The Monthly Airdrop: April 2023
Quick Note: M31 Capital will be meeting with investors over the next few weeks, visiting the East Coast (April), West Coast (April), Europe (May), and Dubai (May). If we are visiting your area, we'd love to meet in-person! Otherwise, fill out this form to schedule a call with us.
March Performance
In This Issue:
Market: Crypto rallies during harshest regulatory attack yet
Narrative: U.S. courts & politicians push back against Operation Choke Point 2.0
Highlight: Gensyn (TBD) uses blockchain tech to prevent the centralization of AI
Market Action
March was an insane month. Bank runs, bailouts, and Bitcoin outperformance. The market whipsawed as the Fed simultaneously: 1) hiked rates, 2) in the middle of a global financial meltdown, while 3) also undoing +70% of last years’ QT in just 1 week.
The initial panic took the market down nearly -20% as banks collapsed and the U.S. government’s attack on crypto banks domino’d into a full-blown global banking crisis. But when people saw that BTC was literally safer than dollars in the bank, the top asset turned around and rallied +45%, outperforming nearly every other asset.
The Operation Choke Point 2.0 attack on crypto continued (as forecasted in our previous newsletter). Financial regulators in the U.S. targeted crypto-affiliated banks. Senator Warren, by her own admission set out to build an “Anti-Crypto Army”. Binance, the largest CEX in the world, was served a lawsuit by the CFTC. Coinbase, the second largest CEX in the world, was served a Wells Notice by the SEC.
Meanwhile, the U.S. tried and publicly failed to force price down by market selling 9,800 BTC which it had been saving for a moment like this.
Yet even that wasn’t enough to stop BTC from ending the month +23.2% higher.
Web3
Decentralized internet infrastructure actually made a huge amount of technical progress in March, though the sector was largely overshadowed by the various macro, political, and global banking crises.
Filecoin launched the initial phase of its Filecoin Virtual Machine (FVM), enabling users to deploy Ethereum smart contracts onto Filecoin, and paving the way for new Web3 primitives like Data DAOs and perpetual storage. The protocol made new highs in daily data stored with 5,300 TiB of data and more is expected post-FVM.
Livepeer’s protocol revenue jumped +7.5% in March after partnering with Filecoin VM for cost-effective video content archiving, a brand new use case for Web3 video.
Akash increased vCPUs +71.1% in March due to rapidly increasing demand for decentralized compute power, a trend on the rise due to enormous AI demand.
Arweave network transactions reached a new ATH of 80.9m, +15.1% m/m driven by the launch of RareWeave, the first Arweave-native marketplace.
DeFi
Decentralized finance protocols proved incredibly resilient amid the industry’s harshest regulatory battle yet. Daily DEX volume hit an ATH of $24.8bn in March.
Derivatives DEXs continue to see increased usage as centralized entities continue to lose users and volume amid serious regulatory pressure. GMX, dYdX, Synthetix & Gains Network saw $60.7bn in trade volume over the last 30 days, up +35.5%, resulting in $23.1m in monthly revenue.
In response to the regulatory pressure on centralized finance, more effort is being placed on building, using, and strengthening decentralized tools. Synthetix usage jumped, rallying SNX +73.6% off the lows, InstaDapp (INST) similarly ended the month +75.1%, and due to the attacks on crypto-friendly banks, Kraken announced a new bank catering exclusively to the crypto industry.
Arbitrum launched its ARB token, leading to massive activity on the L2: +2m daily transactions, +950k DAUs, ~$1.8m in 24h fees, & daily active address ATH of 112.9k.
Celestia also went live with their testnet, aiming to bootstrap an initial validator set, and has already received over +20,000 applications.
TL;DR
In a month where a bipolar Fed was simultaneously printing & hiking, and an unstable global banking market saw Depression-era bank runs & ‘08-style bailouts, it is an unbelievable testament to the maturity of our industry that Bitcoin is acting as such a strong flight to safety asset.
Likewise, the DeFi & Web3 sectors are getting their act together, focusing on providing real world value, making technical progress, and doubling down on anti-fragility.
The takeaway from March is that the attacks on crypto are backfiring. Badly.
Amid new Coinbase & Binance lawsuits, BTC price has nearly doubled, ~90% of all ETH is now held in self-custody & DEX activity is crossing all-time highs
While Senator Warren is building an “anti-crypto army”, an army of pro-crypto politicians is growing, and existing politicians have proposed 2 anti-CBDC bills
While regulators circumvent due process to take down crypto-friendly banks, new crypto-only banks are emerging in response
Judges are laughing SEC’s crypto lawsuits out of the courtroom because SEC lawyers are “more interested in advancing their own agenda than adhering to the law”
Even Barney Frank, the architect of one of the harshest Wall St. regulations in history, Dodd-Frank, is siding with crypto on this one
Meanwhile, Nasdaq & Fidelity are launching new crypto services by end of Q2
In their effort to attack crypto, the U.S. is instead catalyzing innovation in the space, increasing adoption of open finance tools, and creating infighting within their own ranks.
Looks like America’s war on crypto is going about as well as their war on drugs, terror, alcohol, poverty, the internet, and inflation.
March Highlights
Partner Highlights
Protocol Highlight
Gensyn (TBD)
Gensyn allows users to rent out their idle GPU resources, enabling the parallel training of machine learning models, which significantly reduces both costs and time.
High costs associated with AI and machine learning model training have led to the best models being primarily accessible to well-funded groups and organizations. Gensyn aims to address this issue by providing a decentralized blockchain platform that serves as a marketplace for computational power.
Why It Matters
Compared to the current costs of training a machine learning model, which stands at $15,000 per hour on Ethereum and $2 on AWS, Gensyn offers a substantial cost reduction, with rates at approximately $0.4 per hour.
The protocol has the potential to scale further as it continues to develop, but already demonstrates remarkable improvements vs. centralized LLM training. For example, an image classification model took just 0.01 days to run on Gensyn, while the same task required 80.19 days on Ethereum. These impressive speed enhancements showcase the potential of Gensyn to revolutionize the accessibility and affordability of AI and machine learning model training.
That’s a 99.99% reduction in time required.
Takeaway
As AI and LLMs take center stage in technology, developing and training machine learning models will become essential for driving research, innovation, and progress. It's crucial to ensure that the creation, training, and expansion of these models are accessible to everyone, without being restricted by high costs.
Gensyn plays a critical role in addressing this issue by preventing the centralization of machine learning models and making training more affordable. Additionally, Gensyn allows users with idle GPU resources to earn income by contributing their computing power to the network.
Upcoming Events
The M31 Capital team will be speaking at and attending a number of upcoming conferences and events. Please reach out if you are interested in connecting, or better yet - meet us there:
New York: NFT.NYC (4/12 - 4/14)
Cambridge: MIT BTC Expo (4/22-4/23)
Austin: Consensus 2023 (4/26 - 4/28)
Tel Aviv: Tel Aviv Blockchain Week (5/1-5/2)
Montreal: W3 Conference (5/5 - 5/6)
New York: Security Summit (5/9 - 5/10)
Portland: ETH Portland (5/12)
Amsterdam: The Web3.Conference (5/19)
Santa Clara: Blockchain Expo (5/17 - 5/18)
Miami: Bitcoin 2023 (5/18 - 5/20)
Lisbon: Non-Fungible Conference (NFC) (6/7 - 6/8)
Paris: EthCC (7/17 - 7/20)
Toronto: ETH Toronto (8/13-8/16)
Austin: Bit Block Boom - (8/24-8/27)
Austin: Permissionless (9/11 - 9/13)
Singapore: Token 2049 (9/13 - 9/14)
About M31 Capital
M31 Capital is a global investment firm dedicated to crypto assets and blockchain technologies supporting individual sovereignty.
Website: https://www.m31.capital/
Twitter: https://twitter.com/M31Capital