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Chain Reaction - Issue 5 - 20th December 2021

Welcome to this 5th edition of our Chain Reaction newsletter for the week commencing the 20th December 2021. In the news this week we saw details from an EY/Mawson report on the future of digital economies here in Australia, further US Senate hearings (this time on stablecoins), the roadmap for Ethereum 2.0 and more trends expected for DeFi and cryptocurrency in 2022. If you're interested in analysis, we added some insights from Dune Analytics in our data section below and for this week we jump into Part 3 of our Getting Started in DeFi series.

Have a great week!

What you can expect in this newsletter
  • In the News

  • Videos of the week

  • Charts and Data

  • Around the world of social media

  • Education

In the news

Blockworks - Senators Can’t Agree on Path for Stablecoin Regulation During Hearing - The Senate Banking Committee heard from various stablecoin experts including Dante Disparte, CEO of Circle, the company behind the stablecoin USDC (US Dollar Coin). It was an interesting back and forth and certainly clear that there were disagremeents on the utility of stablecoins and DeFi itself but one thing that was not clear was when regulation would begin on this. This comes straight after the House Financial Services Committee had their hearing with other digital asset firms which was, as noted here, had a far different (read positive) tone. Check out the full hearing video here if you're interested.

AFR - EY tips crypto economy to hit $68b, create 200K jobs - In this article by Aleks Vickovich he cites that "modelling conducted by EY and commissioned by Nasdaq-listed bitcoin miner and asset manager Mawson Infrastructure Group, has projected the size of cryptocurrency-related economic activity to grow from $2.1 billion this year to $68.4 billion by 2030." Additionally, it says the workforce in this space could grow from nearly 12k to over 200k by 2030. Of course this is a bullish read and would require a favourable regulatory environment but it does make for some great reasons to get involved in DeFi if you're not already looking.

SMH - Why the government is rushing to regulate digital money - In this piece from Accenture MD, Andrew Charlton, he highlights the need to look at stablecoins as an important piece of the overall Australian payments system especially as more transactions are being done here. The argument is that by not doing something Australia face the risk of having non-locla entities dictate how local payments work. It's a similar argument we're seeing across the ocean in the US where Senate is hearing from various cryptocurrency firms in exploratory talks on how regulation would work. Nationalism is a key part of that as well. Whatever happens here in Australia, there'll be a need to ensure what we're doing is not misaligned with the rest of the world and, more importantly, that what is done protects consumers but does not stifle innovation.

SMH - Government could soften key crypto proposal after sector raises concerns - In this piece we see pushback from crypto companies on the need for on-shore custody of crypto assets. rThe argument being that rules like this could hinder Australian company progress if we're out of step with how the rest of the world is treating crypto assets.

SMH - The ‘next big thing’ in computing: Why you should care about ‘Web 3.0’ - A look at the next and better version of the internet, Web3.0. It highlights how Web1.0 was more limited in terms of access which further grew with Web2.0 where non-technical users could grow and create content but on closed platforms. Ownership and freedom is at the heart of Web3.0 and it promises great rewards for investors and users who find a way to get into it.

NewsBTC - This Crypto Collaboration Aided Health Staff Beaten By Venezuelan Regime - In this article we see how stablecoins have been used to help in foreign aid relief for healthcare workers in Venezuela. This was becuase of US sanctions on the country and the inability to distribute aid via Venezuelan banks. US fintech company Circle is behind this collaboration with opposition leader Guaido (and who those in the US believe is the legitimate President).

CoinTelegraph - Vitalik Buterin outlines ‘endgame’ roadmap for ETH 2.0 - Vitalik Buterin's 'plausible roadmap' for Eth2 includes a future of increased scalability and high standards of trustlessness and censorship resistance. Vitalik put details of this up on his blog on Monday 13th December (read here). The trade-off for the above would be the need to make block production more centralised but block validation is trustless (and decentralised). Roll-ups (layer 2 solutions executing transactions outside of the ETH chain) were also addressed in the article but the view is that these are secondary to block production being centralised.

CoinTelegraphi - Solana on-chain development increases after a recent DDoS attack - Despite sufffering from a recent DDoS (distributed denial of service) hack, Santiment has shown that submissions to the Solana GitHub have been on the increase in a sign that developers are working to shore up the protocol. Despite this, experts are worried about vulnerabilities in the proof of history (PoH) mechanism.

Cryptelicious - Robinhood Said To Be Working On Letting Users Send Cryptos Like Bitcoin, Dogecoin To Others Via Digital Gift Cards – Dogecoin – United States Dollar ($DOGE) - Users have discovered hidden code inside the popular trading app which looks to include a way to send cryptocurrency as a gift card along with messages for receivers. Just in time for the holiday season.

CoinDesk - 8 Trends That Will Shape Bitcoin Mining in 2022 - In this survey of crypto miners done by CoinDesk, they found that whilst the industry is maturing there is potential for more M&A activity in this space. It's a "gold rush" period according to Amanda Fabiano (Head of Mining) at Galaxy Digita as well as seeing this space become less risky and more like traditional businesses. The article also highlights the hashrate doubling leading to more miners joiing the network but on the other hand, a high likelihood of margins being reduced meaning miners will have to work harder to stay profitable. If you're in to mining then check this out.

Esquire - This Filipino Gen Z Startup Helping Students Graduate Through Gaming Has Raised P176 Million in Seed Funding - Amazing to see a startup focusing on educatiing the next generation of play to earn gaming community in the Philippines. AcadArena raided $3.5m USD backed by well known gaming and other technology founders from Twitch, Animoca Brands, Sky Mavis and more.

Videos of the week

The Defiant - Threats To Unbank Crypto & Copyright Concerns – Can DeFi Bounce Back? - In this video, Robin and Camila from The Defiant bring on Raoul Pal from Real Vision Finance to talk all things NFTs, DeFi and thoughts on DeFi unbanking (plus stablecoin risks). As mentioned in the show, whilst trading volumes in DeFi had dropped, usage of protocols and the number of new protocols coming out continue to trend up. They highlight Curve, Compound and other interesting DeFi projects built last year but a bit less this year (only Olympus DAO as something of note on Ethereum). The team also look forward to 2022 with their thoughts. 38mins

US Senate Committee on Banking, Housing, and Urban Affairs - Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks? - In this video we see various sides of the stablecoin space in discussion with the US Senate on Stablecoins. This includes Alexis Goldstein of Open Markets Institute, Dante Disparte from Circle, Jai Massari of Davis Polk & Wardwell and Hilary Allen of American University Washington College of Law. Unlike the previous senate hearing last week on the crypto industry in general (including representatives from Circle, FTX, Coinbas and more), this appeared far more anti-crypto and posed some interesting questions as to how will governments be able to regulate stablecoins given owners of these tokens are global. 1hr57mins

glassnode - The Bull/Bear Line in the Sand - Glassnode Bitcoin Onchain Analysis (Week 50, 2021) - Market summary as well as discussion on 1) Aftermath for derivatives post deleveraging, 2) Transition from derivatives, to on-chain led markets. 3) Flow of funds from and to exchanges, 4) NUPL Line in the sand for buills and bears. 25mins

Interesting debate by Johnny Harris taking both sides of the argument to debate crypto in general. No major conclusions here but very much an interesting one to watch as he talks about both sides of the argument. The good and bad on both sides is highlighted so its definitely a fair argument being put forth here. Worth a look and perhaps something that might make you question your own beliefs in this space. Either way, the argument towards pro crypto/blockchain for us is clear, there is no arguing the move forward in blockchain technology and how it keeps improving. 23mins

Charts and Data

Glass Node

This analysis comes from the analysis by Justin Arzadon of BetaShares in his weekly newsletter - click on this link or the image below to see full newsletter. More details available at Glass Node.

"This week I take a look at Realised Loss which denotes the total loss (USD value) of all moved coins whose price at their last movement was higher than the price at the current movement. Taking a look at this chart gives us an indication of whether the sellers in last week’s steep drop were coming from coins in profit or loss.

Citing data from on-chain analytics company Glassnode, the Realised Loss chart spiked, showing over $3B of losses were realised last week at a price of $48,962. There were only two other dates in May and June which had larger realised losses, redistributing coins that were accumulated between January and June, so most of the coins that sold would have been accumulated in October or more recently."


Top 10 cryptocurrencies by market cap as at the 20th December 2021 12:49AM AEST on CoinGecko. Seeing some green again in the 7 day movement of 4 of the top 10. Terra has come back into the top 10 again after coming in and droppping out again last week.

Dune Analytics - Dashboard of the week

This week its a look at Olympus DAO in more detail (check it out here). We can see market cap growth and pull-back in recent months and how much is staked vs not staked.

Additionally, can see on this dashboard more detials about the market value of treasury assets of Olympus as well as a breakdown by asset type with most in liquidity and reservers.

Social post of the week

With crypto posts taking over Times Square in NY, buying out the naming rights to the Staples Centre in Los Angeles and other various billboards around the globe, here is another with the team at FEG taking over train stations screens - check it out here


Getting Started Series - Part 3 - Last week we went through blockchcians and mining them. This week we get into Smart Contracts, what they're all about and how they underpin the very essence of DeFi.



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