Bell Curve
Is This An Inflection Point for Crypto? | Roundup
Fri Jul 14 2023SEC lawsuitRippletokenstokenizationNFT collateralized loansmarket trendsnarrative changesCoinbase Wallet messagingNFT recognitionchallenges in crypto market
Description
The episode covers the SEC lawsuit against Ripple, the emergence of different types of tokens and tokenization of real-world assets, NFT collateralized loans, market trends and narrative changes, Coinbase Wallet messaging and NFT recognition, challenges in the crypto market, and discussions about connecting open source LLMs to governance platforms.
Insights
SEC Lawsuit Victory
The federal judge ruling that the programmatic sale of XRP on exchanges was not a security is seen as a victory for the crypto industry.
Positive Outlook for Tokenization
Real-world assets are being tokenized on-chain, and there is optimism regarding regulatory structures that will enable further growth in tokenization.
NFT Collateralized Loans
NFTs are being used as collateral for loans, allowing lenders to lend without knowing borrowers' personal information or credit history.
Market Trends and Narrative Changes
Technology improvements in DeFi are boosting NFT prices and confidence, and changing narratives are expected to drive higher ETH prices.
Coinbase Wallet Messaging and NFT Recognition
Coinbase Wallet has launched built-in messaging and aims to compete with platforms like Signal. NFTs are gaining recognition beyond just financial value.
Challenges in the Crypto Market
Many companies in the crypto market are making poor decisions, leading to closures and challenges for startups. Consumer crypto startups, especially NFT ones, are facing difficulties.
Chapters
- SEC Lawsuit Against Ripple
- Tokens and Tokenization
- NFT Collateralized Loans
- Market Trends and Narrative Changes
- Coinbase Wallet Messaging and NFT Recognition
- Challenges in the Crypto Market
Summary
Transcript
SEC Lawsuit Against Ripple
00:00 - 06:56
- SEC has filed a lawsuit against Ripple claiming they issued unregistered securities (XRP)
- A federal judge ruled that the programmatic sale of XRP on exchanges was not a security
- Ripple selling XRP directly pursuant to contracts was considered an investment contract and therefore a security
- The decision is seen as a victory for the crypto industry, but there may still be appeals and more work to be done
- There is a need for consistent laws and frameworks in the industry
Tokens and Tokenization
06:27 - 13:24
- Timing is perfect for discussions with lawmakers as there have been recent developments in the market structure draft and the Lewis Gillibrand redraft.
- There are two types of tokens emerging: app tokens and infrastructure tokens. Infrastructure tokens, like L1 and L2 tokens, are likely to be seen as commodities by regulators, while the status of app tokens is still uncertain.
- Listing XRP on exchanges not being considered a security could impact the Coinbase lawsuit.
- The Ripple case was particularly egregious, so it may not have implications for other tokens.
- Real-world assets are being tokenized on-chain, indicating a positive outlook for crypto despite some pessimism.
- Tokenization historically faced challenges due to low rates and lack of valuable assets, but now high rates make it attractive to bring low-risk financial instruments on-chain.
- Optimism exists regarding regulatory structures that will enable further growth in tokenization.
- Many sidelined individuals are entering the bull market, even those who were expecting a recession.
- A Patak Philippe NFT loan demonstrated the potential of bringing real-world assets onto DeFi platforms.
NFT Collateralized Loans
13:04 - 19:45
- A lender gave a stranger a $35,000 loan at a 12% APR using an NFT as collateral.
- The borrower sent the watch to a grow company, who then sent back an NFT representing ownership of the watch.
- The borrower listed the NFT on arcade and accepted the best loan offer.
- The NFT was transferred to an escrow wallet until the term is up or the borrower repays in full.
- If the borrower defaults, the lender can claim the watch by burning the NFT.
- This process allows lenders to lend without knowing borrowers' personal information or credit history.
- In traditional capital markets, getting a loan for assets like watches or art involves high rates and limited options.
- As more assets are brought onto blockchain platforms, rates will eventually converge to better rates.
- Platforms gain traction by enabling access to a long tail of supply that wasn't possible before.
- Treasury yields will drive adoption and tokenization of assets in general.
- Business as usual for investing in crypto with no major changes due to recent developments.
Market Trends and Narrative Changes
19:18 - 25:59
- Pacing of new deals has been consistent every month this year
- Technology improvements in DeFi boost NFT prices and confidence
- Higher ETH prices expected with changing narratives
- Quick impact of narrative changes on revenue in crypto industry
- Permissionless sales ticket week was the biggest since launch
- People's narrative cognition level is about a month
- History has limited memory in finance compared to other disciplines
- Celsius bankruptcy marked the end of a bearish period in crypto
- ETH bottomed around June 13th, while technology stocks rebounded earlier
- Tom Lee is an eternal optimist with bullish calls on crypto market
- Coinbase announced opening of base and wallet-to-wallet messaging
Coinbase Wallet Messaging and NFT Recognition
25:44 - 32:41
- Coinbase Wallet launched built-in messaging powered by the XMTP protocol
- The messaging feature is end-to-end private and portable
- Coinbase Wallet aims to compete with platforms like Signal in terms of messaging capabilities
- The messaging feature allows users to connect directly through their wallets and engage with others
- It enables B2C communication as well as consumer-to-consumer interaction
- Blockworks is excited about the messaging feature as it allows them to communicate with their community on-chain
- Google Play Store has reversed its previous decision and will now allow apps with NFTs to be bought, sold, and used on Android phones
- NFTs are gaining recognition for their consumer appeal beyond just financial value
- Messaging and interplay between games in the blockchain space are becoming increasingly interesting
- There are efforts to build ad networks within the crypto industry, including potential plans from Coinbase
- Richie Torres, a congressman for NY15 in the Bronx, called for an investigation into SEC Chair Gary Gensler's regulatory approach towards crypto
- This marks a shift as Democrats are starting to criticize Gensler alongside Republicans
- Venture investments in various verticals within the crypto industry have high standards for entry
- Equity and tokens are often included in venture deals due to the potential convergence of companies requiring tokens over time
- 'Arkham' is a company that faced self-sabotage and competition issues within the crypto space
Challenges in the Crypto Market
32:18 - 37:35
- There has been self-sabotage in the crypto market, with many companies making poor decisions.
- Small seed companies are closing their doors and returning capital.
- The fall is expected to be even more dire for startups as they run out of capital raised during 2021.
- Some companies have decided not to raise funds and shut down instead due to the changing market conditions.
- The bear market has burned many entrepreneurs, leading them to question their commitment to entrepreneurship.
- Consumer crypto startups, especially NFT ones, are facing challenges in the changed market.
- Chatcha BT's popularity is declining month over month according to Google Trends.
- Chatcha BT is used for finding random information or getting off zero with a Google Docs document.
- There are discussions about connecting open source LLMs to governance platforms for real-time updates and summarization of proposals using AI.