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Valour Monthly Update – June ’23



Welcome to our monthly newsletter Valour Monthly Update - June '23 where we share insights and developments from across Valour and the wider crypto space.

Welcome to our monthly newsletter Valour Monthly Update – June ’23 where we share insights and developments from across Valour and the wider crypto space.

To stay up to date on our latest activity and engage with our community, join us across our social channels:

State of the Market:

June can be predominantly characterised by the increasingly apparent shift in institutional interest towards crypto assets. Following investment titan BlackRock’s spot Bitcoin ETF application, prices increased some 17% (1W), closing at a net gain of 10% (30D). Spurring a tide of similar applications and refilings by the likes of WisdomTree, VanEck, Invesco and Fidelity, the price effect has been profound, solidifying Bitcoin’s 85% YTD (H1) increase, pushing the wider crypto market up 5% (30D), back beyond the $1.2tn mark.

Indeed, the month’s unfoldings have seen Bitcoin level out in the $30k range. With the outcome of the Fed’s June FOMC meeting signalling several further anticipated rate hikes, Bitcoin’s narrative as an inflation hedge has been reawakened – with an observable rise in open futures contracts. Seemingly, following the decision to maintain the federal funds rate between 5.00 – 5.25%, BTC’s correlation with the S&P 500 has fallen back below 0, whilst its correlation with gold and inverse relationship with the DXY continues to strengthen.

Whilst many displayed concern at the SEC’s rapid dismissal of ETF filings as ‘inadequate’ requesting further ‘descriptive detail’ to be able to make a judgement, the fact that the governmental agency has engaged in a form of discourse is not to be overlooked. With the wave of June’s institutional adoption expanding to Deutsche Bank’s digital asset custody application, the launch of Citadel and Charles Schwab-backed EDX Markets, as well as the listing of the first leveraged Bitcoin futures ETF on the CBOE exchange, crypto’s paradigm shift is becoming evidently more clear. Whereas the passage of time has both presented and challenged several of the sector’s previous narratives, the latest developments seem to indicate that narratives are gradually converging, a feat which will be cemented with further regulatory clarity and participation anticipated throughout the rest of 2023 and 2024.

In the News:


• Standard Chartered and PwC China have joined forces in producing a whitepaper on the application of CBDCs in the Guangdong Province, following the region’s $535bn cross-border trade in 2021.

• Circle Internet Singapore, the stablecoin issuer’s Singapore affiliate received a Major Payment Institution (MPI) licence from the Monetary Authority of Singapore (MAS), enabling the company to offer token services and cross-border transactions in the region.

• The Bank of Thailand has initiated a pilot program for a retail CBDC, collaborating with two further banks and Singaporean payment provider 2C2P, exploring the benefits of CBDCs in retail transactions.

• Hong Kong’s Monetary Authority has completed its public consultation on stablecoin regulations, aiming to introduce its full guidelines by 2024.

• Ripple has partnered with Colombia’s Banco de la República to pilot blockchain technology on the XRP ledger. Running through to 2023, the pilot will be overseen by the country’s Ministry of Information and Communications Technologies (MinTIC).

• The UK government has moved forward with its proposed Financial Services and Markets Bill aimed at strengthening the country’s financial services sector and adoption of crypto services.

• Swiss National Bank (SNB) has unveiled plans for a wholesale CBDC pilot, listing the wCBDC on the SIX digital exchange.
• The EU has outlined plans to leverage blockchain technology for verifying educational and professional credentials, with the EBSI Vector project improving the efficiency and security of cross-border credentials.
• The Tel Aviv Stock Exchange has completed the minting of its first test digital government bond ERC-1155 security token as part of the experimental blockchain project between the Ministry of Finance and the stock exchange.
• German telecoms giant Deutsche Telekom announced that it is using its infrastructure to become one of the 100 validators providing staking and validation services on the Polygon network.
• Nike announced that its .swoosh NFT platform will be integrated with EA Sports games, unlocking a host of features and enhancing the personalised experience of virtual sports.
• Fashion giant Louis Vuitton has ramped up its Web3 efforts, launching the VIA Treasure Trunk, providing an immutable and transparent representation of the label’s iconic rectangular travel trunk.
• Ankr has widened its partnership with Microsoft with the introduction of AppChains, a blockchain creator tool that enhances accessibility and usability for developers launching dedicated blockchain solutions.
• Venture capital giant Andreessen Horowitz (a16z) has expanded its international presence with the opening of a London office, citing the jurisdiction’s embrace of blockchain technology and commitment towards favourable regulation for crypto and Web3.
• U.S-based multi-asset investment giant BlackRock has filed an application for a spot Bitcoin ETF with both the U.S Securities and Exchange Commission (SEC) and Nasdaq exchange.
• Following BlackRock’s spot ETF application, several other investment firms have followed suit, with the likes of Valkyrie, WisdomTree, Invesco and Fidelity amongst the new and refiled applicant holders.
• U.S-based options exchange Cboe Digital received approval by the United States Commodity Futures Trading Commission (CFTC) for margined BTC and ETH based futures contracts.
• The CME group has announced its planned introduction of ETH to BTC ratio futures, realising a new means for the relative trading opportunities between the two largest digital assets.
• MicroStrategy has purchased another $347m of Bitcoin bringing its total holdings to 152,333 ($4.5bn) at an average cost of $29,668.
• German Deutsche Bank has reportedly applied to the country’s financial authority (BaFin for a digital asset custody licence, signalling interest in widening its digital assets service offering, first announced in 2020. The Crypto.com exchange has been granted a Major Payment Institution (MPI) licence by Singapore’s Monetary Authority (MAS), covering Digital Payment Token (DPT) services.
• Banco Santander’s asset servicing arm, CACEIS Bank, has obtained a crypto custody licence from the French regulator. With more than $5tn in AUC, CACEIS will broaden its custody solution to digital assets in the French market.
• JPMorgan has expanded its blockchain based JPM Coin, introducing Euro-denominated for corporate payments, with German-based giant Siemens amongst the first to process a payment.
• Melanion Capital has listed a Bitcoin equities ETF on Amsterdam’s stock exchange, tracking the firm’s Bitcoin Exposure Index.
• Hong Kong-based First Digital Group has successfully launched its First Digital USD (FUSD) stablecoin on the BNB Smart Chain, backed 1:1 with USD reserves or highly liquid assets held by regulated Asian financial institutions.
• JPMorgan has continued exploring blockchain-based solutions, partnering with leading Indian banks (HDFC, ICIC, Axis, Yes, and IndusInd) for interbank settlement of US denominated transactions.
• Stablecoin issuer Tether has announced a partnership with Bitcoin-centric El Salvador, investing $1bn in the country’s renewable energy Bitcoin mining initiative, Volcano Energy.
• NFT platform Enjin has launched a new mainnet by forking the Polkadot parachain Efinity, thereby expanding the Web3 platform’s capabilities in the blockchain space.
• Polygon has unveiled a series of upgrades dubbed Polygon 2.0, aiming to become the value layer of the internet, enhancing capabilities to enable users to create, exchange and program value.
• USDC stablecoin issuer Circle is set to launch a native version of USDC on Ethereum-based Layer-2 scaling solution Arbitrum, speeding up transactions via the use of cross-chain transfer protocols (CCTPs).
• Total Ethereum staked on the Beacon chain has surpassed 23m, amounting to more than $43bn in value. With an APR of 4.5%, staking activation queues currently stand at 45 days.
• Layer-2 scaling solution ZkSync has outlined a new Hyperchains network testnet aiming to improve overall scalability and efficiency via a modular framework of ZK-powered Hyperchains.

Valour’s Monthly Overview:

June saw several material developments on the corporate front. Announcing the appointment of Sue Ennis to its board of directors, the company also provided highlights into AUM, net sales and the outcome of its 2023 Annual General and Special Meeting. On the product side, Valour’s launch of its first physically backed Bitcoin Carbon Neutral product on the Xetra exchange reflects the Company’s dedication towards providing trusted investor access to decentralised finance (DeFi) and the future of the digital economy, whilst maximising value for its shareholders.

June 22: Valour Inc. Appoints Sue Ennis to Board of Directors

Valour Inc. is pleased to announce the appointment of Sue Ennis to its board of directors. As an acclaimed leader in emerging technology and innovation, Sue has over 15 years of experience, raising more than $1bn for Canadian structured product and small cap companies. Currently VP of Corporate Development at Hut8, Canada’s leading data infrastructure operators and Bitcoin miner, Sue continues to have a significant impact on the trajectory of technology and innovation in Canada. With previous leadership roles at Shyft Network, Coinsquare, Voyager and Invesco, Sue’s dynamic career and dedication to the financial sector will benefit the Company’s path forward, reinforcing its mission to pioneer the integration of traditional capital markets and decentralised finance.
This news follows the appointment on June 20 of two other new Directors, Mikael Tandetnik and Stefan Hascoet.

June 21: Valour Inc. Provides Corporate Updates on AUM, Net Sales, and Other Corporate News

Valour Inc. announced several corporate updates for the month ending May 2023. At month close, Valour’s AUM stood at C$178.9m, with net sales increasing to C$475.2m. Meanwhile, Valour’s investment in partially owned SEBA Bank AG stood at C$37m. Recognising the substantial rise in AUM, CEO Olivier Roussey Newton highlighted that equity valuation underperformance followed the clean out of approximately 13m shares following an aggressive sell order. However, with the Company’s continued monthly growth and pipeline of new products, Valour will continue to increase its assets over the balance of the year. The Company also announced that Mr. Stan Bharti and Forbes & Manhattan, Inc. have divested their shareholdings in the company and no longer have any interest in it. In addition, the Company revealed that it has entered into shares for debt settlement agreements with various officers and consultants of the Company to settle an aggregate balance of $674,837.78 of accrued fees, issuing common shares of the Company at a price of C$0.085 per ‘Debt’ share. Subject to acceptance of Cboe Canada, the settlement agreements will help the Company strengthen its balance sheet by reducing its liabilities and further aligning the interests of officers and consultants with shareholders of the Company.

June 20: Valour Inc. Announces 2023 AGM Voting Results

Valour Inc. announced the voting results from its Annual General and Special Meeting of shareholders held on June 20, 2023. With 14.60% of all issued and outstanding shares of the Company represented at the meeting, shareholders approved the election as directors of, Olivier Roussy Newton (99.07%), Krisztian Toth (94.09%), William Steers (85.23%), Mikael Tandetnik (99.10%), and Stefan Hascoet (99.19%). Additionally, shareholders voted overwhelmingly in favour of the ratification and approval of the appointment of BF Borgers CPA PC, the Company’s auditors, with 98.8% in favour and 1.12% withholding their vote. Further to this, shareholders voted 98.26% in favour of the Company’s name change to ”DeFi Technologies Inc.,” with 1.74% withholding their vote on the Name Change. The board of directors expresses gratitude to shareholders for their continued participation and support.

June 15: Valour Announces the Launch of its First Physically Backed Bitcoin Carbon Neutral Product (ETP) on Frankfurter Wertpapierboerse XETRA

Valour announced the launch of its physically backed Bitcoin Carbon Neutral Product (ETP) on the Börse Frankfurt (Xetra) exchange. The 1Valour Bitcoin Physical Carbon Neutral ETP (ISIN:GB00BQ991Q22) offers investors exposure to Bitcoin and presents a trusted investment method that benefits the environment and aligns with ESG goals through the funding of certified carbon removal and offset initiatives.
Valour has partnered with leading climate action infrastructure provider Patch in the structuring of the ETP, ensuring all carbon emissions linked to the investment will be targeted to achieve a carbon neutral output. As the 13th ETP offered by Valour and the first product on its physically backed platform, Valour anticipates the launch of further innovative products, offering investors trusted access to decentralised finance and Web3.

Venture Spotlight:

Our portfolio companies continue to build their products and develop new partnerships. Here are some of their highlights for the month of June.

Boba Network announced that it had surpassed the 10m txn mark on BobaBNB. Having processed a record 3m transactions throughout the month of May, BobaBNB has seen significant month-on-month growth, up from 2.8m transactions in April, 500k in March, and 99k in February. In addition to several new partnerships and integrations, Boba increased its wallet count by 80,000, with approximately 200k daily transactions.

CLV announced the integration of its CLV Wallet with GateKeeper for PolygonID Verifiable Credential Management. The new partnership will enable users to issue, claim and store verifiable credentials powered by PolygonID. Meanwhile, CLV announced a further integration with the first crypto-biometric network Humanode chain, enabling the utilisation of HMND through the multichain wallet.

Skolem expanded its support for a number of Layer-2 blockchains as well as adding a new execution feature to enable swaps between wrapped and unwrapped native currencies (wETH, ETH, wMATIC, MATIC, wAVAX and AVAX). On the platform front, the team announced that it has started building dashboards for blue chip DeFi protocols directly on its front-end, providing users with simple access to money market data, starting with AAVE v2.

Sovryn announced several general updates including a system upgrade that enables support to WalletConnect v2.0. In addition to work on a non-custodial bridge between Stacks and Rootstock to bring Sovryn’s 100% Bitcoin-backed $DLLR stablecoin to Bitflow liquidity pools, crypto wallet provider Exodus announced that it has added the Sovryn Dollar to its corporate treasury and user wallets.

Volmex launched the public testnet of its perpetual futures exchange protocol. Based on a decentralised matching engine and order book that is underpinned by off-chain relayers, the perpetual futures contracts enable users to hedge, diversify, and speculate with crypto volatility products. Volmex will expand the testnet to additional ETH-based L2s in the coming weeks, enabling support for additional stablecoin collaterals.

Wilder World published their first dev log providing updates on the metaverse’s latest version (v.0.1.15). Focussing on updates to Wheels, Wiami, and zSpace, the log provides users with an in-depth overview of the latest developments across the Wilder World ecosystem.

Valour ETPs

For the month ending June, Valour reported an increase in total assets under management to $140.6m, as aggregated net sales continued to steadily increase. Notwithstanding the recent increase in price levels across the crypto space, Valour’s pipeline of products across both its certificates and physically backed issuance programs will undoubtedly contribute towards further growth, suitably positioning the company ahead of further market developments.

Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and brokers. Valour’s current product suites includes 12 unique ETPs including, Cardano (ADA), Polkadot (DOT), Solana (SOL), Uniswap (UNI), Avalanche (AVAX), Cosmos (ATOM), Enjin (ENJ), Binance (BNB), Bitcoin Carbon Neutral, and Valour Digital Basket 10 (VDAB10). Valour’s flagship Bitcoin Zero (BTC) and Ethereum Zero (ETH) products are the first fully hedged, passive investment products with 0% management fees.

For more information on products and offerings, visit: https://valour.com/.

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Den nordiska ETF-marknaden november 2023



Handeln på den nordiska ETF-marknaden november 2023 uppgick till cirka 9,1 mdkr (11,8 mdkr i oktober) varav cirka 8,6 mdkr omsattes i den svenska marknaden. Av den totala nordiska ETF-omsättningen var XACTs marknadsandel cirka 97%.

Handeln på den nordiska ETF-marknaden november 2023 uppgick till cirka 9,1 mdkr (11,8 mdkr i oktober) varav cirka 8,6 mdkr omsattes i den svenska marknaden. Av den totala nordiska ETF-omsättningen var XACTs marknadsandel cirka 97%.

Av den totala börsomsättningen i Sverige i november svarade ETF-handeln för cirka 2,2.%.

Den nordiska ETF-marknaden november 2023

Som vanligt var det XACT som hade störst marknadsandel på den nordiska ETF-marknaden i november 2023, med en marknadsdel på 96,78 procent. Finska Seligson & Co hade en marknadsandel om drygt 2,6 procent, vilket faktiskt gör att detta företag hade 100 procent av den finska ETF-marknaden. Resterande andel, 0,57 procent, svarade norska DNB OBX för. DNB är, sedan XACT lagt ned sina norska ETFer, den enda aktören som är verksam i Norge.

Statistik för den nordiska ETF-marknaden för perioden: 2023-11-01 – 2023-11-30

Antal handelsdagar: 22

Under november 2023 var den mest omsatta börshandlade fonden den traditionella XACT OMXS30 ESG (UCITS ETF).

Den näst mest omsatta börshandlade fonden hävstångsfonden Xact Bear x 2. Xact Bear x 2 tillsammans med Xact Bull x 2 handlas frekvent, och på kort sikt, vanligt förekommande i till exempel daytrading.

På fjärde plats hittar vi XACT Svenska Småbolag, en fond som sällan hamnar så pass högt på denna lista,

På femte plats finns Xact Norden Högutdelande, en ETF som oftast ingår i varenda utdelningsjägares portfölj, just för att denna börshandlade fond delar ut varje kvartal. Denna ETF lämnade årets fjärde utdelning under november vilket kan ha bidragit till det stora intresset.

Av de mest omsatta ETFerna på den nordiska ETF-marknaden oktober 2023 var elva av de tretton mest handlade börshandlade fonder emitterade av XACT. Utöver ovanstående ETFer finns även två börshandlade fonder från Lyxor, numera Amundi samt en från isländska Landsbréf, som handlas på den nordiska marknaden.

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WDGE ETF investerar i amerikanska utdelningsaktier och valutasäkras i euro



WisdomTree US Quality Dividend Growth UCITS ETF - EUR Hedged Acc (WDGE ETF) försöker spåra WisdomTree US Quality Dividend Growth (EUR Hedged)-index. WisdomTree US Quality Dividend Growth (EUR Hedged)-index spårar utdelningsbetalande amerikanska aktier med tillväxtegenskaper. Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning). Indexet är ett fundamentalt viktat index. Valuta säkrad till euro (EUR).

WisdomTree US Quality Dividend Growth UCITS ETF – EUR Hedged Acc (WDGE ETF) försöker spåra WisdomTree US Quality Dividend Growth (EUR Hedged)-index. WisdomTree US Quality Dividend Growth (EUR Hedged)-index spårar utdelningsbetalande amerikanska aktier med tillväxtegenskaper. Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning). Indexet är ett fundamentalt viktat index. Valutasäkrad till euro (EUR).

Denna börshandlade fond har en TER (total cost ratio) som uppgår till 0,35 % p.a. WisdomTree US Quality Dividend Growth UCITS ETF – EUR Hedged Acc är den enda ETF som följer WisdomTree US Quality Dividend Growth (EUR Hedged) index. ETFen replikerar det underliggande indexets prestanda genom samplingsteknik (köper ett urval av de mest relevanta indexbeståndsdelarna). Utdelningarna i ETFen ackumuleras och återinvesteras i den börshandlade fonden.

WisdomTree US Quality Dividend Growth UCITS ETF – EUR Hedged Acc är en mycket liten ETF med tillgångar på 0 miljoner GBP under förvaltning. ETF lanserades den 31 juli 2023 och har sin hemvist i Irland.

WisdomTree US Quality Dividend Growth UCITS ETF – EUR Hedged Acc

Fonden strävar efter att spåra pris- och avkastningsutvecklingen, före avgifter och utgifter, för WisdomTree U.S. Quality Dividend Growth UCITS Index. Andelsklassen strävar efter att leverera exponering mot indexet samtidigt som den neutraliserar exponeringen mot fluktuationer i euron genom att implementera en valutasäkringsmetod.

Varför investera?

• Få tillgång till högkvalitativa, utdelningsväxande företag från globala utvecklade marknader som uppfyller WisdomTrees ESG-kriterier (miljö, social och styrning)

• Dra nytta av riskscreening för att utesluta företag baserat på egenutvecklade kvalitet och momentum

Direktavkastning och inkomstpotential kan vara högre än ett börsvärdesindex

• Används som ett komplement till globala högavkastande utdelningsstrategier eller som en ersättning för aktiva tillväxt- eller kvalitetsstrategier med stora bolag

• Valutavolatiliteten minimeras genom användning av valutaterminskontrakt

• ETFen är fysiskt uppbackad och UCITS-kompatibel

Potentiella risker?

• Utdelningsviktade index kan prestera annorlunda än ett börsvärdevägt index

• En investering i aktier kan uppleva hög volatilitet och bör betraktas som en långsiktig investering

Direktavkastning och inkomstpotential kan vara högre än ett börsvärdesindex

• Investeringsrisken kan vara koncentrerad till specifika sektorer, länder, företag eller valutor

• Avkastningen av valutaterminskontrakten, som rullas på månadsbasis, är utformade för att minimera valutafluktuationer men kanske inte perfekt kompenserar de faktiska fluktuationerna.

Denna lista täcker inte alla risker – ytterligare risker beskrivs i KIID och prospekt


WisdomTree US Quality Dividend Growth UCITS ETF – EUR Hedged Acc (WDGE ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och Borsa Italiana. Av den anledningen förekommer olika kortnamn på samma börshandlade fond.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.


Borsa ItalianaEURDGRE

Största innehav

NamnKortnamnLandVikt %
1. Microsoft CorpMSFT USUS8.49%
2. Apple IncAAPL UQUS6.12%
3. Johnson & JohnsonJNJ UNUS3.98%
4. Broadcom IncAVGO USUS3.57%
5. Procter & Gamble Co/ThePG USUS3.16%
6. Home Depot IncHD UNUS2.78%
7. Coca-Cola Co/TheKO UNUS2.54%
8. Merck & Co Inc/NJMRK UNUS2.50%
9. Cisco Systems IncCSCO UQUS2.34%
10. Walmart IncWMT USUS2.24%

Innehav kan komma att förändras

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Bitcoin Expands Utility and All Eyes on Polygon: What Happened in Crypto in November?



Bitcoin Expands Utility Markets flourished in November. The total crypto market cap increased by ~13%, month-over-month, with increased institutional interest in this burgeoning asset class.

Markets flourished in November. The total crypto market cap increased by ~13%, month-over-month, with increased institutional interest in this burgeoning asset class. Stocks also had a comeback last month, with S&P 500 and Nasdaq recording their best performance since July 2022. In line with the market sentiment, Europe’s inflation dropped more than expected to 2.4% in November, down from 2.9% in October, the lowest over two years. The cost of living has eased with plummeting energy prices, but higher interest rates limit the economy’s ability to grow. However, with a cooling inflation towards the ECB’s 2% target, markets are hopeful that interest rates will stop by April 2024. In the U.S., inflation data is coming out on December 12, with indicators like the personal consumption expenditures price index (+0.2% month-over-month) already pointing towards cooling inflation and potential interest rate cuts in 2024.

Ahead of the historically calm holiday season, Bitcoin and Ethereum increased by 9.31% and 13.38% in November, respectively, as shown in Figure 1. The biggest winners of last month were Solana (+69.28%), Avalanche (+86.72%), and Uniswap (+42.34%). Additionally, in this report, we’ll explore what Argentina’s new president could mean for South America’s troubled, second-largest economy. We’ll also discuss Bitcoin’s expanding utility and how it reflects on its fundamental metrics; exchanges looking at Polygon for deploying their own custom blockchain; Avalanche aiming to position itself as the platform for financial institutions; and Lido decentralizing its node-infrastructure operations.

Figure 1: Price and TVL Development of Major Crypto Sectors in November 2023

Source: 21shares, CoinGecko, DeFi Llama. Data as of November 30, 2023.

5 Trends to Remember from November

Argentina’s New President

Bitcoin rallied back to pass the $37K mark as Argentina elected a pro-Bitcoin, right-wing president, Javier Milei. Although the president-elect made no promise to make Bitcoin a legal tender, the volumes indicate some hope that Milei’s appointment could mean economic revitalization for South America’s second-largest economy with the help of Bitcoin, a la El Salvador. El Salvador’s GDP is expected to reach $33.4B by the end of 2023, a ~20% increase from when it declared Bitcoin as a legal tender in 2021. With an inflation rate exceeding 140% in 2023, Argentina’s GDP growth has been sluggish, averaging 0.51% from 1993 until 2023, as shown in Figure 2.

“The central bank is a scam. What Bitcoin represents is the return of money to its original creator, the private sector,” Argentina’s president-elect said as part of his presidential campaign, vowing to shut down the central bank, replacing the Argentine peso with the US dollar, and embracing decentralized finance. Samson Mow, CEO of JAN3 (a startup scaling Bitcoin) and an advisor to El Salvador during its adoption of Bitcoin, has said he’s planning to meet with Argentina’s new president. Indicators of whether Milei’s plan will work in Argentina’s favor are yet to be discovered.

Figure 2: Argentina’s GDP Growth Rate

Source: Trading Economics

Bitcoin Fees Skyrocket While the Network Expands its Utility

Bitcoin’s fees have increased by 593.94% over the past month, mostly driven by Ordinals, a protocol that allows users to inscribe digital assets akin to nonfungible tokens. Ordinals have had the most inscriptions since May 2023, as shown in Figure 3. With the backdrop of Ordinals’ success rate, Bitcoin developer Robin Linus introduced BitStream, a decentralized file hosting on Bitcoin, where users can upload unique files, enabling anyone to monetize their excess bandwidth and data storage capacities without relying on trust or heavy-weight cryptography. BitStream’s pay-to-download approach allows the server to charge for each download, ensuring that the revenue scales with the popularity and demand for the media, creating a balanced and profitable ecosystem. This development is another expansion of Bitcoin’s burgeoning use cases and would onboard a diversified audience. With BitStream’s promise, Bitcoin can capture the total addressable market of data storage, which stands at at least $230B. Although BitStream’s pricing scheme is not clear yet, decentralized data storage solutions, like Filecoin and Arweave, have been proven to be a lot cheaper than Google Cloud, Amazon S3, and its other centralized peers, varying by usage, as showcased extensively in the tenth issue of our State of Crypto, which you can find here.

Figure 3: Fees from Ordinals and non-Ordinals (%)

Source: 21.co on Dune Analytics

Exchanges Looking at Polygon for Deploying their Own Custom Blockchain

Kraken and OKX are strategically eyeing the Polygon network, aiming to capitalize on its CDK framework for constructing their individual blockchains. This strategic move aligns with Coinbase Base’s remarkable success, amassing approximately $5.4M in profit since inception, translating to an annualized profit of around $20 million. Boasting 9M and 50M monthly users, respectively, Kraken and OKX processed a daily average of ~$1B in 2023 and would potentially foster substantial growth within the on-chain ecosystem. Both moves would contribute to Ethereum’s revenue via anchored networks paying security costs to settle their transactions. Additionally, leveraging CDK modules proves advantageous for Polygon, empowering network stakers to bond POL and enhance earnings amid escalating network usage — a positive demand loop for the POL token within the new Polygon 2.0 staking layer design. Notably, Polygon’s efforts to onboard diverse companies are gaining traction, surpassing BNB and Ethereum in supporting new applications (Figure 4).

Figure 4: Total number of new applications on the five leading Smart-Contract Platforms

Source: Artemis

Avalanche Aiming to Position themselves as the Platform for Financial Institutions

For instance, Citibank and Fidelity unveiled a foreign FX exchange solution operating on a private permissioned Avalanche Subnet to enable instantaneous settlement and cost-effectiveness. Further, JP Morgan and Apollo Global collaborated on an asset-agnostic portfolio management solution. The latter empowers fund managers to tokenize portfolios using JP Morgan’s ONYX and the Oasis Pro asset-issuing platform while leveraging multiple crypto interoperability protocols to seamlessly exchange and rebalance portfolios across various blockchains, bridging EVM and non-EVM, private and public chains.

The experiment demonstrated the power of smart contracts in automating over +3000 operational steps and reduced costs by almost 20% via programmatic settlement despite involving multiple parties in the asset management process. The experiment also demonstrated the benefits of interoperability, providing a holistic solution for managing traditional and alternative assets in a single discretionary portfolio spanning multiple asset classes.

Both initiatives underscore Avalanche’s unique value proposition, positioning it as a standout choice among smart contract platforms. The Evergreen subnets, designed for compliance with KYC and AML checks, offer native privacy and customizability, providing enterprise-level blockchain support without the constraints of a siloed private blockchain system. The model also facilitates a pioneering connection between traditional finance’s proprietary software and native crypto railways, potentially fostering synergies and accelerating ecosystem integration. Ultimately, despite the initial surge in Avalanche’s transaction volume following these integrations, reaching its peak since inception, as illustrated in Figure 5, the network activity sharply declined after that. This underscores the imperative for the network to intensify its initiatives in onboarding high-demand projects as subnets.

Figure 5: Total number of transactions on the Avalanche Network

Source: Subnets.avax.network

Lido is Decentralizing its Node-Infrastructure Operations

Lido DAO, the largest non-custodial staking provider, approved two proposals to adopt Distributed Validation Technology. DVT refers to a mechanism spreading out key management and signing responsibilities across multiple parties to reduce single points of failure and increase validator resiliency. That said, Lido will integrate DVT modules with Obol and SSV protocols, which is set to introduce a more diverse profile of node operators beyond its current list of 38 validators and help address a key concern around centralization. This is a key development as Lido stirred a debate since it’s close to accounting for a third of staked ETH (see Figure 6); it could have undesired influence over the network’s validation process and block production. This implementation is crucial to ensure the diversification of the protocol’s node operators and increase their reliability in case of validator failures or censorship attempts. Conversely, SSV and Obol networks represent new primitives, so they must remain vigilant regarding any unforeseen vulnerabilities they could introduce.

Figure 6: Dominance of Entities Staking on the Ethereum Network

Source: 21co at Dune

What to Expect

Binance, CZ, and the softening headwinds leaning into 2024

On November 21, Binance pleaded guilty and agreed to pay over $4 billion to resolve the Justice Department’s investigation into violations related to the Bank Secrecy Act, failure to register as a money-transmitting business, and the International Emergency Economic Powers Act. Binance’s founder and CEO, Changpeng Zhao (commonly known as CZ), also pleaded guilty to failing to maintain an effective anti-money laundering program and has resigned as CEO of Binance. The world’s biggest crypto exchange by assets under management has experienced $47.3B in outflows and $44.6B in inflows in November, as seen in our Dune Analytics dashboard tracking Binance’s proof of reserves.

What should we expect in 2024? CZ could face up to 18 months in prison after his sentencing in February 2024. Binance’s new CEO Richard Teng, has outlined his vision to continue building on Web 3, with a special focus on decentralized applications that empower data ownership. With Binance’s Greenfield venturing into decentralized file storage, we can expect more investment in this space to diversify revenue streams and return Binance’s brand image to industry leadership. One catalyst for that is the fact that Teng is a member of the World Economic Forum, which can yield further institutional interest in the broader industry of decentralized finance. One challenge remains untackled: Binance’s dwindling market share, especially in derivatives. In the first weeks of November, the Chicago Mercantile Exchange (CME) toppled Binance in Bitcoin futures following speculation around a spot Bitcoin ETF in the U.S.

Figure 7: Binance Asset Flow

Source: 21.co on Dune Analytics

Interoperability Protocols are Rethinking Strategies to Remain Relevant

Polkadot, for instance, is replacing its long-standing parachain auction system with Bulk Coretime and Instantaneous Coretime. For context, the existing auction system is a model for applications to enter into a competitive bidding war to lease a slot on the Polkadot network as an interconnected network known as a parachain. That said, the new two models would introduce either a pay-as-you-go model where developers rent blockspace as needed for their projects or alternatively use the conventional lease model with shorter rent periods that make it more cost-effective for projects.

Polkadot’s imminent 2.0 system redesign, slated for the second half of 2024, incorporates the aforementioned modules and introduces a trustless bridge to link with the Ethereum ecosystem. These enhancements, addressing the network’s waning interoperability against competitors like Chainlink, are pivotal for Polkadot to sustain its relevance and fortify its accessibility towards more vibrant ecosystems such as Ethereum.

On the Cosmos side, the community approved a proposal to decrease the network’s inflation from 14% to 10%, reducing the staking APR from 19% to 13.4%. While the proposal addresses the challenge of ATOM’s high inflation, which dilutes the token’s value, it highlights a utility conundrum. ATOM lacks a clear role in facilitating access to the Interchain security economy powered by its InterBlockchain Communication protocol (IBC). This absence of a distinct value proposition beyond its attractive yield may prompt smaller validators to unstake, potentially leading to increased centralization and compromising IBC security.

That said, the discord led the founder to propose a hard fork of the network into ATOM1, as he argues the inflation rate cut compromises the security of the Cosmos hub due to the network’s interoperability design, which is more crucial than elevating ATOM as a sound medium of exchange currency akin to ETH. Further, Cosmos’s interoperability technology has also been exported to the Avalanche network on testnet, a significant milestone marking the first integration outside the Cosmos ecosystem and bringing crypto closer to a trustless multichain future. Finally, Cosmos is experiencing heightened chain activity, likely driven by the launch of dYdX and USDC on Cosmos and evidenced by increased fees and active users, reaching a YTD peak, as illustrated in Figure 8, which we’ll be closely monitoring over the next few weeks.

Figure 8: Growth of Active Users and Fees on the Cosmos network

Source: Token Terminal


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Next Month’s Calendar

These are the top events we’re closely monitoring in December.

Source: 21shares, Forex Factory, CoinMarketCal

Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com


The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.

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