1. Summary of Industry Dynamics
Industry News
Last week, the crypto market followed the US stock market and had a large correction. It closed negative for 8 consecutive trading days and fell sharply on Thursday and Friday. The market is still in the game of interest rate hikes in the next few months, but the overall upward trend has not been broken. Bitcoin has also been supported at 21,500. The liquidity of the exchange is still at a recent high, with no obvious fluctuations, and the trading volume fluctuates around 30 billion. As of writing, Bitcoin closed at 21,938, down 4.32% during the week, with an amplitude of 8.73%; Ethereum closed at 1538.29, down 5.58% during the week, with an amplitude of up to 12.55%. Another reason for the decline in this round of crypto market is that Coinbase CEO tweeted that the SEC intends to cancel the cryptocurrency staking service for US retail investors. This rumor has not been confirmed, but it has once set off the slogan of "US 94" in the market. We should treat this FUD rationally. The SEC's crackdown on Kraken this time is mainly due to the false publicity of the annualized rate of return on staking, and the model of attracting deposits and raising interest rates by providing staking services in the name of this. Judging from the market performance, this incident was a case of much ado about nothing and did not have much impact on prices. It also shows that market participants are already highly "educated".
On the other hand, the US stock market fell across the board last week. The Nasdaq stayed above the annual line for a few days without any results. It fell below the annual line on Thursday and closed below the annual line on Friday. The bullish offensive weakened. The S&P trend was slightly better and still maintained the 4,000 points and the annual line mark, which may start a wave of shocks. The CPI will be released next week, and the market will face a new directional choice. A large rise or fall is inevitable. The CPI may not necessarily be optimistic. This may be the key reason for the US stock market to make adjustments in advance. In January, the US gasoline price rebounded rapidly, reaching an average of US$3.5 per gallon, an increase of 9.2%. The weight of automobile fuel in the CPI is currently 3.275%. The gasoline component alone will bring a 0.3% increase to the CPI. In addition, in terms of rent, the average rent in the United States fell by 0.3% in January. The proportion of rent in the CPI reached 1/3, so the statistics of rent are crucial. The forecast value of the US CPI in January is 6.2%, and the core CPI is 5.5%, which is lower than 5.7% in December. A decline of nearly 3% is required to achieve expectations. At present, it is indeed a bit difficult. We have seen from this month's non-farm data that the unemployment rate is extremely low. One of the two important goals of the Federal Reserve, full employment, has basically been achieved. The other goal, inflation, has become the main work direction of the Federal Reserve. If the CPI data in January rises again month-on-month, the market will gamble on the expectations of interest rate hikes in May and June, as well as expectations of interest rate cuts at the end of the year. Powell has made it clear that there will be a small interest rate hike, but the timing is uncertain. The interest rate meetings in the first half of the year were March 22, May 3, and June 14, and it is not surprising that there will be another interest rate hike in March. What is worth gambling on is the policy in May and June, so the CPI data at the beginning of the year is the top priority.
Industry data
1) Stablecoins
As of February 11, 2023, the combined supply of the top four stablecoins (USDT, USDC, BUSD, DAI) was approximately 131.022 billion, a decrease of approximately 1.05 billion (-0.8%) from last week, and the cryptocurrency market has seen a significant outflow of funds again.
Among the three major fiat stablecoins, the supply of USDT continued to rise, increasing by about 290 million (0.43%) this week, and the upward trend continued. The supply of USDC and BUSD both fell this week, with the supply of USDC again falling sharply by 517 million (-1.47%) and the supply of BUSD falling by 124 million (-0.76%). USDC continued to decrease, and funds continued to flow out of the US market, mainly affected by the US SEC's supervision of crypto staking services and rumors of possible supervision of stablecoins (and related banking businesses). Some investors chose to exchange USDC for USDT.
Overall, this round of rebound was mainly driven by existing funds and short covering. The outflow of funds in the currency market may indicate that the rebound has come to a temporary end.
2) BTC Miner Balance
The BTC miner address balance shows the total BTC holding balance marked as miner addresses on the chain, including Foundry USA, F2Pool, AntPool, Poolin, Binance and other addresses.
This data is usually used to judge miners' interest in the current BTC price. When the miner's balance increases, it usually means that the chips are in a state of accumulation; when the miner's balance decreases, it indicates that miners are selling or pledging their BTC.
According to OKLink data, the balance of miners has been in a slow downward trend in the past six months, but the overall change is not significant, and miners are still accumulating chips; the market rebound since the beginning of this year and the market correction last week have not caused a large-scale sell-off, and miners are currently holding coins stably.
3) ETH deflation data
As of February 12, according to ultrasound.money data, the supply of ETH this week decreased by about 8,000 compared to last week, and deflation has accelerated. Since the completion of The Merge, the supply of ETH has decreased by 16,265 in total. Based on the data of the past week, the annualized inflation rate is -0.3%. The last large-scale burning of ETH occurred in early October 2022, when users minted $XEN on a large scale, which caused FOMO.
Compared with ETH under the POW mechanism, the supply under the POS mechanism has been reduced by about 1.74 million coins, and the inflation rate has dropped from 3.5% to -0.3%.
2. Macro and Technical Analysis
The market adjusted as expected. We believe there is still a need for adjustment in the short term, but it is an opportunity to make arrangements.
Two-year Treasury notes rise as recession expectations fall
Nasdaq still needs to pull back
1、Ahr999：0.52
2、MVRV：1.17
Number of BTC addresses: The number of addresses holding more than 100 coins rebounded slightly
Number of ETH holding addresses: the number of addresses holding more than 100 coins is decreasing, and the number of addresses holding more than 10k coins is increasing.
III. Summary of Investment and Financing
Investment and Financing Review
From February 5 to February 12, 2023, the crypto VC market disclosed 25 investment and financing events, with a cumulative financing amount of more than US$235 million; (https://www.rootdata.com/Fundraising)
During the reporting period, there were four events with financing amounts exceeding US$10 million:
SALT Lending is a membership-based lending and borrowing platform that allows users to lock up their assets to obtain cash loans. It recently completed a $64.4 million Series A financing.
Carbonplace, a carbon credit trading company, has raised $45 million in seed funding from UBS, Canadian Imperial Bank of Commerce, BNP Paribas and others. Carbonplace is a global carbon credit trading network based on blockchain that fundamentally changes the way carbon credits are bought and sold by allowing carbon credits to be settled simultaneously and ownership to be transferred immediately after payment.
Crypto security company Coincover has completed a $30 million financing round led by Foundation Capital. Coincover will help protect users’ digital assets from hacker attacks or human errors.
Mobile gaming company Mino Games has completed a $15 million financing round led by Standard Crypto, with participation from Boost VC, Collab Currency, Earl Gray Capital, and Konvoy Ventures. The new funds will be used to create the Dimensionals collectible character game with Web3 features.
Organization News
4. Crypto Ecosystem Tracking
NFTs & the Metaverse
（1）NFTs
NFT Market of the Week
Market Overview: This week, the NFT blue chip index did not change much from last week, with a slight increase compared to last week. The blue chip index in the past 30 days is still in a downward trend. As of February 10, the data of the blue chip market did not show a strong recovery trend and is still at a freezing point in the market.
NFT total market value: This week, the total market value of NFTs did not change much, down 0.94%. After the total transaction volume fell last week, it rebounded significantly this week, with an increase of 16.37% in 7 days. Looking at the total transaction volume in the past 3 months, it has risen significantly from the lowest point in November. We can also expect the NFT market to rebound in the second quarter.
Market activity: This week, the number of NFT market holders increased slightly (+1.99%), trader activity decreased compared to last week, -8.94%, buyers decreased by -5.05% compared to last week, and sellers decreased by -8.8% year-on-year.
The top three NFTs in terms of NFT market transaction volume this week are BAYC, Checks, and Otherdeed. The floor price of BAYC has risen sharply in the past week and is currently around 78ETH.
Overview of Metaverse Projects This Week:
The trading volume of the 10 leading blue-chip projects in the Metaverse sector declined this week, with a 7-day increase of 14.93%. NFT Worlds continued to occupy the second place in trading volume, surpassing decentraland and the sandbox. In terms of total market value, the top three Metaverse projects are still Otherside, Decentraland and the Sandbox. The floor price of land prices has not changed much, remaining in the range of 0.8-1.7 ETH.
(2) This week’s NFT & Metaverse dynamics focus:
Dynamic Focus: Prada NFT Project: The brand's first step into the Web3 community
Timeline summary: December 2019 - Time Capsule new product launch gameplay
Prada has started a new product launch called the Prada Time Capsule. On the first Thursday of every month, a 24-hour sale will be held. The products include limited edition Prada men's and women's clothing, and can only be purchased through the official website.
There is also a special area called "Pradasphere", which includes Prada's fashion week shows, special events, competitions, movies, etc., in order to create a special and unique online experience mode.
Time: January 2022 Prada and Adidas' "joint marketing" is also an upgraded version of the "Internet business model"
Both brands also invited fans to upload personal photos.
The brand randomly selected works from 3,000 fans and gave them to digital artist Zach Lieberman for secondary creation, generating a 6000x6000 pixel "mosaic" digital artwork.
The brand turned this digital artwork into an NFT and put it up for auction on the SuperRare platform.
The NFT work was bought by a collector for approximately US$50,000.
5% of the proceeds will be distributed to digital artists, 80% will be donated to a non-profit organization, and 15% will be given as rewards to 3,000 selected users.
Time: June 2022 Prada’s new NFT marketing strategy
Four months after co-marketing with Adidas, Prada launched its new NFT-based model
For the new products released by Time Capsule, each physical product will come with a corresponding limited edition NFT.
The NFT format is video, and the content will be relevant to Prada's new products in terms of design concepts and elements.
Currently, Prada users can only use legal tender to purchase Prada products, and NFTs are only gifts. When users purchase physical goods, they can receive an email and receive the NFT about 45 days after purchasing the physical goods.
So far, Prada has issued a total of 8 types of NFTs in the Time Capsule series, with a total of 450 pieces. Among them, 100 pieces were issued for the first time, and 50 pieces were issued each month. The ninth type will be released in February 2023. However, Prada promises to give corresponding NFTs to users who start purchasing Time Capsule products in 2019.
What are the benefits of holding NFTs? NFT holders can get exclusive benefits, experiences and gifts, as well as potential future NFT airdrops.
In September 2022, Milan Fashion Week was held in Italy. Prada invited a lucky NFT holder to participate in the fashion show during Milan Fashion Week. This is not just a ticket to a show, but also a 4-day exclusive Prada experience. The brand will cover the round-trip transportation to Milan, Italy, luxury accommodation, an exclusive private experience at the Milan flagship store, a full set of Prada clothing, an exclusive party after the fashion show, and more.
In addition, in the upcoming February sale, they will also draw one lucky holder to attend the 2023 Fall/Winter fashion show on February 23.
Prada’s NFT performance:
OpenSea data shows that the current floor price of this series of NFTs is 0.55 ETH. However, its transaction volume is only 29 ETH. Based on a 10% royalty, the brand earns only 2.9 ETH. On OpenSea, this series of NFTs was traded only twice within 3 months of its launch. However, Prada's project team is not worried about such a low transaction volume. They believe that the young generation born after 1990 is a very important customer, and the NFT strategy is not only about exploring NFTs, but also about leveraging the Web3 community to build better loyalty among young customers. In other words, Prada believes that NFT and Web3 are a way to approach and serve a new generation of young users with a new business model.
To this end, they built an official page called Prada Crypted, which is dedicated to presenting content related to the Time Capsule series NFT, and also established a Discord server of the same name. The project party also stated that this marks the first step for the brand to officially enter the Web3 community. By creating its own community, it will further promote the brand's entry into the Web3 field in multiple dimensions, which is inclusive and open to everyone. In the server, you will learn about Prada's future projects and NFT issuance. This is a place to exchange ideas and inspire each other, while connecting the world of fashion with the worlds of art, architecture, film, music, Web3, and more.
Key Project: CHECKS
Background: Checks comes from Jack Butcher, the founder of Visualize Value. They are committed to helping customers visualize the ideas of NFT and web3, using images to express efficient information simply and directly and convey it in this era of explosive traffic.
Checks was inspired by Twitter's authentication feature. This is not just a feature update, but a movement that has swept the Internet and is part of the Internet culture. The meaning behind it is to make more people worthy of more attention. Later, Musk opened up an $8 authentication service. The $8 price and more authentications have led to more discussions on Twitter. When a thing forms a broad consensus, its value is immeasurable. This is also the basis for the pricing of checks.
Checks were sold in early January as an open edition at a price of $8 for 24 hours, and 16,027 checks were eventually minted.
“This artwork may or may not be notable”, just as the title implies, Jack himself does not know what its future will be like, so the open edition is released to allow users to verify his ideas.
Gameplay and Mechanics:
Checks are composed of 80 small ticks. The version that players initially mint has 80 Twitter certification marks. They can choose to burn 2 initial versions to get a new version, which will have 40 Twitter certification marks. Similarly, each version update requires consuming 2 NFTs of the same version. 80->40->20->10->5->1->0. On this basis, 4096 initial versions, that is, 64 versions with only 1 small tick, can eventually be combined into 1 black small tick. Players can choose to evolve their NFTs, which of course means that they can choose to keep the NFT at a certain version.
Checks value: Checks is like the work of artist Andy Warhol, with simple repetition, expressing the era culture of American consumerism through pictures. Every generation is pursuing status, and identity authentication reminds people of their pursuit of social status all the time. This small check has formed a symbol that transcends culture and language. Checks is a canvas of infinite expression, designed to challenge the concept of ownership and creator identity in the Internet age.
2. GameFi Chain Games
(1) Overall review
In general, the Gamefi industry as a whole has pulled back. From the perspective of token prices, 9 of the top 10 blockchain games by market value have seen a drop in price. BinaryX led the gains this week, rising 29.17% in the past week (BNX tokens were split at a ratio of 1:100 to better promote BinaryX's economic model and products.) Affected by the broader market, the rest of the tokens in the top ten projects all fell.
In terms of on-chain contract interaction volume, 80% of the top ten most active blockchain games saw a decline in interaction activity over the past week. Only Axie and Meta Apes saw a slight increase in activity.
2. Key Project: Fusionist
Recommended reasons: Binance investment; the fastest growing blockchain game in the past week (an increase of 350,000 people in a week);
Website: https://link3.to/fusionist_io
Product: Generally speaking, it is a Star Wars-themed simulation game. Fusionist plans to build a game world that consists of 3 types of gameplay:
Game 1: Colonization (Construction Simulation). Colonization is the first chapter of Fusionist. Its core gameplay is to simulate various types of building structures and manufacturing materials. Players can mine minerals, build industrial compounds, develop new technologies, and trade. The main goal is to use planetary resources to manufacture mechas and establish a stable industrial production chain. By scanning blueprints and consuming resources, new mechas can be quickly created, thus establishing a prosperous galactic trade network that every player wants.
Game 2: Conquest (turn-based tactics)
Game 3: Group Battle (Explore, Expand, Exploit, Eliminate) Players will play as mecha commanders, manage their own planets, collect rare resources, upgrade technology, scan blueprints to manufacture mechas, and build production lines. Fight through PvP and PvE battles, build starship fleets for interstellar wars, and conquer the galaxy.
How to participate: Currently, the official Fusionist game has not been launched, but players can obtain its mainnet native Token ACE through registration, interaction, etc. Holding project-related NFTs (Alpha Prestige, Quartan Primes, Bi·Mech, and BOAT) can increase the efficiency of ACE acquisition. You can continue to pay attention to the token listing situation in the future.
Summary: This traditional gameplay game may be listed on the exchange in two or three months according to the official team. Because of Binance’s investment, it is very likely to be listed on Binance. Currently, the market is optimistic about the project and the enthusiasm for participation is very high.
3. Web3 Social & DID & DAO
Nouns DAO
Introduction:
Nouns's painting style is retro video game style, and the background, body, accessories, head, and glasses are randomly generated according to the Ethereum block hash value.
Nouns DAO is different, it is endless. Every 24 hours, a new Noun NFT is generated and then auctioned on the official website to the public. So far, more than 600 NFTs have been auctioned (basically above 30 eth)
The entire amount of the sale goes to the DAO treasury, and the founding team (10 "Nounders") do not receive a share of the sale. The founding Nounders choose to compensate themselves with Nouns. In the first 5 years of the project, every 10 Nouns (Noun ids #0, #10, #20, #30, etc.) will be automatically sent to Nounder's multisig, owned and shared among the founding members of the project. The founding team consists of 10 people, including top NFT collectors (such as Punk4156) and founders (such as Vine's co-founder dom). Together, they maintain the community, website, discord, and help the DAO execute proposals.
All Nouns NFT holders will be automatically added to the Nouns DAO, 1 Nouns = 1 governance vote. In this DAO, members will decide how to use the funds in the treasury.
The core loop of Nouns is: funding great projects, growing the Nouns brand, and creating more demand for Nouns NFTs
Past Projects
Take Nouns coffee as an example. User Brkfstsndwch built a coffee brand through his Nouns derivative project Brkfst World. He also built a good reputation in the Nouns community by helping other proposals. After reaching some consensus, the proposal was submitted to Noun holders for an on-chain vote (1 Noun = 1 vote). After the vote passed, the DAO transferred 105 eth to Brkfstsndwch and the team. The team is expected to provide regular updates to the Nouns community.
advantage:
Treasury, the core utility of Nouns DAO is that every Noun holder can sponsor and vote for proposals funded by the Nouns Treasury. Any holder can sponsor and vote for a proposal.
shortcoming:
The cost of joining a DAO is high, and it is more like a decentralized rich club. But although the threshold is high, as long as you join, anyone can get their proposals funded. There are also derivatives like Lil Nouns (similar to the Nouns model, but the price is very low) that are lowering the cost of entry.
The project's return on investment is unclear. It is unclear whether the DAO strictly measures the return on investment of the projects it funds. There is no commitment that the projects must return the money to the treasury.
The supply is unlimited, and it is unclear whether unlimited supply will put downward pressure on prices or make governance voting more difficult. (Last year's auction price was 80 eth, and the current auction floor price is around 30 eth)
5. Team News
This Thursday, the fourth issue of JZL Garden's semi-monthly talk will be launched, inviting senior project owners and investors in the industry to discuss the topic of Gamefi.
about Us
JZL Capital is a professional institution registered overseas, focusing on blockchain ecosystem research and investment. The founder has extensive work experience and has served as CEO and executive director of many overseas listed companies, and has led and participated in eToro's global investment. Team members come from top universities such as the University of Chicago, Columbia University, University of Washington, Carnegie Mellon University, University of Illinois at Urbana-Champaign, and Nanyang Technological University, and have served internationally renowned companies such as Morgan Stanley, Barclays Bank, Ernst & Young, KPMG, HNA Group, and Bank of America.
