GM and welcome to another edition of THE W3EKLY, your one-stop shop for recapping all things crypto from the past week. Let's dive in.

EXEC SUMMARY:

Regulation and legal activity continue to dominate the mainstream narrative around crypto in the US.

• Binance CEO Zhao is sued by CFTC over 'willful evasion' of US laws and unregistered crypto derivatives products. Tokens were referred to as "commodities" in the lawsuit.

• In a class action suit against bZx, a judge ruled DAO token holders plausibly owe a duty of care to investors.

• US Law Firm Cooper & Kirk published a report, titled "Operation Choke Point 2.0," calling out the regulatory overreach targeted at the crypto sector.

Ethereum scaling solution activity exploded last week, introducing a variety of new competitors into the space:

• Polygon Labs unveiled their highly anticipated zkEVM Layer 2 chain last Monday, seeing 49k transactions within the first six days.

• ConsenSys announced the go-live of their zkEVM testnet.

• Roughly a year after the $625M blockchain hack occurred, Axie announced they will transition their Ronin sidechain to proof-of-stake consensus mechanism and expand beyond Axie Infinity’s IP.

To round out the week, the Cosmos ecosystem also saw a few major announcements contributing to the development and expansion of their ecosystem:

• Injective, a Cosmos-based blockchain, and development company Eclipse are launching Cascade, which enables Solana applications to port directly into the Cosmos ecosystem.

• The extremely popular DEX, DYDX, is set to launch a private testnet of its Cosmos-based blockchain.

TOP HEADLINES:

MACRO:

• PCE Inflation Print: Data showed the index rose YoY to 5% versus the 5.1% consensus. Core PCE YoY came in at 4.6%, lower than the forecasted 4.7%.

• Bank Failures: Top US Treasury official said that crypto had no direct role in bank failures.

• Donald Trump: The former president was indicted in connection with his alleged role in a hush money payment scheme involving adult film star Stormy Daniels.

• Nasdaq: The American stock exchange reveals its digital asset strategy, with plans to offer digital asset custody services by Q2 of this year.

POLICY/LAW:

• Voyager: A federal judge temporarily stopped the bankrupt company from completing a proposed $1.3B sale to crypto exchange Binance.US.

• SEC: Crypto platform Beaxy and their founder were charged for failing to register.

• SEC: Chairman Genselr insisted clear rules for crypto market 'already exist'.

• US House of Reps: Majority whip Tom Emmer introduced ‘Blockchain Regulatory Certainty Act,’ which says devs and service providers that don’t custody funds aren’t money transmitters.

• Signature: FDIC told the bank's crypto clients to close accounts by April 5.

• FTX: US prosecutors charged SBF with bribing Chinese officials with $40M.

• Hong Kong: Regulators will host a meeting to help crypto firms with banking.

• Thailand: The country’s SEC wants to lift restrictions on initial coin offerings.

PRODUCT:

• Ethereum: The L1’s Shapella upgrade confirmed for epoch 194048 on April 12.

• Chainstack: The blockchain infrastructure provider integrated Polygon zkEVM to help scale decentralized applications.

• QuickNode: The blockchain infrastructure provider also announced their integration of the Polygon zkEVM scaling solution.

• Lido: The LSD plans to incorporate NFTs into its unstaking process.

• Lido: The LSD also plans to sunset services on Polkadot and Kusama by Aug 1.

• Zebedee: The Bitcoin play-to-earn startup unveiled a Bitcoin Lightning-powered cross-border payments feature.

• MetaMask: The wallet prover added EIP-4361 compatibility so users can securely log into websites.

• Unstoppable Domains: The Polygon-based web3 DNS unveiled a new feature, allowing users to create AI-generated avatars and mint them on chain.

• Arbitrum: The L2 held its first vote to incorporate a DAO, with over 98% of holders voting in favor of incorporation.

• Optimism: The L2’s DAO has voted to activate the protocol's Bedrock upgrade, with over 99% voting in favor of activation.

• MakerDAO: The stablecoin issuer’s 'Endgame Plan' has been ratified in new 'Constitution'.

CORPORATE ACTIVITY:

• Algorand Foundation: The blockchain protocol announced 3 major India-based partnerships to focus on real world utility for blockchain in India.

• Gemini: The crypto exchange is planning an overseas derivatives exchange for perpetual futures.

• Zipmex: The crypto exchange said their restructuring plan was approved by Singapore court.

• Kraken: The exchange announced a global partnership with F1 team Williams.

• UNICEF: The United Nations agency is eyeing a prototype DAO.

• Lens: The decentralized social media company’s founder hinted at introducing a new blockchain for the social media protocol.

• MicroStrategy: The team paid off their $205M silvergate loan and purchased 6,455 more Bitcoin.

• The Block: The research company identified Larry Cermak as their new CEO.

• Animoca: The company’s co-COO is set to leave as he takes on CEO role at wallet venture Gryfyn.

• MoonPay: Several dozen staffers have departed in recent months, but the startup says it’s not laying people off.

• Safemoon: The BNB-based liquidity pair was compromised in $8.9 million hack.

• Euler Finance: The hacker returned another $68.7M of the $197M stolen from the DeFi lending protocol, adding to the approximate $110M already returned.

NFTs:

• Ticketmaster: The ticketing company's latest widget gives NFT holders early access to events.

• Universal Pictures: The film studio is launching a web3 game and sweepstakes on the Aptos blockchain to promote its new vampire movie "Renfield".

• Gucci: The designer brand and Yuga Labs kicked off Metaverse Fashion Week with the announcement that they have teamed up on an as-yet undefined project.

• Metaverse Fashion Week: Last week’s event kicked off with a variety of luxury brands, including Dolce & Gabbana, Coach, Tommy Hilfiger, and Balmain.

• 9dcc: The web3 fashion brand is launching ITERATION-03, a luxury baseball cap, at NFT NYC.

• Magic Eden: The NFT exchange is launching its ETH marketplace beta next week with 10 partner collections.

• PROOF: The NFT Art Curator project and Transient Labs collaborate on Outliers, a 6-week program for select creators to build “the next groundbreaking projects in web3”.

• PROOF: The Curator’s also introduced Evolving Pixels, featuring artwork exhibitions curated by 10 artists beginning with Emily Xie.

• Avalanche: The L1 announced a unique program aimed at driving Avalanche NFT growth, featuring artist residencies for over 50 Digital Creators.

• Donald Trump: The former president’s indictment spurs activity around his NFT trading card collection.

• UK Government: The country cancels its plans to launch an NFT.

• Disney: The entertainment giant eliminates its Metaverse division.

FUNDING/ INVESTMENTS:

• Ledger: The hardware wallet startup raised a $108M Series C extension at a $1.41B valuation led by True Global Ventures, Digital Finance Group, VaynerFund, and others.

• EigenLayer: The Staking Protocol raised $50M, led by Blockchain Capital, in preparation for launching the initial version of its protocol.

• Fetch.ai: The blockchain startup raised a $40M round from DWF Labs to build tooling focused on “autonomous agents, network infrastructure, and decentralized machine learning”.

• Hydra Ventures: The DAO raised $10M from ConsenSys, 1kx, and others to build a DAO that will back other investment DAOs.

• True I/O: The blockchain security firm raised a $9M Series A led by Deal Box Ventures to build out on-chain supply chain security and verification.

• Particle Network: The Singapore-based web3 middleware platform raised a $7M round, led by ABCDE Capital with participation from Animoca Brands, Hashkey Capital, Longhash Ventures and others.

• Conduit: The remote crypto native infrastructure platform, raised a $7M seed round led by Paradigm.

• Econia Labs: The startup developing an order book protocol for the Aptos chain, raised $6.5M, led by Dragonfly with participation from Wintermute Ventures, Aptos Labs and others.

• Cega: The Solana DeFi app providing exotic structured products raised $5M in funding led by Dragonfly Capital to expand on Ethereum.

• So-Col: Irene Zhao's web3 social platform unveils $4.5M in new funding across 2 rounds. Investors include DWF Labs and Blockchain Capital.

• Polytrade: Web3 protocol raised a $3.8M seed round led by Alpha Wave, Matrix Partners, Polygon Ventures, and CoinSwitch Ventures. The team plans to continue building “various models to bring the entire trading supply system onto the blockchain”.

• LandVault: The metaverse construction firm extended its Series B, raising $3M from The Sandbox, the Gemini and others.

• Orderly Network: The Near decentralized trading infrastructure protocol raised an undisclosed amount from India's CoinDCX Ventures at a flat token valuation of $200M.

MY 3 CENTS:

1. Algorand Foundation announced 3 major India-based partnerships to focus on real world utility for blockchain in India.

I don’t know Algorand all that well, but I have to say, their recent partnerships in India are quite impressive. For those that didn’t read the article, the foundation is collaborating with various entities, primarily concentrating on education and startup financing to transform India into a web3 talent hub. Notably, one partnership goes beyond conventional investments. Algorand is working with the state of Maharashtra to create 100 million NFTs for storing personal health data. Although the specifics and discussions surrounding data accessibility and transparency remain unclear, this use case could have a variety of positive implications. Healthcare data has always been challenging to access and accurately record, resulting in opaque insurance costs and a plethora of other issues. Cryptographically packaging and securing this information could unlock significant insights to be drawn and applied in battling diseases, malnutrition, and hereditary trends. The elimination of human error in medical history, more transparent insurance costs, and the reduction of assumptions and estimates around disease trends are some potential benefits that initially come to mind. But balancing insight and personal privacy is really what this comes down to. Regardless, it’s an innovative concept and I’m extremely excited to see how this blockchain application works out.

2. MetaMask added EIP-4361 compatibility so users can securely log into websites.

Despite the abundance of SSO options, none have really offered the security and flexibility of web3 cryptography—until now. This update didn’t garner much attention, but it’s a major innovation. Here’s a primer for how it works. Users can now log into web 2.0 sites using MetaMask. As long as no malicious transactions are signed, wallet security is better than most web 2.0 applications. With advancements in contract decoding, this may not even be a concern a year from now. This innovation marks a significant stride towards a secure, decentralized future and on-chain identity. Further, I have no doubt that the ConsenSys team is working on web2-3 integrations via wallet sign-ins. For example, web2 sign-ins could reduce risks and verify ownership without requiring any on-chain signatures for token-gated gaming and commerce. Simultaneously, secure SSO options could potentially attract a new wave of users. This development is a major step forward for the decentralized web and it’s an area to keep an eye on.

3. The extremely popular DEX, DYDX, is set to launch a private testnet of its Cosmos-based blockchain.

I think this announcement is signaling what’s to come in web3. With Polygon's supernets, Avalanche's subnets, and Cosmos's IBC ecosystem, blockchain-as-a-service appears to be the next significant innovation that will "explode overnight." This concept is the key to making applications in this space scalable. No custom chains = no mass adoption. At a high level, these custom chain providers offer customizable validator parameters, public vs. private chain functionality for applications with high confidentiality requirements, and increased throughput due to reduced network congestion. If implemented correctly, every data storage solution out there could be disrupted, as this innovation essentially offers a more affordable, transparent alternative. That said, the early winners in this space likely come from gaming activity. That’s where we currently see the bulk of on chain network use, so I find it interesting DYDX is zigging when others are zagging. To further that point, just think about some of the recent announcements. Polygon is working with the creators of the final fantasy series; I can’t imagine that not resulting in a supernet, and that just scratches the surface of their partnerships. Then you have major esports brands like Loco and TSM partnering with Avalanche, explicitly announcing subnet plans. That said, it never hurts to be the first mover, so I’m excited to see how this works out for DYDX. Don’t fade application specific chains.

Signing off.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.