Disclaimer: Everything we write in "The Crypto Insider Report" is an x-ray of the industry as we see it, through the lens of publicly available information. We are not financial advisors.
Coinbase Launches New Layer 2 - Base
Coinbase, one of the largest centralized exchanges - regulated in the US, listed on the stock exchange, serving 108 million verified users and moving 80 billion USD in assets - announced Base, a new layer 2 chain.
Built on Optimism’s OP Stack, Base aims to bring together a developer-friendly ecosystem with real users and real assets, as opposed to having an esoteric deployment where you need to bring developers and users. Because Coinbase is behind it, Base will make it easy to access fiat onramps and reach all its users right away. Furthermore, everything is open source and the team has joined OP Stack as core devs in order to further build the infrastructure, benefitting any layer 2, not just Base.
I think more than any other L2 launch, this is a big deal since it can essentially mean that Coinbase will help onboard 100M users to Web3 & decentralized apps, as well as provide them with fiat conversion options. The fact that Coinbase users are KYC’d takes away from the Web3 ethos, but also makes it easier for the ecosystem to withstand the upcoming regulations we are expecting. Last but not least, no token is planned for Base, meaning more utility for ETH moving forward.
We will see how all of this pans out in time, as right now we are only getting a testnet. But, as always, it’s great to see infrastructure being built in a bear market.
Spotify explores NFTs (again)
Whitelists, allowlists, token-gated and now we’ve got token-enabled! Lots of fancy names for very similar things - and Spotify’s in on it. They’ve launched a pilot program that allows certain NFT holders to listen to curated music, based on their NFTs.
The program will last for 3 months (unless we see an extension), time in which the playlists will be constantly updated. The lucky people are those who hold Fluf, Moonbirds, Kingship or Overlord (Creepz) NFTs… and own an Android, living in the US, U.K., Germany, Australia or New Zealand. Pretty weird to see an Android-first launch since we’re used to Apple being at the forefront. But i guess it makes sense given Apple’s current stance toward blockchain, fees and their necessary cut of whatever flows through the App Store. Below’s a pic of the pilot:
I think it looks as it should. Are there (at least) 3 extra steps just to connect your wallet? Sure, but at this point i’m afraid this is the best we can do. At least until Apple fully integrates wallets and we can automatically login using Apple ID. Can’t say i currently see this as an option in the near to medium future.
So, they’re trying NFT-gated (sorry, token-enabled) playlists. I hope this gains enough traction and leaves a good impression on the NFT holders because rolling the program out globally would mean NFTs exposed to 456 million monthly active users. We could have another Reddit moment with NFTs.
5-10% of assets will be tokenized by 2030
A recent report conducted by HSBC and Northern Trust, predicts that 5%-10% of all assets will be tokenized by 2030. Even though a dollar figure was not offered, it is estimated that it equates to $19.5 trillion, compared to the $16 trillion predicted by BCG last year. BCG’s forecast also anticipated that tokenization would reach 10% during the same time period.
The report explores the impact of tokenization on asset servicing and has a couple of interesting case studies, particularly in wealth management. Today’s most popular ETFs track stock market indexes. With tokenization and fractionalization, it is theoretically possible for a user to directly hold the individual stocks in the index without an ETF. Any rebalancing can be done with smart contracts. The paper highlights some potential tax benefits because the losses of individual stocks can be offset by other gains.
The publication also highlights the potential for customized portfolios and for smaller portfolio sizes to become more viable for asset managers enabling them to provide more thematic investment options.
This report doesn’t come as a surprise as both banks are progressing with digital asset initiatives. Northern Trust merged its digital asset team with its securities innovation team in 2022, whilst HSBC’s focus on blockchain technology use cases is long known. Only last month HSBC launched its bond issuance platform, HSBC Orion, debuting with a GBP bond issuance for the European Investment Bank.
While the concept that underpins blockchain is that it requires zero trust, the two banks believe trust will continue to play a critical role in financial markets. And none more so than custodians and digital asset custody. Both banks are amongst the world’s top ten custodians in terms of assets under custody.
For more educational crypto content, check out the links below:
The Stakeborg DAO Talks on YouTube: https://www.youtube.com/playlist?list=PLOrFZZifNn4Nx4nSQL3WS52ALPXgrTSVG
Discord channel: https://discord.com/channels/901898461568442458/903006233584341052
StakeborgDAO Quarterly Reports: https://docs.stakeborgdao.com/reports/dao-quarterly-reports
Stakeborg Academy: https://academy.stakeborg.com/
Another interesting part of not issuing a token: Base will use ETH as the native gas token. Will be interesting to see how it impacts ETH price.