Artemis Weekly Wrap-up (11/17/2023)

your go-to source for weekly fundamental updates

This week, Bitcoin options open interest reaches all time high of $15bn on Deribit, Coinbase expands actively managed solutions for private wealth and institutions, and Thai Billionaire Sarath Ratanavadi plans to work with Binance to roll out crypto exchange in Thailand in early 2024.

🌞 Apollo and JP Morgan partner with blockchain platforms to transform the asset management space

💫 Artemis Data Insights:

• NEAR is supported on the Artemis Blockchain Activity Monitor!

• UpvsDown (Gaming Application on Polygon)

The crypto ecosystem saw L1 / L2 market prices temper this week with average and median WoW increase of 3.9% and decrease of 3.0%, respectively. This week’s price movement was led by Avalanche’s ~44% WoW rise, which stemmed from with an announcement that the network is partnering with large-cap traditional financial firms such as Apollo and JP Morgan to “reshape portfolio management and democratize access to alternative assets.” Meanwhile, the S&P 500 and Nasdaq Index increased 2.4% and 2.8% WoW, respectively, driven by U.S. inflation rate increasing 3.2% YoY for the 12 months through October, which was lower than expectations.

🌞 Apollo and JP Morgan partner with blockchain platforms to transform the asset management space

This week, JPMorgan and Apollo announced that they have been working with several blockchain firms including Axelar, Oasis Pro, Avalanche and Provenance to demonstrate "proof of concept" for how asset and wealth managers (AWMs) could tokenize funds on the blockchain of their choice. The project sits under the Monetary Authority of Singapore’s (MAS) “Project Guardian,” a collaborative initiative between the MAS and the broader financial industry to assess the feasibility of applications in asset tokenization / decentralized finance. The first iteration of the joint collaboration was an attempt to “enable wealth managers to purchase and rebalance positions in tokenized assets across multiple, interconnected blockchains.”

The project looks to address several challenges present within wealth management:

• Complexity in Portfolio Management: Managing portfolio allocations, especially across asset types, involves extremely manual processes, multiple systems, and reconciliation efforts​​.

• Limitations with Alternative Investments: Alternative investments (private equity, private credit, etc.) offer potential benefits but are not commonly included in model portfolios due to operational complexities and limited liquidity​

• Fragmented Access to Tokenized Assets: Tokenization of assets across disparate blockchain networks has led to fragmented ecosystems, limiting the effectiveness of these technologies​​

Within the technical whitepaper issued alongside the announcement, numerous improvements offered by blockchain technology / tokenization were mentioned to describe how blockchain-based asset management can fundamentally change the existing asset management landscape. Some of the improvements include:

1. Automated Back-office / Operational Processes: Blockchain platforms can reduce those 3000+ operational steps to a single automated process, thanks to smart contracts and streamlined digital workflows

2. Reduction in Portfolio / Settlement Fees: The implementation of blockchain technology can lead to a reduction in portfolio fees by approximately 20% as a result of reduced cash drag and faster, more efficient settlement processes

3. Improved Liquidity for Alt Assets: Representing assets as tokens on a blockchain could facilitate better liquidity markets for alternative investments, as the process of transferring ownership becomes more straightforward and less dependent on manual, bilateral negotiations

4. Increased Efficiency and Accuracy of Payments: The blockchain provides a single source of truth, significantly reducing the need for costly and time-consuming reconciliations and minimizing trade errors

5. Greater Access and Flexibility for Investors: Blockchain enables more flexible and accessible portfolio management, allowing a wider range of investments, including alternative assets, to be easily included in investment portfolios

graphic of how portfolio managers, fund managers and tokenized assets are connected via blockchain networks

Ultimately, this partnership between J.P. Morgan and Apollo sends a strong signal that blockchain technology can be used for real business cases that have the potential to generate meaningful bottom-line opportunities for its constituents. With the effective implementation of blockchain technology, JP Morgan and Apollo believe that AWMs will be able to build personalized, scalable portfolios with greater speed and efficiency than legacy systems.

💫 Artemis Data Insights: NEAR is supported on the Artemis Blockchain Activity Monitor

NEAR has been added to the Artemis Blockchain Activity Monitor! You can use the activity monitor to check out the top applications utilized on the NEAR network. This week, the top-ranking dApps by gas consumed were:

• Kai-Ching (Social)

• Sweat (Gaming)

• Aurora (Layer 2)

• Orderly Network (DeFi)

• Spin (DeFi)

top gas consuming applications on NEAR in the past week

Of note, Kai-Ching is the largest application by active addresses, which has grown to ~600-700k active addresses on the network since launching at the end of August.

One of Kai-Ching’s core applications, KAIKAINOW sits on the user’s home screen and offers a variety of curated content including news, language learning, games and trending stories. KAIKAINOW is an opt-in technology and was created by Cosmose AI, a global platform that “uses AI to predict and influence how people shop offline.”

💫 Artemis Data Insights: UpvsDown (Gaming Application on Polygon)

UpvsDown has been the #1 application on Polygon by gas usage over the past month, consuming ~$122k over the past 30 days. Over that same period, the game has seen ~2.8k monthly active users with daily active users exceeding ~600 over the past few days. UpvsDown is a “Web3 PVP Trading Game” where consumers can bet on things such as whether the price of Bitcoin will go up or down.

will bitcoin go up or down

daily active addresses on UpVsDown on Polygon

While the active address growth has been quite impressive, we looked into the active address numbers for accounts that never took more than an 8 hour break (more likely to be bots) vs. accounts that did (more likely to be humans). What we found was that almost half of the accounts over the past few weeks fall under the “bot” category which would bring the actual number of active users down to ~300-400.

With that said, UpVsDown is still consuming a substantial amount of gas on the network, which introduces an interesting relationship between bots and blockchain profitability. While most blockchain networks are searching for real users to onboard onto its platform, bots that initiate transactions on chain still utilize gas to consummate transactions and contribute real transaction fees to the underlying blockchain.

Detailed dashboard for people who love more numbers in smaller font:

Note: Revenue represents fees that go to the protocol’s treasury or are returned to tokenholders via a burn mechanism (source: Token Terminal). Weekly commits and weekly dev activity as of 11/6/23.

The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments.

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