Eterna's Insights - October 2024

A New Dawn for Crypto: Pro-Crypto Wins in U.S. Election Signal Industry Growth

The recent U.S. elections have ushered in a notably pro-crypto political landscape, with the re-election of President Donald Trump and the success of numerous crypto-friendly candidates in Congress. Trump's victory, coupled with the election of 257 pro-crypto representatives in the House, signals a potential shift toward more favorable cryptocurrency regulations. Notably, Ohio's Bernie Moreno, a staunch crypto advocate, unseated incumbent Senator Sherrod Brown, indicating a growing acceptance of digital assets among lawmakers.

This political shift has positively impacted the crypto market, with Bitcoin reaching a record high of over $75,000 following the election results. Industry leaders, including Coinbase CEO Brian Armstrong, have expressed optimism, anticipating that the new Congress will be the most pro-crypto to date, potentially leading to regulatory clarity and fostering innovation within the sector. The alignment of the executive and legislative branches in support of cryptocurrency suggests a promising future for the industry, with expectations of reduced regulatory hurdles and enhanced integration of digital assets into the broader financial system.

Stablecoins: The Beginning of a New Era

Stripe confirmed plans to acquire stablecoin platform Bridge for $1.1 billion, aiming to develop the "world’s best stablecoin infrastructure." If completed, this would mark the largest crypto acquisition by a major payments firm. Stripe, which handled over $1 trillion in payments in 2023, provides payment APIs to manage finances. Bridge, launched in 2022, enables stablecoin payments with fiat payouts, serving clients like Coinbase and SpaceX, and achieved a $5 billion annualized payment volume by August 2024. Stripe CEO Patrick Collison highlighted stablecoins as transformative for financial services, improving speed, reach, and cost-efficiency globally.

Centralized Exchange Kraken Launches OP Stack Layer 2

Kraken has announced its Layer 2 (L2) blockchain, Ink, expected to launch in early 2025. Initially considering partnerships with Polygon, Matter Labs, and Nil Foundation, Kraken chose to build Ink on Optimism’s OP stack via Gelato’s rollup-as-a-service and will join the Superchain collective. Ink will use Ethereum’s Layer 1 for data availability and integrate with Kraken’s self-custodial wallet. This move aligns Kraken with other exchanges like Coinbase, Binance, OKX, and Crypto.com, which have launched EVM-compatible blockchains.

State of Crypto Report

Andreessen Horowitz's 2024 State of Crypto report highlights rapid growth and notable trends in the crypto industry, reflecting its increasing integration across global finance, technology, and society. As of September 2024, active monthly crypto addresses reached 220 million, tripling since late 2023—a testament to the sector's expanding user base. Politically, crypto is gaining prominence in the U.S., especially in swing states like Pennsylvania and Wisconsin, as elections near. Stablecoins continue to find strong product-market fit, processing $8.5 trillion across 1.1 billion transactions in Q2 2024, which outpaced Visa's $3.9 trillion, underscoring stablecoins' potential for fast, low-cost global payments.

Infrastructure advancements, particularly with Ethereum’s Layer 2 networks, are driving scalability and reducing transaction costs, enabling a new wave of decentralized finance (DeFi) growth. Over $169 billion is now locked in DeFi protocols, demonstrating sustained interest in decentralized financial services. The report also notes a surge in the intersection of AI and blockchain, with one-third of crypto projects incorporating AI, up from 27% last year. Improved scalability has sparked fresh on-chain applications, including social networks and games, showing the ecosystem’s evolution and diversification. Together, these trends underscore the continued momentum in crypto and its potential to reshape industries worldwide.

Eterna Portfolio Company Spotlight:

Bluesky Becomes Part of the Eterna Capital Portfolio

We recently announced our investment in Bluesky, a social platform designed to operate without being controlled by a single entity. It reimagines social media as a collaborative space where many contributors shape the experience, while still offering a seamless, user-friendly interface. This is made possible through the AT Protocol, Bluesky’s open-source framework that allows various social apps to communicate and work together. Eterna Capital believes that now, more than ever, social networks need to evolve and adopt an open infrastructure to drive the next generation of products and services — one that empowers users at the heart of the social media ecosystem.