This weekly roundup of news from mainland China, Taiwan, and Hong Kong attempts to curate the industry’s top news, including influential projects, changes in the regulatory landscape, and corporate blockchain integrations.
A lot of like last week, China’s minor COVID flare-ups dominated the headlines as the country tries to avoid more severe lockdowns. The cryptocurrency has managed to stay out of the news, which can only be seen as a good thing given the recent regulation.
Lots of love for the Layer Twos
On August 3rd, IOSG Ventures and Chainlink organized the Demo Day of the Layer-Two Hackathon in Shanghai. The event aimed to support developers working on scaling solutions for Ethereum and was supported by major projects such as Polygon, Near, The Graph and Matter Labs. The winning team that won awards and mentoring was an asset management project based on Synthetix. The winners, called ObjK, used The Graph’s query technology to pull data from Synthetix for automated portfolio realignment across pools.
Layer twos have always been popular in China, especially as users are less concerned about custody risks and decentralization. Last week OKEx officially launched OKExChain, an EVM-compatible Layer 2 network similar to what other major exchanges have published.
This is interesting because of OKEx’s large user base, which only comes second after Binance when sorted by volume. Layer 2 networks shared by exchanges often lack some of the technical strengths of dedicated Layer 2 networks, but have a huge advantage in accessing users, assets, projects and communities.
OKExChain was proof of this when it amassed over $ 2 billion in assets in the first week. About $ 350 million of that goes to AMM CherrySwap, which is fairly generously based on BSC’s PancakeSwap. This TVL would rank 30th in the largest DeFi app in all networks, about the same size as OlympusDAO on Ethereum and BakerySwap on BSC. KSwap, another AMM platform on OKExChain, achieved a 24-hour trading volume of over $ 684 million on Thursday, making it the second busiest dApp in the industry behind Uniswap V3. The challenge, of course, lies with the applications and network in maintaining these early numbers after the generous APYs have been reduced to more sustainable numbers.
Track acceptance elsewhere
Despite declining DEX trading volume on both BSC and Huobi Eco Chain, BSC recently saw explosive activity surrounding CryptoBlades, an NFT game that was more than triple the transaction volume of the entire Huobi Eco Chain on Thursday.
In order for chains like Huobi ECO or OKExChain to compete with other Layer 2 networks, they ultimately have to find a way to attract unique app developers to their ecosystems rather than relying on ports or forks from other networks. As Axie Infinity has shown, any blockchain network can become full of transactions and users if the right application is deployed on it.
China’s own shadowy supercoder
In the two years between April 2019 and this summer, more than $ 2.2 billion worth of cryptocurrencies were sent from Chinese wallets to addresses associated with illegal activity, according to a Chainanalysis report.
The majority of this is related to the infamous PlusToken Ponzi scam that took place in late 2019. Since then, the number of addresses involved in fraud and illegal activity has plummeted, suggesting that Chinese crackdowns are having some consumer protection implications.
Regulators seem pleased with their victories, as shown by an article from a People’s Bank of China working conference last week that mentioned the digital currency crackdown in a list of efforts to date for 2021.
Tech giants are eyeing the NFT space
Crypto companies aren’t the only ones feeling the wrath of Chinese regulators these days. Hundreds of billions of dollars have been wiped out of China’s technology stocks over the past week, including online education, delivery and video games.
Tencent, which invests in a number of major game publishers, saw its share price decline by more than 17% this month alone. But that didn’t stop it announces this week that an NFT trading platform will be released, roughly translated as “Magic Core”. Third parties have reportedly been able to post NFT graphics on the platform, and it is only designed by one of several teams within Tencent who develop NFT-related services. Because of China’s strict regulatory policies, most of the NFTs introduced by the major Internet companies are based on private chains or the technology of consortium chains. Alibaba also launched an NFT platform in late June.