This Week In Crypto #11
One could describe the past few days as the week of the bears. Red horizons, market bleeding, yada-yada. However, is it really worth talking about the price movement as the crypto space becomes more and more extensive? There are so many new developments pouring in nowadays, from many different sources and levels of interest, that talking about prices is just dull. There is more drama, glitter, sorrow, wealth changing hands, villains, and heroes in each week than a soap opera script-writer could think of. So, what events should we dissect this time?
Otherside land drop made Ethereum crash
Otherside represents the take of Yuga Labs to conquer the Metaverse. A digital world where you can turn your NFT into a playable character. Yuga Labs is the company behind Bored Ape Yacht Club, the most successful NFT collection ever, so, when they announced the release of the new project the FOMO (fear of missing out) was real.
Two days before the launch, in a bold blog post, they explained why the dutch auction mechanism sucks (a type of auction that starts at a higher price and then over time the price decrease; theoretically anybody could buy the item in the price range they desire), and stated the way in which the drop will function: a flat price of 305 ApeCoins/NFT, for KYCed wallets, capped at 2 NFTs/wallet.
They believed that this mechanism would prevent the apparition of gas wars (when demand surges on the Ethereum network the price of writing a transaction on blockchain raises exponentially). Boy, they were wrong.
$64,000 ETH was spent on gas fees in the process of minting 55k Otherside NFTs. At the time of the drop that meant around $170 million. The entire drop made Yuga Labs around $310 million, so in the process of selling the NFTs, more than half of the raised sum was lost in the process, initially by the buyers, and then (a decent chunk of it) by Yuga Labs itself, which decided to reimburse the tokens lost for gas by users that tried to purchase an NFT but managed only to spend gas without getting any.
The entire episode spurred heated debates. Some argued that Yuga Lab botched the drop on purpose, only to advertise the need for a different chain.
We're sorry for turning off the lights on Ethereum for a while. It seems abundantly clear that ApeCoin will need to migrate to its own chain in order to properly scale. We'd like to encourage the DAO to start thinking in this direction.
— Yuga Labs (@yugalabs) May 1, 2022
Who would have thought that the monkey business can be so complicated and prohibitively expensive?
Google aims to become the leader in providing infrastructure for Web3
I feel you, I also don’t understand how Web3 could remain Web3 on top of centralized service providers, but that’s their stand. A few days ago, Amit Zavery, one of the vice-presidents of Google Cloud told employees in an email that they should aim to make Google Cloud the first choice for Web3 developers.
“While the world is still early in its embrace of Web3, it is a market that is already demonstrating tremendous potential with many customers asking us to increase our support for Web3 and Crypto related technologies.”
As you can see, big tech is coming for a share of the pie. Should we guard it, or should we let them enjoy it?
EU Commission may finally understand crypto, or at least DeFi
Regulators, God don’t we love them? Especially EU ones, they seemed to want to eradicate any trace of decentralization from the system. Maybe they still want it, but strangely enough, they released a report called European Financial Stability and Integration Review 2022 that has a whole chapter dedicated to analyzing Decentralised Finance. We strongly advise reading it.
Apparently, they have a true grasp of understanding on how it works, to the extent that they admitted the need for a new regulatory approach – different from the one applied to traditional finance.
“However, it is obvious that simply copying traditional regulatory approaches in a decentralised environment may not be an option, since they have traditionally focused on intermediaries that play a central role in the financial system. Adapting the regulatory framework to a decentralised environment may be challenging and would require a rethink of how we approach regulation.”
By no means do we want to convey that they won’t do something ludicrous in the future, like banning non-custodial wallets, but at least we can not accuse them of acting out of ignorance.
While prices go down, numbers go up, where it counts
We caught a thread that’s worth reading. VC’s money is pouring into Web3 projects. In only the last quarter alone, more than $10 bn were invested. Keep in mind that those figures regard only VCs money. On-chain capital that was raised by various projects is not taken into consideration. It appears that in a couple of years crypto will stop being perceived as a casino and more as an established industry sector.
last quarter saw more than $10bn invested in crypto/blockchain startups by venture capitalists, the biggest quarter on record, despite a huge retraction in all markets
where did the money go? 🧵 pic.twitter.com/hNlfoRdLYD
— Alex Thorn (@intangiblecoins) May 2, 2022
What’s the thing with NFTs and the food/beverage industry?
After the inconclusive encounters of the NFT space with brands like Mcdonald’s, Taco Bell, and Pepsi, this week Starbucks announced their entering into the NFT world.
In comparison to the brands mentioned above, they seem to have a more articulated approach, one that could fit in their broader concept of the “third place”, a place different from home or work where individuals could feel “a sense of belonging over coffee”.
If I were to be a scoundrel, I’d say that I can drink my home-brewed coffee and still have that feeling of belonging to the Web3 community. Still, it makes more sense than digital McRibs.
“We are creating the digital third place. To achieve this, we will broaden our framework of what it means for people to be a member of the Starbucks community, adding new concepts such as ownership and community-based membership models that we see developing in the Web3 space,” Brady Brewer, Starbucks Chief Marketing Officer.
FIFA in full degen mode
Ok, maybe not full degen, probably not degen at all, but still: they signed a deal whereby Algorand becomes a sponsor of the 2022 World Cup and a “technical partner”. If it’s not obvious, I will say it: expect a bunch of Algorand NFTs featuring the world’s best soccer players.
If we go by what Gianni Infantino, the FIFA president, says, this is just the beginning:
|”The collaboration is a clear indication of FIFA’s commitment to continually seeking innovative channels for sustainable revenue growth for further reinvestment back into football ensuring transparency to our stakeholders and world-wide football fans – a key element of our Vision to make football truly global. I look forward to a long and fruitful partnership with Algorand.”
This leads us to a simple question: Can crypto become more mainstream than that?
Empty base when it comes to NFTs
One of the most awaited moments in the NFT world was the launch of a new NFT marketplace created by Coinbase. Being the biggest crypto exchange in US, and one of the few crypto companies listed publicly, people expected Coinbase’s entry to steal the crown from OpenSea, which is currently the largest NFT platform.
More than 8 million people pre-registered to use the platform. All the prerequisites were set for a huge success. On the 20th of April, it launched in a gated manner, for a select group of users. At the beginning of May, it opened for all.
Guess what! According to Cointelegraph, on the grand opening day, they recorded only 150 transactions, totaling around $75k in volume.
Maybe the NFT “bubble” has finally popped? I know there are a lot of guys out there rooting for the demise of NFTs. Well, not really, in the same day OpenSea recorded a healthy 1.1 bln $ in volumes.
What happened? Maybe the gated vibe that transpired in every move of this launch had something to do with this anticlimactic endeavor.