Web3: SoFi launches Web3 ETF; Monero hard fork; Tiffany $12.5MM after CryptoPunk jewellery; 38 USDC addresses banned post Tornado sanctions
Gm Fintech Futurists —
Welcome to our Web3 newsletter, focused on covering the overall progress in the metaverse, NFTs, and DeFi. This content is premium only — give it a share, and leave suggestions in the comments!
DeFi Protocols and Digital Assets
SoFi has launched the SoFi Web 3 ETF, also known as TWEB, an ETF focused on NFTs, blockchain technology, and the metaverse. TWEB uses data from the SoFi Solactive ARTIS Web 3.0 Index and algorithmically scans companies’ online financial reports for relevant keywords to invest in a total of 40 securities. The expense ratio is 59 bps.
The top holdings in the index include Albert, Alphabet, Amazon, Ceva and Exscientia, as well as crypto-focused firms, such as Coinbase and Galaxy Digital, and bitcoin miners such as Argo Blockchain, Hive Blockchain Technologies, Marathon Digital Holdings and Riot Blockchain.
Crypto and Web3 focused ETFs aren’t new: Exchange Traded Concepts launched the Fount Metaverse ETF last October (-27% YTD), and Defiance ETFs launched its Digital Revolution ETF, which invests in NFT marketplaces and issuers, in December (-53% YTD). Each fund has about $8MM in AUM. Institutional players are also partaking in the action. This year, Fidelity released its Metaverse ETF and Crypto Industry and Digital Payments ETF. A week later, BlackRock launched its blockchain technology ETF, and then Charles Schwab released its Crypto Thematic ETF. There’s quite a bit of overlap in the ETF holdings of these vehicles, which can at most hold other publicly traded companies.
On the one hand, it’s great to see institutions getting involved with traditional product, however, the asset growth in crypto ETFs has been slow (e.g., BlackRock’s blockchain tech ETF has $6MM in assets). We are intrigued to see how SoFi performs with its new fund, but as Nate Geraci, President of the ETF Store, said, “This segment of ETFs is already oversaturated.”
Further, if you can hold the digital assets on chain directly, perhaps ETF structures leave a lot to be desired in term of their exposure profile.
In Defense Of Stablecoins - a16z Crypto
(Un)insuring DeFi Holdings With Ease - Messari
Cryptoeconomics and Blockchain Protocols
Monero suggests that their decentralised cryptocurrency, XMR, is private, secure and untraceable. The protocol uses various cryptography technologies, such as RingCT and Stealth Addresses, to secure the anonymity of transaction histories. As such, users are not affected by the receipt of blacklisted or tainted coins.
The hard fork, completed on August 13th, is the protocol’s latest upgrade, and will enhance the network’s privacy-securing features. Most notably, the protocol has increased the number of signers from 11 to 16 for every transaction. Additionally, the network has been upgraded from Bulletproof to “Bulletproof+” to improve typical verification performance by ~5-7%. Other improvements concern fee changes, wallet syncing and multi-sig functionality to ensure confidentiality.
The hard fork also signifies a “big departure from Bitcoin’s security model” as miners are incentivised by reasonable fees to guarantee the network’s untraceability. We are covering Tornado Cash both below and in the Long Take tomorrow, and assets like Monero are likely to be in regulatory cross-hairs for years to come. This team is leaning against the current trends.