White Star Capital Digital Assets Fund - Newsletter #155
JPMorgan and Apollo test tokenized portfolios with Avalanche
JPMorgan and Apollo test tokenized portfolios with Avalanche
By Raphaël Wat, Analyst, Digital Asset Fund
Onyx, a J.P. Morgan business unit focused on blockchain, has initiated a project called Project Guardian in partnership with Avalanche and Apollo Global. Project Guardian aims to investigate how tokenization and smart contracts could create a significant change in portfolio management in the asset management industry. It is part of a broader initiative led by the Monetary Authority of Singapore (MAS), in collaboration with traditional financial institutions.
The experiment aims to transform asset and wealth management by utilizing blockchain, smart contracts, and tokenization to streamline portfolio management. It reduces over 3000 operational steps into a single automated process for wealth managers. The testnet system allows fund managers to tokenize, buy, and rebalance positions across various blockchains, thereby standardizing transaction settlement processes on interoperable networks. As a result, faster and programmatic settlements reduce cash drag and cut portfolio fees by 20%.
Blockchain technology can handle large-scale client portfolios, execute trades, and enable automated portfolio management of tokenized financial assets. This includes alternative assets that have been difficult to trade and manage, such as private equity, private credit, real estate, and infrastructure, alongside liquid assets in discretionary portfolios. Tokenizing private alternative funds could potentially offer a $400 billion annual revenue opportunity for asset managers, wealth managers, and distributors.
These transactions were conducted in a permissioned manner, meaning access was restricted to selected participants on private blockchain networks. Onyx utilized the Axelar network to establish the Provenance Blockchain Zone, a permissioned instance designed to connect different chains. They modified their existing cross-chain configuration to meet the privacy and access management requirements of the proof of concept. Oasis Pro, a fintech infrastructure provider for real-world assets, carried out the tokenization of assets such as Apollo funds on the Provenance Blockchain Zone.
The LayerZero protocol is also being used to connect Onyx with an Avalanche Evergreen subnet, enabling subscriptions and redemptions for the funds of the asset manager, WisdomTree. Avalanche Evergreen Subnets are individual blockchains designed for institutional applications. They provide features such as EVM compatibility, smart contract deployment, network privacy, and customizable gas features.
With the support of Axelar and Oasis Pro, JPMorgan and Apollo demonstrated how portfolios could be rebalanced and trades executed between Onyx Digital Assets and Provenance Blockchain. The interoperability achieved through Project Guardian is a step forward in showing how tokenized traditional and alternative investments can be automatically managed across multiple systems.
🔦 White Star & Portfolio Spotlight
Trident Digital's proposal to add the pyUSD/USDC pool to the Gauge Controller
Trident Digital has proposed adding the pyUSD/USDC pool to the Curve Gauge Controller. This move aims to improve liquidity and trading volume for pyUSD, a stablecoin launched through a partnership with PayPal and Paxos. The initiative seeks to solve slippage problems encountered when swapping pyUSD for other stablecoins, potentially encouraging wider adoption. Meanwhile, Trident is working to provide substantial liquidity to the pool.
OffScript, Lighthouse's platform bridging Generative AI and physical products
Lighthouse has introduced Off/Script, a platform that enables creators to design, share, and earn from their physical product ideas. It is based on three elements: GenAI Studio for simple product mock-up creation, a community-driven app for voting and buying unique products, and a worldwide manufacturing network. Off/Script bridges the gap between generative AI, user-generated designs, and tangible products. It allows creators to bring ideas to life, earn from sales, and democratize premium product creation in response to the demand for a digital-physical hybrid platform.
Cicada Partners and Atlendis Labs partner for on-chain private credit
Cicada Partners and Atlendis Labs have formed a strategic partnership to develop on-chain private credit solutions, beginning with Asset-Backed Lines of Credit. This partnership focuses on promoting transparency and accessibility in private credit through blockchain technology. It allows Cicada Partners to establish a cost-effective private credit sector, and enables Atlendis Labs to improve institutional lending on public blockchains using their DeFi lending protocol.
Index Coop introduces Gitcoin Staked ETH Index for public goods donations
Index Coop has launched the Gitcoin Staked ETH Index ($gtcETH), allowing users to contribute to public goods on Ethereum while earning staking rewards and retaining exposure to ETH. The index includes leading Ethereum liquid staking tokens and a streaming fee that contributes to Gitcoin's public goods funding. This provides a convenient, passive method to contribute to the community.
Thala Labs introduces a dual-token solution to boost Aptos DeFi's liquidity
Thala Labs is working to solve the low liquidity and value flow problems in Aptos DeFi's staking ecosystem, where only about 0.4% of staked APT is liquid. They are introducing a dual-token liquid solution, thAPT and sthAPT, to improve liquidity, capital efficiency, and decentralization. Their goal is to increase the Total Value Locked (TVL) while promoting transparency and open-source development, audited by OtterSec.
Safello collaborates with Lund University for cryptocurrency research
Safello has formed a partnership with Lund University's School of Economics to support their cryptocurrency research, scheduled to begin in fall 2024. This collaboration seeks to enhance knowledge of cryptocurrencies and their place in the changing financial environment, underlining the significance of research and development for their long-term societal impact.
🏦 Enterprises & Institutions
Coinbase's stock reaches yearly high, surpassing Bitcoin and Ethereum
Coinbase's stock has reached a yearly high of $128.46, outperforming Bitcoin and Ethereum. While Coinbase shares have generally mirrored the cryptocurrency market's volatility, they have recently significantly outperformed Bitcoin and Ethereum, gaining 72% in the past month. This strong performance has led Ark Invest to rebalance its ETF holdings, selling $5.3 million worth of Coinbase shares and buying approximately $1.2 million worth of Robinhood shares, indicating shifting investment strategies in response to market dynamics.
Google Cloud confirms participation in EigenLayer testnet
Google Cloud has joined the "Operator Working Group" on EigenLayer's Goerli testnet, a restaking protocol for several blockchain platforms. It's uncertain whether Google Cloud will participate in EigenLayer's mainnet deployment or incorporate this protocol into its Blockchain Node Engine. Nevertheless, EigenLayer expects Google Cloud's ongoing support as they prepare for mainnet deployment in the first half of 2024.
Santander appoints crypto custodian Taurus to safeguard Bitcoin and Ether
Banco Santander has reportedly selected digital asset management firm Taurus to safeguard Bitcoin and Ether holdings for its Swiss clients. This decision coincided with the launch of cryptocurrency trading services by Santander's Swiss private banking unit. While the bank hasn't officially confirmed the appointment, it is reported that Taurus will provide custodial services for these digital assets.
Circle moves native USDC offering to Cosmos mainnet
Circle has launched its Cross-Chain Transfer Protocol (CCTP) on Noble's mainnet, enabling native minting of USDC within Cosmos' Inter-Blockchain Communication Protocol (IBC). This move aims to enhance the utility of USDC by facilitating cross-chain transactions and addressing its declining market capitalization, currently standing at $23.68 billion, compared to its peak of $55 billion in mid-2022.
⚖️ Government & Regulation
BIS Innovation Hub presents its ‘private CBDC’ project
The Bank for International Settlements (BIS) Innovation Hub has introduced Project Tourbillon, featuring two eCash prototypes: eCash 1.0, providing "unconditional payer anonymity," and eCash 2.0, known for its enhanced security. This initiative explores private central bank digital currencies (CBDCs) that offer payment anonymity while adhering to regulatory compliance, with user identities known to commercial banks but kept anonymous to merchants and central banks during transactions.
Central Banks have no interest in personal data, BIS official says while promoting CBDCs
Cecilia Skingsley, an official from the Bank for International Settlements (BIS), stated that central banks have no interest in personal data, addressing concerns over privacy related to central bank digital currencies (CBDCs). Skingsley emphasized the need to protect privacy and cited a BIS report showing that privacy considerations can boost CBDC adoption, while also highlighting the potential benefits of wholesale CBDCs for cross-border payments. BIS is set to publish privacy solutions for retail CBDCs as part of its ongoing efforts in this area.
Digital Euro can end bank crises, is better than deposits, ex-Bank of Spain Chief says
Former Bank of Spain Governor, Ordóñez has endorsed the digital euro as a safer alternative to bank deposits, suggesting its ability to avert bank crises and potentially deregulate the banking sector. Speaking at a European Parliament hearing on central bank digital currency (CBDC), Ordóñez argued that bank deposits represent promises to pay euros, while a CBDC would provide stability and mitigate the risk of withdrawals destabilizing the banking sector. He also highlighted the digital euro's potential for enabling direct monetary policy and fostering European monetary union.
More foreign banks join China’s CBDC pilot trials
Four foreign banks, including Standard Chartered, HSBC, Hang Seng Bank, and Fubon Bank, have integrated China's digital yuan central bank digital currency (CBDC), e-CNY, allowing clients to transfer, withdraw, and use the CBDC. These banks aim to explore e-CNY CBDC applications in cross-border trade, smart contracts, payments, and supply chain finance, reflecting increasing international interest in China's digital currency.
UK regulator welcomes fund tokenization plan proposed by industry leaders
The UK's Technology Working Group, established by the Economic Secretary to the Treasury's Asset Management Taskforce, has published a report advocating for the implementation of fund tokenization. The report emphasizes the importance of firms ensuring they are authorized by UK regulators and holding traditional assets while promoting interoperability with emerging technology. This paves the way for transformative use cases in the future, with support from the Financial Conduct Authority (FCA).
💰 Funding & Exits
Crypto derivatives protocol MYX raises $5M seed round led by Sequoia China
Crypto derivatives protocol MYX has raised $5 million in a seed funding round led by HongShan, formerly Sequoia China, with participation from investors including Consensys, Hack VC, OKX Ventures, and others. MYX aims to increase awareness and acceptance of decentralized derivative trading and develop trading tools with the newly raised capital. The platform utilizes a unique matching pool mechanism engine that empowers liquidity providers to manage and mitigate risks more effectively.
Crypto Gaming Protocol Saga secures $5M seed funding to support crypto game creators
Crypto gaming protocol, Saga, has secured $5 million in a seed extension round led by Placeholder, raising its total funding to $13.5 million. The protocol aims to aid crypto game developers in launching their own blockchains using a scalable method. This approach enables the creation of multiple parallel chains, referred to as "chainlets," making it ideal for high-performance applications like gaming.
Wind.App secures $3.8M pre-seed funding to revolutionize cross-border payments
Wind.App has raised $3.8 million in pre-seed funding, co-led by Global Founders Capital and Spartan Group, with backing from investors like Coinbase Singapore's Country Director, Hassan Ahmed. The self-custodial smart-contract wallet simplifies Web3 for users, offering instant settlements, lower fees, and yields exceeding 5%, without KYC requirements, making it suitable for underbanked countries.
Binance Labs invests in Open Campus to advance educational content creation
Binance Labs has invested $3.15 million in Open Campus, a Web3 education platform that tokenizes educational content and enables content creators to monetize their work. Open Campus aims to attract educational content creators and learners to Web3 by introducing Publisher NFTs, offering revenue-sharing opportunities, and providing infrastructure for schools, edtech companies, and brands.
IntentX secures $2.5M seed funding to disrupt the perpetual DEX market
IntentX has secured $2.5 million in seed funding, led by Magnus Capital and featuring participation from digital asset investors such as the Agnostic Fund, Prismatic Capital, and more. IntentX aims to disrupt the Perpetual DEX market by introducing innovative architecture to enhance liquidity in decentralized derivatives trading, offering low fees, and bridging the gap between centralized and decentralized exchanges.
Artifact Lab raises $2M in pre-seed funding for privacy-centric mobile game monetization
Artifact Lab has raised $2 million in pre-seed funding, with RW3 Ventures and IOSG Ventures as the lead investors. The platform focuses on revolutionizing how mobile games monetize players through a privacy-centric approach, giving users control over their in-game identity and data, and forming partnerships with game publishers and advertisers for monetization.
🚀 Project Launches & Updates
Carbon credits for Bitcoin miners using renewable energies - Cornell University
Cornell University researchers suggest using economic incentives to promote environmentally friendly cryptocurrency mining. They suggest offering carbon credits for emission reduction, which could motivate miners to use cleaner energy sources. This strategy could help combat climate change while increasing renewable power capacities. Moreover, it could provide additional profits during the initial operation of wind or solar farms.
Magic Eden launches cross-chain wallet
Magic Eden, a prominent NFT marketplace on Solana, has introduced a cross-chain wallet to enhance the trading experience for users dealing with NFTs across various blockchain networks. This wallet facilitates cryptocurrency swaps among Ethereum, Bitcoin, Solana, and Polygon, aiming to simplify NFT interaction across different chains and reduce the complexity associated with managing assets on multiple networks.
Why JSON-LD matters for Web3
JSON-LD is a critical protocol for Web3 as it enables the universal interpretation and connection of data, allowing machines to process and share information seamlessly. By incorporating meaning into JSON documents using RDF, JSON-LD enhances data organization, context, and accessibility. It offers several benefits, including secure data sharing, compliance reporting, and improved interoperability in the ever-evolving landscape of Web3.
How can NFTs transform daily life?
NFTs, once primarily linked to art and entertainment, possess broader potential in fields like healthcare, education, and event ticketing. They offer enhanced transparency and authenticity, including certifying educational achievements, streamlining DMV operations, and revolutionizing event ticketing by ensuring authenticity, security, and better fan engagement.
🔥 Other Bits We're Excited About
Why 2024 could turn out to be a pivotal (bullish) year for crypto
In 2024, several factors are converging to potentially make it a pivotal year for the cryptocurrency industry. These factors include the pending approval of Bitcoin and Ethereum ETFs in the United States, the implementation of the MiCA legislation in the European Union, and the Bitcoin halving event scheduled for April 2024. Additionally, macroeconomic turbulence and growing interest from institutional investors are contributing to the industry's transformation, potentially leading to increased adoption, liquidity, and value for digital assets.
2024 will be the year tokenization truly (finally) begins
Colin Butler, the Head of Institutional Capital at Polygon, expects a significant increase in the tokenization of real-world assets in 2024. Butler believes that the primary obstacles have been technical challenges and infrastructure restrictions, but 2023 has seen significant progress, with major financial players and private equity funds getting involved. This progression paves the way for the tokenization of a range of assets, including bonds, equities, art, automobiles, and real estate, which could potentially transform the financial sector.