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Weekend Wrap: El Salvador’s ‘bitcoin bond’

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Behind the Headlines
  • El Salvador’s president announces new “bitcoin bond” plan. El Salvador has struck a deal with crypto firms Blockstream and iFinex to advance its efforts in the bitcoin market. The country is set to issue so-called Bitcoin bonds to “accelerate hyperbitcoinization and bring about a new financial system on top of Bitcoin,” according to Blockstream. El Salvador could issue $1 billion worth of bitcoin bonds via Blockstream’s Liquid Network. El Salvador, which deemed Bitcoin legal tender in the country earlier this year via legislation, is set to grant Bitfinex’s parent company the country’s first crypto license.
  • Square shares new details about its plan for a decentralized bitcoin exchange. Square’s secretive TBD project, which earlier this year was framed by founder Jack Dorsey as “a decentralized exchange for Bitcoin,” has debuted a new white paper. The 18-page document sketches out the design principles and ambitions for the project, which it describes as “a protocol for discovering liquidity and exchanging assets (such as bitcoin, fiat money, or real-world goods) when the existence of social trust is an intractable element of managing transaction risk.” Launch date not included. 
  • ConstitutionDAO’s crypto journey enters new phase. An erstwhile cadre of crypto natives managed to cobble together the tens of millions of dollars worth of ETH this week to take a crack at the auction for a rare copy of the U.S. Constitution. However, the group was ultimately beat by a competitive bidder who was later revealed by the Wall Street Journal to be Citadel founder and CEO Kenneth Griffin. Yet indications from ConstitutionDAO’s dedicated Discord server indicate that a segment of that community plans to carry on, opting to dedicate their funds to as-yet-to-be-outlined efforts rather than obtaining a refund. More details to come, the organizers say, including how the group will be governed in a decentralized fashion. 
  •  Mastercard EVP Jess Turner on becoming a ‘crypto first’ company. On this episode of the Scoop, Turner joined host Frank Chaparro to discuss how Mastercard is continuing to lean into crypto. More than ever, Mastercard and other traditional financial institutions are finding themselves involved with crypto, Turner said. “Whether traditional banks issue crypto in the way it’s defined today or not, they’re heavily involved today because many of their cards are being used to buy this cryptocurrency.”
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Mews+ Spotlight
A look at how Cosmos is enabling swaps between blockchains
Cosmos is moving full-steam ahead with its radical plan to enable swaps between blockchains. 
The plan, in development for two years, finally kicked off earlier this year with the launch of the Inter‑Blockchain Communication Protocol (IBC) — a technological standard for enabling crypto assets to be swapped between blockchains. A blockchain that supports this standard can connect to any other blockchains that do as well. The Cosmos ecosystem is made up of around 50 blockchains, all built using the Cosmos software. 
One such blockchain is Cosmos Hub (ATOM), supported by a company called Tendermint. Others include Terra (LUNA) — the 13th biggest blockchain by market cap — ThorChain (RUNE) and Osmosis (OSMO). 
There are also a few firms developing the technologies underlying the ecosystem, including Informal Systems, which has been rolling out IBC gradually. Lately, the adoption of the protocol has started to pick up steam. So far, 22 blockchains have activated IBC, with several more on the way.
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What the heck are ‘social tokens’ — and why would anyone want to use them?
Communities on the internet have long gathered around shared interests: enthusiasm for a piece of media, discourse around certain ideology or plain ol’ meme sharing. 
Now, artists, musicians and other creators who have amassed large followings are trying to turn their online communities into digital assets, by launching their own cryptocurrencies. The idea is that creators with a sizable following can use tokens tied to their community — called “social tokens” or “creator coins” — to build micro-economies. 
A growing number of creators are using social tokens to augment their digital presence and bolster audience engagement. For instance, during a recent event at the art auction house Sotheby’s, Nigerian artist Osinachi doled out token rewards to attendees who shared selfies in front of his art on social media. Recently, platforms like Roll and Rally have even emerged to take care of all the technical work for creators who want to launch their own token. 
But what exactly are “social tokens” and how do they work? And are there any downsides to them?
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Follow the Money
  • Snapshot Labs, a decentralized organization (DAO) governance solution provider, has completed a $4 million seed investment round led by crypto-focused early-stage venture capital fund 1kx.
  • Crypto exchange Gemini announced this week that it has brought in external capital for the first time, raising $400 million at a valuation of $7.1 billion. Morgan Creek Digital led the growth equity financing with participation from 10T, ParaFi, Newflow Partners, Marcy Venture Partners, the Commonwealth Bank of Australia and others.
  • Digital Currency Group (DCG) announced Thursday the completion of a $600 million debt capital deal led by private equity firm Eldridge. Capital Group, Davidson Kempner Capital Management, and Francisco Partners participated in the deal.
  • Bitdeer Technologies, a Bitcoin mining outfit owned by former Bitmain chairman Jihan Wu, is planning to become a publicly listed company in the United States. According to a press release issued on Thursday, Bitdeer has entered into a “definitive merger agreement” with blank-check firm Blue Safari Group Acquisition Corp. The planned merger with the special purpose acquisition company (SPAC) will see Bitdeer achieve an implied enterprise value of about $4 billion.
  • The Ethereum Foundation, a non-profit organization supporting Ethereum and other blockchain technology, which is separate from Ethereum tech development, is setting aside $1 million for grants designed for Ethereum and blockchain tech education and advocacy. According to a blog post published on Tuesday, the Ethereum Foundation will split the million-dollar grant pool into two halves: $500,000 for Coin Center, Electronic Frontier Foundation and Fight for the Future — organizations educating legislators on crypto technology — and $500,000 to be used by the Gitcoin community to decide how the funds should be allocated.
  • StarkWare, an Ethereum Layer 2 developer using ZK-rollups technology, has raised $50 million in a Series C funding round and is now valued at $2 billion. Sharing the news exclusively with The Block on Tuesday, Israel-based StarkWare said the round was led by Sequoia Capital, with participation from existing investors, including Paradigm, Three Arrows Capital, Alameda Research, and Founders Fund.
  • Crypto.com has struck a 20-year deal with AEG, the owner and operator of the Staples Center in Los Angeles, to rename one of the most famous sports and entertainment venues in the U.S. Crypto.com has agreed to pay AEG $700 million for the naming rights, a source with knowledge of the deal told The Block. This makes it one of the largest sponsorship deals in sports history. 
The Block Research – Weekly Insights
  • Mapping out the blockchain unicorns. The increasing frequency of later stage rounds has resulted in at least 64 companies in the blockchain/crypto sector reaching unicorn status or a firm with a valuation of $1 billion or more. Compared to 2020, the number of blockchain unicorns is up 1,850% YoY, with 39 firms reaching unicorn status so far during 2021. The Block Unicorn Index was determined through the public valuations of private rounds, estimated revenue based on comparable exchange volumes, and industry sources.
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