Welcome to the June edition of the COSIMO Verbatim newsletter! This month we’re bringing you the latest industry news, a look into our report on the bull case for Ethereum, portfolio updates, and our summer series of blockchain insights.

June Insights

Standard Chartered Anticipates Ether ETF Approval This Week, Reaffirms Year-End Target of $8,000

Tether Launches New Synthetic Dollar Backed by Tokenized Gold in Tokenization Initiative

Bitwise Projects Crypto AI Could Boost Global GDP by $20 Trillion by 2030

Crypto Startup Funding Surpasses $100 Billion

Stablecoin Issuers Become 18th Largest Holder of US Debt

 

The Bull Case for Ethereum & Other Smart Contract Platforms

Bitcoin's success has paved the way for Ethereum and other smart contract platforms like Solana, Avalanche, Polygon, and Near to transform the digital landscape. Ethereum, the largest programmable blockchain network, has adopted the energy-efficient proof of stake consensus mechanism, marking a significant shift toward sustainability while offering staking rewards for validators.

Ethereum, dubbed "Digital Oil," powers transactions and smart contracts, underpinning an ecosystem worth over $1 trillion. It acts as "Programmable Money," enabling seamless financial operations without intermediaries, and is viewed by investors as a "Yield Bearing Commodity" due to its staking rewards exceeding 3.5% annually. These attributes position Ethereum to revolutionize financial markets and technology, powering use cases like stablecoins and tokenization. 

Ethereum ETFs

The SEC's approval of Rule 19b-4 forms for eight ether ETF applications from financial giants like BlackRock and Fidelity marks a significant leap for Ethereum. This regulatory milestone could bring Ethereum closer to mainstream Wall Street adoption, offering ease of access for financial advisors and institutional investors. Analysts predict spot ETH ETFs could capture around 20% of the BTC ETF market share, highlighting the growing legitimacy of cryptocurrencies as an asset class.

Changing Politics and Regulation

The evolving political and regulatory landscape in the U.S. is set to impact Ethereum and other smart contract platforms. Increasing support for crypto-friendly policies and the approval of the Financial Innovation and Technology for the 21st Century Act (FIT21) indicate growing bipartisan acceptance of cryptocurrency regulation. Institutional investment in digital assets is rising, with major players like BlackRock and Fidelity facilitating crypto investments. This trend, combined with the potential for tokenization of financial assets, underscores the transformative potential of smart contract platforms.

Total Addressable Market (TAM)

The TAM for Ethereum and other platforms spans diverse industries:

• Finance, Banking, and Payments (FBP): Blockchain applications can capture 7.5% of the $10.9 trillion market, facilitating faster transactions, reducing costs, and enhancing security.

• Marketing, Advertising, Social, and Gaming (MASG): With a $1.1 trillion market, blockchain's transparency can enhance ad verification and tokenized incentives.

• Infrastructure (I): Smart contract platforms promise efficiencies in supply chain management and IoT integration, capturing 10% of the $1.8 trillion market.

• Artificial Intelligence (AI): A $1.4 trillion industry, where blockchain can ensure data integrity and support decentralized AI marketplaces.

Revenue vs. Web2 Businesses

Ethereum and other smart contract platforms are generating impressive revenues, often surpassing traditional Web2 businesses. Ethereum has generated $3.4 billion in revenue over the past year, more than companies like eBay, Etsy and Twitch. Each Ethereum user generates approximately $172 in annual revenue, comparable to Apple Music and Netflix. This positions Ethereum as a powerful platform business within the crypto space.

Staking: Benefits for the Network and Investors

Proof of Stake (PoS) protocols significantly reduce operational costs for node operators and enhance scalability and security. Ethereum’s transition to PoS has reduced its environmental impact while offering staking rewards of around 3.5% annually. Staking provides a steady income stream for investors, appealing to risk-averse institutional investors and fostering a stronger, more informed community. Other platforms like Solana, Avalanche, Polygon, and Near also utilize PoS mechanisms, achieving high transaction speeds with minimal energy consumption.

Conclusion

Ethereum and other smart contract platforms are poised to transform the digital economy. Ethereum's transition to proof of stake, its robust ecosystem, and substantial market valuation position it at the forefront of this revolution. Regulatory advancements, including the approval of ether ETFs, signify a critical step toward mainstream adoption. The TAM for these platforms spans numerous industries, each benefiting from blockchain's efficiency, security, and transparency. As blockchain technology continues to evolve, the potential for Ethereum and other platforms to drive digital transformation is immense, offering investors both diversification and participation in a decentralized digital economy.

Stay tuned for the full version of this report, which will delve deeper into these insights and more.

 

Portfolio Updates

Archax, the only FCA-regulated digital asset platform, extended their existing collaboration with Ripple, aiming to bring hundreds of millions of dollars of tokenized real-world assets (RWAs) onto the XRP Ledger (XRPL) over the coming year. More here.

Casper Labs, a secure store for managing AI data, named Greg Whalen as CTO to lead AI governance development. With 20+ years of technology leadership experience, Whalen will lead Casper Labs development efforts, including Prove AI. More here.

Defactor, a B2b blockchain-enabled fintech platform, in collaboration with Outlier Ventures and Celo, announced the six startups selected for the Real World Assets (RWA) Base Camp accelerator program. More here.

Hedera, a leading Proof of Stake (POS) blockchain platform, celebrated the launch of the world’s first Hedera (HBAR) ETP at Börse Frankfurt, a German crypto exchange. The ETP was launched by Hashgraph Association and Valour. More here.

 

Blockchain Insights Summer Series

While we're taking some time away from the mic ourselves as Coffee with COSIMO season 1 wrapped, that doesn't mean our blockchain learning journey takes a break. 

So we launched a summer series of blockchain insights to share what we’re consuming to keep our crypto curious minds well fed. From insightful podcasts to must-read articles, we've got you covered!

So far in the series we have…

• A podcast episode from The Scoop by The Block featuring Arca's CIO, Jeff Dorman. He discusses why Wall Street should market Ethereum as the crypto 'app store' and how this narrative could drive more investment flows.
• An episode of the Defactor podcast called "Marketing an RWA Ecosystem." In this conversation, Sebastiaan Opschoorand Adam Bouktila delve into the challenges and strategies of marketing specifically for RWA.

Keep an eye out for more episodes of the series as the summer heats up…