JPMorgan is Bullish on this

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Good Morning,

Welcome back from Consensus. There was a clear sentiment that the crypto industry are "absolutely at war" against policymakers in the US, specifically with the SEC and Senator Elizabeth Warren.

Heavy hitters are advancing legal cases, with Coinbase warning the SEC that it plans to “exhaust all avenues” if sued. We’re truly reaching the final saga.

In Today's Email:

• What Matters: JPMorgan bullish on tokenization 🏦

• Products: Push, web3 notification & messaging 💬

• Charts: Ethereum NFT declines, Bitcoin record transaction 📈

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WHAT MATTERS

JPMorgan Emphasizes Tokenization Opportunity

State of play: The world’s largest bank emphasizes its focus on tokenization of traditional financial assets. Onyx, JPM’s own permissioned blockchain platform based on Ethereum, has processed ~$700 billion in transactions.

• Onyx enables the trading of tokens that denote ownership rights to US Treasuries as well as access to a blockchain-based bank accounts called JPM Coin.

• Onyx’s clients include Goldman Sachs, BNP Paribas, and DBS. With 15 more banks and broker-dealers lined up.

• JPMorgan thinks the opportunity will be in the tokenization or private markets, which are approximately double the size of public markets.

What’s next: A forecast done by BCG and ADDX predicts that tokenization will be a $16 trillion business by 2030. As stated below, the opportunity will revolves around illiquid private markets.

Our take: Building in the tokenization/RWA space takes a lot of time and capital due to level of regulatory requirement. It’s not an easy space for startup to “disrupt”. The majority of players would be from big banks and established TradFi entities.

• The opportunities for startups would be to provide services that these large entities require to advance their tokenization business.

• The other opportunities would be to focus on connecting the on-chain markets with RWA.

For builders: If you’re building in the tokenization/RWA space, make sure to understand the difference between providing tokenization services and a DeFi protocol that integrates real-world assets.

• The former provides services to tokenize existing financial assets. The latter connects RWA with on-chain markets to expand liquidity and access from global market participants.

For investors: Understanding the interest of established TradFi players and how the business model would work for a tokenization/RWA protocol would be key. It’s the investors job to figure out the following:

• What’s the incentive to make the big banks use a permissionless blockchain?

• How can protocols compete without falling into the trap of cutting fees to zero? In a war of cheap capital, the established TradFi players will always win.

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

PRODUCTS OF THE WEEK

Push: Web3 Communication Protocol

Web3 notifications and messaging: Push Protocol is a web3 communication protocol that enables users to conduct cross-chain notifications and messaging features on dApps, wallets, and other web3 services.

• Push is live on Ethereum, Polygon, and BNB Chain.

• 400+ projects have integrated with Push.

• There's a grant for developers who are interested in building on Push Protocol. For details, click here.

Other cool products:

• Museo, a tool to token-gate notion content.

• Coinreen, a multi-exchange platform.

• Okapi, a web3 loyalty wallet.

• Quixty, a platform to trade NFT whitelists.

CHARTS OF THE WEEK

Declining Ethereum NFT Traders

Over the past month, users of Ethereum NFT marketplaces are down by over 85%. The number of users is down from a peak of approximately 25,000 to 5,000 in the past two months.

Our take: Although there are pro trading platforms, including OpenSea Pro and Blur, the products don't seem to be attracting new NFT users.

To watch: NFTs on L2. We haven't seen much action around NFTs on Arbitrum, Optimism, or zkSync Era. If NFT markets are to recover some time this year, L2 activity is the only hope.

Bitcoin Daily Transactions Hit ATH

State of Play: The Bitcoin blockchain number of daily transactions reached a new all-time high of over 408,000 transactions. The surge was most likely caused by Inscription, which is a way to imbue metadata to satoshis, the smaller unit of Bitcoin.

• Inscription's most popular use case is to create NFTs on the Bitcoin blockchain.

Our take: Inscription is a unique phenomenon in which developers are trying to extend the use cases of Bitcoin beyond its narrative as digital gold.

• As Bitcoin halving continues, there needs to eventually be a way for miners to monetize their work. A dApps ecosystem atop the Bitcoin blockchain might just be the solution that we need.

QUICK BITES

• US House expects crypto bill in 2 months.

• Ex-Bridgewater CEO Deputy joins BlockTower.

• Binance VC arm reaches $9 billion in AUM.

• Mastercard launches crypto credential service.

• PayPal extends crypto transfers to 60M+ Venmo users.

• Cross River Bank faces FDIC scrutiny.

• Gemini agrees to a 30-day mediation process with DCG.

MEME & NOTEWORTHY READS

• @jon_charb's read on SUAVE, Anoma, Shared Sequencers, & Super Builders.

• @tradeparadigm's thread on trading block insights from the past week.

• Our Network's read on Solana.

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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.