Gryphsis Cryptocurrency Weekly Report: Ripple's Legal Victory and the Launch of Arkham Intel Exchange

Dear readers, welcome to the weekly cryptocurrency summary for Gryphsis Academy in July. We bring you key market trends, in-depth insights into emerging protocols, and fresh industry dynamics, all aimed at enhancing your expertise in cryptocurrencies and Web 3. Follow us on Twitter and Medium for more in-depth research and insights.

Market and Industry Snapshot:

Layer 2:

The Layer 2 sector has shown an overall positive trend this week, with the total locked value (TVL) on the rise. Starknet leads the way with a 21% increase in 7-day TVL growth rate, continuing its momentum. Some star protocols, including Rysk Finance, Swapsicle, Pinnako, and StarkEx, have achieved the highest TVL growth rate this week.

Meanwhile, zkSync has shown significant progress, surpassing Arbitrum in terms of daily active addresses and daily trading volume.

LSD:

This week, the LSD sector has shown strong growth, with the percentage of total ETH collateral rising to 18%. Among various platforms, Lido's market share in the LSDs has steadily increased, further solidifying its prominent position in the field. However, it is worth noting that the market share of cbETH is declining, reflecting a change in preferences among stakeholders in the LSD market.

AI:

This week, we have seen encouraging performance improvements in the AI sector. Over the past 7 days, the total market value has grown by 4.3%. Leading the way up are $WALV, $ROKO, and $ARCONA, all of which have seen significant increases. On the other hand, $AIM, $ALBT, and $TURBO have experienced the largest declines. It is worth noting that $TURBO appears to be continuing its downward trend, marking the second consecutive week of the largest decline in the currency.

Main Topics

Macro Overview:

• US Stock V.S. Crypto

Key Events this Week:

• Arkham 

• XRP

Protocol Recommendation of the Week:

• Aave

Weekly VC Investment Highlights:

• Sound.xyz ($ 20 M)

• Alluvial (($ 12 M)

Twitter Alpha:

• @DeFiMinty’s thread on market cycles

• @ViktorDefi's thread on Ryze.Fi

• @TheDeFISaint's tutorial of Blockpour

• @cyrilXBT's thread on Venom

• @NFT_GOD 21 biggest lies in Web 3

Macro Overview

This week, the stock market delivered positive results, with significant gains in the S&P 500 and Nasdaq indices. Looking ahead, key market events include the release of data on core retail sales, building permits, Philly Fed manufacturing index, and existing home sales.

Turning to the crypto market, volatility remained throughout the week. The uplifting news of $XRP provided a temporary boost to the market, followed quickly by a sharp decline that almost erased all gains. Both $BTC and $ETH felt the pressure, with $ETH showing slightly stronger resistance to the downturn. Of note, BTC's dominance further declined, currently oscillating below 50%.

This week's major events

On-Chain Sleuthing Sparks Debate: Arkham Intelligence's New Bounty Marketplace

Arkham Intelligence, a pioneer in blockchain intelligence, has sparked controversy by launching the world's first on-chain intelligence marketplace on Binance's Launchpad service and introducing a new token, ARKM. The platform employs a bounty mechanism that allows users to anonymously request and provide information related to blockchain transactions, using ARKM tokens for payment. While the initiative aims to curb crypto hackers through incentivizing blockchain research, it has faced strong opposition due to privacy concerns. Critics have labeled the service as "snitching for profit" or "snitch-as-a-service" and expressed concerns over potential abuses, such as tracking whale wallets. Further fueling the controversy, Arkham has been accused of leaking the email addresses of users registered on their waiting list. The platform is scheduled to launch on July 18, 2023. The crypto community eagerly awaits the launch, while debates about privacy and security continue.

https://twitter.com/ArkhamIntel/status/1678339355314900992?s=20

Our Take

The launch of Arkham Intel Exchange has caused quite a stir in the crypto community. The power of on-chain analysis has already been demonstrated in various scenarios, such as finding early opportunities by tracking whale wallets and identifying potential scams. Intel Exchange could unleash even greater potential. Its bounty mechanism may attract a significant number of participants. However, concerns have been raised about the potential exposure of user information, which contradicts the principle of decentralization. Some critics have even insinuated government connections, pointing out similarities between Arkham's logo and the Pentagon.

Despite these concerns, the launch of Intel Exchange has also shown significant market interest and activity. Its ability to aggregate blockchain intelligence and analysis undoubtedly holds practical value. Ultimately, whether these concerns are valid and the long-term impact of Intel Exchange remain to be seen and will be tested over time. But this launch has undoubtedly prompted the community to delve into deep thinking and discussion about core values such as privacy and transparency in the crypto space.

The Pentagon:

Arkham's CEO, Miguel Morel, has responded to these concerns on Twitter, stating that the email tracking system is implemented in the testing phase for user rewards. He assures that apart from communication and referral tracking, user data will not be used for any other purpose. From our perspective, Intel Exchange seems to have a strong product-market fit, being innovative with tremendous market potential. Concerns about information leakage are risks that users need to assess themselves - if the risks are deemed too high, then they should not use it. However, if the platform's utility is valuable, then accepting potential risks is necessary. In any case, the development of Intel Exchange will certainly be an interesting story.

https://twitter.com/realmiguelmorel/status/1678530044782583815?s=46&t=VBOerRjJ8K6aSJJ__Bjgnw

A Regulatory Milestone: XRP Case Sheds New Light on Crypto Regulation

On July 13, 2023, Judge Analisa Torres in the Southern District of New York made a mixed ruling in the long-running legal dispute between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). Torres ruled that, for procedural sales of digital asset exchanges, XRP tokens are not securities, which is a significant victory for Ripple. This decision is expected to provide clarity for the status of XRP and potentially set a precedent for the classification of digital assets in future cases.

However, the judge also sided partially with the SEC, ruling that the sale of XRP to institutional investors does constitute securities. This conclusion is based on the fact that these sales meet the standards of the Howey Test, which is a legal test used to determine whether certain transactions can be classified as investment contracts. Therefore, this ruling allows the SEC to regulate these specific transactions under securities laws.

Following the announcement of the ruling, the crypto market reacted rapidly and significantly. The price of XRP surged from $0.45 to $0.61 within minutes of the news. Ripple CEO Brad Garlinghouse responded positively to the court's decision on Twitter, expressing confidence in Ripple's stance on the "right side of law and history." This mixed ruling highlights the increasingly complex and evolving nature of regulation in the digital asset space.

https://twitter.com/Ripple/status/1679577577210675200?s=20

Our view

The recent ruling in the XRP case is a significant victory for the crypto community. During a period of increased pressure from the SEC, this ruling boosts market morale and provides clear regulatory guidance for the future. The ruling indicates that if tokens are sold or distributed through exchanges or protocols themselves, rather than through private sales or over-the-counter transactions targeting institutions, they are not considered securities. This is a major step forward in addressing the ongoing issue of cryptocurrency securities status.

This news has had a significant impact on the market.The emotion has had a significant impact, with XRP's increase reaching 30%. Other tokens that were previously seen as securities, such as SOL and ADA, also recorded considerable gains. However, these prices later experienced varying degrees of correction. For investors seeking to capitalize on this positive news, the current situation may not be the best entry point as the initial hype seems to be fading. Nonetheless, it is worth noting whether the narrative of "not being a security" continues to attract attention. Considering that the cryptocurrency market is largely driven by emotions, another rally driven by news should not come as a surprise.

Weekly Protocol Recommendations

Welcome to our "Weekly Protocol Recommendations" section - where we focus on protocols that are making waves in the crypto space. This week, we have chosen Aave, a decentralized finance blue-chip money market protocol.

This week, Aave, the decentralized lending protocol, made significant progress by launching its multi-collateral stablecoin GHO on the Ethereum mainnet. This milestone was materialized after overwhelming community support through the governance vote of the Aave DAO. GHO was initially introduced on the Goerli testnet in February 2023 and is now live on Aave V3 on Ethereum.

GHO stablecoin is issued as over-collateralized loans with assets such as ETH being used as collateral through the Aave protocol. This means users need to deposit crypto assets worth more than the planned loan value as collateral. GHO operates through the Ethereum smart contract system, allowing users to deposit collateral and borrow GHO, with all collateral stored in the Ethereum mainnet pool.

Aave's launch of the multi-collateral stablecoin is an important step in expanding its product line. This not only enriches Aave's services but also enhances its competitiveness in the decentralized finance ecosystem. With the mainnet launch of GHO, Aave once again proves its strength in protocol innovation.

Under this arrangement, the "advocates" approved by the DAO are authorized to issue GHO, Aave V 3 Ethereum platform is the first confirmed advocate. Interestingly, all accumulated loan interest will go directly into the Aave DAO treasury, where the DAO will regulate decisions such as acceptable collateral assets and risk parameters for GHO. This significant move elevates Aave's position in the ever-evolving stablecoin space, and is an important step towards fully decentralized and powerful stablecoin ecosystem.

Aave's multi-collateral stablecoin GHO absorbs the advantages of other algorithmic stablecoins and possesses decentralization characteristics. The launch of GHO showcases Aave's innovative capability as a decentralized finance pioneer, and is expected to contribute to the flourishing development of the stablecoin ecosystem. As Aave DAO further perfects its governance mechanism, GHO also stands to become a reliable and transparent stable asset. From both technological and governance perspectives, this is a positive progress worth attention.

https://twitter.com/AaveAave/status/1680216586047885312?s=20

Our Insight

Stablecoins constitute one of the largest sectors in the crypto space, with a market capitalization of $127 billion, accounting for over 10% of the total crypto market cap. Additionally, the profitability of stablecoin-related activities is worth noting, as demonstrated by the success of Tether.

Over the years, numerous stablecoins have emerged and disappeared, yet efforts to create a stablecoin that achieves the optimal balance between capital efficiency, stability, and decentralization continue. However, due to the existence of the so-called "trilemma of stablecoins," a dilemma similar to the blockchain trilemma, this pursuit has proven challenging.

Aave's GHO stablecoin serves as an example of an overcollateralized stablecoin. This design sacrifices capital efficiency to some extent. The GHO/crvUSD pool has been launched on Curve, currently composed of 70% GHO and 30% crvUSD. This configuration indicates a slightly higher demand for crvUSD so far.

In general, making trade-offs when designing stablecoins is inevitable. Aave chooses to sacrifice some capital efficiency in exchange for stability, which may be a wise choice at this stage. Over time, we can see if there will be sufficient demand for GHO in the market. Aave's efforts to enhance the decentralization of stablecoins are themselves a valuable contribution.

From a trading perspective, the launch of GHO could have a positive long-term impact on the price of AAVE. Since GHO was just launched this week, its real market demand will take time to materialize and grow. If this pattern proves to be successful, a significant influx of fees could increase the demand for AAVE as it can capture a portion of these fees.

Beyond these long-term prospects, AAVE has recently performed quite well. This demonstrates the inefficiency of the cryptocurrency market as the public has been aware of GHO for quite some time. This reminds us that even if the news is not entirely new, trading news in the cryptocurrency market can still be profitable.

Overall, the launch of GHO enhances Aave's image as a leading decentralized lending protocol. While the market response to GHO in the short term is still to be observed, its long-term outlook is promising. For AAVE holders, the success of GHO will boost the value of AAVE, which is a positive signal. Of course, investors still need to carefully evaluate the risks before making any investment decisions.

Weekly VC Investment Focus

Welcome to our weekly investment focus, where we reveal the most significant venture capital trends in the crypto space. Each week, we will highlight the agreements that have received the most funding.

Sound.xyz

This week, innovative blockchain music startup Sound.xyz announced its completion of a $20 million Series A funding round, led by Andreessen Horowitz, with participation from celebrities Snoop Dogg and Ryan Tedder of OneRepublic. Since its beta launch in 2022, the platform has enabled artists to directly sell music to fans in the form of NFTs, generating $5.5 million in revenue for musicians with 1,600 songs. With Sound.xyz opening up to the public, it aims to disrupt traditional music streaming platforms by providing artists with full ownership and instant payments. The newly raised funds will play a crucial role in enhancing the company's artist relationships, engineering, and marketing efforts.

This outcome demonstrates significant progress in music NFTs and blockchain royalties, attracting capital and the attention of top creative talents in the industry. With the decline of the traditional record industry, innovative platforms like Sound.xyz offer inspiring new opportunities for musicians. We look forward to seeing how they utilize their new funding to further build their platform and expand their influence. If Sound.xyz can successfully change this industry, it could become a significant force in the music realm.

https://twitter.com/soundxyz_/status/1679113350829965312?s=20

Alluvial

On July 11th, Alluvial raised $12 million in a Series A funding round, led by Ethereal Ventures and Variant, along with contributions from several prominent investors. The raised funds will be used to expand their high-level liquidity collateralization solution, improving liquidity and capital efficiency by providing on-chain receipts of collateral positions on proof-of-stake networks. Alluvial CEO Mara Schmiedt 

sp;This funding will accelerate team expansion and drive the widespread adoption of Liquid Collective with confidence, effectively bridging the gap between decentralized finance and traditional finance.

This new injection of capital clearly demonstrates that Liquidity Collective Mortgage is gaining increasing attention as an innovative solution to improve capital efficiency and liquidity. With Alluvial further expanding its product portfolio and increasing adoption, the role of Liquidity Collective Mortgage in enhancing the flexibility of financing network assets in proof of stake may become more prominent. Overall, this is a positive signal for driving the mainstream adoption of decentralized finance.

https://twitter.com/alluvialfinance/status/1678751180925665280?s=20

Protocol Events

EigenLayer restaking cap increased.

Rodeo Finance post exploit.

Ribbon Finance proposal to merge with Aevo.

Mantle introduced Manta Pacific.

rwa.xyz launched tokenized treasuries analytics.

Curve proposal to collect fees from tricrypto-ng pools.

BAYC released teaser for licensing.

Starknet v 0.12.0 deployed on Goeril testnet.

Industry Updates

Google Play allows users to earn crypto.

Celsius sues Stakehound.

Dubai crypto regulator suspends BitOasis's license.

Hong Kong government will introduce stablecoin regulation.

Argentina's first BTC futures contract goes live.

Celsius's founder Alex Mashinsky arrested.

Twitter Alpha

There are many Alphas in the encrypted Twitter, but navigating through thousands of tweet threads can be difficult. Every week, we spend several hours researching and selecting insightful threads to curate a weekly selected list for you. Let's dive in!

https://twitter.com/defiminty/status/1679883639230791680?s=61&t=qZAMNybtA0HgZ-ey747pZw

https://twitter.com/viktordefi/status/1679892955191201793?s=61&t=qZAMNybtA0HgZ-ey747pZw

https://twitter.com/thedefisaint/status/1679876167778676737?s=61&t=qZAMNybtA0HgZ-ey747pZw

https://twitter.com/cyrilxbt/status/1679896198684221440?s=61&t=qZAMNybtA0HgZ-ey747pZw

https://twitter.com/NFT_GOD/status/1679148235611418630?s=20

Next week events

Source of news:

https://cointelegraph.com/news/ripple-wins-case-against-sec-as-judge-rules-xrp-is-not-a-security

https://www.investopedia.com/xrp-token-not-a-security-judge-rules-but-ripples-institutional-xrp-sales-broke-the-law-7560765

https://www.coindesk.com/policy/2023/07/13/sale-of-xrp-on-exchanges-not-investment-contracts-court-rules-in-sec-case-against-ripple/

https://news.bitcoin.com/us-judge-rules-xrp-not-necessarily-a-security-on-its-face-sending-xrp-supporters-into-celebration/

https://blockworks.co/news/judge-rules-ripple-xrp-not-security

The above is the content of this week. Thank you for reading this week's report. Hope you benefit from our insights and observations.

You can follow us on Twitter and Medium for instant updates. See you next time!

This report is for informational purposes only. It should not be construed as investment advice. Before making any investment decisions, you should conduct your own research and consult independent financial, tax, or legal advisors. Past performance of any asset is not indicative of future results.