Weekly review calendar week 5 – 2022

Over the years, the Crypto Valley has developed into an essential location within the crypto industry. Thanks to early legal certainty achieved through constructive cooperation between politicians, companies and regulators, the foundation for sustainable growth has been laid. An in-depth insight into the thriving ecosystem is provided by the “CV VC Top 50 Report”, which is published on an annual basis. The latest edition of the study shows that companies from Crypto Valley have once again made significant progress in 2021. The number of companies surveyed exceeded the 1,000 mark for the first time, rising to 1,128 at the end of December 2021 (+18% YOY). The number of employees in the sector increased to 6,002 (+16%) and the valuation of the 50 largest companies grew by a whopping 464% to $611.8 billion. In addition to the branching of numerous new financial service providers, the size of financing rounds registered over the past year is also remarkable. The report underscores the thesis that the turbulent pricing in crypto markets sometimes disguises the fundamental developments happening in the crypto infrastructure.

Non-fungible tokens (NFTs) remain a driving force in the crypto ecosystem. The possibilities presented by these specific blockchain tokens are almost limitless. In addition to art and gaming applications, the technology is also ideally suited for the so-called tokenization. Through it, illiquid and inaccessible assets should be made available to a wide audience, thus bringing forth a democratization of investor markets with substantial efficiency gains. Although the term is a widely discussed one, its definition remains vague and takes on different meanings depending on the context. Alexander Appelmans, a member of the academic council at the Foundation for International Blockchain and Real Estate Expertise (FIBREE), describes the potential of tokenization using real estate as an example.

With the rise of cryptocurrencies and the unfolding of the NFT field, new types of financial models have found their way to the market. Play-to-earn (P2E) is one of them and describes a sector of crypto games whose players are rewarded with financial incentives. P2E games are designed to allow users to “farm/collect” various cryptocurrencies and NFTs. These can subsequently be traded through marketplaces and sold for profits. Particularly in poorer parts of the world, this type of video game has quickly caught on and even replaced day jobs for some people. The merging of the multi-billion dollar gaming and crypto industries is identified as one of the biggest potential growth opportunities today.

The emergence of alternative smart contract platforms such as Solana, Avalanche and Fantom has seen the ecosystem of decentralized financial applications (DeFi) increasingly become diversified away from the pioneer Ethereum into a cross-chain world. An integral part of this “multi-chain” ecosystem are so-called bridges. They allow users to quickly transfer tokens from one blockchain to another. In the past, however, these bridges turned out to be critical points of vulnerability. This circumstance was impressively confirmed this week. A security vulnerability in Solana’s “Wormhole” bridge led to the theft of 120,000 Ether worth over $320 million. A potentially catastrophic liquidation cascade was prevented by the swift intervention of the parent company Jump Trading – one of the largest high-frequency trading firms in the world – by covering the stolen funds.