Gryphsis Cryptocurrency Weekly: Spot ETFs and Bitcoin's Global Dominance

Dear Readers,

Welcome to the weekly cryptocurrency summary from Gryphsis Academy. We bring you key market trends, in-depth insights into emerging protocols, and fresh industry dynamics, all aimed at enhancing your expertise in cryptocurrency and Web3.

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Market and Industry Snapshot:

Layer 2 Overview:

In the Layer 2 space last week, Arbitrum and Optimism saw increases of 9% and 5.99% in TVL respectively, fueled by positive market sentiment, while Bae, zkSync, and Starknet experienced negative TVL changes over the weekend. Protocols like Dexilla, Interport, Yearn, SuperLauncher, and CairoFi showcased noteworthy percentage increases in TVL.

LSD Sector Overview:

In the LSD sector, the growth rate of ETH staking has remained stagnant with no significant changes. From a market share perspective, sfrxETH has seen some growth, while others have remained stable.

RWA Sector Overview:

Driven by optimism in the broader market, the Real World Assets (RWA) sector has seen significant growth in both market capitalization and trading volume. Additionally, active private credit values and tokenized treasuries have also increased. Noteworthy tokens with the largest gains include $POLYX, $DETF, and RIO. Importantly, no tokens experienced significant losses.

Main Topics

Macro Overview:

• US Stock V.S. Crypto

Major Events This Week:

• IBTC and BTC new ATH in high inflation countries

Weekly Protocol Recommendation:

• Vertex

Weekly VC Investment Focus

• Shrapnel ($20M)

• Nocturne ($6M)

Twitter Alpha:

• @wacy_time1 on Arbitrum Ecosystem

• @stacy_muur's protocol list

• @DeFiMinty free dashboard

• @TheDeFISaint Layer 2 roundup

Macro Overview

Last week, driven by the appearance of IBTC on the Depository Trust and Clearing Corporation (DTCC), the cryptocurrency market witnessed a surge, particularly BTC, which saw a 10% price increase by the end of the week. Conversely, the stock market continued to trend downward, with SPX performing weaker than NASDAQ. In the coming week, keep an eye on important developments such as CB consumer confidence, crude oil inventories, initial unemployment claims, and unemployment rates.

Major Events This Week

Spot ETF and Bitcoin's Global Dominance

In recent times, major market events have continued to revolve around Bitcoin. We saw BlackRock's iShares Bitcoin ETF (IBTC) briefly listed on the DTCC website before disappearing and then reappearing. This unexpected appearance quickly sent Bitcoin's price soaring to new yearly highs, highlighting the crypto market's sensitivity to institutional actions, especially those related to potential ETF listings. However, this frenzy was short-lived. The removal of the IBTC ticker from the DTCC website led to a swift market correction, with Bitcoin's value dropping nearly 3%. The DTCC later clarified that the listing was a preparatory action taken in August and did not imply any forthcoming regulatory decisions. This situation vividly illustrates the critical role of institutional actions and the broader narrative of mainstream cryptocurrency adoption in influencing market sentiment.

https://twitter.com/EricBalchunas/status/1716529570759704832

As Bitcoin struggles with the complexities of ETF listings and institutional participation, its role as a powerful financial bastion in the global landscape becomes increasingly evident. Last week, Bitcoin reached unprecedented valuations against a range of depreciating fiat currencies, including the Argentine peso, Nigerian naira, and Turkish lira, achieving historical highs in these countries. Bitcoin's rapid ascent is both a testament to the sharp devaluation of these currencies and its own unstoppable rise.

https://x.com/milesdeutscher/status/1717418953025159563?s=20

In countries facing hyperinflation, Bitcoin-led cryptocurrencies are carving out a potential safe haven for themselves. For instance, Nigeria, which initially resisted the allure of digital currencies, has shown a more accepting attitude by the end of 2022, labeling cryptocurrencies as legitimate "investment capital." Meanwhile, Argentina, grappling with inflation rates as high as 138% and an impending presidential election, finds itself at an economic crossroads. The growing role of Bitcoin in such economies cannot be overlooked, and its potential as a beacon in financial instability continues to strengthen.

However, this journey is not smooth for all countries. Despite a strong inclination towards cryptocurrencies among the Turkish populace, the country has restricted their use in everyday transactions. Nevertheless, to alleviate its economic woes, Turkey is considering launching its own digital currency.

In summary, as the cryptocurrency world awaits regulatory clarity and navigates the challenges and opportunities posed by global economic turmoil, one thing is certain: Bitcoin's influence, whether as a reflection or reaction to broader financial movements, is insurmountable. The events of the past week have underscored Bitcoin's profound impact on global financial dynamics and its growing importance in the tumultuous world of modern finance.

Weekly Protocol Recommendation

The Vertex protocol stands out as a pioneering decentralized exchange (DEX) protocol on the Arbitrum network. As a comprehensive application, Vertex offers a full suite of financial tools, including spot trading, perpetual contracts, and a unified money market. Fundamentally, Vertex is based on a synergistic model that combines a central limit order book (CLOB) with an integrated automated market maker (AMM). This arrangement ensures that liquidity drawn from both LP markets supports the order book, enriching the trading landscape for users. Additionally, the underlying Arbitrum Layer 2 (L2) simplifies gas fees and reduces miner extractable value (MEV), ensuring efficient and cost-effective trading.

Vertex has three foundational elements: an offline sorter (order book), an online automated market maker (AMM), and a dedicated online risk engine. The order book and AMM serve as integrated liquidity reserves for the system, gathering liquidity from API-based market makers and online liquidity contributors. Meanwhile, the risk engine is designed to facilitate rapid liquidation. By leveraging these two sources of liquidity, traders are expected to achieve more favorable trading prices through their synergistic capabilities. The effectiveness of this model is evidenced by the steadily increasing trading volume on Vertex.

Another significant feature of Vertex is its cross-margin system, which offers numerous benefits for both advanced and retail traders. Firstly, it significantly reduces margin requirements. For example, a Vertex trader holding a long position in $ETH spot margin and a short position in $ETH perpetual contracts may have a reduced cumulative margin requirement compared to isolated margin accounts. The system also automates risk management, calculating and transferring margin between open positions to maintain the required levels, which is a boon during periods of high market volatility. Furthermore, it allows for risk/reward optimization, enabling traders to adjust the leverage of positions to suit their individual risk preferences. Another noteworthy feature is portfolio margining, where unrealized profits from one position can offset the margin requirements of another position, enhancing capital efficiency. For instance, if the value of a long $ETH spot margin position declines, the unrealized profits from a short $ETH perpetual contract position can be used to maintain the required margin level, preventing liquidation.

Our Insight

In the highly competitive decentralized exchange space, Vertex continues to perform exceptionally well, consistently capturing 10-30% of daily trading volume. Given the fierce competition with established players like GMX, Gains, and Kwenta, its performance is commendable.

On November 13, Vertex is preparing for another milestone: the first launch of its VRTX token through a Liquidity Boost Auction (LBA). This seven-day event, ending on November 20, 2023, aims to allow the market to organically price VRTX, accurately reflecting investor interest. During the first five days of the auction, participants can engage using $VRTX trading rewards or $USDC.e. The proceeds will fund the VRTX-USDC.e liquidity pool on Vertex. Additionally, participants in the auction will share an incentive pool containing 10 million VRTX (1% of total supply), which will be gradually released over 120 days. During this period, liquidity providers will enjoy the dual benefits of trading fees and VRTX rewards.

Given Vertex's strong performance record, the VRTX token is worth watching. However, caution is advised as the date approaches. We recommend not rushing into the LBA or making immediate secondary market purchases before making any investment decisions, but rather monitoring the event, price dynamics, and Vertex's operations post-launch.

Weekly VC Investment Focus

Welcome to our weekly investment focus, where we reveal the most significant venture capital dynamics in the crypto space. Each week, we spotlight the protocols that have secured the most funding.

Shrapnel

Neon Machine, the game studio behind the upcoming blockchain-based video game "Shrapnel," has successfully raised $20 million in funding. "Shrapnel" shares many similarities with the popular "Call of Duty" series and is expected to become a significant player in the crypto gaming space. This funding round was led by Polychain, highlighting the growing interest and investment in the fusion of gaming and blockchain technology. As the gaming industry continues to explore the potential of Web3 and blockchain integration, games like "Shrapnel" stand at the forefront, showcasing the possibilities of combining traditional gaming mechanics with decentralized gaming experiences.

https://x.com/TheBlock__/status/1717168022769619041?s=20

Nocturne

Nocturne Labs is a protocol dedicated to enabling on-chain private accounts on Ethereum, having successfully raised $6 million in a seed funding round co-led by Bain Capital Crypto and Polychain Capital. This round also saw participation from Ethereum co-founder Vitalik Buterin and entities like Bankless Ventures. Nocturne's innovative approach combines stealth addresses, zero-knowledge proofs, and account abstraction to provide private accounts on public blockchains, addressing the transparency challenges of Ethereum. This funding will accelerate the deployment of the Nocturne protocol and support its legal and integration efforts aimed at enhancing on-chain privacy and compliance within the Ethereum ecosystem.

https://x.com/nocturne_xyz/status/1717150278749725127?s=20

Protocol Updates

DYdX Chain to distribute all network fees

Solana adds incubator to spur growth

LayerZero introduces omnichain token

Polygon 's POL cryptocurrency contracts deployed on Ethereum mainnet

Maestro Telegram bot suffers a contract exploit

Worldcoin to pay orb operators in WLD

Gnosis Chain 's TVL doubles to $150M after Spark Protocol's deployment

GRVT to debut as first 'hyperchain' in zkSync ecosystem

Industry Events

Circle partners with Taiwan's BitoGroup and FamilyMart

Vitalik invests in Nocturne Labs

Fireblocks taps former New York regulator to step up compliance

Deutsche Bank and SC Ventures complete first stablecoin swaps on UDPN

Brazil 's Central Bank plots next moves in adoption of CBDCs

North America leads world in crypto usage

Bitmain plans to unveil mining rigs for Aleo blockchain

Bitfinex 's Ardoino expects 'quantum leap' in Bitcoin scaling solution adoption

Twitter Alpha

There is a wealth of Alpha in crypto Twitter, but navigating through thousands of Twitter threads can be challenging. Each week, we spend hours researching to curate insightful threads and bring you a selection of the week's highlights. Let's dive in!

https://x.com/stacy_muur/status/1715350047766741250?s=20

https://x.com/TheDeFISaint/status/1718390609931637027?s=20

https://x.com/wacy_time1/status/1716091707534545104?s=20

https://x.com/DeFiMinty/status/1717215235382128948?s=20

Upcoming Events

News Sources/References:

https://www.theblock.co/

https://www.theblock.co/post/258041/blackrocks-spot-bitcoin-etf-appears-on-dtcc-website-with-ticker-ibtc

https://www.coindesk.com/markets/2023/10/24/bitcoin-tumbles-3-as-blackrock-spot-etf-ticker-pulled-from-dtcc-website/

https://cointelegraph.com/news/blackrock-bitcoin-etf-ibtc-relisted-dtcc

https://www.nasdaq.com/articles/bitcoin-surges-to-all-time-highs-in-turkey-and-nigeria

https://cointelegraph.com/news/bitcoin-price-all-time-highs-across-argentina-nigeria-turkey

https://www.coindesk.com/tech/2023/10/25/bain-capital-polychain-lead-6m-funding-round-for-privacy-protocol-firm-nocturne-labs/

https://finance.yahoo.com/news/nocturne-raises-6m-seed-round-120000748.html

https://cryptonews.com/news/nocturne-raises-6m-from-vitalik-buterin-polychain-bankless-bain-capital-crypto-enable-private-accounts-ethereum.htm

https://www.theblock.co/post/259283/call-of-duty-style-crypto-video-game-shrapnel-raises-20-million?utmsource=twitter\&utmmedium=social

https://decrypt.co/203208/shrapnel-game-studio-neon-machine-raises-20-million-led-polychain

https://cointelegraph.com/news/neon-machine-raises-20-m-series-a-web-3-blockchain-based-call-of-duty-competitor-shrapnel

That concludes this week's content. Thank you for reading this week's report. We hope you benefit from our insights and observations.

You can follow us on Twitter and Medium for real-time updates. See you next time!

This weekly report is for informational purposes only. It should not be considered investment advice. You should conduct your own research and consult independent financial, tax, or legal advisors before making any investment decisions. Past performance of any asset does not guarantee future results.