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Quick Take

• TreasureDAO is a decentralized NFT infrastructure on Arbitrum that bridges a growing network of play-to-earn (P2E) metaverse projects.
• It is a Loot derivative project that had a fair launch.
• Metaverses in this ecosystem are powered by MAGIC tokens and are linked to each other by lores, transferable assets, and token economics.
• It aims to develop an infrastructure that consists of essentially four different lego bricks: a foundation for other projects, a P2E game, interoperable assets, and an NFT marketplace. It may turn out to be extremely challenging to build all these facets at once. 

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Quick Take

• NFTfi is an Ethereum-based P2P lending marketplace where individuals can borrow ETH or DAI against their collateralized NFTs.
• Total loan volume on NFTfi has surpassed $200 million, though it has only pocketed less than $400,000 in revenue since its inception 2 years ago.
• This research article will look at NFTfi’s economics, including the LTV ratio, default rate, and the risks of taking out non-recourse debt in terms of NFTs.
•  

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.

A mix of companies announced the formation and launch of the Metaverse Standards Forum on Tuesday in an attempt to drive industry-wide cooperation on interoperability standards within the amorphous online space.

The set is hosted by the Khronos Group, a non-profit consortium of 170 organizations supporting interoperability standards in industries such as 3D graphics, VR, AR and machine learning. It will focus on projects geared towards implementation prototyping, hackathons, plugfests and open-source tooling, it said in a release.

The release also said that it aims to “accelerate the testing and adoption of metaverse standards, while also developing consistent terminology and deployment guidelines.” 

The more than 37 founding members include obvious candidates such as Meta, Microsoft and Sony Interactive Entertainment, Chinese tech giants Alibaba and Huawei, Epic Games and several consultancy groups and standards organizations. Less obvious candidates for metaverse projects are also on the books, including furniture giant Ikea.

But it’s the absences that are more conspicuous. While metaverse creators such as Lamina1 have signed up, as have a smattering of AR and VR-focused companies, major brands such as Decentraland and The Sandbox are missing.

The Forum confirmed to The Block that the two were not yet members, but did not confirm by publication whether they had been asked to join. 

The push for establishing interoperability standards in the metaverse has been growing since the explosion of interest that followed Facebook’s rebranding to Meta last year. Comparable to internet standards that allow different networks to interact with each other in Web 2, metaverse interoperability would allow for the transfer and continuity of assets between platforms.

The full list of founding members includes: 0xSenses, Academy Software Foundation, Adobe, Alibaba, Autodesk, Avataar, Blackshark.ai, CalConnect, Cesium, Daly Realism, Disguise, the Enosema Foundation, Epic Games, the Express Language Foundation, Huawei, IKEA, Jon Peddie Research, Khronos, Lamina1, Maxon, Meta, Microsoft, NVIDIA, OpenAR Cloud, the Open Geospatial Consortium, Otoy, Perey Research and Consulting, Qualcomm Technologies, Ribose, Sony Interactive Entertainment, Spatial Web Foundation, Unity, VerseMaker, Wayfair, the Web3D Consortium, the World Wide Web Consortium, and the XR Association (XRA).

© 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.

Executive Summary

This report analyzes the current state of Bitcoin’s expansion beyond its core base layer protocol in two key areas – (i) payments and asset issuance protocols and (ii) general-purpose protocols. It gives an overview of projects in both areas and compares them based on design trade-offs and performance metrics.

The report finds several key developments:

Bitcoin’s Base Layer Stands to Benefit from Increased Application Development

Bitcoin’s falling block subsidy creates a need for recurring transaction fee revenue to ensure its long-term security. Bitcoin-based protocols that enhance Bitcoin’s scalability and broaden its use cases could dramatically expand its total user base and generate sustainable transaction fee revenue.

Bitcoin-based Applications Can Unlock Value for Users

Bitcoin-based protocols can provide users with relatively high levels of security and dependability. Market data showcases underlying user demand to put BTC to productive use in decentralized finance (DeFi) applications – but much of this demand is being absorbed by Ethereum and other layer-1 blockchains. Bitcoin-based applications can allow users to deploy capital directly within Bitcoin’s established security framework – thus avoiding the heightened centralization risks associated with bridging and deploying BTC on layer-1 networks.  

Extending Bitcoin’s Use Cases is a Multi-Front Exercise          

Lightning Network, Bitcoin’s layer-two scaling solution, has grown significantly in the last two years. While efforts to extend its functionality (beyond facilitating BTC payments) are underway, its network does not support general-purpose application development.

Projects focused on providing general-purpose support, such as RSK and Stacks, have taken novel approaches based on learnings from previous attempts to add functionality on top of Bitcoin. Both of these networks employ their own respective data ledgers (to avoid congesting Bitcoin’s base layer) and use cross-chain consensus mechanisms to leverage Bitcoin’s underlying security. These consensus mechanisms reside at the center of their networks and impact their relative security and performance.

Bitcoin-based App Development Still Lags Layer-1 Blockchains

Infrastructure improvements are needed to match the developer and user experience of Ethereum and other Ethereum Virtual Machine (EVM) compatible blockchains. Increased investment into Bitcoin-based protocol development organizations is an encouraging sign for improvement in this area. On a year-to-date basis, these organizations have collectively received ~$400 million in funding.

© 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.

Animoca Brands and its digital collectibles market subsidiary Quidd has launched a feature for minting and unminting digital collectibles on the Ethereum blockchain named Mintables, the company announced on Tuesday.

According to a statement from Animoca, Mintables will make it easier and cheaper for beginners to mint their first non-fungible tokens (NFTs) and remove the need for cryptocurrency to do so, while the assets remain interoperable with popular Ethereum NFT marketplaces such as OpenSea and Rarible.

“With Mintables, we are delivering user choice in addition to true digital ownership. Why should the platform decide if a digital item should be on a blockchain, or even which blockchain? The Mintables initiative gives real power to the collectors,” said Michael Bramlage, CEO and co-founder of Quidd.

Animoca Brands acquired Quidd in 2019. The app focuses on the virtual collecting and trading of collectibles by popular brands, from football teams including Manchester United to shows like Ricky and Morty or Adventure Time. Assets are paid for in fiat. 

© 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.

FTX US, the American subsidiary of global crypto exchange FTX, is acquiring equities clearing firm Embed Financial in a move to enhance its newly-launched stocks trading offering.

FTX US and Embed Financial are not new to each other. When FTX US announced last month that it would begin offering stocks, it said Embed will provide it custody, execution and clearing services for securities. Embed is an independent registered broker-dealer and a member of the Financial Industry Regulatory Authority (FINRA).

Terms of the deal weren’t disclosed, but Embed has raised around $40 million in total funding to date and is valued at up to $120 million, according to Dealroom estimates.

Embed founder and CEO Michael Giles confirmed the firm’s total funding to The Block but declined to comment on the valuation and the deal size. FTX US president Brett Harrison declined to comment on whether the deal will be financed via cash, equity, tokens or a mix of those things.

The deal is subject to FINRA approval, said Harrison and Giles, declining to comment on the expected timeline of deal closure.

FTX Stocks

FTX US debuted its stock trading functionality, FTX Stocks, last month for select customers in private beta. The public release, limited to the US, is expected later this summer.

The acquisition of Embed will help FTX US offer the stock trading functionality to other firms, said Harrison.

“Embed and FTX US together can provide combined stocks, options and crypto white-label services to broker-dealers,” he told The Block. “These businesses may be trading and investing apps, or they could be neo-banks or other fintechs looking to add such services as add-ons to their core functions.”

As part of the deal, all 32 employees of Embed will stay on through the acquisition, said Giles and Harrison. Giles will continue to stay on as CEO of Embed, and Embed will continue to operate independently, said Harrison.

Embed is Giles’s second startup to be acquired by a high-profile company. In 2015, he founded Third Party Technologies, an investing API platform, which was acquired by Jack Dorsey’s Square (now Block) in early 2019. Following the acquisition, Giles remained the CEO of Cash App Investing until December 2019, according to his LinkedIn profile.

The Embed acquisition comes six months after FTX US raised $400 million in its first funding round at an $8 billion valuation. This is FTX US’s third acquisition to date, after LedgerX and Good Luck Games.

© 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.

The Solana whale who came on the verge of getting liquidated last week has started moving their funds to mitigate risk to the Solana-based DeFi protocol Solend, where all their funds were previously held. The so-called Solend whale has transferred $25 million of its debt to Mango markets, the Solend team noted on Tuesday.

The team added that this was the result of Solend’s efforts to persuade the anonymous whale (3oSE) to spread their lending position across a second lending platform.

With the user transferring a part of their position to Mango Markets, Solend has relieved itself from suffering the full brunt of a possible forced liquidation. However, the crisis is still not fully averted, according to Solend, as this simply limits exposure to Solend itself; the trading position — and its potential liquidation — remains active.

“This doesn’t completely solve the problem however, since the large liquidation wall still exists,” Solend wrote. “We’re in touch with the Mango team and 3oSE…uRbE to figure out a long term plan.”

How did this come about?

The issue started when the Solend user took a loan of $108 million in stablecoins. The loan was collateralized by 5.7 million solana (SOL) ($215 million), which represented 95% of the SOL deposits in Solend’s main lending pool.

Yet when the market crashed, this loan became at risk of getting liquidated. It was estimated that this would happen if the price of SOL dropped to $22.30. The Solend team claimed that a liquidation of this size on-chain would be very risky. If the on-chain liquidation went through, the Solend protocol would be at risk of accruing bad debt due to a cascading drop in SOL’s value. 

Solend later became the subject of criticism when it proposed to take over the user’s position and manually liquidate it in an over-the-counter (OTC) deal. However, that proposal was later invalidated over fears that it could undermine its level of decentralization, leading it to look for an alternative solution.

© 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.

Ethereum co-founder Vitalik Buterin came out against overly simplified financial models for crypto markets on Tuesday, citing the stock-to-flow model as a “harmful” example. 

Buterin tweeted that the stock-to-flow model was not looking good and he couldn’t help but criticize simplistic financial models.

“I think financial models that give people a false sense of certainty and predestination that number-will-go-up are harmful and deserve all the mockery they get,” he said. 

Stock-to-flow is a model some bitcoin (BTC) traders use to forecast the price of the cryptocurrency, that was used for natural resources like gold. As these are scarce resources the amount that can be produced reduces over time, which causes the stock-to-flow ratio to increase.

Essentially the ratio measures the amount of bitcoin available in the market divided by the amount mined annually. This is then used to create a line (the red line below) on a price chart showing estimated prices in the future. 

Source: Look into bitcoin

Based on the above chart the stock-to-flow model has, for the most part, been correct. However, as was pointed out by sassal.eth, and echoed by Buterin, the model has recently begun to decouple from the actual price of bitcoin.

The model predicted bitcoin’s price to be $67,175 as of June 18, however, bitcoin traded below $19,000 that day and was trading at $20,845 at the time of writing, according to Coinbase data via TradingView.

© 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 BlockFi announced it has secured a $250 million revolving credit facility from crypto exchange giant FTX. 

“Today BlockFi signed a term sheet with FTX to secure a $250m revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength,” CEO Zac Prince tweeted on Tuesday. 

This is a breaking story and will be updated. 

© 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.

Magic Eden, the largest non-fungible token (NFT) marketplace on the Solana blockchain, has raised $130 million in a Series B funding round and is now valued at $1.6 billion. 

Electric Capital and Greylock Partners led the round, with Lightspeed Venture Partners and previous investors Paradigm and Sequoia Capital also participating, according to an announcement on Tuesday. 

Magic Eden’s Series B round comes just three months after it unveiled a $27 million Series A round led by Paradigm. At the time, the firm didn’t disclose its valuation, but it was valued at up to $162 million, according to Dealroom estimates. That means Magic Eden’s valuation has soared nearly nine times in just three months.

Valuation surge 

Investors were attracted by Magic Eden‘s fast growing share of the market on Solana, co-founder and CEO Jack Lu told The Block in an interview.

According to The Block’s Data Dashboard, Magic Eden is currently the third-largest NFT marketplace by trading volumes. It was launched less than a year ago in September.

Another reason investors wanted to take part in Magic Eden’s round is the firm’s recent expansion in gaming NFTs, said Lu. “Investors were very optimistic about our expansion in this area given our strong start in this category,” he said.

Magic Eden says its games discovery portal, Eden Games, has launched 45 games and seen 90% of all gaming NFT volume on Solana since its launch in March of this year.

Notably, Magic Eden managed to close the round in the current market downturn. Lu said the round was completed earlier this month and is an equity round.

Expansion plans

With fresh capital in hand, Magic Eden plans to further improve its main peer-to-peer NFT marketplace and a primary marketplace called Launchpad, which serves creators and helps them launch their own NFT collections.

Lu said Magic Eden aims to serve creators and end-users across their NFT journey — from buying to community engagement.

Magic Eden, which currently only supports Solana, also plans to launch on more blockchains. Zhuoxun Yin, the firm’s other co-founder and its COO, declined to name those blockchains in the interview but said, “we are considering all the ones that you would expect.”

More and specific details on the multi-chain expansion strategy will be shared “in the coming weeks,” he added.

There are currently about 100 people working for Magic Eden and the firm plans to add about 50 more in the next six to 12 months, said Lu. He is hiring across functions, including engineering and product management.

Magic Eden is also “conceptually open” to the idea of launching its own token, according to Lu. “But we don’t have specific plans to share on that front yet,” he added.

© 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.