Building Blocks #30

Your route to web3 alpha in the MENA region. Whether you’re a seasoned HODLer or just getting into crypto - we’ve got something for everyone to keep you ahead of the curve. By the community, for the community - Building Blocks.

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Birds Eye View (vs Last 7 Days)

💵 Overall Crypto Market Cap: $2.9 Trillion (+25%)

🔶 BTC Dominance: 57.48% (+0.18 PPT)

💵 Price Snapshot:

🟠 Bitcoin: $87640 (+20%)

🔵 Ethereum: $3168 (+22%)

🟣 Solana: $206 (+13%)

🟡 BNB: $610 (+5.6%)

Bitcoin profit-taking remains 'below historical peaks' amid $90,000 high

Bitcoin has jumped over 40% since October 13, and traders remain upbeat about its growth potential, noting that profit-taking is only about half as strong as during previous record-high cycles.

"While profit-taking is significant, it's still below past peaks, hinting at more room for gains before hitting possible demand limits," crypto analysis company Glassnode said in a November 12 market report.

"We've seen $20.4 billion in realized profits since entering this latest all-time high phase," the report added.

Glassnode reported that "realized profit volumes" have averaged around $1.56 billion daily since Bitcoin BTC$87,593 broke its March record high of $73,679 on November 5. This is roughly half of the $3 billion per day seen during the previous cycle's peaks in March.

With growing confidence after Donald Trump's presidential election win, Bitcoin hit $85,000 on November 11 and had its best daily increase ever, rising $8,400.

Bitcoin kept its strong upward trend to a high of $90,100 on November 12, but has since cooled to trade at $87,534, according to TradingView data.

Swan Bitcoin CEO Cory Klippsten said it's "amazing that after Bitcoin surged that much over the weekend on low volume," it's still holding its current price level.

Many traders were hopeful that it has more room to grow.

Pro-Bitcoin writer and businessman Robert Kiyosaki said in an X post that he'll keep buying Bitcoin until it "goes past $100,000."

"Then I'll stop. Not a time to get greedy," Kiyosaki wrote.

"Bitcoin is only $89k now, still a bargain," WealthSquad Chris wrote in a November 12 X post.

"When Bitcoin passes gold's market cap and the price of a Bitcoin is $500k +, we'll see this was the most obvious thing ever," he added.

Anthony Pompliano noted in a November 13 X post that it "is now a race to the sky between the debt and Bitcoin's price," with US politicians adding "$850 billion to the national debt."

Additionally, ETFs have also been a major proponent of BTC's rally as they roped in $2.6 Billion USD in a single week, and Blackrock even saw their ETF flipping their gold fund!

DeFi Technologies launches SolFi as ‘Microstrategy for Solana’

DeFi Technologies, a crypto investment platform, has launched a new company called SolFi aimed at being a "Microstrategy for Solana," as announced on Nov. 12.

SolFi, a DeFi Technologies offshoot, focuses solely on "giving investors direct exposure to the Solana blockchain ecosystem through proprietary trading, validator node operations, and ecosystem investments," DeFi Technologies stated.

SolFi plans to compete with existing Solana staking platforms by aiming to earn higher yields on staked Solana than its rivals, according to DeFi Technologies.

"By staking Solana with DeFi Technologies' validator and proprietary Maximum Extractable Value (MEV) engine... SolFi Technologies aims to generate steady cash flow at higher yields than third-party staking providers, which can then be reinvested or paid out to shareholders as dividends," SolFi explained.

"MicroStrategy's success has boosted exposure to Bitcoin, the top digital asset, and we're excited to focus SolFi's digital asset strategy on Solana from the start," said Olivier Roussy Newton, CEO of DeFi Technologies, in a statement.

"Like MicroStrategy, SolFi will generate cash flow from an operating company, and use capital markets for innovative financing structures that allow SolFi to quickly grow its treasury and speed up its staking operations."

MicroStrategy's shares have risen over 2000% since 2020 after the company, originally a software provider, fully committed to a BTC buying strategy.

Its stock, MSTR, trades at $356 per share as of Nov. 12, compared to less than $15 per share in 2020.

During its Aug. 1 earnings call, MicroStrategy doubled down on BTC buying by committing to a unique performance metric: Bitcoin yield.

Bitcoin yield measures the ratio of BTC holdings to outstanding shares and effectively sets BTC-per-share as a key indicator of corporate performance.

On Oct. 30, MicroStrategy announced plans to purchase $42 billion of BTC over the next three years.

Investors are particularly optimistic about Solana, with 30% expecting a peak of over $600 before the end of the cycle as told by MV Global, a Web3 investing firm.

"Solana is a consensus long among almost every allocator we talked to," said Tom Dunleavy, a managing partner at MV Global.

On July 9, DeFi Technologies agreed to acquire trading desk Stillman Digital in an all-stock deal that analysts say will transform the Canadian crypto platform into "a smaller version of Galaxy Digital."

Institutions are betting big on RWAs and predicting large returns

The digitization of tangible assets, known as real-world asset (RWA) tokenization, is gaining traction, attracting significant attention and funds from big institutions.

This trend has sparked predictions of rapid growth in the RWA field, with projections ranging from $4 trillion to $30 trillion in market value by 2030.

A study by Tren Finance indicates that the RWA tokenization sector might expand 50 times by 2030.

Industry giants like BlackRock and Boston Consulting Group are making serious investments in this market, seeing its potential to transform asset trading, ownership, and investment methods.

Michael Bucella, co-founder and managing partner of Web3 investment firm Neoclassic Capital, explained that large investors are attracted to real-world asset tokenization because it tackles pricing inefficiencies in both traditional finance and crypto.

In an interview, Bucella stated, "Markets naturally gravitate towards pricing inefficiencies. For traditional finance, this means mispriced credit facilities or exposure to undervalued volume. For crypto-natives, it's low-volume, secure assets."

Bucella explained that these pricing gaps, or "mispricings," occur in both traditional finance and crypto because key components like technology, financial services, and regulations are interlinked and evolve together. These gaps exist due to the ongoing development and imperfect synchronization of these areas.

As more assets transition to blockchain, these pricing gaps are likely to shift, making real-world asset tokenization more attractive to major investors.

Bucella added, "This will change over time, as digitally native assets are created and secured on-chain, existing capital markets move on-chain, and new financial tools emerge due to blockchain innovation."

Dan Spuller, senior director of industry affairs at the Blockchain Association, a US trade group advocating for pro-crypto policies and regulations, noted that RWA tokenization and decentralized physical infrastructure networks (DePIN) are among the fastest-growing sectors in the blockchain industry.

Spuller said, "Assets that were traditionally illiquid, such as real estate, commodities, and private debt, can now be divided into smaller parts, making them more accessible to a wider range of investors while spreading risk."

He further stated, "I believe blockchain technology enhances this process by providing both transparency and security, with clear records of ownership and transaction history. As adoption increases and digital asset regulations become more defined, this trend is expected to gain momentum, especially among institutional investors."

In 2024, the RWA sector saw remarkable growth, showing big finance's increasing interest in blockchain assets. BlackRock, a top global asset manager, reported over $1 billion in tokenized treasuries, aiming to reach $10 billion by year-end.

The Assetera protocol, newly launched on Polygon, targeted traditional finance markets with regulated, blockchain-based investment options in Europe. These moves are just the start, with experts predicting RWAs will lead capital markets within ten years.

Looking ahead, Boston Consulting Group (BCG) suggests RWAs could reach a $16 trillion market by 2030, over 2,030 times higher than the current $7.88 billion market cap.

At TOKEN2049, Chainlink co-founder Sergey Nazarov predicted RWAs might soon outvalue cryptocurrencies, hinting at their potential to reshape finance. As more traditional firms adopt these assets, the market moves towards a key role in the financial world.

Market growth estimates for RWAs vary. McKinsey offers a more modest forecast of about $2 trillion by 2030.

Several factors fuel RWA growth, meeting institutional and retail investors' needs for better efficiency, transparency, and market access.

Tokenization brings big benefits, like improved liquidity, by splitting assets such as real estate and bonds into smaller, tradable units on the blockchain.

This breakdown lowers entry barriers, opening up investment chances and allowing more people to join markets that were once hard to access, like real estate or fine art.

Tokenization on blockchain platforms cuts transaction costs by removing middlemen and speeding up settlements. This shift turns days-long processes in traditional markets into instant transactions on-chain, boosting liquidity and lowering risks between parties. Such efficiency appeals greatly to big investors aiming to fine-tune their portfolios cost-effectively.

Moreover, tokenized assets come with built-in compliance, embedding regulatory rules directly into the tokens. This setup reduces the need for manual checks and simplifies cross-border investments by cutting through red tape.

Linking these assets to decentralized finance (DeFi) systems also opens doors to new financial products and income sources. By connecting traditional and decentralized finance, tokenization taps into blockchain's openness and security, fostering a more inclusive and accessible financial landscape.

The growing optimism stems from unprecedented adoption by institutions and the technology's increasing maturity. For instance, tokenized U.S. government bonds have surged by 450% this year, driven by attractive yields and easier access on platforms like Ethereum.

Bucella and Spuller are upbeat about RWAs' continued growth. "The growth is unavoidable. I think a key market that's flying under the radar is the financialization of IP (intellectual property) — a sector developing rapidly in the East," Bucella noted, adding:

Spuller agreed, stating, "This trend will likely continue, pushed by institutional interest and tech advances. Tokenization's liquidity, transparency, and security have wide appeal, and as rules and industry standards evolve, growth in tokenized real-world assets should pick up speed."

However, rapid growth also hinges on how well blockchain tech can tackle scalability and interoperability issues crucial for large-scale trading of tokenized assets.

Furthermore, traditional finance institutions bring both credibility and strict regulatory demands. Their involvement suggests tokenization will need to follow regulatory frameworks and risk management practices, potentially slowing sector growth but ensuring its strength and stability.

RWA growth faces several practical hurdles. A major issue is the lack of unified verification standards.

Currently, RWA verification is fragmented, with various protocols and practices causing inefficiencies and increasing fraud risks.

Spuller also emphasized the importance of standardized verification for RWAs' continued growth and adoption. He noted, "Verifying tokenized assets brings challenges in proving authenticity, validating ownership, and meeting regulatory requirements."

Spuller continued, "As an industry, we can tackle these issues by setting asset classification standards, introducing regulations, and implementing third-party checks." He added that standardized token creation and storage could "boost investor trust and speed up regulatory approval."

A big hurdle in RWA tokenization is managing both the digital token and the physical asset it represents. This extra step adds costs and complexity, reducing some of the savings that blockchain finance might offer.

Bucella notes that custody is another major challenge in RWA tokenization, as "the cost benefits of blockchain finance are lessened by the need to store both the digital version of the assets, and the physical assets themselves (for things like bonds)."

He sees custody as one of many obstacles. However, he stresses that these issues are being addressed, with "productive talks happening between crypto and traditional institutions at events like the RWA Summit in New York last month."

This lack of consistency worries investors, as it reduces clarity and trust in how assets are managed.

Proving legitimacy is a big challenge for RWA growth because anyone can easily make a non-fungible token (NFT), but not all NFTs represent real ownership. Without legal or market recognition that an NFT is the official proof of ownership for a physical asset, like property or art, its value is questionable.

This lack of inherent legitimacy is a major obstacle in establishing RWAs as reliable ownership proofs.

Then there's the issue of court acceptance. Courts can transfer ownership of physical assets with traditional documents, but enforcing ownership on the blockchain is trickier.

Unlike physical deeds, the only way for a court to force a transfer on-chain would be to have the owner's private key. Without this kind of enforceability, it's hard to solve disputes involving tokenized assets in a legally binding way.

The scalability of blockchain technology is also challenging. Managing complex assets like real estate needs frequent value updates and compliance checks, which current blockchain systems struggle to support efficiently.

Integrating these processes with traditional finance is technically difficult, as blockchain systems need to improve in security, compatibility, and reliability to handle high-value asset transactions.

Lastly, there's the security of token contracts themselves. Like other smart contracts, these can be hacked. If someone hacks a tokenized asset contract, it raises questions about who owns the physical item the token represents.

Securing these contracts is crucial to prevent unauthorized transfers and avoid confusion and disputes that could undermine trust in RWA tokenization.

The tokenization of real-world assets is changing the financial landscape, offering new opportunities for investors and institutions.

While the future growth of RWAs remains uncertain, their impact is clear. By tackling regulatory, tech, and scaling issues, the sector can blend blockchain benefits with safety and compliance. As more big players join this new market, RWAs are set to become key in future finance, mixing the trust of traditional assets with blockchain's adaptability.

Dubai-based Web3 Unleashed hackathon announces finalists, reveals prize pool

Dubai has become a global hotspot for Web3 and blockchain. With crypto-friendly rules and exciting events, the UAE city has risen to the top as a crypto hub, led by the Dubai Multi Commodities Centre (DMCC).

DMCC's forward-thinking moves help make Dubai a business magnet by working with global players. A recent example is Cointelegraph setting up its regional office at the DMCC Crypto Centre.

DMCC also backs new startups and projects by connecting them with global venture capital through various events.

Building on this, DMCC Crypto Centre has joined forces with crypto exchange Bybit for their second hackathon. Called Web3 Unleashed #2, the event will showcase promising Web3 tech projects on Nov. 20.

With a big 160,000 USDT prize pool, the hackathon has drawn lots of creative talent, narrowing down to 15 top finalists. The competing teams aim to solve real-world problems using blockchain and Web3 solutions.

The 15 finalists showing their projects at Web3 Unleashed #2 are Philanthrify, PHRON AI, Amplifi, Helios Connect, Poppin, Safehouse DecentraSafe, Surfermonkey, Sendit, and Redefined, plus KelpMe, Mavryk Network, Crowdtransfer, Hive, Open Source Economy, and Trepa. Each team brings a fresh idea to the contest, pushing Web3 boundaries.

Web3 Unleashed #2 has expert judges from the global Web3 scene, including Alessia Baumgartner from DWF Labs, Mathias Ruch from CV VC, Dyma Budorin from Hacken, Daniel Zou from Blockchain for Good Alliance, Zaher El Orm from DMCC Crypto Centre, and Gerik Wang from Bybit. They'll judge projects on creativity, tech skills, market potential, and real-world impact.

After the pitches, everyone can mingle at the networking afterparty. This casual gathering will bring together investors, project founders, and industry leaders to share ideas and maybe form partnerships. For the teams, it's a great chance to get noticed, meet investors, and grow their ideas.

The Web3 Unleashed #2 hackathon shows DMCC's goal to boost Dubai as a global Web3 innovation hub through key partnerships. By bringing together top talent, forward-thinking investors, and industry leaders, the event strengthens Dubai's Web3 ecosystem through teamwork and opportunity.

Norway supports MiCA, considers CBDC for financial stability

Norway's central bank, Norges Bank, has shown support for the European Union's Markets in Crypto-Assets Regulation (MiCA) as it weighs the possible launch of a central bank digital currency (CBDC).

In an interview, Kjetil Watne, who leads Norges Bank's CBDC project, said that Norway, being part of the European Economic Area (EEA), welcomes MiCA's rules. Yet, he pointed out that the bank is still thinking about "if more rules are needed to boost financial stability."

Watne made it clear that Norges Bank hasn't "made up its mind yet" on issuing a CBDC and is looking at how to "fix regulatory gaps linked to decentralized finance."

As an EEA member, Norway follows EU rules closely, including MiCA, which Watne said is "being looked at by the public and checked by the Finance Ministry."

Watne noted that Norges Bank sees CBDCs as potentially helpful for payments across borders but that "we'll have to wait and see what a CBDC-based cross-border payment system would look like."

In 2023, the bank took part in "Project Icebreaker," a test exploring new ways to handle retail CBDC transactions across countries. Watne added:

Watne said Norges Bank has taken a careful approach to privacy issues related to CBDCs, knowing that digital payments "will leave digital traces."

He stressed that Norges Bank "doesn't watch individual payment transactions" and said most central banks, Norges Bank included, don't plan to access customer CBDC payment details or account balances.

The EU's MiCA rules are set to fully start on Dec. 30 and might bring "system-wide risks" to banking, especially for stablecoin reserves, according to Tether CEO Paolo Ardoino.

Under MiCA, stablecoin issuers will need to keep a big part of their reserves, at least 60%, in European banks, raising worries about loans.

Ardoino explained that, since banks can loan up to 90% of their reserves, the risks from MiCA's rules could create big weak spots for reserves if a bank holding them goes bust.

High-risk DeFi loans surge after US election as crypto market rallies

Crypto-backed loans are rising sharply, potentially signaling trouble for cryptocurrency markets despite post-election investor optimism.

"High-risk" decentralized finance (DeFi) lending has jumped since the U.S. presidential election, according to data shared by IntoTheBlock on X on Nov. 6.

High-risk DeFi loans use volatile assets as collateral that are close to being liquidated. Investors often use these loans to bet on price swings.

While widespread liquidations of risky DeFi loans can impact the broader crypto market, they won't necessarily crash crypto prices, says Alexander Sudeykin, co-founder of Evaa Protocol, the first decentralized lending platform on The Open Network (TON).

Sudeykin told in an interview: “However, I don’t believe the impact in the worst-case scenario could be that significant. In recent years, DeFi has matured considerably, especially among major protocols that have adopted strong risk management practices.”

While DeFi loans are easier to get than bank loans, they're riskier because they need extra collateral and use assets that can change in value quickly.

Showing these risks, Curve Finance founder Michael Egorov lost over $100 million in DeFi loan liquidations across several accounts in June. The mass liquidations were partly due to a June 13 hack attempt that made Curve's token drop 28%.

While a wave of DeFi loan liquidations could cause price swings in the underlying assets, it's unlikely to trigger a major market downturn, some experts say. The DeFi industry's growth may help it weather sudden drops, Sudeykin said: “This increased resilience may help mitigate the effects of any drastic downturns. For instance, we have implemented asset maximum caps, isolated pools, and other measures to mitigate such risks. Therefore, while the rise in high-risk loans may not necessarily have a significant impact on the short-term crypto market.”

High-risk DeFi loans hit a two-year high of over $5 million on Oct. 16, a level not seen since July 2022, according to IntoTheBlock data.

At the time of writing, there was almost $5 million in high-risk loans on the Benqi lending protocol alone.

Benqi protocol had issued over $115 million in total debt, of which only $5 million was considered "high-risk" at the time of writing.