How to build integrations; Comparing crypto cards: Key trends; What happened in fintech in Q1 2022; Metaverse-as-a-Service;
In this edition:
How to build integrations
When building applications for SMBs, connectivity is a minimum entry requirement. With a reliance on more applications than ever before, small businesses simply expect their systems to work together seamlessly. Integrations, therefore, attract more and stickier customers.
Increasingly, the providers gaining and retaining market share have connectivity at their core. But, building this connectivity in-house needs to be carefully considered as a number of pitfalls lie in wait.
1 It’s far from a copy and paste process - each financial platform has a vastly different data model and will present its own unique set of challenges. Your approach, as well as the resources required, will vary significantly depending on the integration.
2 The real difficulty comes as you scale - building an MVP for one integration is manageable with a mid-level, mid-sized Engineering team. The challenge increases exponentially as you introduce more integrations. The maintenance of the infrastructure requires constant focus, technical debt piles up, API updates distract attention away from your roadmap, and accounting for countless edge cases hampers your ability to ship products quickly.
3 SMBs use a wide range of financial platforms - this can vary significantly depending on factors like geography, business size, and industry. It can take years to achieve full coverage of all the financial platforms your business customers use, which will divert significant resources away from enhancing your core product offering.
4 Financial integrations are not intuitive - they require a team of experts including Technical Architects, Product Managers, Developers, and Specialists in Quality Assurance with an extensive understanding of accounting principles, bookkeeping, and how financial data behaves.
This guide draws on Codat’s extensive experience in the industry to outline the considerations you should make when developing an effective integration strategy. This includes everything from determining your implementation plan, developing an effective data model, dealing with ongoing maintenance, scaling your coverage, and so much more.?
Dragonfly Capital has raised $650 million for its third venture fund
The Dragonfly Fund III handily eclipses the firm’s previous funds, which raised $100 million in 2018 and $225 million in 2021. Its limited partners include Tiger Global Management, KKR, Sequoia China, and the endowments of multiple Ivy League universities, among others.
Dragonfly invests in crypto companies across the spectrum of decentralized finance, smart contracts, NFTs, Web3 development, DAO infrastructure, and the metaverse.
Since the firm’s inception in 2018, it has invested in almost 60 companies, including Ethereum rivals NEAR Protocol and Avalanche, data firm Dune Analytics, and metaverse land investor Everyrealm Inc.
Historically, Dragonfly has participated primarily in early-round funding for crypto startups. The size of the firm’s third fund will allow it, according to a blog post by Dragonfly’s managing partner Haseeb Qureshi, to lead Series B or later rounds for companies, staying with them longer into their maturity.
“With this newest fund we’ll be backing the most disruptive founders, protocol builders, and hackers of this generation,” Qureshi wrote.
Dragonfly’s round comes at a time when crypto-centric venture capital investment is at an all-time high. Last month, Kathryn Haun, formerly of Andreessen Horowitz, announced a $1.5 billion fund for Web3 ventures; in January, FTX announced a $2 billion Web3 fund; Paradigm’s fund, launched in November, raised a record $2.5 billion.
Telegram users can now send crypto via the messenger
The Open Network (TON), a decentralized blockchain initially designed by Telegram, announced this week it is adding a bot that lets Telegram’s more than 550 million users send cryptocurrency to other users via chat. The initial rollout of the “wallet” bot will allow the sending and receiving of Toncoins, which the developers claim will come with no transaction fees.
Telegram has a long history with crypto.
In October 2019, the U.S. Securities and Exchange Commission filed a complaint against the messaging app after Telegram raised $1.7 billion via a private token sale. The SEC alleged that Gram tokens were unregistered securities. As part of a June 2020 settlement, Telegram agreed to return $1.224 billion back to investors.
In the process, Telegram handed control of the Telegram Open Network and Toncoin—now the 205th-largest cryptocurrency according to CoinMarketCap.com with a value of $2.83 billion—to The Open Network community, an open-source community dedicated to developing Toncoin and the associated blockchain.
You can now send #Toncoin directly within Telegram chats!
It’s a new way to send Toncoin without transaction fees to any Telegram user. With this service, you’ll no longer need to enter long wallet addresses and wait for confirmations.
According to The Open Network, those wanting to send Toncoin through the new wallet bot, which it claims has been used by over 800,000 accounts on Telegram since being enabled earlier this week, will need to install the latest version of the Telegram app.
Like Discord, Telegram allows users (such as The Open Network) to create bots to automate activities on the platform. While Telegram allows the wallet bot, that doesn’t necessarily mean it endorses it.
“It is hoped that this simplification of the cryptocurrency transaction process will enable greater adoption around the world, and help to embed blockchain payment solutions into people’s daily lives,” a TON Foundation spokesperson said in a press release.
‘Super App’ for Crypto?
The idea of a super app first took off in China, where WeChat is used for everything from sharing photos to hailing a taxi. A U.K. startup pledges to bring that concept to cryptocurrencies.
Argent aims to create a simple service used for buying, storing and transacting with more than 240 different Ethereum-based tokens. It also gives access to decentralized finance services, such as crypto lending platforms and decentralized exchanges.
The startup has drawn support from some of the top names in crypto investing. Argent plans to announce Thursday that it raised $40 million in a deal led by Fabric Ventures and Metaplanet. Other new investors, including Animoca Brands Corp. and Jump Trading Group, participated alongside existing ones, such as CREANDUM, Index Ventures and Paradigm.
Itamar Lesuisse, a former manager at Amazon and Visa in London, helped start Argent in 2017. The company began with a focus on improving the security of cryptocurrencies and reducing transaction fees. It now wants to enable customers to buy virtual real estate, access online games and use nonfungible tokens.
Lesuisse declined to disclose the company’s valuation. He said this will likely be the last financing made up of mostly crypto-specialized venture capital firms, which have dominated investments in blockchain startups. Argent will pursue more traditional investors in future fundraising, he said.
“We’re a crypto company today. We’re at the end of that,” Lesuisse said. “In a year, two or three years from now, we’re just a company that happens to use blockchain as a technology.”
The startup, which offers so-called smart wallets, said it has attracted more than 500,000 users and plans to double its all-remote team to around 50 people this year.
Comparing crypto cards: Key trends
Crypto cards primarily come in two types: debit cards that convert cryptocurrency into fiat so that it can be used to make a payment, often with additional crypto rewards, and fiat-based cards that provide crypto as a cashback reward. Or, in the case of the Nexo Card, cardholders can use held crypto assets to open a line of credit and make purchases in fiat while using their crypto holdings as collateral.
Looking at the crypto card schemes on offer, we found the following trends:
- Some cards require you to be holding a certain amount of crypto to apply. For example, to obtain a virtual Nexo Card, users must have a portfolio balance amounting to at least $50.
- With some cards, the crypto rewards you receive for purchases are based on the amount of crypto you stake. With the Crypto.com Visa Card, the number of CRO tokens you have staked determines the CRO rewards that the user will receive. For example, if your held tokens amount to a value of ￡300,000, you will receive the maximum CRO reward of 8% on transactions, whereas if you have less than ￡300 staked you will only receive 1% in CRO cashback.?
领英推荐
- Rewards are received in a variety of cryptocurrencies, depending on the company. For example, Crypto.com Visa Card users can only receive their rewards in CRO, whereas Gemini Credit Card users can receive their rewards in one of more than 60 cryptocurrencies.
- The majority of crypto cards we track don’t have transaction fees for payments, except for the Binance Visa Card, with charges for transactions and ATM withdrawals up to 0.9%.?
- Many crypto cards don’t charge FX transaction fees, meaning they will convert crypto directly into the fiat currency needed to make foreign purchases abroad without any additional charge. Exceptions here were Bitpay, which charges 3% FX fees for payments outside the US, and Nexo, which is only free of FX fees up to €20,000 (depending on the amount of NEXO tokens being held).?
Many of the crypto cards have been launched in the last few years,which makes this a nascent area that will be subject to a lot of change (which we can help you track) as challengers continue introduce new offerings.
What is the regulatory timeline for Open Finance??
The FCA and the UK Government have committed to introducing a legislative and regulatory framework to mandate and oversee Open Finance and clarify which types of entities, accounts and datasets would be in scope.
The initial proposals for such a framework are expected to emerge in late 2022 or early 2023. This will pave the way for a phased Open Finance implementation in late 2023 or 2024, likely starting from use cases with the best cost/benefits balance.
Some Open Banking requirements will read across to the future Open Finance framework, but we also expect important differences. For example, Open Banking requires that a TPP's access to payments accounts data be equivalent to that of a customer via online banking. Such an approach could probably work for savings or investment accounts, but it is unlikely to be suitable for insurance data.
The regulatory framework will also address the risks arising from Open Finance, such as security and fraud, financial exclusion, poor consumer outcomes, and operational resilience. Heeding the lessons from Open Banking, UK authorities acknowledge they need to ensure coherence between Open Finance rules and other FS and cross-sector rules, such as consumer and data protection or the developing UK Digital ID trust framework. This will be crucial to Open Finance's success. For example, in our experience, the real or perceived tensions between Open Banking and the General Data Protection Regulation (GDPR) have kept many firms from making better use of payments data.
Authorities will also have to clarify the next steps and timings concerning the other key building blocks necessary for Open Finance to become a reality. These include an Open Finance Implementation Entity, common APIs and user experience standards, and a fair liability model between different ecosystem participants.?
Metaverse-as-a-Service
The Metaverse will require countless new technologies, protocols, companies, innovations, and discoveries to work. Many companies with existing technological and network infrastructure might not be capable to build out and offer an immersive Metaverse-like experience to a large number of users.
Just as the internet has a set of protocols for visual representation, communication, graphics, and data, the Metaverse would require a broader and resilient set of standards and protocols that also embrace interoperability. For example, Fortnite functions across almost all major platforms (e.g., iOS, Android, PlayStation, Xbox), allowing for multiple identity/account systems and payment methods, pushing competitors into cooperation (i.e., interoperability) with one another.
Today, Web2 giants (e.g., Apple, Google) use similar technologies, but they are not designed to transition into one another. Interoperability will be far more important for building a scalable Metaverse. Metaverse-as-a-Service (MaaS) would enable companies to use standardized protocols to build their Metaverse campus and begin offering immersive experiences that help bring people together.
Companies could make the Metaverse possible with private network capabilities, delivered to any destination on the internet. Plug-and-play Metaverse services would also offer a high degree of interoperability between experiences. Several Big Techs are exploring the Metaverse and could help drive mass adoption of virtual assets in coming years.
What happened in fintech in Q1 2022
Fintech funding has slightly slowed but it?s still going strong. Fintech startups raised $32.4B globally in Q1 2022, down 10% from all-time high in Q3 last year, but still up 27% year on year.
Fintech funding is holding on better than the broader venture capital ecosystem, especially compared to last year's levels.
Fintech funding is up 27% year-on-year, compared to just 4% for overall VC funding.
Unicorns are holding on.
Exits value has fallen, but the count is higher than ever. There are now 473 fintech unicorns globally. 40 were added in Q1 2022, 8 less than the quarterly average last year, but still a very high pace.
Exits value has fallen from last year, from more than $100B by quarter to $27B, especially due to public listings. But smaller M&A is at an all-time high.
Crypto is now the most invested sector in fintech.
Crypto startups have raised $7.0B in Q1 2022, more than any other fintech segment. Crypto and Defi funding is also growing faster than any other segment, increasing 2.4x compared to Q1 2021.
Crypto valuations are also soaring at all stages. Fintech valuations, excluding crypto, have instead slightly pulled back in late stage, while at early stage they keep going up.
Otherside NFT minting frenzy resulted in the Ethereum network destroying more ETH than it issued
The mad rush to buy Otherdeed NFTs over the weekend spiked gas fees on the number two crypto network, and burned 55,843 Ethereum in the process, worth approximately $157 million, making it the sixth-largest source of burned ETH ever.?
Saturday’s minting event managed to top the all-time burns of OpenSea's exchange contract, the largest NFT marketplace; a Uniswap V3 router, the largest decentralized crypto exchange by volume; and MetaMask, one of the most popular Ethereum software wallets.?
As of Monday morning, Otherdeed still held the 30-day top spot on the Ultra Sound Money leaderboard.
The Otherdeed NFTs that caused fees to skyrocket over the weekend are required to buy plots of land in Yuga Labs’ Otherside metaverse project, an extension of the wildly popular Bored Ape Yacht Club (BAYC) collection.?
What is ‘burned’ Ethereum?
The burn mechanism, introduced by EIP-1559 last August, takes base fees generated by Ethereum transactions out of circulation by sending them to a defunct wallet address rather than paying them to Ethereum miners for validating transactions.?
It’s meant to help the network transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus model, a more energy-efficient algorithm that requires less actual compute power. Granted, the transition has lasted a lot longer than originally planned.?
When it was launched last year, EIP-1559 was expected to take about $30 million worth of Ethereum (or about 10,630 ETH) out of circulation per day.?
However, the Overdeed minting event took far more than that out of circulation.??
As it stands now, the network’s net issuance (the amount of Ethereum created minus the amount burned) is negative 52,899 ETH.?
This effectively means that the Ethereum network has undergone a massive deflationary shock, providing another example of the popular meme “ultra-sound money.”??
This weekend’s activity also means that May has already seen the highest base fees since the burn started last August on only the second day of the month.?
Since it began, 2.3 million ETH, worth approximately $6.3 billion, has been burned. According to the Watch the Burn dashboard, that’s resulted in a 62% net reduction of ETH in circulation.?