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Chainalysis hits $1BN valuation after $100M funding boost

Chainalysis hits $1BN valuation after $100M funding boost

Blockchain analytics and forensics firm is now a $1 billion blockchain company after confirming a $100 million funding

In its third round of funding since its launch in 2014, Chainalysis raised $100 million in investments. Thanks to this funding, the forensics firm  has now added a $1 billion valuation. The latest series C round was spearheaded by Lee Fixel’s investment firm Addition.

Fixel has previously worked with Tiger Global Management, an investment firm he joined back in 2006.  During his 13-year stint with the New York firm, he rose through the ranks to become partner and head of the private equity business. He resigned from the firm in 2019 and started his venture capital firm, Addition early this year.

Other investors that were involved in the round include Accel, Benchmark and Ribbit. Chainalysis’ co-founder and chief executive Michael Gronager expressed enthusiasm following the completion of the round.

Gronager asserted that the funds will be redirected to help with the company’s scaling up plans. He added that the investment would benefit its investors, more so Addition, which contributed most. This round of funding could drive Chainalysis to unicorn status. The unicorn status has been a collector’s item in the crypto space with only a handful of crypto companies having realised valuation exceeding $1 billion. No crypto firm in the crypto tracing niche has achieved this status before.

Chainalsyis is well-positioned to set this record as it has contracts with many private and government agencies looking to see what happens in the blockchain.

“Government agencies and the private sector need the right data, tools, and insights to responsibly oversee and participate in the cryptocurrency economy. We have established a network of government agencies in over 30 countries and more than 250 of the most important businesses around the world. Our partners, at Addition, understand the power of our platform and are a natural partner for this next phase of growth,” Gronager said.

Chainalysis has grown to become a popular analytics firm in the crypto sector owing to its efficiency in monitoring blockchain transactions and delivering crucial insight in the crypto space. The firm recently won a $625,000 IRS contract to develop a tool that will help the IRS crack Monero transactions.

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Total value locked in DeFi surpasses $14BN

Total value locked in DeFi surpasses $14BN

The total Bitcoin and Ethereum held in DeFi protocols has surpassed the $14 billion mark

The total value locked in DeFi reached new heights thanks to a boost by surging crypto prices. The total value locked (TVL) almost broke $14 billion on 14 November, but a sharp fall saw it drop to $13.47 billion two days later. A week later, on 21 November, TVL reached $14 billion before setting a high of $14.39 billion the following day.

This figure has since slightly decreased to its current $14.3 billion levels. The rise in total value locked has been driven by the rising price of Bitcoin and Ethereum over the past few days.  Ethereum has seen the biggest jump in its price, going up by 54% since the month’s start. In the same period, Bitcoin has recorded a 34% price upswing.

However, there’s a fly in the ointment that shadows the growth in TVL. The number of Ethereum held in DeFi protocols has been dipping and is currently 25% lower than it was last month. DeFi Pulse estimates that over two million ETH have exited the DeFi sector. However, the number of Bitcoin in the DeFi ecosystem has remained about the same, moving from 164,500 on 20 October to the current 168,500.

The ETH outflow is most likely a result of investors moving to support the upcoming launch of the Ethereum 2.0 network. These investors may have taken out their deposits from DeFi to activate Ethereum’s most ambitious upgrade yet, hence the slump.

Ethereum 2.0, scheduled to launch on 1 December, required about 525,000 ETH to be sent to a deposit contract address.  This target was reached yesterday after more than 150,000 ETH were injected in 24 hours.

There is also a possibility that DeFi users feel the need to be more careful with their crypto assets as many hacks are being reported. In November alone, DeFi projects Value DeFi and Akropolis have been exploited by hackers. Pickle Finance was also hacked, losing millions to the incident. Late in October, Harvest Finance suffered a loss of over $34 million in another incident. Fearful of these hacks, DeFi users may have decided to pull out some of their assets.

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PayPal and Square responsible for Bitcoin’s soaring price

PayPal and Square responsible for Bitcoin’s soaring price

Recent activities by PayPal and Square have been the major catalysts for Bitcoin’s price rally, says Pantera Capital

Pantera Capital claims giant payment corporation PayPal and financial service company Square have contributed significantly to the recent Bitcoin rally. The blockchain investment firm argues that the two companies are buying almost every new mined Bitcoin, resulting in a shortage. This shortage of Bitcoin in the market is, in turn, causing the crypto price to soar high.

The two companies currently hold strong positions in the cryptocurrency sector. Early this month, Square gave out a grant to Maggie Valentine, a developer looking to make Bitcoin wallets more user-friendly.  Square also announced a crypto patent consortium that would tackle patent trolling back in September.

PayPal recently announced its entry into the crypto sector. Before this move, PayPal had been relatively dormant in the sector. The company’s former chief executive Bill Harris even called Bitcoin “the greatest scam in history” in 2018. Fast forward a few years, the payment service provider is now at the forefront of crypto adoption in the world.

Pantera claims this simplicity has played a major role in shaping Bitcoin’s perception and its consequent adoption.

“Previously, the friction to buy bitcoin was pretty onerous: take a selfie with your passport, wait days to a week to get activated, daily limits. Three hundred million people just got instant access to Bitcoin, Ethereum, and other cryptocurrencies. BOOM! The results are already apparent,” the firm wrote in a blog.

Pantera Capital also adds that the insatiable appetites for Bitcoin by PayPal and Square have contributed to the rally. The investment firm said that, combined, the two are acquiring a lot of Bitcoin. Based on a previous report by the firm, Square’s Cash App was buying 40% of all newly mined bitcoins. Added to PayPal’s 70% share, the two are buying 110% of all new Bitcoins creating a 10% shortage in the market.

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Record number of addresses holding at least one ETH

Record number of addresses holding at least one ETH

The number of Ethereum addresses with one or more ETH have risen to a record high

According to crypto data analytics site Glassnode, more addresses hold at least one ETH today more than ever. The metric site noted that there are as many as 1,170,598 addresses with one or more ETH currently trading at $483.82 — up 1.858% over the last 24 hours.

DeFi contribution

Ethereum made its biggest strides around June during its bull run, which was attributed to the rise of decentralised finance. The DeFi sector has taken off in the past few months, with its total value locked currently at $13.8 billion, and  7.7 million ETH having been injected into it, according to DeFi Pulse.

Glassnode pointed out that 1.076 million ETH addresses were holding at least one ETH back in July. This tally rose to 1.126 million as of September, translating to a 4.6% increase. Since then, more addresses have joined, taking the figure to 1.17 million as of the moment. Although this rise has been tremendous, it doesn’t come close to the scenario witnessed in 2017 when ETH approached its all-time high price.

2017’s remarkable upsurge

There were less than 66,000 holding at least one ETH at the beginning of that year. At the end of 2017, this figure had gone up beyond 700,000. By the time ETH was hitting its record price in January 2018, there were 872,783 addresses, a leap of over 1,200%.

While the current increase in the number of addresses with more than one ETH is less than 10%, it could be an indicator of how well the general crypto industry is doing.  That said, it is important to keep in mind that not all of these addresses are owned by individuals.

Bitcoin, on the other hand, had the highest number (825,254) of wallets holding one or more BTC on 4 November. This number is considerably smaller than that of ETH, but that is expected considering Bitcoin has a higher price than Ethereum.

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Ethereum is leaving exchanges and moving to smart contracts

Ethereum is leaving exchanges and moving to smart contracts

Ethereum held in smart contracts has increased while that in exchanges has gone down over the past few months

ETH sitting in smart contracts increased between June and October, going up by about 5% in this period. The percentage of ETH currently in smart contracts stands at 17% from 11% back in June. Traders have poured more Ethereum into smart contracts as it is more likely to generate interest in DeFi protocols.

Meanwhile, crypto data metrics site Glassnode shows that the amount of ETH in the hands of exchanges has been decreasing since the end of July. The supply of Ethereum in centralized exchanges has plunged from 19,000 ETH to 15,500 ETH.

Glassnode chart showing Ethereum supply in exchanges vs. in smart contracts. Source: Anthony Sassano

The supply of Ethereum in smart contracts has slowed down and remained flat in October and November, a trend explained by the lack of significant activity in the DeFi sector. Even in this period, however, more and more Ethereum has continued flowing out of centralised exchanges.

Analysts speaking on the subject have explained the trend saying it is similar to what is happening with Bitcoin. They say many coins are being pulled out of centralised exchanges by traders and then deposited in private wallets, adding that these traders are probably not in a hurry to sell in the short-term.

The overall upshot is felt in the markets where a slump in the supply can result in price soaring due to increased competition among the interested buyers.  This is almost the same case with Bitcoin as Chainalysis details.

The difference between Ethereum’s situation and Bitcoin’s, however, is that although ETH’s supply in smart contracts has levelled, it is still in the same range as its record highs.

“ETH is becoming more liquid, moving into wallets that not only trade frequently, but that are also quite new […] Over 8 million ETH moved into liquid wallets less than one month old at the time of acquisition,” Chainalysis explains.

The plateauing of smart contract usage doesn’t appear to be a problem to ETH holders, though. They seem to be comfortable with the current situation as long as ETH prices keep soaring.

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