Circle research

Weekly Crypto Recap 9/28-10/4

Know & go

  • Yale’s endowment invests in another crypto fund, Bakkt faces competition from ErisX, and LedgerX prepares to launch ETH futures. More below.
  • EOS took the spotlight this week, with claims about block producer collusion and airdrop troubles, bringing its governance into question.
  • Fred Wilson (Partner at USV) and Vlad Zamfir (Ethereum researcher and developer of the Casper protocol) share insightful posts on the current phase of the crypto ecosystem and blockchain governance, respectively.
  • Total crypto market is down 1% w/w and daily volume is down 29% w/w. 46% of the top 100 by market cap are trading up in the last 24 hours. BTC and ETH are each trading up 0.2% in the last 24 hours.

Weekly market snapshot

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Chart sources:,, Circle

Top Stories

EOS woes. EOS received negative attention this week on multiple fronts. It started with an EOS token holder sharing a leaked internal file framing Huobi, a crypto asset exchange and an EOS block producer, of trading votes and colluding with other block producers. However, Huobi denied culpability and the claim has yet to be verified - the situation remains unresolved.

Given EOS’ focus on securing the network through collaboration1, some believe that block producers voting for each other to support the network is warranted and required. While this may be true, the lines are blurred and it is difficult for token holders to separate good intentions from bad, if the intention is to use a cartel approach to stay in power and continue receiving block rewards. Further, the current interim constitution has a “no vote buying” article. However, the constitution has not been ratified by the community, so it is unclear if such a move would be in violation. The broader question this incident raises is that on-chain governance systems are still in their infancy and projects using on chain governance need to...on making them stronger and resistant to corruption.

Later in the week, a dice game built on EOS, Se7en mistakenly airdropped one billion tokens into a single user’s account then secretly removed the tokens without notifying the user. The game’s developers did not use the standard functions for sending tokens and the airdrop transaction was not confirmed by the network. The community is questioning the dApp developer’s ability to modify the balances in a user’s account without notifying or getting the permission of the user.

For a deeper dive into EOS, check out our EOS primer.

Yale invests in crypto. Yale’s endowment ($30 billion) invests in Paradigm, a $400 million crypto fund founded by Fred Ehrsam (co-founder of Coinbase), Matt Huang (formerly at Sequoia) and Charles Noyes (ex- Pantera employee). Previously, Yale also invested in Andreessen’s crypto fund according to unknown sources (Bloomberg).

The crypto exchange game heats up. A new crypto exchange called ErisX received an investment from TD Ameritrade. Other firms backing the project include DRW, Virtu Financial and other high speed traders and Wall Street firms. ErisX claim they will be competitive with ICE’s Bakkt. It will initially offer spot crypto trading sometime in 2Q19; and offer futures trading on multiple crypto assets (Bitcoin, Ethereum, Litecoin, etc.) later in 2019 subject to regulatory approval. ErisX has been licensed as a regulated entity since 2010 and is working towards being regulated as a clearing entity, allowing the exchange to custody and physically settle contracts.

In other news

  • LedgerX is getting ready to launch ETH futures contingent on regulatory approvals from the CFTC. The CFTC could make a decision as soon as 10/5 (The Block).
  • Pending deal with Tiger Global and existing shareholders values Coinbase at $8 billion (Recode). In other news, a senior executive and current institutional lead, Adam White (also the fifth employee at Coinbase), is resigning (Coindesk).
  • During his speech at the UN, Malta’s prime minister, Joseph Muscat, hails crypto as the future of money (Coindesk).
  • The ETH Constantinople hardfork testnet was supposed to go live on Sunday 10/7. It has been delayed to address a vulnerability (Bitcoin Exchange Guide).
  • Ripple announces three xRapid partners at its Swell conference. xRapid is a Ripple product that claims to use XRP as the bridge currency.
  • The Wall Street Journal also published a report on how abusive crypto bots contribute to market manipulation (WSJ).
  • The Wall Street Journal goes to Japan to create WSJcoin to better understand the market (WSJ).

What we’re reading

  • The Myth of the Infrastructure Phase. Fred Wilson of Union Square Ventures comments that the infrastructure phase in the crypto space is a myth. In short, the infrastructure phase consists of first building the tools (i.e. base chains, interchain interoperability, clients, wallets, browsers, etc.), which can then be used to build the applications.

    However, Fred Wilson points out that we don’t build all the infrastructure first, and once that’s done, begin to build all the apps. Fred believes in a continuous “apps-infrastructure cycle” where “first, apps inspire infrastructure, then that infrastructure enables new apps”.
  • Bitcoin’s Mining Pool Concentration. In the Ark Invest newsletter on 9/30, Yassine discusses that the Herfindahl-Hirschman Index, or HHI (a commonly used metric for market concentration and competition), for Bitcoin has been in the range of 700 to 1,700 since 2013. An HHI of less than 1,500 indicates a competitive market, 1,500 to 2,500 indicates a moderately concentrated market, and 2,500 and above indicates an highly concentrated market.
  • Introducing A Crypto Benchmarking Framework. Vision Hill Advisors publishes a crypto benchmarking framework that first provides an overview of market segmentation and investment strategies in the crypto space, then proposes a framework seeking “to provide points of reference for measuring performance among similar investment strategies”.
  • My Intentions for Blockchain Governance. As a follow up to his Blockchain Governance 101 and in response to CleanApp’s Blockchain Governance 102 post, Vlad Zamfir shares a post on his preferences and intentions for blockchain governance.
  • Crypto Accounting with Bitmain’s Filing. Greg Cipolaro, CEO of DAR, published an article to address confusion on how Bitmain accounts for its crypto asset balances.

What we’re listening to

Where we’ll be in October

  • Institutional Crypto: Laying the Foundation, New York, NY (10/15)
  • Uprise Festival, Dublin, Ireland (10/17-10/18)
  • Mars Finance Blockchain Summit, New York, NY (10/18)

Circle in the news

  • Circle agrees to acquire crowdfunding firm SeedInvest pending regulatory approval.
  • Circle Invest rolls out “Collections” feature as a follow up to “Buy the Market”. Users can now buy collections of Platforms, Payments, Privacy tokens.

1 Block producers are elected ahead of time and once they are elected, they collaborate to create blocks and secure the chain in a given slot.

If you have any thoughts or questions, please reach out at [email protected].


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