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December 05, 2022

Happy Monday, folks 👋🏻 GM. Welcome to the inaugural issue of the Chain Catalyst newsletter, brought to you by Launchy! What is Launchy and what is Chain Catalyst ❓

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It covers the most relevant topics, three times a week, bringing web3 founders and investors up to speed with what's happening in crypto.

With that out of the way, let's get into today's issue 👇

In Today's Email:

Over the Weekend: Genesis owes $1.8 billion 🤯
Products: NFT loss harvestooor 🚜
Charts: Blur NFT market share and DeFi insurance 💸

OVER THE WEEKEND

Genesis Owes Creditor $1.8 Billion

Genesis, one of the largest crypto lending prime brokerage firms, has been under a lot of fire recently. For now, it seems that more fuel will be added to the fire 🔥

State of play: Financial Times reported that a group of Genesis' creditors that were using Gemini exchange's Earn program, which is its yield or savings-account-like product, are owed $900 million. Coindesk then reported that a second group represented by law firm Proskauer Rose is also owed $900 million. Bringing the tally to $1.8 billion... and counting. So what happens now?

What's next: The crypto market is concerned that Genesis fallout might have a much more significant impact on its parent company, Digital Currency Group (DCG), which also owns Grayscale.

Grayscale is the largest crypto asset manager with $10 billion+ in AUM.
DCG owes $1.5 billion+ to Genesis.
$575M of that $1.5 billion is due soon, which might mean that Grayscale need to sell some of its assets to the open market.

Our take: Storing your crypto on an exchange will always have its risk. Gemini is one of the most regulated exchanges and Genesis is based in the US. They're both not immune to contagion (FTX and 3AC caused Genesis to be in its current situation -- more here).

When you see loans and financial trickeries between related entities, even amongst DeFi protocols, be cautious. While this practice can be beneficial, it requires precise timing and robust risk management to prevent duration mismatches caused by market conditions.

PRODUCTS OF THE WEEK

NFT Loss Harvestooor

nftlossharvestooor.com

Lost a lot of money from buying worthless JPEGs in the past year? This product has the right solution for you!

Simply put, it buys your NFT for 0.00000001 ETH, helping you "recognize a capital loss". By doing so, you can reduce your taxable income for the year. The product is made by CoinLedger, a crypto tax software company.

Other cool products:

pfpedia, an app to stay up-to-date with NFTs.
Grindery, a web3 gateway for Zapier.
Vyper Protocol, a derivatives DeFi platform.
Fire, a chrome extension for a better crypto transaction experience.
0xKYC, a zero-knowledge identity solution.

CHARTS OF THE WEEK

Blur Dominates

Dune Analytics

Blur, the NFT marketplace, and aggregator, significantly increased its market share over the past few months. Its second airdrop will happen today, December 5th.

Blur was launched in October 2022.
It's backed by notable investors, including VC firm Paradigm and Punk 6529.
Blur promises faster trade execution and enhanced NFT trading features such as floor sweeping and sniping.

Blur is both a marketplace and an aggregator, which has prompted criticism from other NFT aggregators such as X2Y2. Crypto Twitter comments that Blur's action is like Amazon, being the aggregator and the marketplace at the same time, which is unhealthy and detrimental as it kills the competition in the long run.

Our take: Competition is always good for end users. At the same time, Blur's ability to gain market share shows that a combination of token incentives and a good product can be extremely powerful. X2Y2 might be operating on the basis of decentralization, but Blur shows that a smart business strategy and a good product will still win.

To watch: The largest decentralized exchange, Uniswap, launched its NFT aggregator after previously acquiring the NFT aggregator called Genie. As part of its launch, Uniswap will be airdropping $5 million USDC to select historical Genie users.

Insurance Under 1% TVL

Delphi Digital

In 2022, the crypto market saw $2.5 billion+ of on-chain exploits and multi-billion off-chain insolvencies. Having proper insurance sounds like a pretty good idea. However, less than 1% of all DeFi TVL is in on-chain insurance protocol.

State of Play: Insurance is both a B2B and a B2C business. In crypto, directly selling insurance to consumers (B2C) is extremely hard to do. Most users don't care enough or don't have enough capital at stake. Large institutions would opt for established off-chain insurance solutions such as Lloyd. As a result, we haven't seen much adoption of on-chain crypto-native insurance protocols.

Our take: On-chain insurance is tricky to execute as most users don't care enough. Founders of insurance protocols should focus their designs to cater towards high-net-worth individuals and other protocols. They need to understand the B2B and private banking playbook extremely well.

QUICK BITES

Bybit cuts 30% workforce.
Reddit avatar tokens minting reached record high.
Coca-Cola releases FIFA world cup NFTs.
Binance pauses withdrawals amidst ANKR exploit.
Apple forces Coinbase to disable NFT transfers.
BitMEX releases proof of liability system.
Stripe supports fiat-to-crypto onramp.
Zipmex receives $100M VC buyout.

MEME & NOTEWORTHY READS

Sigh

Galaxy's research report on zkEVM.
Vitalik's blog on Ethereum application system that excites him.
CMS Intern's notes on SBF's dealbook interview.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.