We start with the big boss: Bitcoin. Arizona has introduced a bill to adopt Bitcoin as legal tender. Will it pass? TBD. But cities, states, nation-states … they are coming. It won’t be smooth, it won’t be immediate, but it is coming. Bitcoin was a macro story in 2020, a tech story in 2021, and may just be a nation-state story in 2022. Coincidentally, Fidelity published a paper this week arguing that Bitcoin should be considered separate from other crypto assets, namely because it is unlikely for another crypto asset to improve upon bitcoin as a monetary good – in their view, Bitcoin is the most secure and decentralized sound digital money and any ‘improvement’ will necessarily require tradeoffs … A related trend to file away: the countries that have been the most vocally anti-crypto (I’m looking at you, China and India) are also the first two to introduce blockchain versions of their own currencies.
The most mainstream story of 2022 continues to be NFTs. We cannot escape the jpegs. January saw NFT trading volume reach a monthly all-time high (nearly $6.9B), good for 129% month-over-month growth. OpenSea continues to run in pole position, but others are scaling fast – LooksRare did nearly $2B in volume after launching on January 10th and the Solana NFT ecosystem saw monthly NFT sales surpass $1B for the first time … A more specific data point to highlight this growth: Bored Ape ecosystem NFTs (BAYCs/MAYCs) did more in sales on OpenSea in January ($495M) than the global movie industry did at the box office ($482M). Too bad you can’t shoot NFTs from your wrists, Spiderman … Tobias Lutke, CEO and founder of Shopify, will join Coinbase’s board of directors. This is likely tied in part to Coinbase’s NFT marketplace rollout which is expected to come later in 2022 … Justin Bieber bought a Bored Ape for $1.3M, then bought another for $470K. Clearly he’s a belieber. At this point, if you’re a celebrity and don’t own a million-dollar NFT, how can you even show your face in public profile picture online? Biebs could still use some help on his OpenSea username: ‘JustinBieberNFTs’ is simply not going to cut it … Here’s a short Rolling Stone article from someone who has been converted from NFT naysayer to believer.
Financings | The company behind Bored Apes, Yuga Labs, is in talks with a16z to raise its first outside financing round that would value the company at $5B. The round is expected to be at least $200M in size. For those wondering, Yuga Labs generates revenue via primary sales of its Apes and other NFTs, plus residual revenue when those NFTs are resold on secondary markets. Buyers retain IP rights to their Apes, which means they can use the image to sell or market other products … FTX announced a $400M raise at a $32B valuation. Together with FTX.US’s recent raise at an $8B valuation, the combined entity briefly surpassed Coinbase’s public market capitalization ($40B to $38B). Coinbase has retaken a slight edge in recent days … Phantom, a crypto wallet that first launched on Solana, raised a $109M Series B financing at a $1.2B valuation. As I referenced last week, Phantom will be a household name by year-end 2022.
Fundraises | Alexis Ohanian’s 776 has raised $500M across two funds, with plans to invest primarily in crypto startups: ‘[Crypto] will be the majority of the portfolio by the end of this year’ … GameStop and layer-2 scaling platform Immutable X launched a $100M joint fund for gaming NFTs. GameStop was granted IMX tokens by Immutable X, then promptly ‘dumped’ $47M worth on the market. Thanks but no thanks, GameStop. We liked you better as a Wall Street Bets rags-to-riches story.
Solana | The Solana ecosystem had a big week and has therefore earned its own category for this issue. The week started with two massive announcements: Solana Pay and Coinbase launching support for Solana ecosystem tokens (SPLs, the ERC-20 version of tokens built on Solana). The importance of Coinbase launching support for SPLs is straightforward – as one of the largest onboarding platforms for users, Coinbase offering SPLs extends their ‘reach’ immensely. Solana Pay is the more fundamental game-changer. It is a new payments protocol that will use Solana’s infrastructure to deliver true peer-to-peer payment technology that works for users, merchants, and developers – doing so with immediate settlement and costs measured in fractions of a penny … Coachella announced ‘Coachella Collectibles’, a first of its kind opportunity for individuals to own lifetime festival passes and access other perks. Live entertainment ticketing via NFTs is a ‘when’ not ‘if’ development. Coachella became one of the first big brands to launch on Solana, rather than Ethereum. I will be buying none of these because I have a ten-month-old and a geriatric soul … Unfortunately, not everything went according to plan for Solana this week. Solana played partial host to the second-largest crypto hack ever – a hacker stole $325M via a smart contract bug from the Wormhole protocol, a protocol that lets users move tokens and NFTs between Solana and Ethereum. Jump Crypto, which incubated Wormhole, has confirmed that they provided the 120,000 ETH to refill the contract.
Stablecoins | Tomasz Tunguz published a short but informative blog post on the growth of stablecoin issuance. Stablecoin issuance on Ethereum has grown to over $110B. At 5% monthly growth, stablecoins may comprise ~1% of the total USD money supply by the end of 2022.
Exits | The New York Times bought Wordle! I know, not crypto – but I love Wordle and will continue guessing ‘BLOCK’ as my first word until it hits. The NYT intends to keep it free-to-play for now but just in case, you can download the next 2,000 days of Wordle. You can also buy a friend or loved one this Wordle beanie, a gift that fits any occasion.
Other | Crypto investors recognized a big and rare tax win this week when the IRS ruled that unsold tokens from staking and mining will not be taxed (until sold) … Related news: Coinbase launched a direct deposit program with TurboTax to send state and federal tax refunds to Coinbase accounts, with the option to automatically convert dollars to crypto assets … DAOs made it into the New Yorker in an article that will surely resonate with my dad better than my explanation that DAOs are like sub-Reddits with joint bank accounts. For those keeping track, there have now been DAOs created to buy the following: one of thirteen extant original copies of the Constitution, a golf course, an NBA team, and a city in Wyoming.
Lastly, crypto continues to permeate pop culture at a rapid pace. This week saw Ledger earn prime product placement position in YG’s newest hip hop music video. I’m guessing Gary Gensler was not consulted on the decision to highlight crypto in a song titled Scared Money. With this newsletter now carrying a two-week streak of including hip hop music videos, I will happily take submissions of other genres. If crypto makes its way into a country music video, it’ll finally give me a reason to use the cowboy emoji (🤠) in a professional setting.
Source Code
Arizona Senator Seeks to Make Bitcoin Legal Tender:
https: /www.azleg.gov/legtext/55leg/2R/bills/SB1341P.pdf
Bitcoin First: Why investors need to consider bitcoin separately from other digital assets:
India to introduce 30% crypto tax, digital rupee CBDC by 2022–23:
https: /cointelegraph.com/news/india-to-introduce-30-crypto-tax-digital-rupee-cbdc-by-2022-23
Monthly NFT trading volume reaches all-time high of $6 billion in January:
https: /www.theblockcrypto.com/linked/132323/monthly-nft-trading-volume-high-6-billion-january
@NTmoney: In January BAYC & MAYC did more in sales on Opensea ($495M) than the global movie industry did at the box office ($482M):
2,842
Shopify CEO Joins Coinbase Board of Directors:
https: /www.coindesk.com/business/2022/01/31/shopify-ceo-joins-coinbase-board-of-directors/
Pop Star Justin Bieber Buys Bored Ape NFT for $1.29 Million, Pays More Than 300% Above Floor:
Reports Bored Ape creator in funding talks with A16z at $5B valuation:
https: /cointelegraph.com/news/reports-bored-ape-creator-in-talks-with-a16z-potential-valuation-5b
FTX Reaches $32B Valuation With $400M Fundraise:
https: /www.coindesk.com/business/2022/01/31/ftx-reaches-32b-valuation-with-400m-fundraise/
Solana wallet Phantom raises $109 million in new funding, launches iOS app:
Alexis Ohanian’s Venture-Capital Firm Raises $500 Million, Doubles Down on Crypto Startups:
GameStop, Immutable to Launch $100M Joint Fund for Gaming NFTs:
https: /blockworks.co/gamestop-immutable-to-launch-100-joint-fund-for-gaming-nfts/
Solana Pay ushers in new payments era:
https: /solana.com/news/solana-pay-announcement
Coinbase Lists Solana-Based Project Tokens for First Time:
https: /www.coindesk.com/business/2022/01/31/coinbase-lists-solana-tokens-for-first-time/
Coachella Collectibles NFTs:
Wormhole replenishes its blockchain bridge after $325 million exploit:
How Much Money is Flowing into Crypto?:
https: /www.linkedin.com/pulse/how-much-money-flowing-crypto-tomasz-tunguz/
The New York Times Buys Wordle:
https: /www.nytimes.com/2022/01/31/business/media/new-york-times-wordle.html
IRS May Not Tax Passive Income From Holding Crypto Right Away:
TurboTax will let users deposit tax refunds into crypto accounts:
https: /www.nytimes.com/2022/02/03/business/turbotax-tax-refunds-coinbase.html
DAOs, The Latest Craze in Crypto:
https: /www.newyorker.com/culture/infinite-scroll/the-promise-of-daos-the-latest-craze-in-crypto
[Disclaimer: Any opinions expressed are solely my own and do not express the views or opinions of my employer. Because the information included in this newsletter is based on my personal opinion and experience, it should not be considered professional financial analysis or advice.]
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