure to subscribe to The Block on Telegram.

© 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 traded product (ETP) issuer, 21Shares, launched a new product line on Wednesday, aimed at investors faced with the current diminished crypto prices. 

21Shares Bitcoin Core ETP (CBTC) has gone live on the Swiss exchange, SIX, the first product in the issuer’s “Crypto Winter Suite.” The firm decided to launch these new products in light of the crypto market downturn, and the potential for a prolonged period of decline, known colloquially as a crypto winter. 

The CBTC ETP aims to give investors low-cost exposure to bitcoin (BTC), with a total expense ratio of 21 basis points, or 0.21% — 44 basis points below the next product. In order to afford this, a portion of the underlying crypto will be lent out on a fully collateralized basis. Lending has not yet begun; it will begin once the product achieves sufficient scale. 

Arthur Krause, director of ETP product at 21Shares, told The Block that the firm was aware of the current backdrop and delivered the new suite of products to help investors navigate these market conditions. 

ETPs are a debt instrument, which are 100% collateralized by an underlying asset, in this case bitcoin. Investors in ETPs can redeem their investment in return for the underlying asset. Exchange-traded funds (ETFs) and ETPs are often used interchangeably, since ETFs are the most popular type of ETP.

In April 21Shares launched a physically-backed ether (ETH) and bitcoin ETF in Australia. Both of these products have been trading down since launching on May 12, following the collapse of the Terra blockchain.

© 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.

Episode 59 of Season 4 of The Scoop was recorded live at NFT.NYC with The Block’s Frank Chaparro and Ivan Soto-Wright, co-founder and CEO of MoonPay.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.

Web3 can be daunting for new users and brands looking to enter the space.

But MoonPay — the crypto payment infrastructure company that raised $555 million at a valuation of $3.4 billion just last year — has spent the last few months building out a suite of NFT related products in an attempt to simplify the process of introducing new users to web3.

So far this year, MoonPay has enabled NFT purchases via credit cards, built out its white-glove NFT concierge service for celebrities, and launched an NFT minting service aimed at brands and content creators.

In this episode of The Scoop recorded live at the NFT.NYC conference, MoonPay co-founder and CEO Ivan Soto-Wright sits down with host Frank Chaparro to discuss the inroads MoonPay has made into the burgeoning NFT industry, and to explain some of the ways he envisions the space evolving over the coming months.

One potential use case for NFTs that Soto-Wright is excited about is their potential to act as redeemable tokens for real-world items. According to Soto-Wright:

“‘Phygital’ — or ‘digital twinning’ — is the idea that you can take something that exists physically and create a digital pair of that as an NFT, and then you can hold on to that and redeem it for the physical…”

In addition to helping brands combat counterfeiting, Soto-Wright explains how brands could use ‘phygital’ items to pitch products directly to consumers:

“Let’s say Gucci has a special line of shoes that they want to sell on their website, and maybe the shoes haven’t actually been released yet — they could release them digitally and they could actually start to engage with the audience and see whether there’s actually demand for that asset before it actually is created.”

Big brands are part of the audience MoonPay hopes to attract with its new HyperMint NFT utility service, announced at the start of NFT.NYC last week, which allows brands and creators to mint millions of NFTs at a time.

During this episode, Chaparro and Soto-Wright discuss:

• The importance of MoonPay’s focus on retail ‘conversion’
• The relationship between NFTs and intellectual property
• Digital property and identity on web3

This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Cross River
Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 725 financial institutions, has secured the transfer of over $1.5 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.

About Coinbase Prime
Coinbase Prime is an integrated solution that provides institutional investors with an advanced trading platform, secure custody, and prime services to manage all their crypto assets in one place. Coinbase Prime fully integrates crypto trading and custody on a single platform, and gives clients the best all-in pricing in their network using their proprietary Smart Order Router and algorithmic execution. For more information, visit www.coinbase.com/prime.

About Cross River
Cross River is powering today’s most innovative crypto companies, with banking and payments solutions you can rely on, including fiat on/off ramp solutions. Whether you are a crypto exchange, NFT marketplace, or wallet, Cross River’s API-based, all-in-one platform enables banking as a service, ACH & wire transfers, push-to-card disbursements, real-time payments, and virtual accounts and subledgers. Request your fiat on/off ramp solution now at crossriver.com/crypto.

© 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.