Good morning, and welcome to Protocol Fintech. This Thursday: brushing off crypto winter at NFT.NYC, eBay buys KnownOrigin, and Hester Peirce nixes crypto bailouts.
Off the chain
Are blockchains actually decentralized? A new report commissioned by DARPA — you know, the organization that backed the original decentralized internet — and authored by cybersecurity consultants Trail of Bits suggests that the bitcoin blockchain and Ethereum are inadvertently centralized in many aspects. One statistic jumped out at me: “Of all bitcoin traffic, 60% traverses just three ISPs.” It’s worth a read, and for those involved in building core blockchain infrastructure, a hard think about Web3’s architecture.
— Owen Thomas (email | twitter)
Crypto winter wonderland
With Bored Apes and CryptoPunks beaming from Times Square billboards and thousands of collectors and creators meeting in person for the first time, last November’s NFT.NYC was described in the New York Times as a coming-out party for the Web3 world.
Seven months later, blockchain aficionados are descending upon Manhattan for the fourth annual NFT.NYC conference under sharply different circumstances: what even the biggest bulls are calling crypto winter. Despite that, the party rages on this week, with daytime panels and networking giving way to Deadmau5 concerts at night. Times Square is once again home to massive digital billboards from MoonPay, Coinbase NFT and Rubber Duckz, among others.
We don’t talk about winter, no, no. “At NFT.NYC, the circles I’m in aren’t talking about prices,” tweeted Chris Cantino, a partner at venture capital firm Color Capital. “Aren’t talking about leaving crypto. Aren’t talking about the next fad or flip. They’re talking about the future, and how they are going to build it.”
- It might appear that the reported 15,000 attendees of NFT.NYC are suffering from a collective delusion, given the crypto bear market. But there’s a little more to it.
- The value of the crypto market is sinking in general. Bitcoin, the world’s most famous token, fell below $20,000 for the first time since 2020 over the weekend. Ethereum and solana, the tokens most commonly used with NFTs, have fallen about 71% and 79% this year, respectively.
- Falling prices combined with lower transaction volume means that, in dollars and cents, the NFT market is tanking. NFT marketplace volume fell to just over $4 billion in May, from $7.2 billion the month before.
- But a focus on dollars means you’ll miss the rise in volume. Chainalysis describes the current moment as a market “stabilization” after a booming 2021, not a crash. The firm also points out that collectors sent $37 billion to marketplaces like OpenSea between January 1 and May 1 of this year — already on track to cross the $40 billion threshold set in 2021 before the year’s half over.
NFT.NYC showcased both crypto’s optimism and its eccentricity. There are plenty of panels with names like “Intellectual Property Considerations Raised by NFTs.” Then there was the “God Hates NFTs” protest/marketing stunt and a Snoop Dogg impersonator going by Doop Snogg.
- “There are folks in the space now who have survived a couple of crypto winters,” said Gavin Gillas, co-founder and CEO of Project Venkman, an NFT-focused rewards company. While projects that were seeking quick wins are destined for a shakeout, he added,“the focus long term is that it is time to build.”
- Gillas’ Project Venkman and the Chive on Wednesday debuted images at NFT.NYC of the Bill Murray 1000, an NFT collection with original artwork featuring the comedian. Murray recounted 100 stories for the project that will be featured in 10 colors apiece. The Murray project is evidence celebrities are still jumping on board with Web3 projects. His son, Jackson, appeared on stage Wednesday for the debut.
- The project will debut next month on Coinbase’s NFT marketplace, one of the first collections to launch there.
Coinbase is not alone in expanding its NFT business, despite the downturn. Yesterday, eBay said it had bought NFT marketplace KnownOrigin for an undisclosed sum. VCs, whose job it is to predict the trends, are still bullish as well. NFT-focused startups have raised $2.9 billion in the first five months of the year, according to PitchBook, outpacing the investment of 2021, despite values falling. No one knows when, or how, this crypto winter will end, but for now, NFT fans are still putting the “fun” in “fungible.”
— Ryan Deffenbaugh (email | twitter) and Veronica Irwin (email | twitter)
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On the money
On Protocol: To get in on the NFT action, eBay is acquiring U.K.-based NFT marketplace KnownOrigin. It’s far from the only company in traditional ecommerce making the move despite the recent crypto crash: Shopify also made a push for better NFT tools this week.
Crypto.com is moving toward obtaining regulatory approval in Singapore. The Singapore-based crypto exchange giant received an in-principle approval from the Monetary Authority of Singapore for a Major Payment Institution License Wednesday.
Ledger is launching an NFT marketplace and Web3 services. The crypto hardware firm will focus on processes for avoiding common NFT scams, with CEO Pascal Gauthier saying proper security for Web3 is “one of the industry’s biggest problems.”
Tether is launching a stablecoin pegged to the British pound. The new stablecoin, GBPT, will be the fifth coin launched by Tether. Existing Tether stablecoins include ones pegged to the U.S. dollar, the euro, the yuan and the Mexican peso.
Meta Pay is more than just a rebranding for Facebook Pay, according to Mark Zuckerberg. Described as a “digital wallet for the metaverse” by the Meta CEO, he claimed that the digital wallet will eventually allow for transactions in digital goods across metaverse environments.
Nexo has hired Citigroup to advise it on acquisitions. The crypto lender said it has “reached out to several companies … in current need of liquidity and offered to alleviate financial pressure through a number of different options.”
Overheard (the regulators edition)
SEC Commissioner Hester Peirce might be hailed by the crypto community as “Crypto Mom,” but she’s letting you know right now that she’s not going to baby you. Peirce said that even if there was a bailout mechanism for crypto, she “would not want to use that authority” because there is a “need to let these things play out.”
European Central Bank President Christine Lagarde wants to get into the nitty-gritty of crypto regulation. While the EU’s Markets in Crypto-Assets bill likely won’t be implemented by 2024, Lagarde thinks that more future legislation “should regulate the activities of crypto-asset staking and lending, which are definitely increasing.”
Fed Chair Jerome Powell thinks that crypto regulation shouldn’t, in theory, be that hard, because digital finance products are similar to traditional finance products in some ways. “The same activity should have the same regulation no matter where it appears,” Powell said. If that sounds familiar, it’s because California official Suzanne Martindale made a similar point to Protocol recently.
Moves and hires
Pharrell Williams has joined NFT project Doodles as its chief brand officer. Williams will also serve as executive producer on an album of Doodles-inspired music called “Doodles Records: Volume 1,” released in partnership with Columbia Records, according to Decrypt.
Noah Davis is leaving his role as head of Digital Sales at Christie’s to join CryptoPunks. Davis will be a brand lead for the NFT collection.
Better.com has lost three executives, according to TechCrunch: Jillian White, general manager of Better’s affiliate businesses Better+; Megan Bellingham, senior vice president of Sales and Operations; and John Moffatt, vice president of Sales.
Jin Hwang has joined Fundbox as its chief product officer. Hwang most recently served as head of Product-Platform at Marcus by Goldman Sachs.
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Thanks for reading — see you tomorrow!
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