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🔮EIP-7702, FTX not FTT, Bad Airdrops, Ethena Partners With Bybit, Hong Kong ETFs in Review

Coinbase Earnings, Crypto VC, PayPal Collaborates with MoonPay, Market Efficiency

🔮EIP-7702, FTX not FTT, Bad Airdrops, Ethena Partners With Bybit, Hong Kong ETFs in Review

Token Specific News

Ethereum's Latest Proposal EIP-7702: A Game-Changer for Gas Fees

Vitalik Buterin has introduced a groundbreaking proposal known as EIP-7702. This proposal enables regular Ethereum accounts to temporarily upgrade to smart contract accounts for a single transaction, offering innovative solutions to address gas fees. With EIP-7702, users can batch multiple transactions together to optimize gas costs or even have someone else cover the transaction fee through fee sponsorship. Remarkably, this proposal leverages existing Ethereum capabilities without necessitating complex protocol upgrades, showcasing Buterin's knack for ingenious solutions. Incredibly, Buterin conceived EIP-7702 in a mere 22 minutes

Establishing a New Base

In Q1, the leading U.S. crypto exchange, Coinbase, achieved remarkable financial results, with revenue soaring to $1.64 billion, a 122% increase year-over-year, and earnings-per-share (EPS) surpassing estimates by 59% at $1.65. Net income stood at $1.2 billion, fueled by a staggering $300 billion in trading volume. Notably, Wall Street acknowledged the significance of the Base ecosystem as a revenue driver, contributing to Coinbase's phenomenal performance. Base, a key component, recorded over $18 million in profit during Q1 2024, showcasing its substantial contribution to Coinbase's overall success.

Source: Dune

Crypto Companies Raise $2.5B in Q1

Last quarter saw a staggering $2.5 billion raised by crypto companies, with notable investments in various sectors. Some highlights: Securitize secured $47 million to tokenize real-world assets, with BlackRock leading the funding round. Optimism raised $90 million to advance Layer 2 solutions, with A16Z as the lead investor. MilkyWay received $5 million in seed funding from Polychain Capital to expand its liquid staking protocol. Meanwhile, Blade Gaming secured $2.4 million to develop a new gaming engine for onchain games, supported by WebAssembly and zkVM tech stacks.

Source: Twitter

Friend.Tech Token Faces Turmoil Amid Glitchy Debut

The freshly launched FRIEND token, introduced alongside Friend Tech's v2 iteration, is currently trading at just a $25 million market cap following a debut marred by numerous complaints from users. On May 3, FRIEND tokens became claimable alongside the unveiling of Friend Tech v2, which also brought forth BunnySwap, a native decentralized exchange, and a revamped social platform named Money Club, among other features. However, many users encountered errors when attempting to claim their tokens, and frustrations mounted as FRIEND tokens were found to be non-transferable except for trading on BunnySwap, with the liquidity pool allegedly seeded with only one FRIEND token. These issues have led to widespread criticism and skepticism within the crypto community, casting doubt on Friend Tech's ability to regain momentum after a decline in platform activity. Despite prior success in the SocialFi space, data from Dune Analytics reveals a stark drop in daily users and trading volume, signaling challenges ahead for the platform's growth and sustainability.

Ethena Collaborates with Bybit, Integrates USDe as Collateral Asset

Ethena Labs has partnered with Bybit to introduce its USDe token as a collateral asset on the exchange, enabling traders to engage in perpetual trading while potentially earning yield on Ethena. Bybit users will benefit from zero-fee trading on BTC and ETH pairs and integration with the Earn platform. The integration is seen as a strategic move in the stablecoin wars, mirroring the success of top stablecoins like USDT and USDC by expanding adoption beyond DeFi into the most liquid trading venues. Ethena's ecosystem, including its synthetic stablecoin USDe, has seen significant growth since its controversial launch, climbing the ranks in the stablecoin market.

Regulation

PayPal Expands Cryptocurrency Offerings in Collaboration with MoonPay

PayPal, with over 426 million customers, partners with cryptocurrency company MoonPay to offer access to over 100 digital assets. MoonPay's integration aims to overcome banking hurdles encountered in crypto purchases, offering seamless transactions without requiring additional personal or card information. The expanded offerings include Solana, Tether, Dogecoin, Cardano, and Polygon, among others. U.S. customers can purchase cryptocurrency using their PayPal account balance, direct bank withdrawal, or debit card, with MoonPay ensuring compliance through robust KYC processes and regulatory controls.

FTX Bankruptcy Estate to Compensate Creditors and Customers, Excludes FTT Token Holders

The FTX bankruptcy estate has projected compensation ranging from $14.5 billion to $16.3 billion for creditors and customers, excluding payouts for holders of FTX's FTT token. The plan filed in Delaware bankruptcy court states that claims regarding FTT are to be "canceled or released," while NFTs trapped in the FTX NFT platform will be returned to their owners. Additionally, creditors with allowed claims less than $50,000 are expected to receive 118% of what they're owed, representing a little interest on top of the funds lost during FTX's collapse. The downfall of FTT, synonymous with FTX's collapse, stemmed from factors including a flood of withdrawals triggered by Changpeng Zhao's decision to sell Binance's FTT holdings, leading to bankruptcy filings and a significant drop in FTT's value.

Compliance Efforts by U.S. Crypto Firms Improve Market Efficiency

U.S. crypto firms operate within a regulatory gray area, with only FinCEN MSB federal licensing and state money transmitter licenses as mandatory requirements. However, many firms voluntarily comply with traditional finance (TradFi) regulatory norms, aiming to enhance market efficiency and reduce investor risk. A study by George Mason University highlights the effectiveness of these efforts, showing that third-party verification of information and credibility increases investor confidence. By going beyond regulatory requirements, crypto firms can converge with traditional asset markets, building reputation and trust while addressing market inefficiencies to attract more investors.

Hong Kong's Spot Bitcoin and Ethereum ETFs See Modest Debut Amid Growing Interest

The debut of spot Bitcoin and Ethereum ETFs in Hong Kong garnered $12.7MM in day one trading volume, a fraction of the U.S. counterpart's $125MM. However, by the end of the week, the six funds had accumulated $273MM in assets under management (AUM), with $230MM flowing into Bitcoin ETFs and $43MM into Ethereum products. While the response is proportional given Hong Kong's market size, interest in Ethereum ETFs remains lower, although it could grow if fund operators were allowed to stake their ETH holdings. The products may serve as a gateway into the Chinese market in the future, providing investors with more choices. However, with higher fees compared to the U.S. and limited regulated service providers, the landscape in Hong Kong differs, though it allows for in-kind transactions, enabling investors to buy and sell shares using crypto tokens.

Other Domestic Regulation Updates

Other International Regulation Updates

Pain & Gain

Pain


Gain


Important Legal Notices

This reflects the views MJL Capital LLC (“MJL”), but it should in no way be construed to represent financial or investment advice. Nothing in this correspondence is intended to constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite, or otherwise acquire or dispose of any security, including any interest in any private investment fund managed by MJL. Any such offer may only be made pursuant to a formal confidential private placement memorandum of any such fund, which may be furnished to potential investors upon request and which will contain important information to be considered in connection with any such investment, including risk factors associated with making any investment in any such fund. Further, nothing in this correspondence is, or is intended to be treated as, investment or tax advice. Each recipient should consult their own legal, tax and other professional advisors in connection with investment decisions.

Domenic Salvo
Domenic Salvo

Domenic Salvo is a Managing Partner at MJL Capital, helping lead Portfolio Research and Investor Relations.

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