🟣 Maybe Larry Fink’s on to something

Home equity loans lead tokenized RWA category

Author

Macauley Peterson
May 17, 2024

Welcome back to 0xResearch – quick hitting alpha for the crypto degens. Here's what we got for you today:

  • BTC catches a bid

  • RWAs growing, but not where you think

  • Where are the Treasurys?

  • CT: Lamenting ETH

All quiet on the Western market front. Equities, the US dollar and 2Y Treasurys are all virtually unchanged, but bitcoin looks positively perky, up 3%.

I’ll use the breather to bring up an RWA-focused endeavor that has popped up on my reading list of late.

Provenance is the chain with the largest TVL you’ve never heard of. Developed by Figure Technologies using the Cosmos SDK, Provenance was built specifically for the regulated financial services industry.

No cartoon PFPs or memecoin-hawking KOLs to be found.

Last week, analytics platform rwa.xyz added data from Figure to its tracker, displaying active loans across blockchains and illustrating how Provenance has greater than 13 times the loans of all other chains combined at more than $7 billion, and growing steadily.

How is that possible? The answer is Figure’s HELOC business — home equity line of credit — which, according to the Provenance Foundation’s CEO Anthony Moro, is “the first and only asset class to have been disrupted by blockchain.”

In working with major mortgage issuers, Figure has found that tokenizing these loans is more efficient and reduces costs for borrowers.

The loans are not typically traded, but could be securitized and traded down the road.

JPMorgan and Apollo Global are two big names that have experimented with private and permissioned zones built on Provenance, but such proofs of concept can be migrated via IBC to the mainnet “literally at the press of a button,” Moro said.

Provenance Mainnet is operated by around 65 validators, with stake — in the form of the Provenance utility token HASH — controlled by institutional holders. Figure owns more than half of the chain, followed by Apollo.

That’s unusual for a Cosmos chain, but Provenance is banking on regulated institutional players’ demand for chains with firmer control over their governance stakeholders.

— Macauley Peterson (X: @yeluacaM | Farcaster: @Macauley)

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Tickets are only $199. Check out our site for more info!

Tokenized Treasury market:

Here’s a snapshot of the tokenized US Treasury market since the launch of BlackRock’s BUIDL fund on Ethereum in late March.

Interestingly, Stellar had the first mover advantage here by partnering with Franklin Templeton for its OnChain U.S. Government Money Fund, and it wasn’t until Q3 of 2023 that Ethereum attracted the bulk of onchain UST TVL.

More recently, BUIDL has had an outside impact in this area of the market.

Loss-versus-rebalancing (LVR) is arguably Ethereum DeFi’s biggest problem. Thus, reducing LVR is fundamental to the success of Ethereum. This report dives into the world of LVR. We uncover its importance for AMM designers, discuss the two major mechanism design categories and various projects developing solutions, and offer a higher level perspective on the importance of AMMs in general.

The Across Protocol emerges as a dominant bridge within the Ethereum and L2 ecosystem, settling notable volumes with low latency, low fees and no slippage. The protocol’s architecture is based on intents, a deviation from many of its competitors' designs of “lock-and-mint” or “message-passing.” The recent v3 upgrade dramatically expands the scope of transaction types that can be settled through Across, enabling a higher degree of cross-chain interoperability and chain abstraction.

It’s in the best interest of our elected officials to cultivate that interest in crypto and incorporate these voters into a long-term political strategy.

The courts adjourned the trials against Binance and Tigran Gambaryan until May 22 and May 23.

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.