Coinbase Joining the L2 Gang - Wen Token? No Time Soon
TopShot NFTs Are Probably Securities! - Many Such Cases & Spotify - Will Big Brands Getting into NFTs Work?
🗓 Daily Bullets - Thursday, February 23rd
Today’s newsletter is 1430 words. A cool 7 minute read.
Crypto continues to limp along - No major improvements from Bitcoin or ETH. Both have yet to either move past their walls or crash from $25k and $1700 respectively. In other major news, Coinbase followed up their announcement of an announcement yesterday that they’re launching their own L2. L2 season? Arbitrum token wen?
Today we’re looking at:
- 🔵 Coinbase Joining the L2 Gang - Wen Token? No Time Soon
- 🏀 TopShot NFTs Are Probably Securities! - Many Such Cases
- 🎧 Spotify - Will Big Brands Getting into NFTs Work?
🔵 Coinbase Joining the L2 Gang - Wen Token? No Time Soon
Quick Take: Coinbase has launched the testnet of Base, an Ethereum Layer 2 network designed to provide a secure, low-cost, and developer-friendly way for anyone to build decentralized apps on-chain.
- Base will serve as a home for Coinbase’s on-chain products and an open ecosystem for developers to build on.
- Base is incubated inside Coinbase and is built on Optimism’s OP Stack, with the goal of creating a standard, modular, rollup agnostic Superchain powered by Optimism.
- Plans to progressively decentralize the chain over time and does not plan to issue a token.
- Ethereum L2 is where Coinbase will deploy future applications that aim to serve its entire customer base.
- Coinbase made three primary decisions to provide a paved road for internal onchain development: EVM as the primary developer platform for dapps, Ethereum Layer 1 for the highest value dapps, and Ethereum Layer 2 for dapps that require scale.
Significance: Is the future multi-chain or L2? L2’s such as Arbitrum and Optimism have been gaining major traction and many speculate that the future of crypto will be built on Ethereum and scaled by L2s. As one of the world’s major leading crypto exchanges, Coinbase carries a lot of weight and they’ve now put that weight behind Optimism.
What does this mean going forward? Coinbase isn’t the only platform choosing to build their own L2 and many projects have elected to go the way of either building their own L1/L2 or their own appchain. There’s lots of competition out there - who will dominate?
🏀 TopShot NFTs Are Probably Securities! - Many Such Cases
Quick Take: A federal judge has ruled that the NBA-branded "Top Shot" NFTs offered by Dapper Labs may be securities. The ruling comes after a class-action lawsuit was filed against Dapper Labs for violating federal securities laws by offering the NBA Top Shot Moments without registering with the SEC.
- The Howey Test was used to determine whether the transactions qualified as "investment contracts"
- The Howey Test has four elements that must be met for a transaction to be considered an investment contract, including investment of money, common enterprise, expectation of profits, and the profits come from a third party or promoter.
- The first prong of the test, an investment of money, was "adequately pled," and that the second prong, a common enterprise, was also met.
- The purchasers' fortunes were tied to the overall success of Dapper Labs, as the company controlled the Flow Blockchain and the online marketplace where the Moments were sold and traded.
- The third prong of the test, an expectation of profits, was also met, as Dapper Labs' public statements and marketing materials objectively led purchasers to expect profits.
Significance: The judge concluded that what Dapper Labs offered was an investment contract under Howey, which may be considered a security. The ruling may have implications for other NFT offerings that are marketed and sold in a similar manner.
Analysis: Remove all the legal jargon and technical hullabaloo and the cold hard truth is that most things in crypto, including NFTs are probably securities! Most people don’t want to hear that because it throws a wrench in their plans to make lots of money. But in spirit and almost every way that matters, people are buying something with an expectation to profit from it. Most people inherently view these things as investments and as history has proven time and time again, where there is financial incentive, there is shady, unscrupulous and downright criminal behavior in order for certain participants to profit, often at the expense of normal people.
Whether people want to call it a security or not, there NEEDS to be some form of regulation or channels to ensure behavior such as insider trading can’t keep occurring - because it constantly does.
🎧 Spotify - Will Big Brands Getting into NFTs Work?
Quick Take: Spotify is testing a new service called "token-enabled playlists" that allows holders of NFTs to listen to curated music.
- Currently only available to token holders within the Fluf, Moonbirds, Kingship, and Overlord communities in the U.S., U.K., Germany, Australia, and New Zealand.
- The playlists can only be accessed by community members via a unique link.
- Universal Music Group's NFT band KINGSHIP has created a token-gated playlist for NFT holders featuring Queen, Missy Elliott, Snoop Dogg, and Led Zeppelin.
- NFT holders can connect to their Metamask, Trust Wallet, Rainbow, Ledger Live, or Zerion wallets.
- Spotify previously experimented with integrating NFTs into its service, allowing select artists to promote NFTs on their profiles.
- The global streaming platform has over 489 million users.
- Web3 music platforms like Audius, Royal, and Anotherblock allow creators to sell music royalties as fractionalized NFTs.
Significance: Will crypto ever go mainstream? Will normies use crypto without knowing they’re using it? That is the multibillion dollar question. There have been countless attempts by major brands such as Reddit, Disney, Facebook/Instagram, Starbucks to incorporate crypto services into their offerings. Most of those have yet to bear fruit, however these are the types of trials you should be keeping a close eye on for signs of acceptance/rejection by the market.
✅ Daily Bullets
- SBF charged with conspiracy to make unlawful political contributions and defraud the federal elections commission
- Mint “Base, Introduced” - a commemorative NFT that celebrates the initial launch of Base
- BlackRock is offering an ETF that will focus primarily on tech companies that are exposed to the metaverse
- Crypto intelligence firm Messari cut 15% of its employee base as part of a restructuring effort
- SEC objects to Binance.US’ $1B Voyager deal, alleging sale of unregistered securities
- Web3 music streaming platform Audius integrates TikTok
- Frax Finance votes to fully collateralize frxUSD - a step for Frax’s native stablecoin to retire its algorithmic element
- On-chain liquidity and derivatives trading protocol Synthetix deployed v3 on the Ethereum mainnet following security audits
- XRP Ledger proposes cross-chain bridge to increase network and token utility
For those who want more breadth and detail:
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📊 Market Dashboard
- 📈 Gainers:
- $AMP: Digital Collateral Token
- $BNX (old): GameFi
- $DEXE: Asset Management
- 📉 Losers:
- $1INCH: DEX Aggregator
- $XMR: Privacy Coin
- $BNX: GameFi
Chart of the Day - Optimism Daily active users vs. daily active developers
- On the back of Coinbase launching their own L2 using the Optimism stack, let’s check out the activity of those building and using Optimism. Active developers are nearing all time high while active users are attempting to regain an uptrend that broke in January. Interesting choice from Coinbase.
- Blurring fee lines | The Royalty Wars - source
- Legal Arguments Take Shape in Class Action Against Dapper Labs That Could Rock the World of NFTs | Are NBA Top Shot Moments Securities? - source
- When does a transaction become final and irreversible? | Tiers of Transaction Finality for Rollups - source
- MVRV Ratio is one of the most popular and widely used on-chain metrics | Mastering the MVRV Ratio - source
- Phemex's trading volumes showed a different pattern than other exchanges | Is There Any Wash Trading in Centralized Exchanges? - source
- Money markets are an important part of the DeFi ecosystem | How the Money Market in DeFi Has Reached Its Limit, And How We Invented the “Profit-sharing Primitive” to Break It - source
Why Being a Trader is Best For 99% of You
Why Being a Trader is Best For 99% of You
$BTC $ETH #Bitcoin#Ethereum#Altcoins
— Altcoin Sherpa (@AltcoinSherpa)
Feb 22, 2023
How Blur achieved 53% market share within a few months of launch
.@blur_io has surpassed OpenSea to become the largest NFT marketplace.
Its airdrop has fueled an incentive flywheel to create real network effects.
Blur has achieved 53% market share within a few months of launch, here's how they did it: 🧵⬇️
— Delphi Digital (@Delphi_Digital)
Feb 21, 2023
Solana co-founder: L2s will not be able to achieve lower fees than Solana at scale
L2s will not be able to achieve lower fees than @solana at scale. Even an L2 on solana will end up being as expensive as @solana at best.
This is because fees aren't driven by the resources used, like compute or bandwidth, but by state contention. If 100 seconds worth of… twitter.com/i/web/status/1…
— toly 🇺🇸 (@aeyakovenko)
Feb 22, 2023
Flawed arguments on blur eating up OpenSea
Seeing a lot of takes on how @blur_io is eating up OpenSea / Blur has the best product / @opensea is going to 0
I don't think so. Many arguments are flawed.
Here's why: 👇
— Teng Yan ⛩ (@0xPrismatic)
Feb 22, 2023