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Venture market update | 07.11.23

Nov 7, 2023
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📉 Market context

💡 Bitcoin has maintained a consistent valuation of approximately $35,000. This stability coincides with weaker U.S. jobs data. Open interest in CME's standard BTC futures, often referred to as large futures, has surged by 35% within a four-week period, reaching a total of 19,603 contracts, equivalent to $3.4 billion. Evmos aims to support only Ethereum-based wallets and tools while phasing out Cosmos transactions, with full completion targeted by the third quarter of 2024.

Bitcoin holds steady above $35,500 as traders anticipate impact of US jobs report

Over the past days, Bitcoin has maintained a consistent valuation of approximately $35,000. This stability coincides with weaker U.S. jobs data.

The prevailing sentiment in the market suggests that the Federal Reserve may be ceasing its series of rate hikes. The release of U.S. Labor Department's employment report, which revealed the creation of only 150,000 new job positions in October (compared to around 297,000 in September), has strengthened the expectations of a more dovish stance from the Fed.

The central bank's decision to halt rate hikes is likely due to tightening financial conditions, characterized by rising bond yields in recent months. Traders are currently estimating a 95% probability that the Fed will keep rates unchanged in December, compared to the 80% probability before the release of the payroll data.

Bitcoin (BTC) futures, particularly those offered by the Chicago Mercantile Exchange (CME), play a significant role in price discovery for the leading cryptocurrency. Sudden increases in open interest, which represents the number of active contracts, in cash-settled BTC futures can be indicative of potential trend changes in Bitcoin's price.


CME Bitcoin Futures Open Interest Surge Indicates Interim BTC Price Top

Open interest in CME's standard BTC futures, often referred to as large futures, has surged by 35% within a four-week period, reaching a total of 19,603 contracts, equivalent to $3.4 billion. Notably, these standard contracts have a size of 5 BTC, which is approximately $173,000 each. These large futures contracts are widely regarded as a barometer of institutional activity in the Bitcoin market.

The substantial increase in open interest in a relatively short time frame suggests that Bitcoin's ongoing upward trend may be reaching a saturation point, possibly setting the stage for a price correction. During this four-week period, the cryptocurrency's value has risen by over 25%, bringing it close to the $35,000 mark.

Historically, such surges have often signaled turning points in Bitcoin prices, indicating potential tops or bottoms in the market.

source: coindesk

Evmos plans to deprecate Cosmos transactions, signals Ethereum alignment

Evmos aims to support only Ethereum-based wallets and tools while phasing out Cosmos transactions, with full completion targeted by the third quarter of 2024.

Maintaining compatibility for both Cosmos and Ethereum clients has been a challenge, with the network currently supporting distinct transaction hashes for each ecosystem, creating complexity that the team plans to eliminate.

The shift will allow Evmos to enhance the user experience and interoperability for Ethereum developers while still preserving core Cosmos functionalities like staking, governance, and interoperability via EVM Extensions.

Fees from phased-out Cosmos transactions will be burned, and users with Cosmos-only wallets will need to migrate to EVM-compatible clients, with popular wallets offering necessary support.

Evmos is part of the Cosmos network, which hosts over 50 unique Layer 1 blockchains. Its original objective was to enable the deployment of Ethereum-based smart contracts and assets within the Cosmos ecosystem.

💸 Venture market: what’s new?

Explore the most notable raises of this week.

  • 💡 Llama raises $6M for development access control and governance platform for smart contracts.
  • Fundraising: $6M
  • Round participants: Electric Capital, Founders Fund, Reverie,Fj Labs, Amplify Partners and some angel investors.

Llama enables protocols to utilize an on-chain policy engine for establishing permissions for action creation and roles for action approvals and disapprovals.Protocols maintain an on-chain audit trail of their roles and permissions, offering assurances to users and investors. The main features of the platform are: “Onchain policy engine”, “Custom execution strategies”, “Treasury management”.

The investment was made in Seed Round.

Website || Twitter

  • 💡 Modulus Labs raises $6,3M for the development of its blockchain service.
  • Fundraising: $6,3M
  • Round participants: Variant, 1kx, Alliance DAO, Global Coin Research, Floodgate, Bankless, Inflection, Stanford University.

Modulus employs cryptography to ensure the integrity of AI results, thus enabling smart contracts to leverage AI capabilities while upholding the principle of trustlessness. The company leverages specialized ZK provers for AI, resulting in a solution that is 1,000 times more powerful than traditional approaches.

The investment was made in Seed Round.

Website || Twitter

  • 💡 Topos raises $5M in extended seed round****.****
  • Fundraising: $5M
  • Round participants: Evolution Equity Partners,K2 Access Fund, Triatomic Capital.

Toposware is a research and engineering company that develops innovative technology for a secure and interconnected future.

Topos provides robust capabilities, a distinctive architecture, and innovative solutions that tackle numerous prevalent challenges in the blockchain industry. Its features make it an appealing platform for a diverse array of applications.

This recent funding round was intentionally designed to bring on board important venture capitalists and industry leaders who have direct experience in creating global standards, expanding widely-used products to gain a large market share, and aligning access and usefulness within specific market sectors.

Website || Twitter

🧠 Exploring Crypto: "Layer-2: what is it conditioned by and when will the excitement around L2 solutions subside?”


Between 2020 and 2022, Layer 1 blockchains like Solana, Near, Fantom, and Avalanche gained popularity as "Ethereum competitors" to address Ethereum's scaling issues. New entrants, Aptos (2022) and Sui Network (early 2023), offered fast transactions but faced liquidity challenges.

David Hoffman's concept of "blockchain kingdoms" and "blockchain empires" explains the shift in the market. Security in blockchains relies on "defenders" who create "walls" through energy or locked capital.

Blockchain kingdoms, like Bitcoin or Solana, face scaling challenges due to high costs. Blockchain empires, such as Ethereum, offer their "defenders" to other networks for fees. External settlements are L2 blockchains that develop independently but rely on the core network's consensus mechanism.

Ethereum's transformation into an "empire" outpaced resource-constrained "kingdoms," reducing interest in L1 blockchains lacking innovation. Market dynamics shifted from "kingdom" competition to "empire" rivalry.

Why do we need so many L2 networks?

At the time of writing, DeFiLlama tracks 19 roll-up networks, while L2Beat, which covers niche blockchains and other technical solutions, displays 32 active L2 networks.

Some of them, such as Base, opBNB, and OP Mainnet, are built on the same technological stack and essentially offer similar capabilities. At the user level, the distinctions between ZK-Rollups and Optimistic Rollups are scarcely noticeable. So, why does the market have so many "similar" second-layer networks? There are several reasons.

The Evolution of Technology:

The technological foundation of L2 continues to evolve. Developers and the community have not yet determined the optimal solution that would ensure security, a high-quality user experience, and efficient transactions.

Some early Layer 2 networks, such as ImmutableX, were built on Validium and stored data off-chain. Thanks to Optimism, Optimistic Rollups gained widespread adoption, enabling the formation of transaction batches, reducing their cost, and providing data accessibility. Currently, ZK-Rollups are actively employed, which are less space-demanding for data storage.

The next generation of L2 is likely to focus on ensuring privacy (e.g., Aztec). Furthermore, Ethereum itself is undergoing transformation, which will also require the adaptation of second-layer networks.

New projects are developing their solutions—more efficient, secure, and technically advanced. The segment is still in its early stages of development.


The fundamental standard for Ethereum Layer 2 networks is compatibility with the Ethereum Virtual Machine (EVM). This ensures ecosystem integrity and creates a unified environment for developers. However, L2 blockchains retain broad flexibility in defining their rules, whether it's the sequencing mechanism, fee structure, or data storage architecture.

Emerging L2 networks are striving to establish a wide range of standardized parameters, enhancing compatibility through software development kits (SDKs). Examples include OP Superchain and Celestia Rollkit.

Furthermore, developer tools expedite and reduce the cost of developing second-layer blockchains, which also fosters the emergence of new projects. For instance, the time between Optimism's testnet announcement and its public mainnet launch was 13 months, whereas Base took only six months to launch, thanks to OP Stack.


Another reason for the emergence of numerous "similar" L2 blockchains is their specialization. Different teams may utilize the same technical solution for their specific purposes:

  • Arbitrum is building a universal network but has become the de facto "home" for DeFi.
  • Coinbase is developing the technical infrastructure for its ecosystem.
  • Optimism aims to unify different blockchains and attract developers.

In tandem with technological evolution and rule standardization, the second-layer landscape is transitioning from "universal" blockchains like Arbitrum towards more niche solutions, such as DYDX V4 Protocol.

On one hand, we observe an increasing number of second-layer networks catering to diverse tasks. On the other hand, these networks are gradually standardizing, utilizing shared technological stacks and solutions. Ultimately, genuinely unnecessary projects will lose liquidity and users, akin to many "Ethereum killers" or Bitcoin forks.

Not Just for Technology

Currently, cryptocurrency companies that previously relied on established blockchain infrastructure are launching their own L2 networks. Examples include Coinbase and dYdX Trading Inc.

These projects allocate funding for the development and maintenance of their proprietary blockchains, rather than building their ecosystem on Ethereum or even a matured platform like Arbitrum. So, why is the number of "niche" L2 solutions on the rise?

The most apparent reason is financial gain. L2 opens access to two new sources of revenue:

  1. Transaction fees.
  2. Tokens.

L2 operators cover the cost of deploying a transaction batch on the Ethereum network but collect fees from users. The difference between the fees and compensation to L1 validators forms the network's revenue.

For instance, in the last 30 days, Base's revenue, according to DeFiLlama, amounted to $2.64 million, with a total of $3.8 million in collected fees.

Regarding token issuance profits, revenue sources vary depending on the tokenomics and approach. Profits can be earned through the sale of treasury or team assets, as well as by incentivizing the ecosystem, the growth of which will lead to an increase in fee-based income.

In addition to this, venture financing is available. The L2 ecosystem is in a stage of formation and evolution, and its leader is not yet evident. Investment funds are willing to invest in new projects that offer additional advantages or aspire to be game-changers.

Since 2017, there have been 90 funding rounds for L2 projects, totaling over $3 billion. Out of these, 40 of them (~$2.1 billion) occurred in 2022-2023, indicating a growing interest among investors in this sector.

Proprietary Infrastructure and Inherited Advantages

The second reason why projects aim to launch their own L2 networks is the presence of a controlled technological foundation for building a loyal ecosystem.

Blockchains aspire to provide a secure and trustless environment for decentralized applications. However, in practice, developers encounter issues such as technical failures, low interoperability of L1 networks, and selective incentives.

In such conditions, a proprietary second-layer blockchain appears more reliable than third-party infrastructure, particularly when considering the emergence of Software Development Kits (SDKs) and Rollup-as-a-Service (RaaS) platform models, which simplify network deployment by:

  1. Reducing development and expansion costs.
  2. Offering modularity and flexible infrastructure configurations.

If these projects, like Base or Linea, were to rely on an L1 network for their infrastructure, they might face challenges in ensuring security and interoperability. However, L2 solutions inherit these aspects from the underlying blockchain, reducing financial and technical barriers to infrastructure creation.

Furthermore, L2 networks benefit from the primary blockchain and several other advantages, including technical asset compatibility, liquidity, integration with infrastructure providers, and a user base.

These "inherited" advantages, combined with rewarding loyal users through token distributions, enable most second-layer blockchains to overcome the hurdle of a cold start.

On one hand, when interacting with L2 networks, users encounter an environment and experience somewhat similar to the parent blockchain. On the other hand, they are promised rewards. This allows significant second-layer projects to grow more rapidly.

When Will the "L2 Summer" End?

Currently, we are in the phase of active development of Zero-Knowledge Proof (ZKP)-based rollups. The advanced ecosystems of Arbitrum and OP Mainnet may lag behind Optimistic Rollups in terms of the number of users and the volume of assets locked in smart contracts. However, they are already ahead in terms of the number of projects. The competition also continues among the networks in development.

The "L2 Summer" with its explosive segment growth, the launch of "universal" networks, rapid liquidity attraction, and new users, is likely to subside in the near future. To further advance this trend, niche blockchains and Software Development Kits (SDKs) will be key, along with the consolidation of two opposing factions - Optimistic Rollups and ZK-Rollups.

🌏 Conferences

Conferences are a great opportunity to grab the attention of the whales in the crypto industry, spread the word about your project and win some funds! A quick line-up of the upcoming conferences below!

NEARCON 2023👥 Hackathon🌐 Lisbon, Portugal📆 Date: 07 Nov 2023

Where the Wild Things Are👥 Conference🌐 Online Event📆 Date: 08 Nov 2023

Web3: Impact the Economy👥 Conference🌐 Vilnius, Lithuania📆  Date: 09 Nov 2023

Staking Summit👥 Conference🌐 Santa Clara CA, United States📆 Date: 10 Nov 2023

World Blockchain Expo👥 Conference🌐 Dubai, United Arab Emirates📆 Date: 15 Nov 2023

Wiki Finance Expo-World, Sydney👥 Conference🌐 Sydney, Australia📆 Date: 15 Nov 2023

Blockchain Jungle👥 Conference🌐 San José, Costa Rica📆 Date: 16 Nov 2023

Crypto Expo Milan👥 Conference🌐 Milan, Italy📆 Date: 24 - 25 Nov 2023

Paris Blockchain Summit👥 Conference🌐 Paris, France📆 Date: 25 Nov 2023