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Can These Adoption-Centric Developments Summon the Bull?

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Markets fell over the past week following Nasdaq’s earnings call, where they announced they’re no longer pursuing crypto custody, citing regulatory uncertainty. As recession fears loom in the U.S., Bitcoin and Ethereum fell by around 3% each. The biggest winner was Maker DAO which increased by 14% over the past week, while Solana suffered the most with an almost 13% decrease. Maker’s surge can be attributed to their buyback scheme, which is meant to reduce the surplus of MKR to enhance the token’s scarcity and value proposition. The Smart Burn Engine periodically allocates excess DAI stablecoins from Maker’s surplus buffer to purchase MKR from a Uniswap pool. At the sixth edition of the Ethereum Community Conference (EthCC) last week, Solana introduced Solang, a new compiler designed to smooth the transition for Ethereum Virtual Machine (EVM) developers into the Solana ecosystem. More developments were unveiled at the EthCC; read on as we break them down later in this report.

Markets fell over the past week following Nasdaq’s earnings call, where they announced they’re no longer pursuing crypto custody, citing regulatory uncertainty. As recession fears loom in the U.S., Bitcoin and Ethereum fell by around 3% each. The biggest winner was Maker DAO which increased by 14% over the past week, while Solana suffered the most with an almost 13% decrease. Maker’s surge can be attributed to their buyback scheme, which is meant to reduce the surplus of MKR to enhance the token’s scarcity and value proposition. The Smart Burn Engine periodically allocates excess DAI stablecoins from Maker’s surplus buffer to purchase MKR from a Uniswap pool. At the sixth edition of the Ethereum Community Conference (EthCC) last week, Solana introduced Solang, a new compiler designed to smooth the transition for Ethereum Virtual Machine (EVM) developers into the Solana ecosystem. More developments were unveiled at the EthCC; read on as we break them down later in this report.

Figure 1: Weekly Price and TVL Developments of Cryptoassets in Major Sectors

Source: 21Shares, CoinGecko, DeFi Llama. Close data as of July 17, 2023.

5 Things to Remember in Markets this Week:

• Societe Generale Becomes Authorized to Bridge Institutions to Crypto

On the same day Nasdaq announced the halting of its crypto custody application due to regulatory uncertainty in the U.S., Societe Generale became the first company to receive a digital asset service provider (DASP) license in France. This instance speaks volumes of the dire need for legal clarity to streamline the adoption of this asset class, especially for institutions. The license allows Forge, the bank’s cryptoasset division, to operate digital asset custody, sell and purchase digital assets for legal tender, and trade digital assets. In April, Forge launched CoinVertible (EURCV), an institutional stablecoin on the Ethereum blockchain, with the euro as the denominator. Societe Generale hits two birds with one stone: addressing regulatory concerns over the hegemony of the euro with the rise of dollar-pegged stablecoins, as well as meeting the institutional need for an innovative settlement and cash management solution.

• Gnosis Launches Self-Custodial ATM Card at Ethereum Community Conference

Gnosis is a blockchain infrastructure provider known for its Ethereum Virtual Machine (EVM) execution-layer chain that utilizes Maker DAO’s DAI stablecoin to enable transactions and cover fees. Gnosis launched two products at the EthCC in Paris last week: Gnosis Card in partnership with Visa and Gnosis Pay to provide the community with a payment solution that would allow users to spend cryptoassets held in their custody, with KYC verification in partnership with Fractal. Gnosis Pay also allows crypto wallets to use their APIs and toolset to issue their debit cards. This payment solution was made possible thanks to an earlier partnership with Monerium, granting Gnosis access to the SEPA payment system. So far, people in Europe and the UK can open an account on Monerium, set up their Gnosis Card, trade Monerium’s euro-pegged stablecoin, and soon DAI. There are plans to expand to Mexico, Brazil, and Hong Kong. The U.S. is also on the roadmap for Q3. With a mobile app in the works, this self-custodial payment solution promises to solve key pain points ailing the crypto wallet subsector, mainly regarding regulations and user interface that stand in the way of mass adoption.

• Polygon unveils the last puzzle piece of its 2.0 network, focused on governance. Namely, the overall system will be compartmentalized into three distinctive branches: Protocol, Smart Contracts System, and Community Treasury Governance. The protocol level will expand the existing governance framework to all the networks that will plug into the Polygon network. On the Smart contracts level, Polygon proposes a community-governed ecosystem council to improve decision-making. Finally, the community treasury will aim to fund promising initiatives that help drive the evolution of the ecosystem, giving users a say in determining the trajectory of growth for the network. The decision to define the three governable pillars is designed to help establish clear responsibilities for the key decision-makers and an effective framework to administer the growing network. The announcement, culminating Polygon’s 6-week program to unveil its new network design, saw a steady growth in total number of users and an increase of close to 100% in AuM on the new scaling solution, climbing from ~$23M to ~$55M, as shown below.

Figure 2: Polygon zkEVM Scaling Solution AuM

Source: 21co on Dune Analytics

• Google Feeling Warmer Towards Crypto

After long refusing to support advertisements on its search engine or on its play store application, Google is finally embracing the web3 ecosystem. The change of heart was laid out in their latest July 2023 policy updates, where the company modified set guidelines for developers looking to integrate blockchain-native content into their applications. Namely, they must maintain transparency and avoid glamorizing potential earnings revenue ensuing from crypto-based activities. That said, this is a turning point in the history of web3 as abstracting the complexity of the technology via integrating with existing systems should help accelerate the adoption of crypto, especially as it merges into the backend with existing backend infrastructure and becomes invisible for the user. It’s also a key step in promoting unique user-owned content and helping consumers retain the value of their data and time.

• UniswapX; an Upgrade Looking to Tackle Users’ Frustrations

Uniswap Labs announced the X upgrade during EthCC last week, a protocol enhancement merging on-chain and off-chain liquidity aggregation, internalizing Maximum Extractable Value (MEV) through price improvement, offering gas-free swaps, and opening the doors for supporting cross-chain trading. While some of the newly advanced features have long been incorporated into smaller exchanges, the upgrade nevertheless holds significant value for blistering the adoption of non-custodial infrastructure. Namely, abstracting away the toxic practice of MEV to safeguard users’ transactions has been a chronic problem hindering the adoption of decentralized exchanges. Thus, considering Uniswap’s position as the market leader, offering a refined experience that matches the intuitiveness of centralized platforms and prioritizes users’ needs is a key driver to help onboard new entrants and make them feel comfortable using blockchain-native applications.

Figure 3: Daily Number of Unique UniswapX Users

Source: @cryptokoryo on Dune

What You Should Pay Attention To

• Chainlink’s highly anticipated interoperability product finally launched on Mainnet. Announced at EthCC, Chainlink’s Cross Chain Interoperability Protocol (CCIP) is an inter-blockchain communication standard that helps with transferring data and value across a web of incompatible networks, with initial support for transfers between Ethereum, Polygon, Optimism, Avalanche, and Arbitrum at the start. Check out our State of Crypto Issue 8 for a deeper dive into the technology.

That said, four features will be incorporated into CCIP to address the shortcomings of the existing bridging solutions. The first feature is an Active Risk Management (ARM) Network that can detect malicious activity and automatically pause the transfer of data per achieving a certain threshold. The second is programmatic transfers, transactions with a set of preconfigured instructions that execute automatically once a condition is satisfied. Three, rate limits, a mechanism to prevent transfers from surpassing a predefined maximum amount of tokens to address unauthorized access, and finally, smart execution, enabling the execution of cross-chain activities without incurring multiple payments using a pre-funded escrowed account.

Chainlink’s product is a major step forward for the growth of the ecosystem as it tackles fundamental weaknesses crippling crypto’s infrastructure. Cross-chain bridges with weak security designs have been a prime target for hackers, which have, over the past two years, led to the exploitation and siphoning of Close to $2.5B worth of value. Thus, it’s a pivotal milestone to have an internet of contracts, similar to how the TCP/IP unified the global internet, facilitating liquidity to be globally accessible and the value of applications to flow across networks to be established on battle-tested infrastructure that enabled more than $8T in transactional value.

Further, due to the wide applicability of interoperability across the crypto landscape, CCIP will likely be Chainlink’s biggest and most consequential product. For context, applications using Chainlink’s CCIP can pay in either LINK or a set of ERC20 tokens to transact cross-chain, with a 10% premium set on the latter to incentivize LINK usage. This distinction positions the network’s native token as a universal gas currency across all chains. It eliminates the operational necessity of selling the token for node operators and incites the foundation to switch off its subsidization program.

With a fee-based revenue model in place, the protocol can now grow sustainable earnings for the nodes participating in Chainlink’s Decentralized Oracle of Networks (DONs), which are the security backbone of all of Chainlink’s services. That said, although Chainlink accrued only $30K in fees over the first few days due to the limited partners at launch, with only Synthetic and Aave employing CCIP for transferring tokens and cross-chain governance, we could see substantial growth as Chainlink expands its partner network. The integration with SWIFT further solidifies CCIP’s potential as the go-to solution for cross-chain interoperability for crypto and traditional players, eventually allowing connectivity between both financial systems.

Figure 4: Total Revenue Accrued by CCIP

Source: @Ericwallach on Dune

• Solana Attempting to Claw Back

Solana experienced a rough start to the year stemming from the collapse of FTX, then recently, due to its involvement in the SEC’s legal actions against Coinbase and Binance. However, the network has welcomed a series of developments that could help catalyze its recovery. First, Solana Labs has unveiled Solang at EthCC, a new compiler designed to allow Ethereum developers to deploy their applications using the native ETH-based programming language, Solidity, on the Solana operating system, bridging the gap between both ecosystems. In addition, Neon EVM went live on Solana’s mainnet, introducing the first Ethereum-compatible smart contract allowing developers to seamlessly migrate their ETH apps onto Solana without incurring significant modifications for the codebase. Finally, Solana Labs revealed GameShift, a unifying web3 game development API that aggregates all the necessary tools to streamline the developmental process for building games on the network.

Overall, Solana’s activity is showing signs of hopeful recovery, with the total number of active addresses rebounding from the June lows to grow by 25% over the past ~7 weeks, while the total AuM locked into the network reached its highest level over the past year. That said, there are plenty of catalysts that could trigger further excitement about the network, from the Jump Crypto’s Firedancer validator client designed to diversify node software and combat network outages to the flurry of highly demanding applications like Hiver, Teleport and Helium that wouldn’t be feasible on networks with less throughput. Nonetheless, there’s still a lot of work to do to encourage users to move their capital back to Solana, especially as the total value transferred on the network remains at relatively muted levels.

Figure 5: Monthly Value Moved on Solana

Source: TheBlock

Next Week’s Calendar

These are the top events we’re monitoring for next week.

• Earning week across the board

• FOMC rate decision, Fed Chair Powell news conference, Wednesday

Source: Forex Factory

Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

Disclaimer

The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.

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Hashdex kryptokorg nominerad till Digital Assets ETP Of The Year

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Hashdex Nasdaq Crypto Index ETP, den största kryptoindexprodukten i Europa med över 500 miljoner USD i AUM, har nominerats till ETF Stream Awards 2024, i kategorin "Digital Assets ETP Of The Year"!

Hashdex Nasdaq Crypto Index ETP, den största kryptoindexprodukten i Europa med över 500 miljoner USD i AUM, har nominerats till ETF Stream Awards 2024, i kategorin ”Digital Assets ETP Of The Year”!

Hashdex är glada över att se sitt engagemang för att tillhandahålla innovativ, reglerad tillgång till kryptotillgångsklassen erkänd. Detta erkännande belyser deras ledarskap när det gäller att utveckla kryptoinvesteringslösningar.

Hashdex Nasdaq Crypto Index ETP, den största kryptoindexprodukten i Europa med över 500 miljoner USD i AUM, har nominerats till ETF Stream Awards 2024, i kategorin ”Digital Assets ETP Of The Year”!

Detta erkännande belyser Hashdex engagemang för att tillhandahålla innovativa, robusta produkter som förenklar tillgången till kryptotillgångarnas värld. HDX1 erbjuder diversifierad exponering och tydlighet på en komplex marknad, vilket förkroppsligar Hashdex uppdrag att föra kryptons framtid in i nutiden av investeringar.

Prisutdelningen äger rum den 28 november i London, där Hashdex kommer att ansluta sig till branschens främsta ETF-spelare.

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China’s ETF outflows captured elsewhere in Asia

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For years, India has been ramping up to contend with China as the region’s top technology leader. Pandemic-era supply chain issues hastened its successes in luring foreign tech firms. Now, equity investment flows are following suit. Dina Ting, Head of Global Index Portfolio Management at Franklin Templeton, highlights a few factors behind how the subcontinent is benefiting from rotational flows.

For years, India has been ramping up to contend with China as the region’s top technology leader. Pandemic-era supply chain issues hastened its successes in luring foreign tech firms. Now, equity investment flows are following suit. Dina Ting, Head of Global Index Portfolio Management at Franklin Templeton, highlights a few factors behind how the subcontinent is benefiting from rotational flows.

As China braces for renewed friction over President-elect Donald Trump’s tariff threats, investor flows may be following similar currents as those of regional supply chain shifts—that is to say, diversifying from China and toward opportunities in markets such as India and Japan.

After the People’s Bank of China revealed the most aggressive stimulus package it’s rolled out since the COVID-19 pandemic, China stock markets saw a short-lived rally at the end of September. A lack of detailed measures targeting consumption seems to have disappointed investors and led the bullish sentiment to deflate.

Adding to the country’s economic woes are societal changes like falling birthrates and a rapidly ageing population. Estimates by China’s National Health Commission suggest the country’s elderly population will grow to over 400 million by about 2035. To better cope with this crisis, China’s statutory retirement age will be extended, starting in January 2025, for the first time since the 1950s.

India investors, meanwhile, are finding the subcontinent—which has already overtaken China as the world’s most populous nation—appealing for its relative immunity to global risks, given its domestic-driven economy. Its younger labor force has also attracted a market pivot to this prime alternative to China manufacturing. For the 12-month period prior to China’s September 2024 stimulus announcement, US-listed India equity exchange traded funds (ETFs) garnered US$7.5 billion in flows—a sharp contrast to the US$6 billion in outflows experienced by China ETFs over the same period.1

Judging by India’s impressive initial public offering (IPO) environment, businesses there are feeling the optimism. The country’s 258 IPOs accounted for 30% of the global total by number by the end of September and 12% by the amount of money raised, in an economy that makes up just over 3% of global GDP.2

And investors in India are taking note. Aided by the improving digitalization of finance and increased internet access, India’s middle class is also an expanding retail investor class. By one measure, nationwide stock trading accounts nearly tripled from 2019 to 2023 to roughly 140 million.3

In dollar terms, total returns for Indian stocks have risen by 93% over the past five years, compared with about a 24% rise overall for emerging markets and drop of 5% for China stocks over the same period.

Many investors seeking to better diversify emerging market exposure or layer in targeted broad country allocation can tap single-country exchange-traded strategies.

Emerging markets in the Asia region are not the only beneficiaries of a potential US-China trade war. Earlier this year, investors were already driving up flows into Japan ETFs. Market watchers consider Japanese stocks to be indirect beneficiaries of Trump’s reflationary economic policy—which may keep interest rates high, thereby boosting the dollar and weakening the yen to the advantage of Japanese exporters.

The MSCI Japan Index is up nearly 21% in US dollar terms in the one-year period ending October 31, 2024. Consumer discretionary, financials and industrials holdings led gains during this time.

An element of uncertainty around the policies of a second Trump term, however, are still causing jitters around Asia, especially given the president-elect’s transactional approach to international relations.

Fortunately, Japan is seeing a renaissance in its semiconductor industry for which Tokyo is investing heavily (more than US$25 billion through 2025) and has established strong multilateral trade partnerships.

Japan has already elevated its role in global supply chain reorganization in recent years, and seeks to take advantage of its clout in joint free trade initiatives, such as the US’s Indo-Pacific Economic Framework for Prosperity to strengthen its regional supply-chain leadership.

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30IG ETF köper eurodenominerade företagsobligationer med förfall 2030

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iShares iBonds Dec 2030 Term EUR Corporate UCITS ETF EUR (Dist) (30IG ETF) med ISIN IE000LX17BP9, strävar efter att spåra Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened index. Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened-index följer företagsobligationer i EUR. Indexet speglar inte ett konstant löptidsintervall (som är fallet med de flesta andra obligationsindex). Istället ingår endast obligationer som förfaller under det angivna året (här: 2030) i indexet. Indexet består av ESG (environmental, social and governance) screenade företagsobligationer. Betyg: Investment Grade. Löptid: december 2030 (Denna ETF kommer att stängas efteråt).

iShares iBonds Dec 2030 Term EUR Corporate UCITS ETF EUR (Dist) (30IG ETF) med ISIN IE000LX17BP9, strävar efter att spåra Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened index. Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened-index följer företagsobligationer i EUR. Indexet speglar inte ett konstant löptidsintervall (som är fallet med de flesta andra obligationsindex). Istället ingår endast obligationer som förfaller under det angivna året (här: 2030) i indexet. Indexet består av ESG (environmental, social and governance) screenade företagsobligationer. Betyg: Investment Grade. Löptid: december 2030 (Denna ETF kommer att stängas efteråt).

Den börshandlade fondens TER (total cost ratio) uppgår till 0,12 % p.a. iShares iBonds Dec 2030 Term EUR Corporate UCITS ETF EUR (Dist) är den enda ETF som följer Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened index. ETFen replikerar det underliggande indexets prestanda genom samplingsteknik (köper ett urval av de mest relevanta indexbeståndsdelarna). Ränteintäkterna (kupongerna) i ETFen delas ut till investerarna (kvartalsvis).

Denna ETF lanserades den 9 maj 2024 och har sin hemvist i Irland.

Varför 30IG?

Exponering mot företagsobligationer i euro denominerade i investeringsklass, skattepliktiga, fast ränta och som förfaller mellan 01/01/30 och 02/12/30

Det är en investeringsperiod i fonden att andelsägare den 02/12/30 kommer att få sina andelar inlösta utan ytterligare meddelande eller aktieägargodkännande den 30/03/12

Indexet tillämpar skärmar som exkluderar emittenter som är involverade i följande affärsområden/aktiviteter: tobak, kärnvapen, civila skjutvapen, kontroversiella vapen, termisk kolbrytning, generering av termisk kolkraft, oljesand, konventionella vapen och vapensystem/komponenter/ stödsystem/tjänster.

Investeringsmål

Fonden strävar efter att uppnå avkastning på din investering, genom en kombination av kapitaltillväxt och inkomst på fondens tillgångar, vilket återspeglar avkastningen från Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened Index, fondens jämförelseindex.

Handla 30IG ETF

iShares iBonds Dec 2030 Term EUR Corporate UCITS ETF EUR (Dist) (30IG ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
XETRAEUR30IG

Största innehav

EmittentVikt (%)
BANQUE FEDERATIVE DU CREDIT MUTUEL SA2.66
INTESA SANPAOLO SPA2.54
VOLKSWAGEN INTERNATIONAL FINANCE NV2.09
COMPAGNIE DE SAINT GOBAIN SA1.95
MERCEDES-BENZ GROUP AG1.82
VERIZON COMMUNICATIONS INC1.82
VONOVIA SE1.78
MIZUHO FINANCIAL GROUP INC1.69
BANCO SANTANDER SA1.35
PERNOD-RICARD SA1.35

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