📝 Web3 Field Notes #12
The war on crypto; Vitalik Buterin and Balaji; ETH staking withdrawals; Doritos enters Web3; Hermès lawsuit; Reddit's super bowl collection; new start-ups & more.
“Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.” – Adam Smith
📚 Readings:
Fidelity: Bitcoin first. Link
The war on crypto: a detailed account of the coordinated, ongoing effort across US financial regulators against crypto. Again: Whatever the US does, the world must be watching. Link
Panthera Blockchain Letter: The year ahead. Link
a16z: Regulate Web3 apps, not protocols. Link
First episode of The Network State Podcast with Vitalik Buterin and Balaji Srinivasan. Link
How ETH staking withdrawals will work. Link
🚨 What caught my eyes:
Kraken agrees to pay $30M and discontinue its crypto-asset staking products to settle SEC allegations. SEC Commissioner Hester Peirce: “Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.” This is certainly another blow to crypto in the US, after the burst of recent crackdowns against US banks handling crypto. Link
Binance says the New York regulator ordered Paxos to stop issuing its BUSD stablecoin, which has 6.2M holders. Meanwhile, the SEC has told crypto firm Paxos that it plans to sue the company for violating investor protection laws. The SEC hasn’t previously taken enforcement action against a major stablecoin issuer. “The war on crypto”, folks. That might just be the beginning. Link
PayPal pauses work on its stablecoin. Another sign of the widening US government crackdown on crypto. Link
Web3, the metaverse, blockchain, decentralized identity, and tokenization appeared on the recently released Gartner impact radar. Web3 is still a promise. We are far from realizing a user-owned, “open, equitable” web or immersive, mixed-reality worlds. Regulation is vague. The interfaces are still complex and clumsy. After a generation of Web2, users will need to learn the concept of “ownership” of their data and the utility of a “wallet” as a tool to unlock Web3 beyond payments. Brands are still experimenting, finding out what works and what doesn’t. But the promise stands. And it’s a big one. And the time to engage is now. Link
Doritos enters Web3. In their 3 day event (8-10 Feb) held in Decentraland, Doritos UK were giving users the chance to win custom gaming PCs, RTFKT & Meebits NFTs, limited edition Doritos wearables and more. All NFTs are minted on Polygon. Smart move to partner with some of the most valuable NFT brands (by Larva Labs) and target tech-savvy gamers which is likely a core customer segment for Doritos. Link
First-ever legal trial on NFTs – aka "NFTs aren't art". Hermès won its lawsuit against the digital artist behind the “MetaBirkin” NFTs. The jury found that Rothschild had infringed on Hermès trademark rights and awarded the company $133k in damages. They argued that the NFTs were similar to commodities and not protected by the First Amendment as art. This ruling could set a precedent for other big brands seeking to protect their trademarks in the NFT space. Link
Reddit’s Collectible Avatars are back. After teasing their release last week, Reddit dropped the Super Bowl LVII x Reddit Collectible Avatar collection last week in collaboration with the NFL. The NFTs are free and, like Reddit’s previous drops, provide owners with unique benefits on the platform. Reddit pioneered the use of blockchains and NFTs in deepening engagement within its communities – without ever mentioning "blockchain" or "NFTs". I expect this to be the "new normal" for the next wave of NFT projects. To-date, Reddit’s “Collectible Avatar” NFTs have been minted by over 4.5m unique users and have a total sales volume of over $12m. Link
🚀 Interesting Web3 start-ups:
W3rlds: A platform to produce content, spaces, and events for companies in the Metaverse.
Addressable: Target users across blockchains and social media to boost growth.
Lighthouse: The open metaverse navigation engine.
💡Word on the street:
Crypto-optimism in the new year was hammered by multiple worrying regulatory developments in the US: Binance was cut off from USD, the US government is allegedly closing down crypto on- and off-ramps, PayPal suspended working on its stablecoin, Kraken had to stop its staking offering and BUSD was stopped by New York regulators with an alleged case against Paxos by the SEC.
Last December, I wrote that regulation would likely come back stronger. Here we are, folks. And this might just be the beginning.
After the remarks of Gary Gensler on the Kraken case, the divide among the crypto community widens. Bitcoin maxis shout that no “crypto community” exists, but only the “Bitcoin” and the “fiat community”. Some of them even support Gensler, describing crypto as a “scam” and Ethereum as an “unregistered security”.
Meanwhile, the “Bitcoin community” is divided because of the recent boom of Bitcoin “ordinals” (aka Bitcoin NFTs), causing heated philosophical debates among Bitcoin’s core community.
Crypto is not back yet. Risk and uncertainty have increased. We’ve got a lot of ground to cover.
That’s all for now, folks.
Back to building and learning! 🚀
– Marc
📈 Awesome charts to share with friends:
🎨 Artwork: “Between Two Worlds” by Mikko Lagerstedt
