Crypto markets melting down + All the Web3 news you missed this week
Crypto markets melting down + All the Web3 news you missed this week
Coinbase’s market cap < $10B, Bitcoin < $30k, UST and Tether depegged from the $1 - welcome to your first (second, third or fourth) crypto down cycle. After going through a few of these myself, I am expecting the new few weeks/months to be filled with new crypto fanatics panicking, crypto veterans shrugging it off and crypto haters getting on their soap box.
We’re also going to see a huge number of crypto/web3 projects fail, either because they were dependent on crypto prices only going up, or they fail to get funding and attract talent in a bear market. Expect a flurry of acquisitions/acqui-hires in the coming months from those who raised massive rounds last/this year.
A falling bitcoin price tends to cool all things blockchain, even if it isn’t related to bitcoin. Corporate interest in blockchain tech tends to lose internal momentum when the bitcoin price falls. Few organizations have the conviction to push their blockchain projects as negative crypto headlines dominate mainstream media.
Either way, stay tuned - its going to get very interesting.
A few personal announcements: I’m going to be at Permissionless next week, message me if you’re interested in connecting. Also, I’m going to be teaching a Startup Exec Bootcamp, designed for current or aspiring startup execs. Learn more about it here.
Here’s the Web3 news from the past week
General
(Note: The news is moving very quickly, so some of these articles may already be dated by the time this is published)
Bitcoin tumbles more than 50% below its all-time high as crypto plunges again (CNN)
As of Monday, Bitcoin prices had fallen 20% in a week, a 50% drop from its highest high last year. (Ethereum, Solana, and Dogecoin, among others, were also down.) Analysts believe this trend will continue: Bitcoin is “not immune” to inflation concerns affecting the rest of the financial world, and investors may steer away from crypto and instead invest in “safe havens, such as dividend-paying blue chip stocks.”
UST Stablecoin Loses Dollar Peg for Second Time in 48 Hours, LUNA Market Cap Falls Below UST's (CoinDesk)
UST, a stablecoin engineered to maintain a price of $1, fell below its dollar peg on Monday, the second time it had done so in three days. Its sister token, LUNA, saw its own price drop 44% to $35, sinking its market cap below that of UST — which “potentially throws the foundation of UST's entire stabilizing mechanism into jeopardy.”
In its first quarter earnings, Coinbase reported a loss of $430 million and a 19% drop in monthly users. But on top of its poor performance, the exchange said that if it goes bankrupt, the $256 billion in assets that it holds for users could also be subject to bankruptcy proceedings. In short: users could lose their funds.
Coinbase CEO Brian Armstrong later addressed the issue on Twitter, saying that the company has “no risk of bankruptcy,” but that the team believes that its Prime and Custody customers “have strong legal protections in their terms of service that protects their assets, even in a black swan event like this.” Armstrong added that Coinbase is updating user terms for retail customers “such that we offer the same protections to those customers.”
NFTs
Coinbase NFT Draws Fire as a ‘Web3 Instagram (The Defiant)
Coinbase NFT, a platform that combines NFT sales with a strong social media component, made its public debut on May 4. The reactions to it were not altogether glowing: Some in the space have commented that it comes off as a “web3 Instagram,” appears to have been “designed by committee,” and seems unlikely to draw users away from platforms like OpenSea.
Why Axie Infinity’s co-founder thinks play-to-earn games will drive NFT adoption (TechCrunch)
Jeff Zirlin, co-founder of Axie Infinity parent company Sky Mavis, says that for his team, 2021 was a year of growth and 2022 is about building. After its $625 million hack earlier this year, the company has launched a free version of Axie Infinity intended to give newcomers a chance to get to know the universe before investing in it financially — a move that Zirlin sees as an “important moment for NFTs.”
The NFT market is probably not as down as you think it is (Fortune)
Despite headlines about the NFT market collapsing — which the analytics site NonFungible says stemmed from a misunderstanding of its data analysis — the market seems to be recovering from a decline earlier in the year. Big-name projects like Moonbirds and Otherdeeds from Bored Ape Yacht Club have contributed to a recent boost in NFT sales.
Instagram to start testing NFTs with select creators this week (TechCrunch)
Instagram has enabled a small group of test creators to share NFTs that they’ve made or bought in their grid posts, Stories, and messages. This trial is an effort, per Instagram head Adam Mosseri, to “work out how to embrace those tenets of distributed trust and distributed power, despite the fact that we are, yes, a centralized platform.”
DAOs
Juno’s DAO Votes To Confiscate $35M in Tokens From Whale in Messy Dispute (Blockworks)
The smart contract platform Juno plans to strip three million tokens from a wallet belonging to an organization that seems to have circumvented the initial distribution’s cap on how many tokens can go to a single entity. Some see the whole affair, which took two months to resolve, as a case for better governance systems in crypto.
Metaverse
Nearly a third of U.S. adults are more ‘scared’ of the metaverse than ‘excited’ (CNBC)
A recent survey of 2,500 U.S. adults found that a majority of people are either lukewarm or actively afraid of the metaverse. Just 7% of respondents said that the metaverse made them “more excited” about the future, while a third said it made them “more scared” and 58% said they didn’t feel strongly either way.
Inside the lucrative business of a metaverse landlord, where monthly rent can hit $60,000 per property (Fast Company)
One way the metaverse is replicating real-world economics? Landlords. Admix is a London-based company that buys up virtual real estate, builds out experiences, and leases them out to companies like McDonald’s, Pepsi, and Formula One racing, raking in profits of more than 70% in the process. With virtual land prices growing by a factor of five year over year, Admix founder Sam Huber believes that many brands will ultimately be priced out of buying.
Off topic stories I found interesting
We Saw This Movie. Everybody Died at the End (with Rick Heitzmann) (Newcomer)
Rick Heitzmann of Firstmark Capital appeared on “Dead Cat,” Eric Newcomer’s Silicon Valley-focused podcast, to discuss how rising interest rates are bringing a 10-year bull market to a close, creating a “new normal” in terms of how capital is deployed.
In case you missed it - this was the most opened article from last week’s news roundup
Matt Turck (VC at FirstMark) wrote a great piece on his blog: The great VC pullback of 2022. Matt Turck writes,
“The growth market seems effectively dead right now.” The two exceptions to this trend: Seed rounds, which are smaller and focused on companies exiting 6-10 years out, and crypto, where investors are more closely entwined with projects in the space (and are continuing to chase the hype).
About Me
Hi, I’m Andrew Chang - I created the Web3 Roundup to share what I’m learning in this space. I’ve spent my career at the forefront of the technology industry in areas such as crypto/blockchain (Former COO @ Paxos, co-founding partner of Liberty City Ventures), video and adtech. I learn by meeting with founders, investors and other thought leaders and approach Web3 with the same enthusiasm – and skepticism – I had about crypto/blockchain technologies 10 years ago.
You can connect with me on LinkedIn or Twitter (@DigitalDrex)