JPM Tokenization: Is Public Blockchain Useless?

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Good Morning,

I can confidently say that outside of SBF’s ongoing trial news, which can either be exciting or incredibly boring (please let’s move on), crypto has been the quietest in the past three years.

But hey, at least we get some entertainment out of it.

In Today's Email:

• What Matters: JPM-Blackrock-Barclays tx 💱

• Founders Highlight: Dovey of Primitive Ventures 👩‍💼

• Deal Flows: Membrane $20M Series A 💰

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WHAT MATTERS

JPMorgan’s Blockchain Collateral Settlement

State of play: The banking giant debuted its first blockchain-based collateral settlement transaction via its Tokenized Collateral Network (TCN).

• TCN was used by BlackRock to tokenize shares in one of its money market funds, then the tokens were transferred to Barclays for collateral in an OTC derivatives trade.

• The process that typically takes days happens in mere minutes.

• Initially, TCN will focus on money market funds, but it will look to support other asset classes as collateral, including equities.

Why it matters: Tokenization is the natural next step for TradFi institutions.

• Similar to how ETFs brought upon efficiency in capital markets, tokenization will boost this even further, eventually reducing cost and making the global financial markets more accessible to the broader population.

For builders and investors: However, it remains unclear what benefits tokenization will provide for the onchain crypto ecosystem.

• Some argue that this will bring upon composability and TradFi institutions will eventually be comfortable with blockchain technology, allowing value to flow to public and hybrid ecosystems.

• Others think that this will sway TradFi institutions from entertaining public blockchains if a private solution works just fine.

BUILDER-INVESTOR HIGHLIGHT

Dovey Wan, Founding Partner of Primitive Ventures

Dovey Wan is the Founding Partner of Primitive Ventures, a crypto venture firm that’s wholly owned by the team.

• Dovey is an OG figure in the crypto investing landscape, with a particularly strong network and understanding of the China crypto landscape.

• She’s an investor in Kyber, Messari, StarkWare, 0x, Cosmos, and many other notable crypto protocols.

Previous backgrounds: Prior to crypto, Dovey was a Product Manager at eBay.

• Post eBay, she got into the VC industry as an angel, advisor, and mentor for numerous VC firms and accelerators including Jason Calacanis’ LAUNCH and Michael Arrington’s XRP Capital.

• She holds a Master of Information Systems from Carnegie Mellon University and a Bachelor of Computer Software Engineering from Sun Yat-sen University.

The big idea: Primitive Ventures was founded in 2018. The firm believes that “crypto represents the new socioeconomic primitive that will redefine individual sovereignty and financial paradigms”.

• Their check sizes can range from $100k to $10M. The firm also incubates, invests, and collaborates with fellow founders from their earliest stages

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INSIGHTS

BIS Crypto Tracking Project

The Bank of International Settlement (BIS) has launched a pilot program to track international flows of crypto assets.

• Called Project Atlas, the program combines data from centralized exchanges with onchain data.

• Participants in the program include Eurosystem, De Nederlandsche Bank, and the Deutsche Bundesbank.

• The program aims to “collect granular and aggregate data relevant to central banks’ mandates, from public and proprietary sources”.

• The report that came out with the program claims that as much as 70% of crypto activity on centralized exchanges is wash trading.

• “The output of Project Atlas could serve as a starting point for preliminary assessments and inform the drafting of data reporting requirements and regulation of crypto market actors.”"

Our take: Let’s be a bit practical… shall we?

DEAL FLOWS

Membrane Labs $20M Series A

Deal flows remained consistent this week 📈 — we saw $70M+ in deals.

Crypto prime broker Membrane Labs raised a $20M Series A with participation from big names such as Brevan Howard Digital and Point72 Ventures.

• Simply put, Membrane is building trading, OTC, and lending infrastructures for institutional crypto market participants.

• The new capital will be used to build out more clearing, netting, and settlement engines.

• The overarching theme is to increase transparency and risk management in a post-FTX world.

Deal flows in the past week:

• Initia, Undisclosed $ Pre-Seed Round

• Fairblock, $2.5M Pre-Seed Round

• OrdinalsBot, $1M Seed Round

• NexGami, $2M Seed Round

• Neutral, $3.2M Seed Round

• Ostium Labs, $3.5M Seed Round

• Parsec Finance, $4M Seed Extension Round

• Game of Silks, $5M Seed Round

• Republik, $6M Seed Round

• Untangled Finance, $13.5M Seed Round

• Membrane Labs, $20M Seed Round

• Account Labs, $7.7M Strategic Round

• Beldex, $3M Undisclosed Round

QUICK BITES

• Polkadot cuts staff.

• USDR depegs by 50%.

• EU Regulator warns of DeFi risks.

• Trezor unveils new hardware wallets.

• CoinList launches multi-chain staking fund.

• Bitcoin might get Ethereum-style smart contracts.

• Coinbase sounds alarm on IRS crypto tax proposal.

• CFTC charges Voyager Co-Founder Stephen Ehrlich.

• Alameda was hacked for $190M due to bad opsec.

• JPMorgan debuts blockchain-based collateral settlement transaction.

NOTEWORTHY READS

• The Core Loop’s read on the state of web3 gaming.

• David Hoffman’s read on Diva, a new LST protocol attacking Lido.

• Decentralised’s read on revisiting the metaverse.

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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.