JZL Capital Blockchain Industry Weekly Report No. 24: Inflation in the United States has exploded, and the time to enter the market has not yet come

summary of the week

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- ETH continues to fall under the influence of Celsius and stETH, will it become the next Terra and UST?

1. Industry dynamics last week

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1. Industry dynamics last week

This week, the market plunged on Friday. With the release of unexpected CPI data, the U.S. stock market plunged, and the encryption market followed suit. It made up for the decline twice on Saturday and Sunday. Bitcoin fell to around 26,500 at the lowest level. As of writing At that time, it closed at 27876.5, a drop of nearly 7%. On the other hand, ETH is obviously oversold. Affected by the FUD sentiment caused by the unanchor of stETH, ETH continuously fell below the integer level on Saturday and Sunday, and the lowest fell to the 1400 platform. As of the writing date, it closed at 1506, a drop of 15.76% within the week . The market value of the entire encryption market has also evaporated nearly 100 billion in market value within a few days, reaching a level of 1.1 trillion. With the upcoming new round of interest rate meeting of the Federal Reserve on Wednesday, the entire encryption market will be in panic before Wednesday.

Also this week, the small platform of the U.S. stock market failed to hold in the end. Under the support of the CPI data that exceeded expectations, short sellers launched an attack in advance before the market this Friday. The market gapped and fell sharply, and the U.S. stock rebound basically ended. The announced CPI data was 8.6%, 0.3% higher than expected, and the CPI curve has also changed from a sign of turning heads to a continuous upward trend, which has crushed the confidence of many investors. Especially in the past week or so, the long and short sides of the U.S. stock market have been evenly matched. In this case, whichever side gets a little external help can gain the initiative, and at this time the CPI has become the biggest weapon of the airdropper.

Why is this CPI so lethal? First of all, as inflation continues to run high, more and more investors are beginning to suspect that the United States may experience a recession. According to Bloomberg survey statistics, 48% of investors believe that the Great Depression will occur in 2023. Then next Wednesday, the Federal Reserve will raise interest rates again. At this critical moment, CPI exceeding expectations means that the hawkish policy will continue, and there is even a forecast of an increase of 75 basis points. With this expectation, the Federal Reserve’s interest rate meeting will be held from Monday to Wednesday. The market will be terrified before the end.

Google Trend shows that people search for inflation more than economic recession, but economic recession has gradually become a popular search term in the past few months, indicating that after experiencing high inflation, the next step for Americans is whether the economy will recession, Deutsche Bank It is predicted that the United States will fall into an economic recession next year, and expectations are the biggest devil in the financial market. If there are too many expectations, they will self-fulfill and turn expectations into reality. When more and more people expect an economic recession, the danger may be on the way. If a stock market crash does occur, compared with the financial crisis in 2008, the stock market will still have a 20% decline to match it. Under such expectations, investors are advised to continue to be cautious.

In terms of news, Ethereum is undoubtedly on the cusp this week. First of all, RopSten, the Ethereum test network, has successfully transformed into PoS, and according to Ethereum developers, multiple test networks including RopSten will be shut down at the end of this year, which also reflects that the PoS transformation technology has basically taken shape and no longer needs to With so many test networks running, the formal transformation of Ethereum to PoS in the second half of this year as mentioned by Vitalik before will become a high probability event. Then there is the "insolvency" situation of ETH positions on the giant CeFi platform Celsius Network. First of all, Celsius Network is a head-centralized cryptocurrency lending platform based in the United States, which stores customers' 1 million+ Ethereum for financial management , and on June 6, Twitter user @yieldchad claimed that Celsius's ETH position was "insolvent", because only 27% of Celsius's 1 million ETH was readily available, and the other 73%: 44% and above StETH exists in the form of stETH, and 29% are directly pledged in ETH2.0. If all 1 million ETH customers want to cash out in the short term, then 73% of the ETH can only be cashed out for 280,000. The Celsius platform allows users to redeem flexibly, so on a certain level Such events are possible. In addition, on the same day, Dirty Bubble Media revealed that Celsius had pledged nearly 40,000 ETH on the Stakehound platform, and the platform lost part of its ETH reserves in the key loss event in May 2021, including 40,000 ETH from Celsius. Ten thousand ETH, this matter has been concealed by Celsius until today. Various events triggered FUD incidents against stETH, causing the unanchoring of stETH's liquidity pool in Curve, with a maximum unanchoring of 5%. But this incident has no similarity with the previous UST unanchor:

•First of all, the mechanism of stETH allows stToken to be rigidly exchanged for standard tokens at 1:1, and any price difference of stToken will be smoothed out by currency standard arbitrageurs. Although stETH cannot be converted into ETH 1:1 at present, with the approach of the Ethereum PoS transformation, the arbitrage opportunities of stETH are also clearer, so the speculative demand for stETH in the market will attract a lot of buyers.

•Celsius, as one of the top three CeFi platforms in the world, is valued at US$10.5 billion in its next round of financing. Its overall asset size includes available lending tools. Even if 1 million ETHs are required to be redeemed at the same time, it is necessary to ensure liquidity. The ability is there.

• Alameda Research's withdrawal of nearly 50,000 stETH within a few hours on June 8 was the largest stETH sell-off event in recent times. Although the purpose of this behavior is unknown, it is obviously not a premeditated market short-selling behavior.

From another point of view, the author of the original tweet this time is also a media account that is specifically bearish. He has been calling out Coinbase, Tesla and other large institutions all the year round. With the re-fermentation of the theft incident, it can be seen that this is an obvious FUD emotional rendering incident. , In the bear market stage where gray rhinos are walking everywhere, we may see it many times in the future. Therefore, for investors, how to effectively deal with FUD emotions and even seek investment opportunities in them is more important.

Another annual encryption event "Consensus" opened on June 9 in Austin, the capital of Texas, USA. The conference will last for 4 days, with nearly 500 speakers, including FTX CEO SBF, Fidelity Investment CEO Abby Johnson, Paypal CEO Dan Schulman, etc. , JZL will follow up the important topics of the meeting in next week's weekly report.

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2. Macro and analysis

On Friday, the U.S. CPI exceeded expectations, which led to a sharp decline in the overall overseas capital market. Therefore, BTC fell below 30,000 USDT in the short term, and has now fallen to 25,000 USDT. There is a chance for a rebound in the short term. The rebound point focuses on 20,000 USDT. The short-term opportunity is after the FOMC meeting. There may be a certain rebound, but the probability is small.

BTC has fallen below the previous lows, currently there is no support, and there is no danger to defend. The short-term rebound opportunity will follow the US stock market.

The trend of ETH is worse than that of BTC, and we judge that the short-term cost performance of BTC is higher than that of other digital currencies.

After the Nasdaq index rebounded to 12300, affected by the high CPI, it fell in a straight line. We judge that it will fall below the previous low point.

U.S. bond interest rate: The 2-year U.S. bond has basically broken through 3 and has reached 3.183. The short-term is an unexpected release of sentiment. We judge that it is basically the high point of the year, and it is less likely to hit a new high in the future.

1.Ahr999: 0.427, we strongly recommend starting to increase the regular investment in this position.

4. Changes in the number of ETH addresses: the number of addresses holding more than 100 coins has risen again, but the number of addresses holding more than 1,000 coins is generally stable.

Summarize:

3. Summary of Investment and Financing

3. Summary of Investment and Financing

1. Investment and financing review

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1. Investment and financing review

•During the reporting period, 51 investment and financing events were disclosed, with a financing of approximately US$800 million. In terms of specific tracks, the Web 3.0 track has 22 projects accounting for nearly 45%, the Defi track has 11 projects, the Cefi track has 8 projects, the NFT track has 5 projects, and the Infrastructure track has 5 projects, accounting for about 25%. .

• During the reporting period, there were 2 projects with a financing amount of over 100 million, namely: 1) Kushki, an Ecuadorian digital payment platform, completed a financing of 100 million US dollars participated by institutions such as SoftBank Latin America Fund and Kaszek Ventures. Horned Beast" ranks. Kushki is committed to providing global digital currency payment services for Latin American companies; 2) Indonesian cryptocurrency exchange Pintu completed a $1.3 billion Series B round of financing jointly invested by IntudoVentures, LightspeedVenture Partners, PanteraCapital and other institutions. Among them, Lightspeed Venture Partners led Pintu's US$35 million Series A financing in August 2021.Crypto.com4. Encrypted ecological tracking

4. Encrypted ecological tracking

1.NFTs

1) NFT dynamic summary

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1) NFT dynamic summary

• •In the past 7 days, the market value and trading volume of the NFT market have continued to decline following the currency market. With the emergence of more "three noes" projects and imitation disks, panic and gradually spread in the NFT market.• The market situation can be seen more clearly through the recent overall data:

• The highest point of NFT's total market value will appear on April 4, 2022, at about 37 billion US dollars.At present, the total market value of NFT is 23 billion US dollars. The relative decline in total market capitalization was 37%.

• The highest single-day transaction volume of NFT will appear on May 1, 2022, which is about 570 million US dollars.At present, the single-day transaction volume of NFT is 40 million US dollars. The relative decline in single-day trading volume was 92%.

The highest number of NFT traders will appear on April 8, 2022, with about 56,000 people.

The current number of NFT traders is 23,000. The relative decline in the number of NFT traders was 58%.

• Led by blue chip coins, nearly 20% of the market value has evaporated in the past 7 days. With the tightening of liquidity, it will further affect the currency circle. In the future, the NFT market is very likely to see large-scale project breakouts and floor prices plummet. Fortunately, Blue-chip projects with a large market value account for a low number of turnover and high value preservation, so the emergence of the market bottom brings investors a good time to start.

•In contrast to the situation of the exchange, X2Y2 is still strong recently, which shows the high efficiency of its "small to big" and "benefit sharing" strategies. Although the number of participants is still several orders of magnitude behind OP, if it can continue to provide high-quality products in a bear market And services, X2Y2 is very likely to become the biggest competitor of the OS. Of course, in the future, the NFT market will definitely produce more high-quality teams and platforms to increase competition. It cannot be ignored that OS, which has a valuation of 13.3 billion US dollars, adopts the same marketing strategy and mechanism to kill other companies in their infancy again.

2) This week's NFT project introduction: GODA (theGallery of Digital Assets)

• Basic information: initial mint price = 1 ETH

• GODA works closely with traditional artists to help them use the new media model of NFT to bring modern art into the digital realm of Web3 and Metaverse.

• The core team is composed of recording artist, producer, composer, philanthropist, fashion designer and entrepreneur Pharrell Williams, including contemporary artist Nina Chanel Abney, investor and entrepreneur Shaun Neff, gallery owner Todd Kramer , art collector Easy Otabor, investor Nick Adler, NFT collector and advisor J1mmy.Eth, etc.

• The first distribution is planned for this summer, and GODA's Mint Pass NFT must be held to guarantee access. Nina Chanel Abney will be the starting artist for the first artist series.

• Sotheby's announced that it will exhibit and sell 9 NFT works by Japanese artist Tomoichi Matsuyama for the first time from June 14 to 21, including 1 piece in 3 pieces, 5 pieces in 3 pieces and 5 pieces in 3 pieces Edition of 150 pieces is also available for viewing and purchase on Sotheby's Metaverse. In addition, Sotheby’s pointed out that if you buy all 3 NFT works of 150 pieces each, you can get 1 special edition NFT gift designed by Tomoichi Matsuyama, but each wallet address can apply for a maximum of one NFT gift.

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1) Data review

2. GameFi blockchain games

1) Data review

• During the reporting period, the concept of Gamefi significantly underperformed the concepts of Defi, public chain and Web 3.0 with a decrease of -5.6%.

• At the level of specific currencies, YGG "leads" with a -11.4% decline in "Gamefi" concept-related currencies, followed by AXS and SAND with -6.9% and -4.2% declines respectively;

•According to the number of game participants, due to the sudden drop in the number of Splinderland game players at the beginning of the month, it lost its title of the number one active player for several months, which also caused the overall chain game players to drop by 30%-40%.

2) Item of the Week – Illuvium Raises $72M in Land Sale

• During the reporting period, the 3A game Illuvium completed the first phase of 20,000 land NFT sales on the in-game exchange IlluviDEX, raising more than US$72 million. Land NFT is divided into 6 levels, of which T0 is free land, which is only used by players for cash withdrawal and does not generate income. T1-T5 is paid land, the higher the rarity means faster output, the T5 plot can hold Illuvium e-sports activities, and obtain additional benefits such as registration fees and sponsorship fees;

• T1 to T4 plots can be purchased with ETH or sILV2 tokens (both tokens cannot be used in the same transaction). T5 land can only be purchased with ETH. The land from T1 to T4 is a Dutch auction, which is often called a flashback auction. The starting price of the land auction is: T1 land (2ETH), T2 land (6ETH), T3 land (20ETH), T4 land (80ETH) ; T5 plots will be auctioned in British style on Twitch;

• The ETH obtained in this sale will be used to purchase ILV to reward ILV pledgers, and the obtained sILV2 will be directly destroyed, which is expected to bring a 39% reduction in the total amount;

•Although Illuvium's first phase of land sales was a complete success, it has not been reflected in the price of ILV. Since the beginning of this year, the price of the currency has significantly underperformed BTC, and even worse than AXS, which was attacked by hackers.

3. Infrastructure

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3. Infrastructure

1) Dynamic summary of the public chain:

• Ethereum's share is basically the same as last week. The top five rankings are unchanged.

2) Key investment introduction

•Delphia

• • It is worth noting that Tron's TVL has also experienced an inevitable retracement after several consecutive weeks of rise. At this stage, the issuance of USDD has reached 723 million US dollars, and the total reserve is about 682 million US dollars. With the development of the entire currency market Decline, we may also see the depletion of TRON DAO Reserve in the future.

• 2) Key investment introduction

  

• On June 8, Delphia, an algorithmic stock investment platform, completed its Series A financing of US$60 million, led by MulticoinCapital, and participated by RibbitCapital, FTXVentures, ValorEquity Partners, FJLabs, LatticeVentures, and Cumberland. The funding will be used to launch its native token, increase access to user-contributed data, and grow its global headcount.

•Entropy

• Delphia is a stock investment platform supported by algorithms. It has a hedge fund for qualified investors. The fund adopts a neutral strategy and covers about 2,500 US stocks. Delphia will automatically adjust stocks according to market conditions and even social public opinion analysis. position. Users can invest by downloading apps through the App Store or Google Play.

• From the summer of 2022, Delphia will launch Delphia Data Token (ERC-20) to reward users who are willing to share personal data with Delphia. Token holders will also receive membership benefits related to financial products and services, such as reduced fees or early Get new products and more.

• Entropy utilizes multi-party computation-based cryptography to provide users with a way to deposit and spend cryptocurrencies on any blockchain at any time. According to the Entropy protocol, users can implement their own rules for interacting with funds, such as time-gated constraints, a rule that is very commonly used in DAOs.

  

3) Cosmos ecology

•Osmosis

The company’s CEO, Tux Pacific, is a transgender activist and self-taught cryptographer who dropped out of college. He claims the company's main goal is to counter the standard business model of centralized cryptocurrency custodians such as Fireblocks and Coinbase.

3) Cosmos ecology

On June 8, the Osmosis blockchain stopped producing blocks at block height 4713064, and developers are undergoing emergency maintenance. Osmosis DEX and Wallet are temporarily unavailable until the fix is ​​completed. This failure is related to a loophole in a liquidity pool. According to a tweet by Cosmos ecological developer @TheJunonaut, the loophole will cause assets to be added to the pool to provide liquidity, and after liquidity is removed, assets will increase by 50% in the process. %, potentially draining all liquidity pools.

In response to the bug, Osmosis tweeted that the liquidity pool was not "completely drained" and that developers were fixing the bug, determining the size of the loss (likely around $5 million), and working to get it back up and running.

It is reported that this vulnerability was introduced in the Osmosis v9.0 version update. The official team is writing and testing the vulnerability patch. The complete vulnerability report will be updated after a thorough end-to-end test of the network upgrade in the next few days.

Affected by the overall market weakness and the UST crash, the TVL of Osmosis has shrunk severely, from a high of $1.8 billion to a recent $220 million.

In addition, on June 9, FireStake, a Cosmos verification node, revealed on Twitter that two members of its team discovered a serious vulnerability on Osmosis during testing and used the vulnerability to cash out $2 million. FireStake is currently working with the Osmosis team to return the funds as soon as possible. The act was thanked by Sunny Aggarwal, one of the founders of Osmosis.

As of June 12, the Osmosis blockchain has not yet been restarted. The official team said it is conducting data analysis so that it can generate a list of addresses that have suffered losses. This will be used for recovery drop, and it is planned to target damaged users within a few days after the chain is restarted. conduct. Any funds that are not recoverable or are accidentally used due to bugs will be paid out of the Osmosis Developer Fund. This means no reversing transactions or breaking chain ownership invariants.

At present, decentralized governance is still a false proposition in the encrypted world, and the centralized team has unparalleled advantages in dealing with emergencies. The so-called "decentralization" by most project parties is a gimmick used for narrative, while "returning governance rights to the community" is more like a shirk of responsibility, or a "Rug Pull" in a sense.

4.DAO Decentralized Autonomous Organization

•PartyDAO

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4.DAO Decentralized Autonomous Organization

PartyDAO completed a financing of US$16.4 million, led by a16z, and participated by Compound Crypto, DragonflyCapital, UniswapVentures, etc. PartyDAO is a decentralized software development organization. Its first product is PartyBid, which is a collective purchase agreement for NFT.

PartyBid can be understood as an NFT crowdfunding purchase platform. Because star NFT projects are usually expensive and difficult for ordinary users to reach, platforms like PartyBid provide users with a "crowdfunding" place. Users can create a group called Party on the platform to raise funds for the NFT to be purchased.

•Samudai

The project was established in May 2021. The original source of inspiration was the idea published by Mirror founder Denis Nazarov on Twitter-to allow people to pool funds to bid for NFT together. Subsequently, PartyDAO raised 10 ETH start-up projects through crowdfunding on Mirror. According to the information on the official website, PartyBid has a total of 19,000+ users and nearly 1,400 parties, and has raised a total of 8,000+ETH.

PartyBid helps small-amount retail investors to participate more in the market where only a few people could participate in the past. On the one hand, it lowers the threshold, and on the other hand, it also provides more liquidity for NFT products.

DAO management and growth platform Samudai announced the completion of pre-seed financing of US$2.5 million. Coinbase Ventures, FTXVentures and others participated in this round of financing. Samudai plans to launch an alpha version of its platform in July and open a public beta within this year.

We are always looking for creative ideas, business and cooperation opportunities, and we also look forward to your reading feedback, welcome to contact hello@jzlcapital.xyz.

about Us

JZL Capital is a professional organization registered overseas, focusing on blockchain ecological research and investment. The founder has rich experience in the industry. He has served as the CEO and executive director of many overseas listed companies, and has led and participated in eToro's global investment.

The team members are from top universities such as University of Chicago, Columbia University, University of Washington, Carnegie Mellon University, University of Illinois at Urbana-Champaign and Nanyang Technological University, and have served Morgan Stanley, Barclays Bank, Ernst & Young, KPMG, HNA Group , Bank of America and other well-known international companies.

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contact us

We are always looking for creative ideas, business and cooperation opportunities, and we also look forward to your reading feedback, welcome to contact hello@jzlcapital.xyz.

If there are obvious facts, understandings or data errors in the above content, welcome to give us feedback, and we will correct the report.

Note: JZL Capital currently has a Cosmos ecological theme fund. The opinions in this article may have a high degree of interest correlation with the company. This report should not be used as investment advice.