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Cardano Reveal it’s Five-Year Strategic Plan

Frederik Gregaard, CEO of Cardano Foundation, has unveiled a strategic plan aimed at accomplishing various missions. The strategy, according to the online presentation, aims to ensure Cardano’s success while facilitating its global adoption.

Short and long-term ambitions

In the short term, the Cardano Foundation aims to enable 50 banks to use its native digital asset (ADA). These banks will allow users to swap their ADAs for various fiat currencies using the platform’s blockchain.

Another short-term goal is the reduction of third-party intervention when connecting to other blockchain projects. This can be achieved, Fred believes, once Cardano increases the activity of its users on the blockchain as well as the number of active wallets.

In addition, Cardano plans to collaborate with at least three Fortune 500 companies, which will be able to experience the long-term possibilities of a blockchain network. More importantly, the foundation looks forward to these companies owning and using ADA. It is expected that by 2026, a dozen Fortune 500 companies will be trading or holding the ADA token. Additionally, the CEO says the project also hopes to publish three white papers and five practical case studies.

A decentralisation perspective

The announcement further discussed its move towards decentralisation, revealing that Cardano will be a autonomous blockchain. Which in the next five years, the Cardano community will essentially run and manage the third generation of the blockchain. According to Cardano, once the decentralised implementation is up and running, the PoS blockchain is expected to have around one billion users. Funding for the community era will be provided by the treasury system, which generates funds from a portion of the transaction fees. In turn, the funds will be used to respond to all user-voted proposals.

More team members

The Cardano protocol has an impressive team of experienced personnel who are committed in helping Cardano succeed every step of the way. Moreover as part of the 2021 strategic plan, Cardano says it is looking to expand its team by adding an advisory board, board members, an executive team, and a departmental body in the next 12 to 18 months.  Security experts will also be recruited as Cardano plans to launch a bug bounty programme.

By Ayoub Khirane

Insula Newsletter: Singapore’s CBDC Challenge, CBDC in Retail, & Our Fund Highlights

As we observed last week, crypto markets fluctuated, yet they failed to fully recover from the dip earlier in the week, which sent the price of bitcoin below USD 30,000. Bitcoin’s price BTC closed down about 3% for the week and is trading around $34,500. As for the altcoins, with the second and third largest assets in the market cap chart, Ethereum ETH and Binance coin BNB, ending the week around 13% and 15% respectively. 

News

Singapore Central Bank Launch Global CBDC Challenge

One global challenge for retail central bank digital currencies (CBDCs) has been set by the Monetary Authority of Singapore (MAS). In the hope of attracting financial technology (FinTech) companies, and financial institutions from around the world. With the aim of inviting them to submit innovative solutions for a CBDC instrument, its distribution and infrastructure.

The Monetary Authority of Singapore (MAS) has teamed up with several global economic organizations such as the International Monetary Fund (IMF), World Bank, the Organization for Economic Co-operation and Development (OECD) and other UN agencies.  

To launch a competition where entrants must tackle 12 unresolved challenges posed by central bank digital currencies (CBDCs).  for example:

“Can a retail CBDC system be embedded with additional functionalities beyond a basic transfer of value without requiring users to use smartphones?” the first challenge asks.

The Monetary Authority of Singapore’s “Global CBDC Challenge ” will be supported by Amazon Web Services, Mastercard, payments platform Partior, blockchain software developer R3 and blockchain project Hyperledger.

Retail CBDCs

Even though monetary authorities around the world are developing CBDCs. Most of these developments, however, concern wholesale CBDCs, which will facilitate payments at the central bank level. But some are also considering retail CBDCs, which consumers and businesses will be able to use like cash.

Now, this news points to some of the potential benefits that retail CBDCs could offer. For example, increasing the efficiency of payments and supporting the digitalisation of the economy. Nevertheless, it emphasises that retail CBDC solutions must meet a number of public policy objectives.

The solution must be cost-effective to implement and meet the current and anticipated payment needs of the consumer. At the same time, it must be accessible to a wide range of users, including low-income households and the technologically illiterate. 

Finalist selection

Those interested in participating should submit their application here by July 23. Up to 15 finalists will be selected to receive mentoring from industry experts. They will also have access to APIX Digital Currency Sandbox, which provides a comprehensive testing and development platform, including a large number of different application programming interfaces (APIs), allowing them to rapidly prototype digital currency solutions. 

The chosen finalists will present their solutions to an international audience at the Demo Day, taking place this year at the Singapore FinTech Festival. MAS indicates that up to three winners from the 15 finalists will be selected and awarded a prize of S$50,000 (US $37,193). 

Crypto Exchange Binance Banned from: UK, Canada and Japan

Binance, the crypto-currency exchange, is under global surveillance by the financial regulator. As mentioned last week, Japan’s Financial Services Agency (FSA) warned Binance for offering crypto services without registration. 

For Canada, specifically Ontario, Binance has withdrawn from the province, due to increasing regulation. Over the last weeks, the Ontario Securities Commission (OSC) has started pursuing legal action against unregistered cryptocurrency exchanges, such as Bybit and Kucoin ect. So to comply with the legislation put in place there, Binance stated that all users registered in the province should close their positions by Decembre 31 2021. 

AS for the UK, Britain’s Financial Conduct Authority (FCA) bans Binance’s regulated activities on UK soil. The Regulator asserts that the Group and its entities have no license to operate in the kingdom. So The FCA instructed Binance Markets to remove, or give instructions for removal of , any advertising and financial promotions it currently has live.It also required the company to secure and retain all documents relating to the UK cosumers, so they “can be provided to the FCA, or to a person named by the FCA, promptly on its request”, according to the statement.

Other News

  • Andy Warhol ‘three Self-Portraits” art pieces were sold as NFTs for $2.8 million on the Binance NFT marketplace. Which started last week with tokenized artwork of Andy Warhol and Sakvador Dali.
  • Hong Kong’s Financial Secretary insisted on the need for digital transformation and reaffirmed that it will conduct technical tests using the central bank’s renminbi digital currency (CBDC) in 2022.
  • Apparently taking a cue from El Salvador, Indian authorities may decide to classify bitcoin as a regulated asset class: “Top sources who follow the industry told this publication that the government has moved away from its earlier hostile stance towards virtual currencies,” reports the New India Express, “and is now considering classifying crypto as an asset class.” 
  • Bitcoin’s Hashrate declined to the lowest levels since summer 2019. It has dropped by 66% within the past month. Currently the rate is 58 tera hashes per second (TH/s). Due to China’s crackdown on Bitcoin mining.
  • Despite Regulatory Uncertainty, Crypto Investments in India Surged by Almost 20,000%, passing from $200 million to $40 billion last year India.

Insula Fund Highlights

This week we are focusing on our principal fund, Insula Pala. It allows indirect exposure to the decentralised exchanges DEX and provides a hedge against bitcoin dominance. One of the ways Insula provides exposure synthetically is via an Ethereum project called: DeFi Pulse Index (DPI):

DeFi Pulse Index, an index of decentralized finance that is not a synthetic or a derivative – users own the tokens that constitute the capitalization-weighted index.

Initial Index Conditions:

  • Index includes 10 tokens: YFI, LEND, COMP, SNX, MKR, REN, KNC, LRC, BAL, REPv2
  • The price per token and circulating supply were taken on September 8th, 2020 from CoinGecko.
  • The price per token multiplied by the circulating supply determines the circulating market cap. Each position is weighted by its relative circulating market cap to other positions in the index.

The DeFI Pulse Index plans to expand the index to include more DeFi Projects when subsequent rebalances occur.

Wrapped Bitcoin WBTC:

Wrapped bitcoin is a tokenized version of Bitcoin(BTC) that runs on the Ethereum Protocol. Which makes it compliant with ERC-20, allowing it to be fully integrated into the latter’s ecosystem of DEX and other DeFi applications.

WBTC is also backed by BTC at 1:1 ratio via a network of automatically monitored merchants and custodians, ensuring that its price is pegged to Bitcoin at all times and allows users to transfer liquidity between the BTC and the ETH networks in a decentralized and autonomous manner. Moreover Ethereum protocol’s faster average blocktime — about 15 seconds vs 10 minutes respectively — increases the speed with which WBTC can be transacted, compared to actual bitcoins.

We hope you have enjoyed our weekly email and that it has been effective in informing you about Insula and the crypto market as a whole. If you would like to invest in Insula’s diversified crypto fund you can view more information at https://insulainvestments.com/fund.

By Ayoub Khirane

Cardano Reaches New Milestone by Exceeding 650,000 Staking Addresses

Cardano (ADA),  a proof-of-stake, community-based blockchain platform reaches another milestone, as the total number of its staking addresses passed the 650,000 mark. The fifth most valuable platform-cap is based on peer-reviewed researched and has been developed through evidence-based methods.

The past three weeks have been eventful for the fifth largest crypto-currency in terms of market capitalisation. During this period, it has added over 50,000 new staking addresses. An increase of more than 8% since the beginning of June 2021, when ADA announced its latest milestone, exceeding 600,000 staking addresses.

Based on the data, this recent influx brings ADA’s current total of staking addresses to more than 662,000, at the time of the announcement. There are also 2,656 active mining pools. At this date, the data also shows that staked funds amount to $29 billion, or 71% of the total supply.

The milestone is unsurprising as the interest in ADA has steadily grown in the past months. The Cardano Foundation announced that they hit 1 million wallets in May 2021. with new wallets being made even on days where there are price drops. The project also boasted a 400% gain between February 2020 and February 2021.

ADA looks at El Salvador

El Salvador has just made history this month by becoming the first nation in the world to legally adopt a crypto-currency, namely bitcoin (BTC), as its legal tender. Cardano founder Charles Hoskinson has since hinted that the country may adopt ADA in the same way.

In a recent live YouTube broadcast, Hoskinson disclosed details about the potential adoption of ADA in El Salvador. More specifically, he said that his team was in discussions with the country’s authorities. 

What else is next for Cardano?

Apparently, a lot, with over 100 commercial projects in the pipeline. One of these projects includes exploring the possibility of a predictable and fairly priced collection of currencies called “Stablefees”.

True to it’s values, Hoskinson also announced plans to publish a research paper on algorithmic Stablecoins, a digital currently linked to an underlying asset. The strategic move agrees with the Foundation’s growing popularity and amelioration in the community, which has also positively impacted ADA’s price.

Seemingly, all signs point up for Cardano!

By Ayoub Khirane & Leena Dupart

A Sharp Tumble, The Macro View, & Badger DAO

Insula Market Update – Week of June 21st 2021

A wide variety of major cryptocurrencies — everything from Bitcoin and Ethereum to cryptos like Dogecoin and DeFi tokens like Uniswap’s UNI — tumbled sharply this week. Bitcoin dropped from around $41,000 to a low near $31,000 (less than half of its April high of $65,000) and ETH dropped below $2,000. Some investors took advantage of low prices to “buy the dip,” while others bailed on fast-falling tokens. As always, it will be those who remain calm and in control in moments like these that benefit from the innate volatility of the crypto markets.

The Macro View

The broader cryptocurrency market has lost $1 trillion in value since May — down from around $2.5 trillion to $1.5 trillion. A major factor driving the decline has likely been China’s weeks-long crackdown on crypto, which entered a new phase this week. The province of Sichuan ordered mining operations to shut down on Friday; Weibo, a hugely popular social-media platform in China, reportedly shuttered the accounts of popular crypto commentators; and on Monday, China’s central bank doubled down on warning the nation’s financial firms not to conduct crypto business. According to a Bloomberg report, “China … summoned officials from its biggest banks to a meeting to reiterate a ban on providing cryptocurrency services. It’s the latest sign that China plans to do whatever it takes to close any loopholes left in crypto trading.”

Another potential factor? Following Wednesday’s meeting of the Federal Reserve, the central bank signalled it may raise interest rates sooner than expected in response to rising inflation. The dollar strengthened initially following the meeting, and stocks briefly dipped before returning to all-time highs. Crypto, on the other hand, continued its downward trend following the meeting.

In the world of DeFi, a high-profile project backed by Mark Cuban called Iron Finance saw prices for its TITAN token collapse from a high of around $65 to near zero as panicked sellers bailed. According to Bloomberg, Cuban hasn’t revealed the size of his loss, but said, “as a percentage of my crypto portfolio it was small … but it was enough that I wasn’t happy about it.” 

Of course, many investors took advantage of low prices to increase their holdings. Bitcoin’s biggest corporate backer, Microstrategy, doubled down and purchased nearly $500 million more Bitcoin. 

Is Bitcoin good politics?

Miami, which recently hosted the Bitcoin 2021 conference, is now trying to woo displaced Chinese Bitcoin-mining operations with low energy prices and, according to CNBC, “essentially unlimited supply of cheap nuclear energy nuclear power.” Mayor Francis Suarez told the network that the city is working to lower the cost of electricity in order to entice miners to make the move to Florida. In terms of climate emissions, nuclear energy is a “clean” source of power. 

Institutions Remain Bullish

A survey of 100 hedge fund CFOs found that they expect to hold more than 7 percent of their assets in crypto within five years — holdings which would total around $312 billion.

Crypto asset manager Grayscale is exploring 13 new products, including funds tied to Solana (SOL) and Polygon (MATIC) tokens. As the Block reports, “Grayscale is the largest crypto asset manager in the world, managing more than $34 billion in client assets.”

Goldman Sachs, which relaunched its crypto-trading desk earlier this year to provide Bitcoin exposure to certain clients is now expanding into Ethereum via futures and options contracts. 

High-profile investors including Peter Thiel backed a decentralized autonomous organization called BitDAO’s $230 million fundraise. BitDAO will provide grants to fund DeFi projects.

Wedbush Securities, a brokerage and wealth manager that manages assets worth more than $2.4 billion, became the fifth financial institution (others include Bank of America and Credit Suisse) to join Paxos’s blockchain-based equities settlement network — which allows two parties to settle stock trades in under a day. 

More than $17 billion in venture capital has poured into the crypto industry so far this year — only slightly less than all previous years combined. 

Insula Fund Highlights

This week we will be looking at the cryptocurrency Badger DAO (BADGER) in the new Insula Thrinacia investment fund. 

Badger DAO is an open-source, decentralized automated organization that is dedicated to building products and infrastructure of simplifying the use of Bitcoin (BTC) as collateral across many smart contract platforms.

The platform is a shared space where the developers, known as Badge Builders, have the ability to collaborate and implement Bitcoin as collateral to as many blockchains as possible. A developer can earn a percentage of the fees and BADGER tokens from the developer mining pool for every implementation. The mainnet was launched on December 3, 2020.

A builder can be a single developer, a group of developers, or even a company. There are no fixed obligations to participation requirements, and anyone can create. The pillars of Badger DAO include the Badger Builders, the community-created products, the Dedicated Badger Operations team, the fairly initial distribution of the BADGER tokens for governance and the fact that all of the code is open-sourced.

Who Are the Founders of Badger DAO?

The founder of Badger DAO is Chris Spadafora. He is a long-term crypto enthusiast, investor, and partner at Angelrock.

What Makes Badger DAO Unique?

Badger DAO has two main products: Sett and DIGG. Badger DAO is a community-driven project; as such, before any products are developed they first need to be pitched to, voted on and approved by token holders.

Sett is a decentralized finance (DeFi) aggregator that has flash loan mitigation measures focused on tokenized BTC through five strategies. Once a user makes a deposit, they can earn a yield as the protocol’s smart contract does the work.

In order to incentivize this participation, farmers that deposit tokenized BTC into the Sett vault earn BADGER and DIGG. Aside from a 0.5% fee, an additional 4.5% is deducted from the profits to cover gas and transaction costs.

DIGG is a non-custodial synthetic Bitcoin on Ethereum’s blockchain that is pegged to the price of BTC with a flexible supply and a re-base function. Its main goal is to remove centralized third parties.

We hope you have enjoyed our weekly email and that it has been effective in informing you about Insula and the crypto market as a whole. If you would like to invest Insula’s diversified crypto funds you can view more information at https://insulainvestments.com or reach out directly at jules.becci@insulainvestments.com 

China Cracks Down on Crypto Whilst Others Embrace the Change

Volatility remains, but is the market starting to strengthen? After plunging to lows of $30,800 recently, Bitcoin staged a strong recovery on Monday above $40,000. Some of the news the market might be responding to includes El Salvador becoming the first nation to adopt Bitcoin as legal tender, miners’ continued exodus from China, and the crypto industry’s embrace of renewable energy — including Elon Musk’s promise that Tesla will accept Bitcoin again when more than half of mining is powered by renewables.  In the meantime, Bitcoin’s core protocol is planning to implement its first major upgrade since 2017, called Taproot. 

China’s Stance Mixed; Texas Going Pro-Crypto

  • Even as China cracks down on crypto trading and mining, the South China Morning Post reports that the nation “plans to accelerate blockchain development and adoption in push to become a world leader in the technology by 2025.”
  • “Nearly half of millennial millionaires have at least 25% of their wealth in cryptocurrencies” according to a CNBC survey: “The results highlight a new generational divide in wealth creation from crypto, with younger investors able to earn vast fortunes from the surge in the prices of bitcoin, ether and other digital currencies.”
  • In the latest pro-crypto move by Texas, which seeks to become a hub for the industry, the Texas Department of Banking has allowed banks there to hold crypto for clients. 
  • Interactive Brokers, one of the largest of the U.S.-based “e-brokers,” announced it will offer crypto trading by the end of the summer.
  • One other possible reason prices rose this week? A major global banking regulator announced it would introduce capital requirements for banks dealing in crypto. 
  • Another week, another round of Bitcoin ETF applications: “Invesco, a U.S. investment firm with $1.3 trillion in assets under management, has filed two applications for crypto-specific exchange-traded funds,” Decrypt reports. “The two applications join more than a dozen other hopefuls looking to launch cryptocurrency ETFs.

El Salvador makes Bitcoin legal tender

Last week, Salvadoran president Nayib Bukele pushed legislation through the country’s congress that allows citizens to pay taxes in Bitcoin and requires businesses to accept the cryptocurrency as payment for goods and services. Around 20 percent of El Salvador’s GDP comes in the form of remittances — money sent home by El Savadorans living abroad (primarily in the U.S.). “Bukele says that a large chunk of this gets lost in transfer fees, which Bitcoin can help to reduce,” Bloomberg reports. “El Salvador is a so-called dollarized economy, which means that the fiscal and monetary decisions of the U.S. government and Federal Reserve have a tremendous impact. Adopting Bitcoin could give the nation more independence.”

The Central American nation’s Bitcoin adoption may have sparked a global trend: in the past week, officials across Latin America (where high inflation rates and expensive cross-border payments have long been the norm) have been adding laser eyes to their profile pics. And officials in India, which had recently considered banning crypto, are reportedly seeking to make Bitcoin an official asset class.

  • The crypto movement in El Salvador first began in 2019 in a coastal town popular with surfers nicknamed “Bitcoin beach.” There, Bloomberg reports, “some 500 fishing and farming families use bitcoin to buy groceries and pay utilities, something the government envisions for the country at large.”
  • Officials from Latin American countries including Panama, Mexico, Colombia and Argentina have signalled their intention to support bills inspired by El Salvador’s. In Paraguay, congressman Carlos Rejala told Coindesk he hopes to soon pass a bill that would draw crypto businesses to the South American nation: “The project allows cryptocurrency companies … to finance their Paraguayan operations with cryptocurrencies, remit dividends abroad and capitalize their cryptocurrency profits in local banks.”
  • Reportedly inspired by El Salvador, officials in India may move to classify Bitcoin as a regulated asset class: “Top sources tracking the industry told this publication that the government has moved away from its earlier hostile stance towards virtual currencies,” reports the New India Express, “and is now considering classifying crypto as an asset class.” 
  • In Africa, Forbes reports that Tanzania’s new president  has called on the country’s central bank “to begin ‘working on’ facilitating widespread use of cryptocurrencies in the East African nation.”
  • How do El Salvadorans themselves feel about the bill? According to Coindesk they are divided: “some El Salvadoran residents are excited by the thought of bitcoin being treated as legal tender, while others are concerned it may just be a tool for corrupt officials.”

Insula Fund Highlights

This week we will be looking at the cryptocurrency Sandbox (SAND) in the new Insula Scheria investment fund. 

Launched in 2011 by Pixowl, The Sandbox is a blockchain-based virtual world allowing users to create, build, buy and sell digital assets in the form of a game. By combining the powers of decentralized autonomous organizations (DAO) and non-fungible tokens (NFTs), the Sandbox creates a decentralized platform for a thriving gaming community.

According to the official whitepaper, the Sandbox platform’s main mission is to introduce blockchain technology to mainstream gaming. The platform focuses on facilitating a creative “play-to-earn” model, which allows users to be both creators and gamers simultaneously. The Sandbox employs the powers of blockchain technology by introducing the SAND utility token, which facilitates transactions on the platform.

By focusing on user-generated content, the Sandbox creates a metaverse of involved players who contribute to the platform’s further development. Not only that, by introducing the SAND token, the Sandbox promotes decentralized governance and allows users to share their views and ideas about the development of the project. Thanks to the evolving technology, decentralized governance is becoming a must-have in blockchain-based projects.

We hope you have enjoyed our weekly email and that it has been effective in informing you about Insula and the crypto market as a whole. If you would like to invest Insula’s diversified crypto funds you can view more information at https://insulainvestments.com/fund or reach out directly at info@insulainvestments.com 

Taproot and the Lightning Network: An Effective Way Forward

Bitcoin’s core protocol is set to implement its first major upgrade since 2017. Called Taproot, the protocol based on Ethereum’s central idea includes smart contract capability.

Some of the barriers to adopting Bitcoin for non-investment uses are the occasional high fees and long transaction times. Even if the current transaction fees for Bitcoin are about the lowest they have been all year (about $2), this is a considerable amount of money for potential users in low-income countries – plus the fees are often much higher. Solutions in the form of the Lightning Network scaling protocol and Taproot (the biggest bitcoin upgrade in years) are looming on the horizon. Here’s how they work:

Taproot is the upgrade to Bitcoin’s core protocol that was voted on and approved by the global mining community this week. Should everything go to plan, the protocol will go into effect in November. One of the main changes is the activation of limited smart contract functionality – a core feature of Ethereum that has spurred the development of everything from DeFi to NFTs. 

Taproot and the Lightning Network

Taproot works in part by tightly integrating the Lightning Network, a fast parallel blockchain that can process transactions much faster and cheaper than the main blockchain (fees are typically fractions of a cent). The new protocol has the potential to enable more efficient transaction fee markets, theoretically making transactions cheaper and enabling greater privacy. It also improves the privacy of “multi-signature” Bitcoin transactions, which are used by organisations for storing Bitcoins more securely (multi-signature Bitcoin addresses require the signatures of multiple participants to authorise the unlocking).

Statistics reveal that the Lightning Network is gaining momentum and the network is growing. Nodes in the network have more than doubled in the past year and the total number of BTC locked into Lightning recently reached a record 1,400, indicating growing interest and participation in this scaling solution.

By Ayoub Khirane

Market Update – Week of June 7th 2021

For the second week, crypto prices have remained fairly stable — a welcome reprieve following a period of intense volatility. Bitcoin is currently consolidating in the $34,000 range with ETH settling in the high $2,000s. This comes amongst a series of positive news announcements; like the blizzard of press around the Bitcoin 2021 conference in Miami and El Salvador’s President introducing legislation to make the nation the first to adopt Bitcoin as legal tender. 

Miami hosts biggest-ever Bitcoin convention

This week, the 2021 Bitcoin conference landed in Miami, bringing a wide range of crypto advocates, including Wyoming senator Cynthia Lummis, Twitter and Square CEO Jack Dorsey, skateboarding legend Tony Hawk, and Shark Tank investor Kevin O’Leary. The annual conference is the largest Bitcoin event in the world, and this year’s edition attracted at least 12,000 attendees. The convention was a coup for Miami Mayor Francis Suarez, who has long been vocal about his efforts to make the city America’s crypto capital. But Miami isn’t the only locale hoping to attract the booming crypto industry. Here’s how some of the competition stacks up.

  • Interest in Miami isn’t limited to Bitcoiners. A new $25 million fund called Borderless.Miami — which incorporates USD Coin (USDC) and the Algorand blockchain — will assist local financial technology companies.
  • El Salvador president Nayib Bukele appeared via video at Bitcoin 2021 to announce that he would be sending legislation to his nation’s congress that would make Bitcoin legal tender. 
  • Texas is also making a bid to attract crypto capital. Governor Greg Abbott signed a law creating a new regulatory framework around crypto. “Blockchain is a booming industry that Texas needs to be involved in,” Abbott said.
  • Texas is already a hub for Bitcoin mining — with companies including Bitmain, Blockcap, Argo Blockchain, Great American Mining, Layer1, Compute North, Riot Blockchain and Whinstone operating in the state. 
  • Wyoming has attracted crypto-focused firms for years. In April, it became the first state to recognize decentralized autonomous organizations (DAOs) as LLCs, paving the way for online collectives governed by blockchain-based smart contracts to have the same legal status as companies.
  • A pending bill in South Carolina would make the state a potential incubator for blockchain innovators.

Has the NFT bubble really burst?

A new analysis by crypto news site Protos showing that NFT sales have fallen by 90 percent since early May has gotten a lot of attention — with headlines declaring that the bubble in digital art and collectibles has popped. But is that analysis accurate? According to the Block’s Data Dashboard, weekly users of Ethereum-based NFT platforms reached all-time highs just last week. So what’s the real story?

  • It’s possible that both are true: while eye-popping sales seem to have slowed in the months since Beeple broke art-world records, the number of individual users — people interacting with NFTs in a variety of smaller ways — could be rising. And there’s certainly no shortage of new projects. 
  • Big names in traditional art continue to explore NFTs. Auction giant Sotheby’s (which facilitated a $16.8M digital art sale for artist Pak in April) has created a digital replica of its London gallery in the Decentraland virtual world. 
  • The auction house has also assembled a sale of significant NFTs — including Kevin McCoy’s 2014 image “Quantum,” which is considered to be the first-known NFT.
  • NFT news from the world of sports seems to break every day. Crypto is “definitely a big conversation in our clubhouse” said Yankees manager Aaron Boone, who is also an investor in an NFT memorabilia program called Athlete Direct. 

E-sports teams score huge crypto deals; Solana seeks to rival Ethereum

  • In a deal that rivals the size of traditional stadium-naming sponsorships, Hong Kong-based crypto exchange FTX paid a popular e-sports team $210 million to change its name to TSM FTX. In a smaller deal, Decrypt reports that the Uniswap community has voted to sponsor e-sports squad Team Secret — in exchange for the $112,500 grant, the team will “create educational content around Uniswap and cryptocurrency.” (Coinbase partnered with e-sports team Evil Geniuses in April.)
  • Solana is raising up to $450 million to challenge the dominant smart-contract compatible blockchain, Ethereum. Solana claims it can process 50,000 transactions per second (compared to Ethereum’s 10 to 15). However there are concerns about Solana’s decentralisation, with many critics pointing out that their high transaction comes at the expense of decentralisation and network security. Ethereum is currently undergoing a shift to the ETH2 blockchain, which will hugely increase speeds and lower costs.  
  • With Bitcoin mining’s energy use in headlines, payments company Square invested $5 million to build a solar-powered mining facility in the U.S. with mining firm Blockstream.

Insula Fund Highlights

This week we will be looking at Uniswap (UNI) in the Insula Pala investment fund. Not only has UNI become one of the most highly valued cryptocurrencies in its own right, it is also the platform on which many other elements of Insula’s fund are based. Uniswap is a popular decentralized trading protocol, known for its role in facilitating automated trading of decentralized finance (DeFi) tokens.

An example of an automated market maker (AMM), Uniswap launched in November 2018, but has gained considerable popularity this year thanks to the DeFi phenomenon and associated surge in token trading. Uniswap aims to keep token trading automated and completely open to anyone who holds tokens, while improving the efficiency of trading versus that on traditional exchanges.

Uniswap creates more efficiency by solving liquidity issues with automated solutions, avoiding the problems which plagued the first decentralized exchanges. In September 2020, Uniswap went a step further by creating and awarding its own governance token, UNI, to past users of the protocol. This added both profitability potential and the ability for users to shape its future — an attractive aspect of decentralized entities.

We hope you have enjoyed our weekly email and that it has been effective in informing you about Insula and the crypto market as a whole. If you would like to invest Insula’s diversified crypto fund you can view more information at https://insulainvestments.com/fund or reach out directly at info@insulainvestments.com 

Newsletter 1

Insula Market Update – Week of May 31th 2021

The crypto world experienced a week of mixed emotions as consolidation got underway following a highly volatile month from April to May. Bitcoin recovered strongly off of lows of $30,000 and is now expected to trade sideways for some time before a longer term direction becomes clearer. On a related note, global search interest for “cryptocurrency” also reached all-time highs. Of the major cryptocurrencies, Ethereum experienced the most severe swing, with prices briefly dipping below $1,800 before recovering to above $2,500 – still far below the $4,400 all-time high set less than three weeks ago. 

Compared to the broader market, Bitcoin held up relatively well — with prices on Monday down about 10 percent for the week. But what drove the sell-off? There appear to be three major issues: fear of a Chinese government crackdown on crypto, uncertainty around US regulators’ intervention, and fallout from Elon Musk’s recent tweets.

  • On Friday, Chinese Vice Premier Liu He called for authorities to “crack down on Bitcoin mining and trading behavior.” Chinese officials reportedly have a variety of concerns about the cryptocurrency: its potential to disrupt other markets, the perception that Chinese mining operations are using too much energy, and a desire to protect the digital Yuan (the central-bank digital currency the nation has been racing to develop). 
  • In the wake of the announcement, some large mining companies announced they’d be suspending operations in China. This is significant because a large portion of all mining happens in China. (Important to note that many in the crypto community see the potential for less mining to be concentrated in a single country to be a positive outcome.)
  • On Thursday of last week, the US Treasury announced that any crypto transfer of $10,000 or more will have to be reported to the IRS. According to a CNBC report, the move came as analysts on Wall Street and beyond suggest that the Treasury and SEC could “soon take a more active role in cryptocurrency regulation.”

Musk’s Influence Continues

Elon Musk surprised the crypto community and sent markets reeling when he announced on May 12 that Tesla would suspend accepting BTC payments due to concerns over the environmental impact of Bitcoin mining. The Tesla CEO met with the biggest North American mining companies (including Argo Blockchain, Hive Blockchain, and Riot Blockchain) on May 23. Following the meeting, the mining firms announced the formation of the Bitcoin Mining Council — a consortium that aims to accelerate the adoption of sustainable-energy mining worldwide. 

So what does the science say about crypto and the environment? While everyone agrees that Bitcoin mining is a resource-intensive process, Bitcoin doesn’t seem to be a significant contributor to climate change — and new research shows that it could even be helping drive the transition to sustainable energy. 

Stablecoins, Microstrategy and Sports NFT’s

  • Following the NBA and the MLB into the world of non-fungible tokens, Major League Soccer announced new NFT products. 
  • As crypto prices fell, many traders sought refuge in stablecoins. The market capitalization of USD Coin surged past $20 billion — a 400 percent increase since the beginning of the year. 
  • Billionaire investor Ray Dalio — founder of Bridgewater Associates, the world’s largest hedge fund — revealed in an interview that he owns “some Bitcoin.” Citing concerns about inflation, he said, ““Personally, I’d rather have bitcoin than a bond.” 
  • Wells Fargo is the latest large bank to offer crypto exposure to wealthy clients.
  • MicroStrategy, which began adding bitcoin to its treasury last year, announced that it made another $10 million purchase this week. As of May 21, the total value of Bitcoin held by Microstrategy is more than $3 billion. (MicroStrategy CEO Michael Saylor also organized the meeting between Musk and the major North American mining companies.)

Insula Fund Highlights

This week we are focusing on the synthetics aspect of the holdings within Insula’s investment fund, Insula Pala. Synthetic assets allow indirect exposure to financial instruments when it is inconvenient (or even impossible) to own the underlying asset. One of the ways Insula provides exposure synthetically is via an Ethereum project called Synthetix.  

Synthetix

Synthetix is a decentralized finance (DeFi) protocol that provides on-chain exposure to a wide variety of crypto and non-crypto assets. The protocol is based on the Ethereum (ETH) blockchain and offers users access to highly liquid synthetic assets (synths). Synths track and provide returns on the underlying asset without requiring one to directly hold the asset. The platform aims to broaden the cryptocurrency space by introducing non-blockchain assets, providing access to a more robust financial market.

Via Synthetix, Insula gives investors exposure to Cardano (ADA) and Polkadot (DOT), two of the most valuable projects in the cryptocurrency market:

Cardano

Cardano is a proof-of-stake blockchain platform that says its goal is to allow “changemakers, innovators and visionaries” to bring about positive global change. The open-source project also aims to “redistribute power from unaccountable structures to the margins to individuals” — helping to create a society that is more secure, transparent and fair. Cardano was founded back in 2017, and the ADA token is designed to ensure that owners can participate in the operation of the network. Because of this, those who hold the cryptocurrency have the right to vote on any proposed changes to the software. 

Polkadot

Polkadot is an open-source sharding multichain protocol that facilitates the cross-chain transfer of any data or asset types, not just tokens, thereby making a wide range of blockchains interoperable with each other. This interoperability seeks to establish a fully decentralized and private web, controlled by its users, and simplify the creation of new applications, institutions and services. The Polkadot protocol connects public and private chains, permissionless networks, oracles and future technologies, allowing these independent blockchains to trustlessly share information and transactions through the Polkadot relay chain (explained further down). Polkadot’s native DOT token serves three clear purposes: providing network governance and operations, and creating parachains (parallel chains) by bonding.

We hope you have enjoyed our weekly email and that it has been effective in informing you about Insula and the crypto market as a whole. If you would like to invest Insula’s diversified crypto fund you can view more information at https://insulainvestments.com/fund or reach out directly at jules.becci@insulainvestments.com