Crypto in Crisis

Banks are Imploding. Meta Ditches NFTs. And Pudgies Flip the Birds.

👋🏽 Hello everyone, gm gm, WELCOME BACK to another edition of the Overpriced JPEGs newsletter, where we’re catching you up on the world of web3, NFTs, and the metaverse. 

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🥵 A Slippery Slope for “S” Banks

• Wow. What a week. On the heels of Silvergate’s voluntary liquidation and Silicon Valley Bank’s forced shutdown, Signature Bank became the 3rd in a series of startup- and crypto-friendly banks to topple this week

• Here’s a timeline of the collapse, along with yesterday’s OPJ interview, where Carly chats with Axios finance reporter Felix Salmon to unpack the banking crisis from head to toe

• Beginning with SVB’s closure on Friday, things escalated real quick as we got wind of crypto + web3 co’s varying degrees of exposure over the weekend

  • A range of crypto companies, including Ripple, Avalanche, and the embattled BlockFi all had some level of exposure

  • Dapper Labs and Helium network founder Nova Labs had funds at SVB

  • NFT heavyweights Yuga and Proof were also impacted. Yuga declared “super limited exposure,” while PROOF nebulously said it “holds cash” at SVB, later expressing relief that “<50% of holdings are now safe” following the gov’s announcement that all depositors would be made whole

• It was Circle’s disclosure that 8% of its $40 bil in USDC reserves were locked up in SVB, however, that really set off a chaotic chain of events resulting in the depegging of not only USDC, but several other stablecoins, including MakerDAO’s DAI

• Savvy traders made out on the arbitrage opp, and USDC and DAI ultimately re-pegged after the govt swooped in, but to be clear - this is not a net positive and we’re in for a lot of uncertainty

  Elon Musk @elonmusk

  

🔮 So, What Happens Next?

• In short: Crypto companies, startups, and VCs will likely face liquidity challenges as we struggle to find banks who will work with us

• Silvergate and Signature were the primary banks for crypto companies, enabling instantaneous movement of fiat between accounts 24/7. And now we’ve got to look elsewhere.

• Backup Banks: 

  • Coindesk reports that these major banks are still willing to work w/crypto firms (albeit w/restricted services) … but the outlook isn’t great. 

  • Big banks are reluctant to work w/crypto companies due to the lack of regulations; Smaller banks eager to fill the gap will likely struggle in this environment w/o proper liquidity and heightened regulatory scrutiny

• Going Offshore:

  • Some overseas companies have said they’re happy to service US customers, but this reeks of FTX with high risk and zero consumer protection

  • We could also begin to see an exodus of crypto firms, as overseas governments attempt to lure American companies with new laws tailor-made for digital asset companies

• We need look no further than BTC’s extremely volatile price action this week to gauge the overall sentiment and outlook for crypto. In the short run, a lack of banking options is sure to bottleneck and hamper the growth of an already precarious industry. Long-term … The case for DeFi has never looked stronger.

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🐂 Meanwhile, elsewhere in web3 …

• Whew! You still with me?! Because while the banks are burning, degens are still out here getting rekt on Blur bids and absolutely owning NFT twitter with eerily realistic deep fakes. Here’s some of the other major web3 stories you may have missed this week:

• Meta officially (and we believe, temporarily) threw in the towel on NFTs, calling it quits on ‘digital collectibles’ for both Instagram and Facebook less than a year after rollout. Zuck did warn us 2023 would be the “Year of Efficiency”...

  ☆Chris☆ @PRguitarman

  @nftnow Bullish on Reddit to pick up the slack

  

• Salesforce, on the other hand, continues to build out its web3 product suite, which just makes sense considering what a data analytics beast they are

• Heavy rumors continue to swirl around Amazon’s NFT marketplace; latest speculation is an April/May kickoff for US-based Prime members, with ties to real-world physical assets

• Coinbase adds tokenproof integration to its Wallet as a Service, a feature that enables companies to build customizable wallets for their customers

• Judge ruled in favor of a plaintiff who issued formal notice to anonymous hackers via NFT

• Crypto lender Euler Finance was hacked for nearly $200 million in a flash loan attack and is offering $1M reward if 90% of the funds aren’t returned within 24 hours

• CFTC doubles down on its stance that crypto and stablecoins are commodities while crypto’s greatest threat continues to insist they’re securities

• NY Attorney General seeks to block access to Seychelles-based KuCoin; says ETH is a security in new lawsuit

• US Treasury proposes a whopping 30% excise tax on crypto mining firms based on the costs of computing electricity

• Staked ETH withdrawals are being tested on Goerli test net in advance of the upcoming Shanghai upgrade

🌐 web3 + NFTs

• Beeple Studios held its grand opening shindig this weekend. We attended the star-studded event and can confirm - it was legendary. From a live Everyday performance to literal airdrops from the ceilings, Beeple surely knows how to throw a party.

• It’s buried in the job description, but Pokémon is hiring a senior NFT and metaverse expert

• Jack Butcher treated all 12 of his ‘one check’ holders to a TwelveFold-inspired airdrop

• Blur announces mobile functionality and buy/sell notifications, while Pocket Universe reports that Blur signatures are more dangerous than OpenSea’s Seaport signatures

• Old Sport won’t be opening a members-only NFT speakeasy after all; offers refunds to holders 

• Liquid Collections’ Drops of Punk features a premium 15yr Single Malt Scotch, personalized for 50 CryptoPunk holders

• Napoleon Dynamite alum are joining the cast of animated blockchain pilot Cyko KO

• LooksRare discontinued its listings rewards, hints at providing more value to existing users

• OpenSea now checks for flagged items on collection offers

• Polygon partners with Unstoppable Domains to launch .polygon domains

• Limit Break acquires Free NFT, a platform offering projects marketing, content, and smart contract services

• Punk 6529 introduces the Global Digital Rights Charter v1, a set of prinicples for how we live the next 100 years

• Oh, and Pudgy Penguins flipped Moonbirds this week, which totally tracks with this wild week in web3

📈 Brands + Biz

• Luxury watchmaker Breitling introduces end-to-end product tracking; lets users track entire supply chain journey from raw material to finished product

• Aéropostale’s making a four-phase entrance into web3, with plans for an NFTs, avatars, and a Tesla giveaway 👀

• Ticketmaster is looking for someone to help develop its design strategy for its NFT product area, which it says “operates much like a start-up” within the broader org 

• Sesame Street debuts 1st collection on VeVe featuring Cookie Monster 

• GQ’s inaugural launch failed to sell out: mint price 0.1957, current floor .08

• Planet Hollywood is launching a members-only club in LA, Club 3, for Animoca Brands

• Nissan files trademarks for NFT marketplace, virtual clothes, cars, and metaverse advertising services

🤖 AI + Metaverse

• OpenAI announces GPT-4, which is safer and “more aligned” w/how ppl have been using ChatGPT and boy, is it smart

• Lego collabs with Epic games to launch sprawling metaverse with ‘digital playing experiences and e-commerce’

• Google integrates AI features into its product suite, beginning with Gmail and Docs. Future plans to expand AI into Chat, Meet, Sheets, and Slides

• Chat GPT founder Sam Altman’s next big idea is Worldcoin, a global ID database of verified humans he calls “Proof of Personhood” 

• Discord releases AI features for devs using its platform and announces an AI incubator with dedicated resources for devs and startups bringing their creativity to Discord 

• Landscape photographer CATH Simard highlights the divide between AI artists & photogs

• Luca Netz is a man with a plan. He’s aiming to onboard the next 10 million people into web3 by showing powerhouses like Disney and Warner Bros. that Pudgy Penguins can - and will - steal their market share. On top of IP, he’s got fresh takes on marketing, memes, and product strategy. You won’t wanna miss this incredibly engaging ep.

• Big Head Club’s Mack Flavelle joins Carly for our weekly recap. He shares thoughts on Wrapped Punks and the Amazon NFT rumors, and has an especially zesty take on (what we all thought was going to be) Claire Silver’s Louvre exhibition.

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