Gryphsis Cryptocurrency Weekly: Hong Kong’s digital leap, promoting the electronicization of Hong Kong dollars, and safeguarding the future of finance
Welcome, dear reader, to Gryphsis Academy’s weekly cryptocurrency digest. We bring you key market trends, in-depth insights on emerging protocols, and new industry dynamics, all designed to enhance your expertise on cryptocurrency and Web3. Happy reading! Follow ourTwitterandMediumGet deeper research and insights.
Market and Industry Snapshot:
Layer 2 Overview:
In the second-layer network field last week, Arbitrum and Optimism continued their previous momentum, with their total locked value (TVL) increasing by 5% and 3.28% respectively, while the TVL of Base, zkSync and Starknet continued to show negative growth. Protocols like Locus Finance, Interport, Sablier, and CairoFi show noteworthy TVL growth rates.
LSD Sector Overview:
In the LSD space, the growth rate of Ethereum staking continues to stagnate, with no significant metric changes. In terms of market share, rETH has grown while others have remained stable.
RWA Sector Overview:
Last week, the real world assets (RWA) sector continued its previous growth amid optimism in broader market sentiment. Additionally, there has been significant growth in tokenized treasury value. Notable growers include $LMR, $OPUL, and REGEN. Tokens like $DETF, $POLYX, and $LEOX experienced the largest losses.
Main Topics
Macro overview:
US Stock V.S. Crypto
Big news this week:
Hong Kong Crypto Leap
Weekly Agreement Recommendations:
Lodestar Finance
Weekly VC Investment Focus
Modulus Labs ($ 6.3 M)
Topos ($ 5 M)
Twitter Alpha:
@ViktorDefi on recent narratives
@poopmandefi’s token unlocks breakdown
@0x Tindorr on $COIN
@TheDeFISaint Layer 2 roundup
Macro Overview
Crypto markets ended last week in a positive trend, with ETH starting to outperform BTC. Notably, the stock market also reversed its previous downward trend, with the SPX and NASDAQ ending the week with gains of 5.8% and 6.4%, respectively. In the week ahead, events to watch include Powells speech, crude oil inventories, and initial jobless claims.
Big news this week
Hong Kong’s Digital Leap: Promoting the Electronicization of Hong Kong Dollars and Protecting the Financial Future
Last week, Hong Kong took a major step towards digital finance when the Hong Kong Monetary Authority (HKMA) launched the second phase of the electronic Hong Kong dollar (e-HKD) pilot programme. This phase builds on the success of programmable payments and Web3 transactions in the first phase, further highlighting Hong Kong’s commitment to integrating digital currencies into its financial system, promoting innovation and efficiency.
The second phase is not only a recognition of the future of smooth transactions, but also places Hong Kong at the core of the global fintech field, preparing for enhanced cross-border payments and financial inclusion. The adoption of distributed ledger technology underscores the push for interoperability, which is critical to international financial integration and has the potential to attract significant fintech investment.
In response to the recent JPEX scandal, Hong Kong is strengthening its cryptocurrency regulatory framework, a move aimed at restoring investor confidence and preventing future fraud. By imposing stricter oversight on cryptocurrency exchanges, the region strengthens its stance on creating a safe and transparent digital asset environment.
Hong Kong’s Securities and Futures Commission (SFC) has also introduced guidelines for the tokenization of digital assets, bringing clarity and security to this emerging field. These guidelines promote traditional financial institutions to enter the token economy and bridge the gap between traditional finance and blockchain innovation.
From advances in e-HKD to regulatory updates from the Securities and Futures Commission, these strategic initiatives demonstrate Hong Kong’s robust and prudent approach to fintech. The city’s strategy sets an example for combining digital currency innovation with strict regulatory oversight, providing a template for global financial markets to follow. This combination of advancement and protection is expected to further solidify Hong Kong’s leadership in the transforming world of digital finance.
Weekly Agreement Recommendations
Lodestar Finance is an innovative algorithmic money market protocol on the Arbitrum network designed to facilitate trustless lending and borrowing of assets. It seeks to carve out a niche within the DeFi space by providing a platform where users can earn income on their tokens (particularly those native to Arbitrum and lacking proprietary protocols).
The protocol stands out by integrating yield derivatives instruments that are increasingly popular within the Arbitrum ecosystem. These derivatives, which are typically locked in exchange yields, earn revenue through inflation incentives and protocol fees, thus growing in value over time. Lodestar Finance differs by allowing the use of these income derivatives as collateral for borrowing, giving users a safer and more capital efficient lending experience. The protocols use of these derivatives also puts downward pressure on loan-to-value ratios, increasing the security of lending.
Lodestar Finance allows users to take long or short positions on different assets by depositing collateral and borrowing against it. For example, if a user anticipates that an asset will appreciate in value, they can deposit it as collateral, borrow USDC, and purchase more of the asset, with the goal of earning a profit by deducting net interest from the assets appreciation. Conversely, if users believe an asset will lose value, they can borrow that asset as their collateral, sell it immediately, and buy it back later at a lower price. The protocol also supports “looping” operations, a process that allows users to increase their exposure and potential gains despite increased risk.
Our Insight
Within the booming Arbitrum ecosystem, Lodestar Finance has emerged as a notable player in the local currency market, competing against heavyweights such as Radiant Capital and Aave V3. Despite lower total value locked (TVL), Lodestar has doubled its TVL over the past month, in contrast to the modest 10-20% growth witnessed by Radiant and Aave.
What makes Lodestar noteworthy is the continued growth of its lending metrics and user base, which indicates a healthy platform. With Arbitrums upcoming grant expected to fuel another surge in activity, protocols like Lodestar that are lining up for significant funding could experience substantial increases in TVL and token valuation. Lodestars current supply Annual Percentage Rate (APR) is already competitive, and additional grant inflows may enhance earnings and attract more users to participate. This, in turn, may increase the revenue distributed to $LODE token holders, enhancing the token’s appeal.
While Lodestar Finance is gaining attention for its recent strong momentum and potential to benefit from the Arbitrum grant, its important to remain cautious. The price of $LODE has surged more than 80% in the past week alone, and coins with smaller market caps are typically prone to high volatility. Investors are advised to conduct thorough due diligence and approach such opportunities with a measured strategy.
Weekly VC Investment Focus
Welcome to our weekly Investing Spotlight, where we reveal the biggest venture capital developments in the crypto space. Each week, we’ll spotlight the protocols that received the most funding.
Modulus Labs
Modulus Labs, an artificial intelligence (AI) startup that combines AI with cryptographic security technology, has completed a $6.3 million seed round led by crypto venture capital funds Variant and 1kx, Bankless, Blockchain Builders Fund, Inflection Angel investors from the Ethereum Foundation, Worldcoin, Polygon, Solana and Microsoft also participated. The company specializes in combining zero-knowledge proofs (ZK-Proofs) with AI models to improve scalability and security for smart contract developers and on-chain services. With this new round of funding, Modulus plans to expand its product line to include an Ethereum-based AI application and a dedicated AI ZK prover, advancing the collaborative development between blockchain security and AI capabilities.
https://x.com/ModulusLabs/status/1719749763753730118?s=20
Topos
Toposware, a company focused on zero-knowledge cryptography, has secured $5 million in strategic seed extension funding. This round of financing, led by Evolution Equity Partners and with investments from Triatomic Capital, K 2 Access Fund and Polygon co-founder Sandeep Nailwal, aims to strengthen Toposware’s infrastructure and address blockchain interoperability, privacy and Scalability challenges. The company is preparing for its enterprise early access program and plans to use the funds to form additional partnerships and continue to expand in the Americas and Europe, particularly by strengthening its engineering team to deliver core zero-knowledge infrastructure and promote the ecosystem System adoption.
https://x.com/Toposware/status/1719702762189947220?s=20
Protocol update
Derivio launches mainnet on zkSync Era
Voyager token surges after nearly one-third of supply is burned
Uniswap user lost $ 700, 000 to an MEV bot
Lido approves proposal to enable Obol decentralized staking module
SafeMoon executives arrested after DOJ, SEC allege they misappropriated millions
Pyth Network unveils retrospective token airdrop for over 75, 000 eligible wallets
Worldcoin's crypto wallet claims more than 1 million monthly active users
Aptos and Avalanche dominate among $ 450 million in November token unlocks
Industry events
Georgia's central bank taps Ripple for digital currency pilot project
US authorities seize $ 54 million in crypto from darknet narcotics scheme
Block's Q3 bitcoin gross profit jumps 22% year-over-year to reach $ 45 million
SEC seeks summary judgment in lawsuit against Terraform
Treehouse acquires Origins to expand NFT data offering
ProShares launches first short ether futures ETF for bearish traders
Nym ventures into decentralized VPN realm
PayPal hit with SEC subpoena over its PYUSD stablecoin
Twitter Alpha
Theres a lot of alpha in crypto Twitter, but navigating thousands of Twitter threads can be difficult. Each week, we spend hours doing research, curating threads full of insight, and curating your weekly picks list. Let’s dive in!
https://x.com/ViktorDefi/status/1720427627826065524?s=20
https://x.com/poopmandefi/status/1721042521219027068?s=20
https://x.com/TheDeFISaint/status/1720898811525038544?s=20
https://x.com/0x Tindorr/status/1720836875123064944? s= 20
next week events
News sources/references:
https://www.theblock.co/
https://cointelegraph.com/news/hong-kong-issues-asset-tokenization-rules
https://cointelegraph.com/news/jpex-scandal-wont-impact-hong-kong-crypto-vision-financial-secretary
https://cointelegraph.com/news/hong-kong-cbdc-pilot-e-hkd-trials-phase-2
https://www.theblock.co/post/260335/modulus-raises-6-3-million-to-bring-crypto-security-to-ai
https://www.coindesk.com/tech/2023/11/01/crypto-venture-funds-variant-1kx-lead-6 m-funding-round-for-zk-meets-ai-startup-modulus/
https://cryptonews.com/news/modulus-labs-completes-6-3-million-funding-to-integrate-cryptographic-security-into-ai.htm
https://www.nftgators.com/zero-knowledge-infrastructure-provider-toposware-secures-5m-seed-round/
https://www.cointime.ai/flash-news/toposware-completes-44861
That’s all for this week. Thank you for reading this weeks newsletter. We hope you benefit from our insights and observations.
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This weekly report is provided for informational purposes only. It should not be relied upon as investment advice. You should conduct your own research and consult independent financial, tax or legal advisors before making any investment decisions. And the past performance of any asset is not indicative of future results.
