The Scoop

Decentralized derivatives exchange dYdX is expanding. After raising $10 million in Series B funding last month, the team is gearing up for its coming V3 launch.Founder Antonio Juliano sat down with The Scoop this week to talk about where the decentralized finance (DeFi) space is going in the coming year. They could be the answer to the traditional financial system's transparency and security problems. But first, they have to scale.Juliano told The Scoop how dYdX is handling scalability, including mitigating high gas fees. They're using ZK-Rollups, or zero knowledge proofs. These proofs take information and create a "constant sized data object" which means no matter how much data is input, the information remains the same size. The idea is that thousands of trades can be compressed into a small size to run on Ethereum, circumventing the high fees.They're planning on launching their scaling solution in partnership with StarkWare in the next two weeks, according to Juliano. Juliano broke down dYdX's path to ZK-Rollups in this week's episode of The Scoop, along with: Where dYdX's origins began and why it was long before the boom of DeFi. How its flagship product, the perpetual swap, works. Why Ethereum layer 2 scaling solutions help projects like dYdX build out their market and which solutions dYdX almost went with. When the DeFi market might collide with the centralized markets, and how interoperability and scaling will lead the way. This episode is brought to you by KrakenWhether you’re an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With 50+ cryptocurrencies to choose from, industry-leading security and a wide variety of features to suit any investing strategy, Kraken puts the power in your hands to buy, sell and trade digital assets. Visit Kraken.com to get started today.

Michael Sonnenshein took the reigns of cryptocurrency asset manager Grayscale Investments earlier this year. At the helm of the more than $30 billion investment firm, Sonnenshein is charting a course for a broad expansion of the business, which is best known for its Grayscale Bitcoin Trust."We brought in $5.7 billion last year," Sonnenshein said. "We are launching new products, we are investing in technology, we're building out the various teams, it's really about continuing to stay ahead of the growth we are experiencing at really an unprecedented rate."New inflows into the firm helped push Grayscale's assets under management (AUM) to new highs, while also lining its pockets with fee-based revenue. Estimates by The Block Research suggest Grayscale has brought in more than $109 million year-to-date. In addition to new hires, the firm has a plan for upgrading its GBTC product to an exchange-traded fund should the regulators ultimately approve such a product. "We spent the better part of 2017 in SEC registration for Grayscale Bitcoin Trust," Sonnenshein told The Block. "And we made a lot of progress with the commission and ultimately realized the regulatory environment wasn't ready for a bitcoin ETF and we pulled out of that process."He added:"But we hope in the future, like we were planning to in 2017, to register and uplift GBTC onto a national securities exchange as a bonafide ETF."Still, competition is mounting, with BlockFi and Osprey recently rolling out new funds. There's also Bitwise, which has seen its assets under management climb towards $1 billion in recent months. In this episode of The Scoop, Sonnenshein breaks down its hiring goals for 2021 as well as the following: What a bitcoin ETF approval means for Grayscale's GBTC Why mounting competition will result in fees "absolutely" coming down Why he wants to convince a nation-state to buy GBTC The firm's #DropGold campaign and plans for future marketing campaigns The technology investments Grayscale is making in its platform to make the investing process more seamless This episode of The Scoop is brought to you by KrakenWhether you’re an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With 50+ cryptocurrencies to choose from, industry-leading security and a wide variety of features to suit any investing strategy, Kraken puts the power in your hands to buy, sell and trade digital assets. Visit Kraken.com to get started today.

"It's been number one on the ask list for a long time."That's Tim McCourt, global head of equity products for CME Group. Speaking about the reception of the more than hundred-and-seventy-year-old exchange's latest product -- futures based on ETH, the native cryptocurrency of the Ethereum network -- McCourt characterized the response as "overwhelming.""People have been really excited ... I think for a long time customers have really been demanding ether futures. They're really excited about the bitcoin futures and the success they've had," he said on the most recent episode of The Scoop.CME Group saw 388 contracts traded on the first full day of trading for the product, which was announced at the end of last year.That's about 19,000 ETH, or $33 million. The launch of ether futures followed the launch of bitcoin options at the end of 2019 and its bitcoin futures product in 2017. At last check, open interest in CME's bitcoin futures product stood above $2 billion. McCourt said that unlike products trading on other venues, CME's crypto products trade on a venue to which professional market participants are already connected.The firm's crypto products "widgets through the machine” in the same way as its thousands of other contracts, he said. "Your brokers are familiar. Your clearing members are familiar. So you don't have some of those barriers to enter that you have on the spot side."In this episode of The Scoop, McCourt unpacks the growth of CME's crypto products, the development of the overall crypto trading ecosystem, and what might come next for his company's crypto offerings.Episode 7 of Season 3 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Tim McCourt of CME Group.Listen below, and subscribe to The Scoop on Apple, Spotify, Google Play, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.This episode of The Scoop is brought to you by our sponsors Blockset and Kraken. BlocksetWith Blockset, companies gain access to tools such as:1. A highly scalable API that supports Bitcoin, Ethereum, Ripple, and other top chains2. AML/KYC data expediting time to market by complying with legal requirements3. Leading custody solutions using modern multi-party compute (MPC) technology KrakenWhether you're an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With 50+ cryptocurrencies to choose from, industry-leading security and a wide variety of features to suit any investing strategy, Kraken puts the power in your hands to buy, sell and trade digital assets. Visit Kraken.com to get started today.

Stock markets have seen unprecedented levels of trading in recent days, fueled by retail trading activity tied to Wall Street Bets. Robinhood — which became the key figure in this drama as the venue through which much of the publicly visible trading occurred — has been a focal point of this market backdrop after buckling under the pressure of heightened activity and temporarily limiting purchases of certain stocks, like GameStop and AMC. In response, Robinhood came forward and tied its response to the underlying settlement infrastructure. Robinhood said in a blog post that the limits on trading were connected to soaring clearinghouse deposit requirements. The firm later said that a move to real-time trade settlement would remedy f the issues that faced not only Robinhood but other brokers. Here's from the blog:"The clearinghouse deposit requirements are designed to mitigate risk, but last week’s wild market activity showed that these requirements, coupled with an unnecessarily long settlement cycle, can have unintended consequences that introduce new risks."Shane Swanson of Greenwich Associates — a market structure wonk and former director at Citadel Securities — breaks down exactly what happened to the markets last week and why things stopped trading on a new episode of The Scoop podcast.Here's Swanson:"I like to use examples because I am a simple guy and examples seem to help. If I am a broker and I have $10,000 worth of capital and these aren't the accurate numbers, but say that allows me to trade $100,000 worth in the market because I have some leverage capabilities. And I am going to let somebody trade with me and I am to give them margin which means I'm going to lend them money and they're going to trade, and I am exposed to that lending risk. And they trade all the way up and they use all my $100,000 that I am allowed to expose myself to, once I hit that $100,000 I can't trade anymore. I can't expose myself to any more risk. I have used up the bucket of capital of which I am allowed to trade now."As for what happens next, Swanson told The Scoop that "it's always hard to go backwards on cost," referring to the ramifications of moving from T+2 to a more instant settlement process."It all depends. If the costs are egregious enough that the industry has to absorb commissions could come back. Movement from T-plus 2 to T-plus 1 settlement would be over a long enough time horizon I believe that would not be something that ends up impacting the retail investors in terms of cost," Swanson explained.

Cboe is a Wall Street powerhouse. On a typical trading day, the exchange operator handles about a third of U.S. equity volumes. In derivatives, major Wall Street products such as the VIX and S&P 500 options trade hands every day through its venue. Cboe is now trying its hand at the crypto market — again, that is. More than a year after it shuttered its bitcoin futures product, the exchange said that it would re-enter the market through a partnership with crypto data services provider CoinRoutes.  On today's episode of The Scoop, Cboe global head of information solutions Catherine Clay lays out the firm's ambitions to build out a business in crypto market data. Clay also touches on how Cboe's plans set the stage for a wide range of tradable products, including a bitcoin VIX-like product to an exchange-traded fund. "You can even think about creative indices that reflect portfolio allocations with digital assets as a component," Clay said. "Bringing this real price data in for the creation and calculation of indexes falls very much in line with how we think about educating the investment sphere and giving people some idea about how to construct portfolios for crypto."For Clay, the relatively undeveloped state of the crypto data ecosystem harkens back to her time trading internet stock derivatives in the 1990s. "It really reminds me of when I was a derivatives trader back in the late 90s trading the internet stock back then that were really volatility," she said. "I remember standing in the pit where I was the lead market maker for Netscape and Double Click and you could imagine back then there was very little data available to understand where the derivatives—the options— listed on those underlying should be priced and traded."In this episode of The Scoop, Clay also discusses Her background as a derivatives market maker and how that history informs her view on the crypto world  The use case of the real price data it is now distributing through CoinRoutes  The importance of data and analytics for a robust crypto market  The pent-up demand from issuers looking to create crypto products What Cboe's next steps might be if the SEC approves a bitcoin ETF

Pantera Capital's CEO Dan Morehead says initial coin offerings (ICO) aren't dead, but the narrative is gearing towards a bitcoin and ethereum ruled world for investors."Crypto as a market is so volatile that the narrative changes," said Morehead on this week's episode of The Scoop. That narrative lately has been all about bitcoin's growing adoption. From Microstrategy to Stone Ridge Holdings — and maybe soon the city of Miami — big players are allocating millions into the cryptocurrency.But as the money flows towards bitcoin adoption, ICO's aren't over, according to Morehead. Pantera is still pitched one every two to four months, and the firm's initial coin offering (ICO) fund ended 2020 up more than 500%. Still, that's a sharp decline from the 50 pitches a week Pantera sifted through in 2017, and its bitcoin fund closed 2020 up nearly 300%. The crypto narrative for investors is trending towards bitcoin amid institutional adoption, Morehead told The Scoop."We’re really seeing an inflection point with more coming into the market over the last couple of months....I think the reality is they’re looking for managers that manage multi asset funds sometimes both tokens and venture and they ultimately want that all to be within a handful of managers," he said.Lately, he's getting calls from many endowments, putting the industry at an inflection point with so many entering the space. Driving the interest in bitcoin is the current macro backdrop as well as bitcoin's spring halving last year—which the firm said could play a role in bringing its price to $115,000. He broke down what that means for the coming year on this week's episode, along with: Why the market is so focused on BTC and ETH this time around compared to the focus on initial coin offerings in 2017. What institutional investors want out of a bitcoin or crypto fund manager  Why Coinbase's initial public offering will kick off a wave of crypto companies going public. How the industry is going to consolidate in the coming years, and why many exchanges are in a prime position to get rolled up. Why Pantera is "much more bullish on Ethereum" than other parts of the space.

"They start with bitcoin. It is the easiest to understand."In the most recent episode of The Scoop, Olaf Carlson-Wee said that recent headlines about institutional investors making waves in the bitcoin market aren't surprising to him. Since he launched Polychain Capital in 2016, he's become familiar with new market entrants who start by exploring bitcoin and then ultimately make their way to other ecosystems. "It isn't surprising that these big institutional investors are first getting involved with bitcoin," he said. "This is effectively electronic gold. Everyone can reason about gold and the value of gold in an easy way."From Anthony Scaramucci to Paul Tudor Jones, the bull case for bitcoin as digital gold has been all but cemented as a Wall Street talking point. Yet his interest in bitcoin will find its way to DeFi, Carlson-Wee argues."Once you have $100 million of bitcoin, you might start to think how I could get yield on this bitcoin for example," he said. "A lot of the time the answer there is through on-chain financial contracts."Carlson-Wee also believes that interest in DeFi products and services will buck the example of the 2017 ICO bubble and be more long-lasting.As he put it during the interview:"The summer of ICOs was a summer, the summer of DeFi was just the beginning of multi-years of compounding growth. The financial engineering in DeFi, I think, at this point is inarguably moving faster than the financial engineering anywhere else in the world. The capital coordination is faster than anywhere else in the world. A lot of these DeFi protocols are bigger than IPOs—regularly. Despite that go regularly unnoticed and are hard to interact with. The user experience barriers here are very high and despite that we see significant traction in terms of volumes."Still, Olaf-Carlson Wee said DeFi market participants need to work out the UI problems that make platforms difficult to use. In this episode of The Scoop, Olaf Carlson-Wee digs into: The differences between the ICO boom and the current market rally How DEXs went from being irrelevant to facilitating billions of dollars in volumes Where DeFi goes next What he thinks about the upcoming Coinbase IPO YFI's recent proposal to increase inflation  Polychain's lessons learned from the previous 2017 cycle 

Count this as one of the first major acquisitions deals of 2021: Coinbase said on Wednesday that it is set to acquire crypto infrastructure services provider Bison Trails for an undisclosed sum. On this episode of The Scoop, Coinbase chief product officer Surojit Chatterjee and Bison Trails CEO Joe Lallouz unpack the deal with The Block's Frank Chaparro and Ryan Todd. "Bison trails is going to serve as a foundational product within our product portfolio: what we call our ecosystem products," Chatterjee, a former executive at Google, said. "So staking infra services is a start point, but we are going to look at other potential services that we can externalize, that we can create as a service."The deal represents a bigger push by Coinbase to offer its internal solutions to new client segments, Chatterjee said."Over time you will see we will extend additional infrastructure and API services, many of which have actually been developed to power our internal Coinbase product," he added. "We want to externalize them make them services for the entire crypto ecosystem."In this episode of The Scoop, we explore various aspects of the deal, including: What it could mean for Coinbase's existing staking offering How it improves Coinbase's standing as an infrastructure as a service provider in the crypto market How the Bison Trail's team could lead to new external API services for big ticket clients and help improve existing services Chatterjee's product philosophy for Coinbase Recent moves by rivals to snag banking licenses from the OCC 

Bitcoin investment firm NYDIG raised $50 million in October, quadrupled its clients and life insurance company MassMutual purchased a minority stake in the firm.This came about because bitcoin is transitioning to a predominantly institution-owned asset, according to NYDIG CEO Robert Gutmann. MassMutual made a $5 million equity investment in NYDIG last December, as well as a $100 million bitcoin investment for its general investment account through NYDIG. On today's episode of The Scoop, Gutmann said this event could open the floodgates for insurance giants to get in on bitcoin.“You are going to see a lot of dominoes fall after this," he said.Based on the set of macro circumstances 2020 presented, insurance companies are starting to question whether they can go forward only buying corporate credit to make good on policies, according to Gutmann. "Over some number of years, it's hard for me to imagine it is not all of them [investing in bitcoin]," he said. "If MassMutual can get there from a diligence perspective so can the next one...It's definitely coming."He also sees publicly-traded companies following in the footsteps of Square and MicroStrategy. Both firms allocated a portion of their balance sheets to bitcoin. In Gutmann's view, these companies have a "fiduciary duty to consider whether holding 100% of your assets in dollars is in the best interest of your shareholders.""Reasonable people can have different opinions about that, but I personally don’t think only Jack and only Michael and no one else is going to do a cold analysis of that and not come to that conclusion," he said.On today's episode of the Scoop, Gutmann also touched on: Why he expects more insurance companies will enter the crypto space over time How the MassMutual deal came to be Why public companies are interested in bitcoin and how the adoption narrative for public companies is similar to that of insurance firms Why his institutional clients are only interested in bitcoin  NYDIG's M&A strategy. Listen to today's episode on Apple, Spotify, Google Play, Stitcher or wherever you listen to podcasts.

After bitcoin's price fell from its highs above $40,000 this past weekend, investors were left arguing about whether that drop to almost $30,000 was an inevitable market correction or a sign of something more sinister.Indeed, liquidations across futures venues soared to more than $3 billion as crypto exchange Coinbase reported persistent technical issues. But Galaxy Digital's Mike Novogratz isn't particularly worried. "I am positive this is not November 2017," he said on this week's episode of The Scoop. "Listen, the market got way, way overbought. It was overbought by every statistic, every metric you can look."In spite of a fallen price, Novogratz said the real thesis of the past few months was adoption. More people have heard the bitcoin story, according to Novogratz, and a price correction won't meaningfully undercut that progress. There are still institutions waiting to buy, he said."The bitcoin-as-a-hard-asset story remains intact," Novogratz added. "This is a wash-out, a position wash-out. I don't think it will be long-term damaging. $30,000 should hold." He went on to highlight institutional firms that "haven't filled their coffers yet that continue to want to buy.""Insurance companies, asset managers, big institutions haven't bought bitcoin yet and they want to," said Novogratz.During this week's episode, Novogratz explains how he and Galaxy Digital are navigating the market correction, as well as:  Why this price drop won't scare off institutional investors The impact of the macro background and fiscal spending under a Joe Biden-led administration The businesses he's most excited about, particularly in the decentralized finance space How he's viewing Bakkt and Coinbase's plans to go public His advice for new market entrants. This episode of The Scoop is brought to you by Blockset. With Blockset, companies gain access to tools such as:1. A highly scalable API that supports Bitcoin, Ethereum, Ripple, and other top chains2. AML/KYC data expediting time to market by complying with legal requirements3. Leading custody solutions using modern multi-party compute (MPC) technology Learn more and start building today.