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Rock Bottom Royalties. Recur Rugs. And Friend Tech is Still a Thing.
👋🏽 Hello everyone, gm gm, WELCOME BACK to another edition of the Overpriced JPEGs newsletter, where we’re catching you up on web3, NFTs, and the greater world of emerging tech.
🧂 Movers & Shakers
Winding Down. Tapering. Closing Shop. Moving on. These synonymous terms are becoming ever more commonplace in NFT headlines and this week was no exception.
A little more than year after Yuga Labs hired the former ‘NFT guy’ from Christie’s, CryptoPunkNoah is stepping down from his job as Brand Lead for CryptoPunks to focus on his new role as first-time dad (congrats, Noah 🐣)!
Less than a month after Cool Cats’ Artist Clon and CEO Stephen Teglas did their first joint sit-down interview together live on Overpriced JPEGs, the team is parting ways, and Clon will be taking over the new creative direction
And in the biggest shocker of ‘em all, Recur - whose X handle is ironically RecurForever - is shutting down its platform and operations by mid-November. This move is attention-grabbing for a number of reasons:
They’re not broke: Recur raised a $5M seed round (investors include GaryVee, ConsenSys founder Joe Lubin, and the Winklevoss twins) + a $50M Series A at a $333M valuation
They haven’t delivered: They made an additional $20M selling 64k ‘Recur Passes,’ not to mention mint + royalties off collection sales and have had little to show for it
They had high-profile partnerships: With big names like Viacomm & Paramount and dropped highly sought after collections with some of the biggest IP brands, including Hello Kitty, Nickelodeon, Care Bears, RugRats, and Star Trek
And … Just two months ago they launched a partnership with text-to-mint platform Dew Drops featuring art from Bryan Brinkman, Amber Vittoria, Adamtastic … all of whom were caught off guard by the closure
Look, we don’t like to throw the word ‘rug’ around loosely. But when you: 1) Raise a ton of $$ on the backs of name-brand IP; 2) Abruptly shut down your platform with little notice and/or reasoning; and 3) Turn off comments + Leave the ruins of your abandoned discord in the hands of scammers, well …
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👫 Friends x Finance
I’ll be honest, we were not-so-secretly hoping/expecting Friend Tech to go the way of [insert previously shiny but now dead crypto trend here] by now. But you degens are relentless, so here we are.
We covered Friend Tech last week: the mobile app that lets you buy and sell shares of your ‘friends’, but since then:
It’s become the #2 ranked crypto project by user fees, behind only Ethereum
Heaps more people have piled in, including influencers like FaZe Banks and NBA star Grayson Allen
The team rebranded ownership stake from Shares to Keys (nothing to see here, Gary)
And all kinds of FT-adjacent tools and platforms have sprung up, including a leaderboard, activity charts and dashboards galore. You can even now lend and borrow against your Keys and long- or short- the entire Friend Tech index
If you’ve been watching from the sidelines with FOMO levels escalating on the daily, we don’t blame you. There’s plenty to like here: At barely two weeks old, the app’s attracted nearly 100k buyers who’ve made $2M in Tx’s. Lots of smart folks are praising the core tech and philosophy behind the app. Oh, and there are airdrops. Sweet, sweet airdrops.
On the other hand, the app itself has been widely panned for being buggy. The team has a recent history of abandoned projects in TweetDAO and Stealcam. And there’s been several issues related to privacy, not the least of which is the lack of a formal policy.
Our take hasn’t changed. Sure, it’s shiny. Yeah, it’s all over the timeline (how else are ‘Friends’ supposed to get you to buy their Keys)?! But we agree 1) with Mando that it will take a lot of new users to be sustainable; 2) with Beeple that those users aren’t coming; and 3) with Zeneca that lots of folks are going to get burned in the process.
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⚓️ Rough Seas Ahead
Speaking of things we thought had been put to rest… royalties are back. Or, rather, royalties are decidedly not back. This week, OpenSea announced they’re sunsetting the Operator Filter that enforced creator fees and are on a path toward zero royalty enforcement. Here’s what creator fees will looks like moving forward:
New Collections: Optional beginning September 1st
Existing Collections that Currently Enforce Royalties: Optional as of Feb. 2024
Existing Collections on Old Contracts: Currently Optional + will remain Optional
Naturally, the pitchforks came out for OpenSea.
Yuga Labs CEO Daniel Alegre responded that they’ll be sunsetting support for SeaPort for its upgradable contracts and future collections in tandem with OpenSea’s approach - a move that was lauded by fellow artists and creators Luca Netz, Fewocious, and Sara Baumann
Negative reaction to OpenSea’s royalty news was compounded by a follow-up announcement that they’d also be adding a new 0.5% platform fee to all listings and offers on OS Pro at the end of the month
Creators weren’t keen on the news, as evidenced by the comment section, where usual cries for a token drop were supplanted with mostly this energy
Not everyone, however, is pointing fingers. Several folks are questioning the broken model of royalty revenues for PFP projects at a time when holders are selling for exorbitant losses. And others argue the conversation is more nuanced.
Artist Sam Spratt, for example - who’s currently having his Main Character Moment - gave this impassioned plea for empathy and accountability:
And as NFT Stats pointed out, the numbers don’t lie. The move is a reaction to OS’s bleeding market share since Blur’s arrival. With LooksRare at 0% royalty and the not-so-secret Blend loophole that also enables 0% royalties, OpenSea is skating to where we all know the puck is headed.
Former OpenSea employee Nate Chastain was sentenced to 3 months in prison, 3 months home confinement, and 200 hours of community service in addition to a $50k fine and forfeiture of 15.98 ETH for insider trading
Coinbase ups its support for stablecoins by buying stake in Circle; USDC to be launched on six new blockchains
A federal judge rules that Tornado Cash can indeed be classified as a “person” for legal purposes; says ‘the entity is composed of its founders, developers, and DAO’
Taiwan proposed a regulation to add digital assets to its regulated business categories, allowing crypto companies to establish formal industry associations
In the past 5 years, North Korean hackers have stolen $2B in crypto; they’ve taken $200M this year alone - 20% of all crypto stolen in 2023
The FBI seized ~$2M in crypto in a 3 month period this year; issues warning to fraudsters
Roughly 13% of crypto hedge funds shut down so far this year due to weak performance and difficulties accessing banking servies
Major exchanges in Asia tighten KYC requirements ahead of regional regulatory changes incoming
Vitalik transferred $1M in ETH to Coinbase fueling speculation of a selloff
🌐 web3 + NFTs
Cheems Balltze, the viral Shiba Inu who inspired Doge coin, died after a battle with cancer
Moonpay and Howard Hughes Corp. kicked off The Seaport Scavenger Hunt this week; NFTs are hidden throughout Seaport and collectors will be entered into weekly raffles for gift cards, experiences, and hotel stays
Taiwan awarded Vitalik an ‘Employment Gold Card,’ granting him the right to live or work in the country for 3 years without restrictions
After responding to widespread criticism of their original art, Bored & Dangerous finally revealed the art for its Azurian collection; floor is hovering around .04 with 6E in sales
It’s been 8 months since Logan Paul announced plans to compensate holders of his CryptoZoo rugpull and so far nothing’s been refunded
OpenSea kills support for BNB Smart Chain, bringing total # of chains supported to 10
NFT Now unveils The Gateway: Korea, a 3-day event in September featuring immersive galleries and fireside chats with founders and artists like Ray Chan and Beeple
NFT trader - slash - DJ Seedphrase releases new track, Angels, a love letter to Los Angeles
If you’re somehow still making money in this market, you’d be wise not to flex those gains on socials
X competitor Threads is launching a web version to complement the mobile-only app
📈 Brands + Biz
Mercedes-Benz NXT announced its second collection and mint pass for holders (US collectors aren’t eligible to claim)
Museum of Mahomes will release physical trading cards exclusively for Azuki holders, including a 1:1; Patrick himself tweeted the news out earlier this week
Mastercard created a forum for crypto industry players like Ripple and Consensys to discuss and collaborate on CBDCs
K-Pop megastars BLACKPINK are launching The Palace, a dedicated metaverse fan hub in Roblox
Binance is considering legal options after Checkout.com cut ties with the exchange earlier this month
Ralph Lauren CEO says they’ll continue to invest in the metaverse because they want to be where the consumer is
Skechers dropped LE sneaks featuring Snoop’s Ape, Dr. Bombay
NFT Evening explores what Ralph Lauren’s Fortnite collab could mean for web3
🤖 AI + Metaverse
YouTube is launching a Music AI Incubator and will work with industry professionals to inform its AI strategy, including artist compensation for AI-generated music
They’re working with Universal Music Group, which has previously been pretty vocal about its anti-AI stance
A federal court ruled AI-generated art can’t be copyrighted because “human authorship is a bedrock requirement of copyright”; acknowledges there’ll be ‘challenging questions’ around how much human input is necessary
A new LA exhibition features AI-generated poems inspired by poet Allen Ginsberg’s original photography
China’s looking to bring its controversial ‘social credit scores’ - a system that determines a citizen’s trustworthiness - to the metaverse in effort to assert state control over virtual environments
Scientists are using AI to replicate, organize, and manage the unimaginable amount of data researchers rely on in their studies
Studies show that 80% of VR users are reporting mild to severe short-term side effects; warns it could be a problem in the workplace
ChatGPT can no longer train its AI models on The New York Times content after the legacy media org blocked OpenAI’s web crawler
Jesse Pollak is the man behind Coinbase’s hot new layer 2, Base. He joins Carly to share what he says are Base’s unique value props that distinguish them from other layer 2s. He talks about Base’s partnership strategy and how they view a multichain future and dives into the synergies between Coinbase and Base and why culture matters in the world of web3.
Carly and Zeneca are back with another packed weekly recap. Macro vibes are low as Michael Burry shorts the market (again). Sproto Gremlins continue its ascent toward the top of the charts. And DeGods get a whole lot of Season 3 backlash. Catch it all here!
Got something to share with our readers? Leave a comment below or connect with me @hawaiianft on Twitter or @sparkitysparkz on Threads 🤙🏾
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