Ten31 Timestamp 795,052

Jun 19, 2023

Legacy gatekeepers had a busy few days this week, as the Fed finally officially skipped (oh, we mean paused) rate hikes after 10 months of consecutive increases (though officials were quick to insist hikes should resume next month), BlackRock filed for a spot bitcoin ETF (particularly notable given the firm’s track record in getting ETFs approved), and the iOS App Store made life tough for several popular bitcoin apps. While the Fed was busy trying to sell the notion of a “hawkish pause” to the market and BlackRock was angling for its cut of the bitcoin pie, the Ten31 team spent several days at Nashville’s Bitcoin Park hosting a summit to showcase what many of our portfolio companies have been building for sectors ranging from financial services to mining and beyond. The event once again confirmed the clear vibrancy of innovation leveraging the bitcoin ecosystem, one particularly well-timed example of which was Mutiny Wallet kicking off the limited public release of its mainnet lightning wallet. Built as a progressive web app, the wallet runs in a browser and can offer an alternative to censorship-prone walled gardens like app stores.

Portfolio Company Spotlight

Stakwork is a cloudsourcing platform that combines the power of humans, AI, and the lightning network. Stakwork empowers a globally distributed ecosystem of workers, predominantly in emerging markets, who can opt in to automated microtasks driven by algorithmic tools designed to aggregate the completion of complex, repetitive work on behalf of customers seeking to outsource tasks. Stakwork’s services range from data annotation to image and video processing, which pair AI-based processing with human oversight as appropriate. The human input from these microtasks feeds into a Reinforcement Learning from Human Feedback (RLHF) mechanism for various machine learning models and toolkits, helping to train these tools and expand the scope of what’s possible with automation. Anyone can opt in to complete Stakwork’s tasks and can be paid in bitcoin over the lightning network without needing a bank account or even an email address.

Selected Portfolio News

Strike added Send Globally capabilities for remittances to Mexico:

Samourai introduced Surge Cycles, which can allow for more fee-efficient Whirlpool cycles in high-fee environments:

Mutiny Wallet began deploying its mainnet implementation to early waitlist participants:

Media

Several representatives of Ten31 portfolio companies made appearances at this year’s Oslo Freedom Forum, including Strike CEO Jack Mallers and Fedi Co-Founders Obi Nwosu and Justin Moon.

River Financial released an extensive research report digging into bitcoin’s evolving role in the international payments market.

Strike CEO Jack Mallers discussed the regulatory environment for “crypto” on Bloomberg.

Ten31 Partner Marty Bent joined Max Gagliardi’s podcast to discuss recent SEC headlines, the bitcoin mining landscape, and more.

Managing Partner Grant Gilliam was quoted in the Axios Crypto daily newsletter.

Market Updates

May’s CPI reading came in at +4% Y/Y, down from +4.9% in April for the lowest level since early 2021. “Core” inflation fell slightly to +5.3%.

The Federal Reserve held its benchmark interest rate target steady at 5-5.25%, the first “pause” after 10 consecutive increases.

Fed Chairman Jerome Powell signaled that hikes are likely to start again in July and that cuts are “several years out,” though the market seems to disagree on the latter point.

Use of the Fed’s new BTFP lending facility rose for the sixth straight week, remaining above $100 billion.

Treasury Secretary Janet Yellen suggested the US should expect a gradual erosion in its share of global reserves as other countries seek alternatives.

The head of CDPQ, among the largest public pension funds in the world, indicated he expects a “bloodbath” in the near-term in some sectors of commercial real estate.

On the back of a disappointing “economic reopening,” China cut benchmark interest rates several times this week and is reportedly on the verge of significant stimulus spending.

Prominent asset manager BlackRock filed for a new spot bitcoin ETF. The vehicle will use Coinbase as its custody partner, and the associated filing contains some questionable conditions.

Regulatory Update

A leaked version of a draft European Union CDBC bill bans interest payments and programmability on a potential CBDC while limiting total balances to 3,000 euros, moves presumably intended to protect the legacy commercial banking system.

A week after being sued by the SEC, Binance is now under investigation for “acts of aggravated money laundering” by French authorities.

Noteworthy

Apple’s App Store had a busy week of adding friction for bitcoin apps, threatening popular Nostr client Damus with removal and rejecting the latest versions of lightning wallet Zeus and consumer rewards app Fold.

The Zeus situation was resolved the following day, though Apple’s response to Damus’s appeal still requires the app to remove the ability to “zap” (i.e. make in-app lightning micropayments to) specific posts. Both episodes highlight the potential benefit and growing importance of progressive web apps, which cannot be censored by third-party gatekeepers.

Jack Dorsey’s #startsmall initiative funded a $5 million grant to Brink, a non-profit organization supporting bitcoin developers.

Pakistan completed its first government-to-government purchase of discounted Russian crude oil in Chinese Yuan.

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