Dispatch #149: The World Is Your Token

Jul 22, 2023 5 min read

Dispatch

In this patch of your weekly Dispatch:

How asset managers see BTC and ETH 🏦
Grayscale’s moment of truth approaching ⚖️
Microsoft taps Meta for ChatGPT competitor 🤖

The Big Idea

It’s All About The Tokens

Tokenization, a concept we at Nexo have long been enthusiastic about, involves dividing real-world assets like art pieces, real estate, treasury bonds, precious metals, or anything else into digitized tokens on a blockchain. This allows users to buy, sell, and trade fractional portions of the assets, similar to purchasing a satoshi (1/100,000,000th of a Bitcoin). While cryptocurrencies are tokenization of money in essence, blockchain technology holds immense potential beyond this.

If you’re still seeing this as a mere fad, maybe it’s time to reconsider seeing as the biggest names in the financial world, and not only, have already boarded the tokenization train:

JPMorgan executed the first live trade with tokenized Japanese yen and Singapore dollars on the Polygon blockchain.
WisdomTree introduced nine digital funds on the Stellar or Ethereum blockchains.
Hong Kong's central bank issued a $100 million tokenized green bond.
Credit Agricole Corporate and Investment Bank, and Skandinaviska Enskilda Banken collaborating to launch so|bond, a blockchain-based platform for digital bonds.

For those wondering how big tokenization might become – the projection is for a $16 trillion (!) industry to emerge by 2030, according to the Boston Consulting Group. In the world of crypto, MakerDAO is currently the leader in real-world asset (RWA) tokenization – more than $680 million in RWA have been locked on the platform.

NFTs and Web3 applications definitely made a splash in the real world, but will tokenization be the wave that brings in the next billion of cryptocurrency users? The signs are there and time will tell.

The Latest In…

Bitcoin Perspectives vs Ether Realities

The world’s leading cryptocurrencies Bitcoin and Ether have long held a battle for dominance at the top of the digital asset ecosystem. BTC has somewhat become the favorite child of forward-looking investors, while ETH, powering thousands of cryptos, is frequently seen as the spine of value management in digital assets – a.k.a the reliable oldest daughter that fixes any problem for our analogy.But what’s the common denominator uniting these two giants? It’s not a trick question – the answer is asset managers. A recent survey among 51 leading asset managers, collectively managing $900 billion in assets, made for some inspiring revelations:

Bitcoin is seen to have the most promising growth outlook among cryptocurrencies. However, Ether still holds the largest position in their portfolios.
Institutional investors are showing interest in digital assets, and BlackRock's ETF filing boosted market confidence, leading to substantial fund inflows.
Ripple's XRP, Polkadot's DOT, and Cardano's ADA have seen notable interest, especially after the judge's ruling that XRP exchange sales do not constitute securities.

Many of us will focus on charts and graphs anticipating all-time highs – it’s simply reassuring that traditional finance is on the same page.

The Latest In…

GBTC: Where Lesser Discounts are The Good News

The elephant that is Grayscale’s Bitcoin Trust (GBTC) is still in the room. Why might it be an elephant in a room, some may ask? Mainly because it’s this huge pile of fractionated Bitcoin, in all 625,000 coins and close to $19 billion of it, ready to be bought, sold and traded, only if the SEC allows it…

Due to the lack of approval, GBTC has functioned like a closed-end fund, meaning it didn't redeem shares, leading to discounts of over 40% compared to its actual Bitcoin value. And here is where it gets interesting as of lately that discount has been shrinking to reach 25% for its lowest reading since May 2022.

Grayscale’s CEO, Michael Sonnensheim shared for Bloomberg, that the company's attorneys expect a decision on the matter “by the fall at the latest”, though, just to keep us all on our toes, it could be delivered by the court “any day”.

So what’s that saying about the elephant? To continue the metaphor, everyone is getting ready for it to leave the said room – hopefully it fits through the door – and join the traditional markets as it was designed.

The Latest In…

Finally, a Worthy Opponent to ChatGPT?

At the risk of making this week's newsletter seem like a zoo visit, we're moving on from elephants to…llamas. Microsoft is expanding its AI offerings by making Meta's new large language model, Llama 2, available on its Azure cloud-computing service. The social media company has selected Microsoft as its “preferred partner” for Llama 2, which will be accessible for free to companies and researchers.

Although Meta won't directly profit from the partnership, it will potentially reach more users and developers. Microsoft's move shows support for an alternative to OpenAI’s language model, and the company's shares rose around 4,7% after the announcement.

Meta shared it was “blown away” by the demand for Llama 1 following the release of its limited version in February, receiving over 100,000 requests for access. Llama 1's figures, however, were far off from ChatGPT’s, which saw an estimated 100 million or more users sign up to use the model in the first three months.

With the partnership, Microsoft now backs two big players in the AI space, having invested a cumulative $13 million in OpenAI over the course of 2023, according to a January report by Fortune.
Llama 2 is trained on 40% more publicly available online data sources compared to Llama 1, offering enhanced performance in coding, proficiency, reasoning, and knowledge tests.
Llama 2 is also available for commercial use on Amazon SageMaker JumpStart, offering a suite of machine learning tools for developers.

“Meta and Microsoft share a commitment to democratizing AI and its benefits and we are excited that Meta is taking an open approach with Llama 2,” Microsoft said.

The Week’s Most Interesting Data Story

We Are Here: XRP Traders Make It Loud and Clear

Bitcoin and Ether have long registered the most open interest on exchanges i.e. the value of unsettled derivative contracts on trading platforms, but it’s time for another founding cryptocurrencies to steal the show. XRP traders – you’ve earned this!