A weekly recap of the most insightful news, analysis, and capital flows in the wild west we call crypto.

Hello and welcome back to the Web3 Rewind! Per usual in this industry, lots has happened this past week. Here's what we have in store for you:

• China’s crypto gameplan 📝

• SAP trialing USDC payments 📤

• Celsius/Robinhood liquidating tokens 📉

• DeFi 1.0 weekend pump 🧐

• Making money, and keeping it 💸

The Latest

Politicizing crypto regulation dept.

Where does China take the US from here

Throughout the years, you may have heard stories of China banning Bitcoin mining for the n^th time. You would have also heard that ICOs got banned in 2017. If you’re a crypto normie, you probably think China hates crypto. Which begs the question, what is this headline “China’s move to control the blockchain” that came out on Monday from Politico all about?

The article states that China is taking two approaches to crypto at once. Back in the mainland, Beijing is coming out of the gates with strict regulation on crypto, only enabling select enterprise developments and new monetary rails under the strict guidance of the government. Offshore in Hong Kong, which today is still a special administrative region of China, Beijing has taken a slightly more lenient approach to crypto regulation. With headlines such as HSBC Hong Kong launching support for BTC and ETH ETFs and Hong Kong retail investors to start trading major crypto tokens, one may wonder why the stark contrast. The largest stablecoin by market cap, Tether, is also owned by a Hong Kong based company.

By now, most politicians in the US should know of crypto. But perhaps not all are smart enough to understand the global geo-political implications. Let me explain what those implications are. China’s central bank digital currency, eCNY, is leaps and bounds ahead of any other central bank. In recent years, China has been piloting its CBDC across many different cities and provinces.

For those who are unfamiliar, China’s CBDC stands on the shoulders of massive development in mobile payments. In the 2010s, Chinese consumers underwent an unprecedented behavior change with the advent of cheap smartphones and tech giant super apps, which allowed everyone to interact with every facet of life by scanning QR codes. This same infrastructure and consumer behavior has helped China to trial and pilot its CBDC at scale rapidly. What happens when the rest of the world sees China’s successful implementation of a CBDC, and decides to implement their own under guidance from China’s central bank?

Similarly, China works with a plethora of countries as part of its Belt and Road Initiative, often touted as one of the world’s most ambitious infrastructure initiatives. A large number of these countries are based in South East Asia and Africa, both of which are regions poised for exponential growth over the coming decades. As part of wider financial infrastructure developments, China has been attempting to build a SWIFT competitor in the form of its Cross Border Inter-Bank Payments System. It processed $14T with 1,427 financial institutions in 109 countries in 2022. What would happen if China worked with all the countries under the Belt and Road initiative to adopt this new payment system?

Perhaps when Politico says “China’s move to control the blockchain,” they don’t exactly mean the blockchain itself. At the end of the day, blockchains are just another settlement mechanism for value transfer to occur in a decentralized manner. Maybe the larger thing that US regulators and politicians should pay attention to is who will control the rails that money flows on going forward. — JC

Crypto charting

Here's a deeper look into the economics and mechanics of web3 and crypto courtesy of charts by Pyth Data Association. To see more Pyth research click here.

SUI Foundation Accused of Dumping Tokens on Binance $SUI

The SUI foundation has faced allegations of token dumping on Binance, involving the release and subsequent sale of staking rewards. These claims were brought forward by @DeFiSquared, a crypto commentator on Twitter. However, the foundation has refuted the accusations, stating that the highlighted transactions were contractual lockup payments. Despite this, the price of the $SUI token experienced a tumultuous week, plummeting nearly 20% over the past week.

Quick Bits

SAP trialing USDC payments

• Cross-border payments just got much easier. Traditionally, they’ve been expensive, slow, and non-transparent. That could change starting with SAP, one of the world’s largest enterprise software providers, testing out cross-border payments with USDC.

• As a sign of their crypto savvy, they’re trialing this on a testnet rather than mainnet. SAP customers generate 87% of total global commerce, equating to ~$46T per year. Global B2B payment volume totals ~$120T. Imagine if all that took place on the blockchain with USDC.

Celsius/Robinhood liquidating tokens

• In response to increasing regulatory pressure, Robinhood recently gave users until June 27th to sell or transfer a few tokens, including MATIC, SOL, and ADA. Celsius also holds these tokens, which have to be liquidated eventually.

• After June 27th, Jump, who manages crypto assets for Robinhood, will have to sell these tokens at market value. It’s not a huge amount by any means, but forced token selling will likely continue happening throughout 2023, as we haven’t even gotten started with FTX’s assets yet.

DeFi 1.0 weekend pump

• Over the weekend, DeFi 1.0 tokens such as AAVE, Compound, and Synthetix pumped between 20-40% out of the blue. One theory is that someone has been bidding up COMP, or perhaps they’re just insider trading the new platform, Superstate, that Compound founder Robert Leshner just announced.

• Another reasonable argument for the pump outside of COMP is that perhaps someone out there thinks a spot DeFi token ETF will be approved soon…

And last but not least

We’re here to make money, and keep it right?

To set the stage for what I’m going to talk about, Cosmos is an ecosystem that allows you to easily launch your own custom appchain with a bunch of interoperability solutions. One of these is replicated security, where a new appchain, or in this specific case, a consumer chain, will lease security from the Cosmos Hub and its validator set. One of these proposed consumer chains, Duality, a fully on-chain order book DEX, is willing to give 100% of its transaction fees and MEV revenue back to ATOM stakers, and will also be using ATOM as its gas token.

Sure, it makes sense if you’re willing to give away some of your revenue as payment for your security, but giving away 100% seems like going a little overboard. In the proposal, they state that it’s more important to first create value (and a lot of it) before capturing any. They further state that they aren’t concerned about capturing value in the short term. When you compare this to web2 where Uber spent billions of dollars growing the pie and capturing their slice, it honestly doesn’t seem that crazy. “Any meaningful value capture in the long-term will be best accomplished through building a brand and culture known for building open-source, impact-driven software.” Do you agree? — JC

Out of the Ether: Special NFT Edition

Have you read the definitive history of Ethereum? No? Well then get your special edition of Out of the Ether while you can. There are only 1,000 that were printed and each copy is an NFT that can be registered on the Lukso blockchain’s Universal Profile protocol.