Donovan Choy

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We’re kicking off this week with a collection of charts around political markets on Polymarket, Maple’s unstoppable SyrupUSDC growth, and an ambitious Celestia proposal to leave proof-of-stake behind.



<h2 class="wp-block-heading">Polymarket political markets</h2>



Polymarket is back in the limelight amid recent geopolitical conflicts.



In the last week, markets in the “Politics” category saw a jump from $3.9 million to $19.5 million in volumes, as denoted by the light blue bars in the chart below.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc7hUObP8pVy4XKuQ58DPZVGrHGak8rhCt8v4aJbESeWy1ZQbuUOs4sbrb2FYKWggkDpthx_SlAP5mWnRfzly6ZwKn_SuQT_Cy7_J43tKo6nP2JCAWMz03oVChiBY4ORL56tYOy?key=cRSo9z7KKeL8tZciBY-DLw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/polymarket?dashboard=53">Polymarket</a>.</figcaption></figure>



All eyes were focused on the “US military action against Iran before July?” market, which <a href="https://polymarket.com/event/us-military-action-against-iran-before-july?tid=1750273470067&amp;utm_source=hs_email&amp;utm_medium=email&amp;utm_content=367725286&amp;_hsenc=p2ANqtz-8TeV1lleAcBdX0r-vOK9uiPIEv5Nbrs65tK4kFmpL4j8SICyG1mHZ5ThEudBWgPAtIcq25zZeOdR1gHD7q0PLJeWtOTg">contract</a> resolved yesterday following reports of US strikes on alleged Iran nuclear facilities. The market saw a total $29.9 million in trading volumes.



Just before the market surged to 99%+ near certainty, “Yes” shares on the market had been trading at $0.59, meaning markets were pricing in about a 59% probability of the US taking military action against Iran.



<h2 class="wp-block-heading">Celestia’s governance</h2>



Celestia should abandon proof-of-stake consensus for “proof-of-governance” (PoG), argues Celestia co-founder John Adler in an ambitious new governance <a href="https://x.com/jadler0/status/1936813032140636643">proposal</a>.



If passed, the following material changes will be enacted:



<ol class="wp-block-list">
<li>TIA issuance will be cut by about 20x, or 95%.</li>



<li>Delegated staking and liquid staking contracts will be phased out. No more onchain governance.</li>



<li>All TIA issuance will be routed solely to validators as payment for running nodes.</li>



<li>Validators would be picked by off-chain governance, because Celestia lacks general execution and is not suited to support onchain token voting. </li>



<li>Network fees would be burned as a form of value accrual to TIA token holders. Celestia’s protocol fees amount to <a href="https://app.blockworksresearch.com/analytics/celestia?dashboard=138">$100–$300</a> daily.</li>
</ol>



TL;DR: Reduce Celestia’s constant emissions in a bid to stave off its declining price action (see chart).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfSvCeKCWgEbxevKpPXgnWus4Riw0ipBzOlV5NxZJXyWREgS2YblbE3G60fXhrjPF6SRSni1lOALN0SjbEic-fYrINK9x6YkolncwKAfXNjP-w1UUfNYyNFV0ePpOReClVD0MoV?key=cRSo9z7KKeL8tZciBY-DLw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/celestia?dashboard=134">Blockworks Research</a>.</figcaption></figure>



The proposal challenges many common sense “wisdoms” of Ethereum thought, namely where a chain’s “economic security” is derived from (not slashing), the framing of PoS as really permissioned “proof-of-authority,” and how to think about “blockchain profitability.” Expect Ethereum maxis to be triggered.



<h2 class="wp-block-heading">SyrupUSDC growth</h2>



Maple’s yield-bearing stablecoin SyrupUSDC is now at a market cap of $780 million, making it the fastest-growing stablecoin this year.



Users deposit USDC onto the platform, which is then used to issue overcollateralized loans to institutional borrowers. The interest charged on those loans is resulting in above average APYs of about 10% today (6.4% base yield +3.5% Drip points), driving SyrupUSDC’s rapid growth.



You can also forgo points to snag a <a href="https://app.pendle.finance/trade/markets/0x9a63fa80b5ddfd3cab23803fdb93ad2c18f3d5aa/swap?view=pt&amp;chain=ethereum">9.2%</a> PT fixed yield on Pendle instead.



About $587 million is used across DeFi, mainly 55% in Spark and 19% in Pendle.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcjOKU0Y9_fXBG5bWNQwjMk2DQKWWs9NpxTbl0ymw9c9uktQr7seFQ99V8g68hy9po0-e3bF8G6ydZ4EeDvKgf4x1O8GqkxftYu3-ITL9x3u5dxyRYFLqrQV8ax3CWGXtL7mFsDcw?key=cRSo9z7KKeL8tZciBY-DLw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://dune.com/jonaso/syrup-usdc-usage-in-defi">Dune</a>.</figcaption></figure>







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0xResearch Newsletter

Polymarket ‘politics’ markets surge, Celestia rethinks consensus

Ben Strack

<div id="highlights-block_6345d2e3b78ee" class="highlights">
 <ul>
 <li>The Middle East received $270 billion worth of crypto between July 2020 and June 2021 — a 1,500% increase from the year prior</li>
 <li>The firm plans to expand into about a dozen more regions, executives of 21Shares’ parent company told Blockworks after its $25 million raise in September</li>
 </ul>
 
</div>



The world’s largest crypto ETP issuer has brought the first physically backed bitcoin ETP to the Middle East as the firm continues expanding globally after a fresh round of funding.&nbsp;



21Shares’ new product is listed on Nasdaq Dubai, marking the company’s first entry into the region. The company lists 46 products across 12 exchanges in seven countries.



The launch comes after <a href="https://cms.blockworks.co/21shares-parent-company-valued-at-2b-after-marshall-wace-led-fundraise/" target="_blank" rel="noreferrer noopener">the firm raised $25 million last month</a> in a funding round led by hedge fund Marshall Wace — giving the company a roughly $2 billion valuation. Hany Rashwan, CEO of 21Shares parent company 21.co, previously told Blockworks that the firm wants all its products — ranging from single-asset crypto ETPs to indexes — in “every single geography.”



The executive called the Middle East “a crypto hotspot,” pointing to the region’s standout year-over-year growth in crypto value received amid currency devaluation concerns in a number of its countries.&nbsp;



The Middle East received $566 billion in cryptocurrency from July 2021 to June 2022, according to a Chainalysis <a href="https://blog.chainalysis.com/reports/middle-east-north-africa-cryptocurrency-geography-report-2022-preview/" target="_blank" rel="noreferrer noopener">report</a> published last week, 48% more than they received the year prior.



“The region has become a hub for crypto companies and exchanges…especially following India’s decision to <a href="https://cms.blockworks.co/indias-crypto-tax-takes-effect-with-industry-fearing-it-will-stifle-growth/" target="_blank" rel="noreferrer noopener">tax earnings from crypto at 30%</a>,” Rashwan told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The Middle East’s level of interest and crypto-friendliness made it a prime market for expansion for 21Shares,” he said.</blockquote>



After Dubai <a href="https://cms.blockworks.co/dubai-is-the-latest-government-to-roll-out-crypto-law-set-up-regulator/" target="_blank" rel="noreferrer noopener">revealed its first cryptocurrency legislation</a> in March, the emirate granted virtual asset licenses to <a href="https://cms.blockworks.co/ftx-granted-crypto-license-with-dubai-hq-in-sights/" target="_blank" rel="noreferrer noopener">FTX</a> and <a href="https://cms.blockworks.co/binance-granted-license-to-operate-in-dubai/" target="_blank" rel="noreferrer noopener">Binance</a> that month. Kraken <a href="https://cms.blockworks.co/kraken-receives-abu-dhabis-first-virtual-asset-exchange-license/" target="_blank" rel="noreferrer noopener">revealed plans</a> to expand to the UAE in April — opting for neighboring emirate Abu Dhabi — while others such as <a href="https://cms.blockworks.co/crypto-com-secures-provisional-approval-to-open-crypto-exchange-in-dubai/" target="_blank" rel="noreferrer noopener">Crypto.com</a>, <a href="https://cms.blockworks.co/okx-to-expand-in-uae-after-dubai-regulatory-approval/" target="_blank" rel="noreferrer noopener">OKX</a> and <a href="https://cms.blockworks.co/crypto-custodian-komainu-follows-exchanges-to-dubai/" target="_blank" rel="noreferrer noopener">Komainu</a> have also flocked to the area.



Sherif El-Haddad, formerly head of asset management at Al Mal Capital, <a href="https://cms.blockworks.co/21shares-adds-execs-as-part-of-global-expansion/" target="_blank" rel="noreferrer noopener">joined 21Shares in August</a> as the company’s head of the Middle East.



“Cryptocurrencies are fast becoming the asset of the future for investors and wealth managers around the world, as global crypto adoption and investment levels continue to accelerate at pace — and the Middle East is a major accelerator of this growth,” El-Haddad said in a statement.



“The UAE, and broader [Gulf Cooperation Council], is a market of significant strategic importance to our business, and we are excited about the opportunity this market opens to us,” he added.



21Shares <a href="https://cms.blockworks.co/first-australian-spot-bitcoin-ether-etfs-to-go-live-next-week/" target="_blank" rel="noreferrer noopener">launched the first bitcoin and ether ETFs in Australia</a> in May. Executives said last month that the firm is seeking to expand into about a dozen more regions but declined to share specific areas.



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21Shares

21Shares Brings First Spot Bitcoin ETP to Middle East

Sebastian Sinclair

<div id="highlights-block_62b124acabb52" class="highlights">
 <ul>
 <li>Dubai&#8217;s government is hoping to attract foreign investment following the passage of its Virtual Asset Law in February</li>
 <li>Hex Trust is the latest crypto firm to be approved, in part, for licensure within the emirate</li>
 </ul>
 
</div>



Hong Kong-based crypto custodian Hex Trust has become the latest crypto firm to receive provisional approval from the Government of Dubai to conduct business in the region.



Hex Trust said it is in the process of obtaining a Virtual Asset MVP License via the emirate&#8217;s Virtual Assets Regulatory Authority (VARA) to provide a range of services to institutional clients and investors, according to a statement Monday.



VARA, set up in March of this year, oversees virtual asset regulation via a licensing regime. The regulator is also responsible for developing strategic plans and policies relating to digital assets in the region, as well as establishing and overseeing know-your-customer checks and anti-money laundering rules.



It also became the world&#8217;s first regulator in May to establish a presence in the <a href="https://mediaoffice.ae/en/news/2022/May/03-05/Dubai-Virtual-Assets-Regulatory-Authority-becomes-world-first" target="_blank" rel="noreferrer noopener">metaverse</a> as a means of increasing accessibility to stakeholders.



With provisional approval now in hand, the custodian said it would open an office in Dubai for use as a regional headquarters in the Middle East. 



The move follows the custodian&#8217;s recent and first significant raise, an <a href="https://cms.blockworks.co/hex-trust-raises-88m-in-series-b-to-expand-into-europe-middle-east/" target="_blank" rel="noreferrer noopener">$88 million</a> Series B funding round in March, where funds were put toward scaling its operations in the Middle East and Europe.



Crypto firms continue to flock to the major Arab emirate following Dubai&#8217;s head, Sheikh Mohammed bin Rashid Al Maktoum, passing the &#8220;Regulation of Virtual Assets in the Emirate of Dubai&#8221; in February.



Better known as the Virtual Asset Law, the regulation sets about providing clear guidelines and definitions regarding digital assets, including NFTs (non-fungible tokens).



Several major crypto firms including <a href="https://cms.blockworks.co/ftx-granted-crypto-license-with-dubai-hq-in-sights/" target="_blank" rel="noreferrer noopener">FTX</a>, <a href="https://cms.blockworks.co/binance-granted-license-to-operate-in-dubai/" target="_blank" rel="noreferrer noopener">Binance</a>, <a href="https://cms.blockworks.co/crypto-com-secures-provisional-approval-to-open-crypto-exchange-in-dubai/" target="_blank" rel="noreferrer noopener">Crypto.com</a>, Bybit and <a href="https://cms.blockworks.co/kraken-receives-abu-dhabis-first-virtual-asset-exchange-license/" target="_blank" rel="noreferrer noopener">Kraken</a> have recently established regional headquarters or received licenses to operate in the United Arab Emirates.



&#8220;Hex Trust is excited and fully committed to expanding into the Middle East and sees enormous potential for digital asset growth given the progressive regulations, welcoming governments and thriving crypto ecosystem in the region,&#8221; Filippo Buzzi, Hex Trust&#8217;s regional director for the Middle East and North Africa, said in the statement.



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