Welcome back to Connecting Nodes. If you recall,  Connecting Nodes is about connecting the world of   investors and builders, what are the founders of  our future building today? What are they focused   on? Where is the innovation going? And what  potential new themes are forming? For investors,  What does the world of digital assets look  like not only in today's time, but in 1, 3,   5 and 10 years. I'm joined by my colleague  Michal, we look forward to sharing some more   of our thoughts and observations from the world of  venture capital and digital assets. And remember,  Again, this is educational, we are  sharing our points of view. So Michal   if you could lead us off, what are what's  the happenings now in the last few weeks,   here the last few months? There's things  that are happening with Coinbase and Gemini,  Moving offshore is potentially USDC. Then I'll  talk a little bit about the valuations that   we're seeing right now. Kick us off what's  happening out there right now? For sure.  And you've kind of foreshadowed a little  bit of what what I wanted to start off,  Because particularly those moves  that we're seeing from some of the   OG players in this space, particular here on  both Coinbase and Gemini, being some of the   oldest centralized exchanges that are very much on  set up on shore, and here in the US specifically.  They have made the headlines, both Coinbase last  week, and Gemini today, of essentially signaling   their intention is to move offshore, very much in  response to what we've already talked to on our   last episode, which is the hostile regulatory  environment, some, some would even call it a  Crackdown. And that is particularly interesting,  because as we are looking at these VASPs,   mainly the virtual assets service providers that  both Coinbase and Gemini are categorized that,   is that most of them historically have gravitated  toward jurisdictions that provide greater clarity,   and specific guidance. That hasn't been  necessarily the case in the recent months,  Weeks, here in the United States. And that  is very much a directional move by both of   those industry leaders to ultimately position  their businesses and position themselves for   for where they see future of growth in the space.  Now, it is important I would say what two folds;  One very important element is they are moving  to fill a very noticeable void in the derivative   space. When you look at particularly the liquid  markets that has been left by the collapse and   subsequent folding of FTX. At to date has not been  very well that void hasn't been particularly well  Filled. I know Binance has been predominantly  one that has kind of hoovered up that liquidity   looking for new home, but it hasn't been a very  particularly well diversified market. So both   Coinbase and Gemini are setting up offshore  in these kind of offshore havens, where they  Will both be able to structure those offerings  accordingly. Now, second reason why I don't find   I find this news particularly noteworthy is that  this is a little bit of a out of character move.   You have two entities that have been essentially  the poster children for the regulatory engagement,  Being extremely transparent, and treading water  extremely carefully, now essentially taking on   moves that many of the years past we would call  unbecoming, especially moving moving into kind   of offshore offshore waters. And one is publicly traded. Indeed, indeed, and as such, I think it begs a  lot of question as to what is the future and I   think we'll we'll talk a little bit more on this  episode of the regulatory environment. That I  Think seems to be the feature that will be coming  back in months and weeks, this year, for sure.   But perhaps, I think, importantly,  another element to kind of that I think,   caught a lot of headlines and is being widely  discussed among the investor circles that we  Engage with is particularly the headwinds that  USDC is facing, especially here stateside,   but also globally, losing losing tremendous ground  to terror. What started as a essentially a trickle   of loss of confidence is now becoming a lot more  significant. And so just to give our listeners a  Perspective here, out of the $125 billion  that is in stablecoins markets out there,   USDC has specifically lost about 15% of its market  dominance. I believe that it's over $3 billion,   in just those two months when they lost the peg  to $1. And so just to kind of rewind the clock,  What ended up happening is for a very brief  period of time was, especially by what's   stamped stretched out to about a week, there was  uncertainty around the deposits backing the USDC,   that were held by Silicon Valley Bank. And so  as Circle got caught in the crosshairs there,  Then unfortunately, a full push for  depeg to about 88 cents on the dollar,   that a lot of arbitrageurs essentially moved  in to close in that gap. But fundamentally, the   trust was broken. And so that is an element that  Circle is fighting, very much against, both kind  Of proactively reaching out to their investors but  more importantly, running a series of educational   campaigns as well as to how that trust is going to  be restored going forward. That has foundationally   foundationally pretty important implications  to UCDC as the go to stablecoin vehicle. Would you say that, based off of some of the  institutional backing that circle has versus the   always, slightly kind of, it's kind of comical  sometimes when you hear about the the kind of   the audit of Tether versus what you see in terms  of the cap table of Circle, what would you say,  You know, from your experience, what do you  know, in terms of the the cap table Circle,   I think believe we have BlackRock and a  number of other institutions here correct?  That is correct. Exactly. And the Blackrock  relationships particularly pointed here is  They're the ones managing quite a substantial  chunk of chunk of their treasury, especially   and kind of the some of the treasuries  and commercial paper that is underpinning   underpinning USDC a stablecoin. So I would say  certainly, as far as the transparency goes,  Circle, Jeremy and a team here have been  extremely forthcoming when it comes to the   actual holdings and, and also kind of Terms  of Use, which oftentimes have been neglected   by many of the users that popularize  USDC. There are very severe limitations  That perhaps not a whole lot of users realize  today. And those events over the last weeks,   essentially made it painfully clear that there is  the time, that Circle needs to essentially unwind   some of those positions to cover that gap. And  that time is very much a function of kind of the  Traditional capital markets, where that paper,  traditional paper resides. And so it's very much   we are in the process of, of speed running through  the educational process as a result of the recent   crisis's in this space. But one that is incredibly  important because it will pave the way for  Additional innovation that we see especially in  stablecoins that up until very recently, many many   thought the battle was won either by USDC, if you  if you kind of talk to your Western Hemisphere,   or Tether, if you go over to Asia, but that isn't  I would essentially beg beg to differ. There's  A lot more innovation, as it turns out, that can  be done. And especially as we're starting to hear   and see on the grounds in the emerging markets  there are coming up with like very innovative   ways to introduce asset backed stablecoins, for  very particular purposes of either trade, import  Export, and many different exciting use cases  we'll probably cover and of course of this year.  Yep. And just as an FYI, for those listening,  BlackRock, total AUM is north of $10 trillion.   So not small, not really small at all. And  so I'll leave it to you all to make your own  Opinions on that. But their entrance and their  their visibility on the cap table here and their   visibility as a a cog in the machine here,  I think is one important to note. Moving on   to other things that happened in throughout the  last month in terms of valuations and capital  Flows. And so throughout the month of April, and  we're not done with the month of April yet there's   a few more days left. But throughout the month  of April to now, there have been 54 deals, give   or take that have been announced and funded. And  again, this has been drawn primarily through the  Messari database from those at Dove Metrics. And  so 54 deals have been funded, totaling around $630   million. And this is in comparison to last month  where we had about 71 deals funded for a total   of 770 million. So you've seen a little bit of a  deceleration and as Michal pointed out again, this  Regulatory overhang, what has happened over the  last few weeks and months with the banking crisis,   with some of the obviously congressional hearings,  with some of the, you know, dare I say lack of   clarity, even though others out there say that  there is clarity, there is not in our opinion,  But we want there to be clarity. A lot of this  is probably having a slowdown effect on capital   deployment here in the States at least. And so  what we saw Seed deals are about 22, Seed deals   that have been funded for about $102 million.  Series A, the more mature ones out there got  About $170 million. And they were about seven  deals there. And Series B, they were two deals,   and that was $180 million. And we're going to  focus on this a little bit more. So infrastructure   has been something that others have talked about  over the last few months as one of the sub sectors  Of digital assets venture, that has garnered most  of the attention. This is the picks and shovels,   if you will, this is where you need to have the  the plugs the API's, the SDKs. All the things   that make more of these platforms usable to the  everyday person. And so infrastructure was the  Big winner, so far this month in April  of 15 deals totaling over $350 million.   One of the big ones there is Layer Zero, they  were able to get $120 million in their Series   B at a valuation of 3 billion. So yet another  unicorn in the space. And this is tripling its  Valuation from $135 million around in March of  22. So we are seeing some step ups here as we've   talked about before, we are seeing some growth.  Layer zero, just as an FYI, for those that are   listening here and want to learn a little bit  more, offers interoperability and cross chain  Messaging infrastructure that allows decentralized  applications and developers to reach multiple   block chains without the need for a middleman to  facilitate the cross chain interaction. Again,   think of it as something as a very large  bridge or bridges. And really focusing on that,  That language and that ability to transfer  messages across. As it's been quoted in CoinDesk,   and others out there, I think some of the  founders have sped and tried to come up with   something a little bit more pithy and a little  bit more easy to understand what Layer Zero is,  In their opinion, Layer Zero is to blockchains  what the internet was to computing clusters. Layer   Zero allows chains not only to build bridges, as  I said, kind of this transfer of assets and value   between them, but send and execute arbitrary data,  just like a packet on the internet. Now, packets  Are more of a technical term, when you send  information when you send an email when you send   a text message. It's all in forms of packets that  gets delivered over different protocols. I will   not bore you with the technicalities, if you'd  like to enjoy learning more about that I encourage  You to or reaching out to us, I'd like to geek out  about that myself personally. But again, this idea   of packet transfer is really important, especially  across chain or cross protocol. And this is one  Of the things that Layer Zero is really at the  forefront of. So again, big deal, a lot of money,   big valuation. And so it is not all, you  know, kind of fire and brimstone. You know,  Dare I say crypto winter. Again, we've seen in the  early parts of 2018 some of the largest companies   more important for companies like FireBlocks  and OpenSea raised their seed rounds during what   people thought was the end of crypto. And so you  see again, another example of a company able to  Raise a lot of money during what many people are  saying is quite a dark period for this space.   Michal why don't you kick us off on the regulation  side? Why is MiCA such a big deal? What happened  Last week? And why did we think it's important? For sure. And I think it feeds very nicely into   some of the pullback that we've seen in deals  consummated in the course of last month,   especially last quarter as well. I think very  much kind of goes hand in hand with some of the  Prolific dealmaking territory which is US of  A and especially if standing in an extremely   stark contrast that last week long presented very  much kind of the opposite views of the regulatory   engagement or rapprochements with with digital  assets. So on one hand in one corner, you had  Deposition of Gary Gensler in front of the House  Financial Committee, where he not only admitted to   never actually having owned or touched the digital  assets. Mind you this is a regulator that is   staking his claim to having an SEC oversight over  digital assets and crypto as a whole. And on top  Of that he was also very much refusing to define  whether ETH was a security or not. Certainly a   very entertaining feat to watch ,but one that  potentially also causes quite a lot of restriction   understandably, from from from our space. On the  opposite, and on the other side of the Atlantic,  We had the European Parliament passing MiCA,  which is the Markets in Crypto Assets regulation   framework that has passed overwhelmingly with  517 votes in favor fairly against and about 18   abstentions. So overwhelmingly, overwhelmingly in  favor. Now what MiCA does and will be certainly  Talking about MiCA, as a lot of the elements of  that legislation are getting defined, particularly   as they are engaging projects and founders in the  space for for the appropriate common period. But   what it does, it allows for all of the largest  markets in the world, that is European Union,  Will have effectively a unified approach to all  of the crypto asset regulation for all of its 27   member states, making it possible for one firm to  essentially get passport rights. Passport rights   have been tremendously important in the asset  management space, as many of those that are in  Private markets active in the European markets  can appreciate. Essentially, incorporating in   one allows you to give pari passu rights to engage  and move capital freely into other jurisdictions   without any additional hurdles. Same would apply  here in digital assets. Now, it is also very  Important, I think, misunderstood a little bit by  at least some of the press coverage that I've seen   in the US is to understand the timelines. So this  bill essentially will get published in about 20   days in a journal, European Journal of Rights, and  as a result, it will start essentially a clock for  When the clauses will become enforceable. Probably  the one that's earliest into the earliest enter   into the law will be a Title Four, that is the  what is essentially considered the eMoney tokens   regulating quite in providing actually  guidance to the stable oin market,  That one is expected to be already promulgated  about 12 months. So think of it as Q2,   start of Q2 next year, followed very shortly in  about 18 months from from today by Title Three,   which gives a much more thorough authorization  to offer asset reference tokens to the public.  Essentially, think of it as like a really good go  to guide for issuing any assets on-chain. And why   is that, why is that important? Because all of  a sudden there will be a framework of clarity.   So my secret hope maybe to kind of recap very  quickly the segment is that we will hopefully  See a potentially a precedent, whereby EU will  pave the way for for regulatory framework that   hopefully will get followed shortly thereafter  in the US, that is at least my personal hope.   It has happened for Gold ETFs in the early  2000s, where Europe were the first movers,  Shortly followed by by US in missed  opportunity. And so we're not giving   up on US first, but definitely kudos kudos to  our European colleagues for for the foresight.  Absolutely, and it's something we've talked  about a lot. And absolutely, I agree that  While it may not be perfect, it is something to  start with. It is a framework. And just as an FYI,   for those I want to read up about it, that  framework didn't just come about over the  Last week, or two weeks, or a year, or last  month, or in reference to FTX or anything   that happened. This has been going on for the  last few, you know, three, four, five years.   And so there's a lot of work. There were  commissions, they were subcommittees,  There was lots of work that went into  this. So definitely read up about MiCA   if you have not already. If you are a founder  or obviously an investor read up about MiCA,   and we'll be able to maybe possibly give you  some information on that as well too. Lastly,  We wanted to talk about some hot trends, things  that we're starting to see pop up in the market.   For me, one of the things that we're starting to  see a lot of, is a confluence of AI and digital  Assets. What does that mean? Well, everyone with  the pulse has been able to see GBT, chatGBT,   Baby GBT, Auto GBT, AI agent, any kind of, you  know, you name it. It's got something in there.   You've seen you know, the biggest tech people  in the world, Elon Musk and others be very  Concerned about it. You've seen others on the  other side, be very excited about it. Now why   is there a confluence between this and between  digital assets? Well, one AI very quickly here   ,requires a tremendous amount of storage, and  so there is the theory out there that as as  AI continues to get bigger and bigger, that  decentralized storage out there in the world of   digital assets could play a very significant role  with that. Whether that's FileCoin, Storage, Sia   and any other different projects out there that  have been building, Arweave, that could be just  A number of different ones out there they don't  even really know about or haven't even been built.   And so keep your eyes on that, AI plus digital  assets could be very important for storage. And   also could be very interesting for the world of  DAOs, decentralized autonomous organizations.  Could GBT also be part and parcel to the the  improvements made by decentralized organizations.   So there's lots of things happening here, we'll  keep you posted on what we see what we hear,   possibly what we also put our own capital  into. Michal, you wanted to talk about x NFT. Mad shout out to our team and Backpack developed  by Coral. They are a Solana project that has come   up with a fairly exciting new standard for NFTs  right now contained solely in Solana ecosystem,  But one that holds quite a lot of promise. One  that I was able to play around a little bit as a   result of this recent very successful mint of the  Mad Labs collection, but really being used as a  Demonstration of what is xNFT. Very quickly,  X stands for executable. So think of it as   essentially an operating system for the Solana NFT  standard where you can interact and execute with   that NFT. Essentially, today, NFTs in the Ethereum  ecosystem has essentially a reference to the mega  Data stored somewhere on Filecoin, Arweave,  or whatever, whatever the storage might be,   and are not particularly dynamic. So it requires  additional smart contract programming to modulate   their behavior or their properties. Now what  xNFT introduces actually lines of code that  Are embedded into the NFT. So that opens up  tremendously the design space where you can   not only interact and build experiences involving  these NFTs. But more importantly, also think of   potentially software as as an xNFT. So right now,  I absolutely encourage everyone to check out the  Backpack wallet, there is a first place where you  can interface and interact with that new standard.   To me has really harkens back to the days of  like Emulator days where on my Mac in college, I  Was able to fire up and experience some of the PC  titles that otherwise I wouldn't be able to play.   Here very similar vibe of small, silly games,  but ones that tremendously potentially unlock   some great design and builders that are very  much attracted to NFTs being exciting again,  And kind of evolving beyond just being  the static JPEGs that they were known for.  I definitely remember the Emulators when I  wanted to start to play Mario Brothers on my   PC back in the day. Love Emulators. That's a  great one. So again, we wanted to give you a  Little bit of intelligence, a little bit of  observation, some data points. Hopefully it   makes you a little smarter and makes you a little  bit more knowledgeable of what's happening out   there. Again, this is Connecting Nodes, myself  and Michal appreciate you stopping by. We'll  Be back here in a month with more information,  more data. And we hope you are well. Feel free   to reach out to us if you have any questions, if  you have any suggestions, or if you just want to   talk to us. Take care. Bye.