The Sinopsis: Is Insurance What Crypto Needs?
This week's edition continues our month-long look at the role of insurance in the digital asset space, and delves into the crypto credit bubble and India's newly-launched retail CBDC.
Insights
How Insurance Can Strengthen the Crypto Industry
by Eric Nemeth, investment associate at Sino Global Capital
"While these new technologies bring with them some inherent risks, sound risk management strategies can effectively reduce the impact of these threats. This should include working to develop clear taxonomies, establishing a smart regulatory framework that allows for innovation, partnering with reliable insurance companies, and conducting thorough research to weigh the potential pros and cons of the technology."
The Crypto Credit Bubble
As AUM in CeDeFi platforms like Celsius and BlockFi increased, the amount of capital going to trading firms exploded.
Valuations for these platforms rose dramatically, leading to decreased underwriting standards and to illiquid investments funded by borrowers.
Although macro wobbles created an environment for deleveraging, it was not until the Luna crash that the bubble popped.
Going forward, new underwriting standards and risk management tools should be implemented to create a more sustainable business model for crypto prime brokerages.
In this Twitter thread, Ian Wittkopp, COO and head of investment at Sino, chronicled the timing of the crypto credit bubble and key catalysts.
Regional Insights
SGC launches its 'Regional Desk', providing insights into the markets of India, Latin America, and Africa. Our team of experts will offer in-depth insights on key topics such as macroeconomics, cultural trends, regulation, and crypto adoption to foster a closer connection with these communities.
Here’s our first India-focused write-up:
How Will The E-Rupee Improve India's Payment System
by Noah Roy, investment analyst at Sino Global Capital
"CBDCs can provide an alternative medium of making digital payments in case of operational and/or technical problems leading to disruption in other payment system infrastructures."
To read our previous articles, go here.
Sino’s Updates
Evertas Closes a $14 Million Series A Round
“Blockchain technology is a rapidly growing sector where demand for insurance on crypto assets outstrips supply and will likely continue to do so long term. The Evertas team is well positioned to meet the economic and technical challenges inherent to insuring this exciting and ever-evolving new asset class.” - Sino Global Capital CEO Matthew Graham.
SUI: Tokenomics and Airdrop
SUI announced their tokenomics allocation and confirmed an airdrop for early users.
Visa Makes a Move Toward Decentralized Banking
Visa released a proposal that would enable automatic payments directly from web3 wallets without relying on banks or other centralized entities. This would provide a more accessible way for users to become their own personal bank.
Jewel Bank Taps Polygon for New Stablecoin
Jewel Bank announced the launch of Jewel USD (JUSD), a fully-backed stablecoin that can be accessed through the Polygon network.
The stablecoin is backed by a 1:1 reserve ratio with the US dollar and will be subject to regular audits with monthly and quarterly reports released to the public.
ChainSafe Finishes Audit for Push
ChainSafe completed an audit of Push’s smart contracts v1.5, which will introduce new functionalities and improve the utility of the PUSH token.
Push is a protocol that enables communication between web3 dapps and users.
Lens Protocol Is Scaling
Lens, a decentralized social media platform, will be able to handle 50,000 transactions per second.
To learn more about decentralized social media platforms, read this article by Hans Xiang, senior investment associate at Sino Global Capital.
The Feedback Loop: Self-Governing Cities
On the latest episode of The Feedback Loop, our host Mona Hamdy is joined by self-governance advocate, political economy theorist, and three-time entrepreneur Patri Friedman.
They discussed investments in biohacking, life extension, cryogenics, and what Milton Friedman would say about crypto and today’s monetary policy, as well as the Friedman family's golden rule to winning any argument.
Founder’s Funnel: Asset Insurance & Security with Evertas’ J. Gdanski
Founder’s Funnel is a series that aims to spotlight Sino Global Capital’s portfolio project founders and push out their stories to global communities, industry professionals, and policymakers.
In this edition, the CEO and founder of Evertas J. Gdanski talks about the highly specialized nature of underwriting the risk associated with crypto assets, Evertas’ expansion, and the types of security standards that the insurer is developing for the crypto industry.
Learn With Sino
Here are some interesting reads that we recently enjoyed:
Token Insight on Layer Zero:
New venture capital structures in crypto markets:
“We hope that this is the first of many works addressing the use of cryptographic primitives in venture capital financing in order to bring transparency, accountability, cost reduction, uniformity, accessibility, and ultimately aid fiduciaries in fulfilling their duties as operators and stewards of capital.”
Adoption of DeFi, ZK Tech, NFTs and More Will Continue to Increase in 2023 by Pantera Capital’s general partner Paul Veradittakit:
“If crypto has proven anything through its existence, though, it has proven that it can survive unfavorable times. Because of this, the industry will enter 2023 with a level of strength and durability that 2022 has given it.”
Cryptography in Sui: Cross-chain Signature Verification
Joy Wang, engineer at Mysten Labs, dives into the specifics of cross-chain signature verification.
Where Is the Ethereum Virtual Machine Headed in 2023? by Federico Kunze Küllmer
“A key component of Vitalik Buterin’s Endgame vision for Ethereum is a flourishing multi-rollup ecosystem. This may very well pan out, but there will be much more than just EVM rollups involved. There will also be many independent but interoperable EVM blockchains, some of which are going to develop unique, extended EVM functionalities.”
Birth of the Network Nations by CoinDesk’s Jeff Wilser:
“Srinivasan defines the network state as a ‘highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.’”
Game Monetization by StingRayL0 and Anthony Cheng:
“While not exactly monetization, transforming costs like UA, marketing, conversion, or retention to better align incentives between the gamers, the game, and the dev team to be more efficient is also something web3 offers with untapped potential.”
Market Snapshot 📈
BTC is trading at $16,613
ETH is trading at $1,175
SOL is trading at $12.11
Total crypto market cap: $842 billion
All data as of December 19, 4 pm ET
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