$350M Fresh Capital: Polychain & Coinfund

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Good Morning,

The regulatory battle continues with Coinbase CEO set up to meet with House Democrats. At the same time, notable crypto investment firms have been launching their new funds. Seems like we’ll have an exciting Q3.

In Today's Email:

• What Matters: Polychain & Coinfund fundraise 📈

• Case Study: Fantom USDC Arb 🤓

• Governance & Features: Synthetix V3 release 💱

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WHAT MATTERS

Crypto VC Funding Appetite Returns?

State of play: Polychain raises $200M in the “first close” of its Fund IV.

• Polychain is still planning to raise ~$400M in total for the fourth fund.

• At the same time, Polychain is letting go three members of its research team because of changing investing priorities.

• Polychain has raised three funds with a reported $2.6B in AUM.

On the same day, Bloomberg also reported that the VC firm CoinFund has raised $158M for its new fund.

• Initially targeting $125M, the NY-based firm surpassed expectations due to a higher-than-anticipated level of interest.

• During the period of "crypto winter," CoinFund managed to raise $550M.

• With the new funds, CoinFund will focus on investing in start-ups at the intersection of crypto and AI.

Why it matters: These successful fundraising might be the start of a positive indication that the investors’ appetite towards crypto is making a come back.

• Pitchbook reported that crypto VCs have only raised $1.7B in the first half of 2023. By contrast, they raised $22.5B throughout 2022.

For builders and investors: Momentum is key. The funds that over-allocated in 2022 are now struggling to get good ROIs. Builders that didn’t aggressively raise capital now might need to close shops.

• The momentum is slowly coming back. Pay extremely close attention.

CASE STUDY

The Most Intelligent Crypto Arbitrage

Credits to @BobY_Ugo and Arca for the original tweet & report.

State of play: The person or entity behind the wallet address 0xfad7 just pulled the smartest crypto arbitrage in history using USDC/WFTM (Fantom) that involves BC.Game, an offshore crypto casino.

• Multichain was hacked on July 6th, resulting in a $125M theft, with $120M taken from the Fantom Multichain bridge, including $63M in USDC.

• Because the assets that back the bridged assets were stolen, all stablecoins on FTM depegged and led to USDC trading at 50c on the dollar.

• Multichain's contract freeze caused 1 USDC on FTM to lose parity with 1 USDC on Ethereum or other chains.

However, 0xfad7 found an Ocean’s Eleven-like method to bridge back the USDC/WFTM to the Ethereum mainnet by exploiting the loophole on BC.Game

Here’s how:

0xfad7 bought FTM on a CEX -> withdrew it to Fantom network -> swapping it to USDC on Spookyswap -> transferred it to BC.Game -> finally withdrew to another network with USDC valued at $1 again.

• BC.Game accepts crypto from various L1s and L2s, including stablecoins from Fantom.

• BC.Game mistakenly credited USDC from any network at a fixed $1 value, without considering or preparing for a potential de-pegging.

• After realizing the mistake, BC.Game transferred 1M+ of USDC to Spookyswap, selling it at a price lower than $1.

Our take: Crypto casinos have been emerging recently as a hybrid CEX-gambling platform. It remains to be seen how regulators will react, but it seems like the wild west has moved to these casinos instead of offshore CEXs.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

Top 5 Arkham Airdrop Receivers

@AmirOrmu shared his findings on the top 5 Arkham $ARKM token airdrop receivers:

1. @laurakornelija (CEO of a marketing Agency) ~$180K.

2. @freeairdropio (Airdrop twitter page) ~$176K.

3. @ThorHartvigsen (DeFi researcher) ~$130K.

4. @VjRusmayana404 (Founder of Airdrop Finder) Unknown amount.

5. @defigen (Twitter Defi savvy) ~$70K.

FEATURES & GOVERNANCE UPDATE

Synthetix Target V3 Release in Q4 2023

Synthetix plans to launch v3 of its perpetual futures DEX and the newly announced front end, Infinex, in Q4 2023.

• Synthetix is a DeFi protocol for trading synthetic assets and crypto derivatives.

• Synthetix offers spot trading and perpetual contracts.

• There would be no geographical restrictions or KYC procedures for Synthetix products.

Why it matters: Synthetix will not implement user restrictions on its front ends unlike Uniswap, dYdX and 1inch.

• However, Infinex regulatory status will continue to be a subject of debate.

Other notable feature updates:

• Aave launches the GHO stablecoin.

• Starknet launches v0.12 upgrade

• Ajna launches on Ethereum.

• Swaap launches v2 on Ethereum and Polygon.

• Fuji launches V2.

• Stader ETHx goes live.

• Kava 14 goes live on mainnet.

• Uniswap V3 goes live on Avalanche.

• Celo proposes to return to Ethereum.

• Ribbon community proposes to merge Ribbon into Aevo.

• Polygon releases the whitepaper of POL.

QUICK BITES

• Coinbase CEO set to meet with House Democrats.

• US Secret Service seizes funds from Bahamian Bank Deltec.

• Ex-FTX COO Constance Wang emerges at Sino Global.

• OpenSea halts trading of staked-ether NFTs.

• Shinhan Bank tests stablecoin payments on Hedera network.

• G20 recommends crypto and stablecoins regulation.

• Gnosis launches a crypto wallet with Visa.

• Celo proposes to become a Layer 2 network on Ethereum.

• Chainlink launches CCIP to bridge blockchains with TradFi.

• RFK Jr. pledges to exempt bitcoin profits from capital gains tax.

• Ethereum ICO participant awakens after 8 years, moves $116M to Kraken.

MEME & NOTEWORTHY READS

• An Ape’s Prologue read on $AKRM airdrop analysis.

• @vex_0x’s read on dispute games.

• Crypto Linn’s read on reminiscences of a stock operator.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.