March 16, 2022 | Issue #212

Sponsored By:

Editor's Note: Welcome back to another issue of CoinSnacks. Real quick, just wanted to provide a heads up that we'll be out of office next week. CoinSnacks will resume the following week on Wednesday, March 30th.

MUST READS

Planet of The Bored Apes

Yuga Labs, the company behind the most valuable NFT collection, Bored Ape Yacht Club (BAYC), has acquired the right to the intellectual property (IP) of two other highly popular NFT collections, CryptoPunks and Meebits, from Larva Labs. Along with the acquisition of the IP, Yuga Labs also now owns 400+ CryptoPunks and 1,700+ Meebits.

For those not interested in the NFT space, this may seem like a nothing-burger, but the truth is we may look back at this as a pivotal moment in the history of NFTs. We'll take a look at why, but first, some history...

Let's Take A Step Back
In 2017, Larva Labs created and launched CryptoPunks, a set of 10,000 NFTs that have gone on to become some of the most popular in existence. So much so that a bundle of CryptoPunks were sold at Christie's for $17 million in 2021.

The only problem with CryptoPunks was that NFT owners had limited commercial rights to the IP. Over the years the owners of Punks continually believed that Larva Labs would eventually give them the rights, but that went out the window when Larva Labs launched Meebits in 2021. Simply, Meebits (and presumably Punks) holders were only allowed to create physical goods (like t-shirts; nothing digital) and sell them for up to $100,000 per year. Not bad, but nothing special for people who are already spending millions of dollars on the NFTs.

How BAYC Differs
After watching the CryptoPunks saga, Yuga Labs famously launched BAYC a little differently by giving holders an unlimited worldwide commercial license.

Anything else?
Yes, there was also an interesting nuance between both business models. Larva Labs did not have any royalties on the future sales of their NFTs, but held back a percentage of each on launch (10% of Punks for example). Yuga Labs, on the other hand, doesn't hold back a percentage on any Apes but the company does get royalties on all future sales. This means that Yuga Labs would be able to generate revenue as long as people continued to buy and sell Apes. Conversely, Larva Labs only made revenue by selling their NFTs directly into the market. In other words, Larva Labs would eventually run out of revenue on specific collections.

Back To The Acquisition
With Yuga Labs now acquiring the rights to CryptoPunks and Meebits, they announced, "the first thing we’re doing is giving full commercial rights to the NFT holders."

This move quickly opens up the ability for Punks or Meebits holders to begin using these NFTs in Web3 projects and discover new ways to monetize what they previously could not.

What Would This Look Like?
We don't know, but Apes holders have famously capitalized on the NFTs by engaging brands and celebrities to launch various Bored Ape-branded enterprises, including an Arizona Iced Tea ad campaign and a Gorillaz-inspired "metaverse band" from Universal Music Group. With Punk holders including Serena Williams, Jay Z, and other celebrities, we expect to see some interesting enterprises.

Yuga Labs is already planning to kickstart a metaverse gaming project with virtual land sales and the APECoin token, so we wouldn't be surprised to see something similar with Punks.

Let's Talk Money
Last month, Yuga Labs was reportedly in funding talks with A16z at a $5 billion valuation. But now that they own the 1st and 2nd largest NFT collections, that valuation may be conservative.

What It Might Mean For The NFT Ecosystem
While prices for top-tier collections like BAYC and CryptoPunks remain high, the overall market of NFTs has been soft with trade volumes, transactions, and accounts all down significantly. Perhaps this acquisition though is just what the market needs.

After Walt Disney, Robert Iger Heads to the Metaverse

Robert Iger, the former Disney CEO, is apparently making the leap into the metaverse. The 71-year-old is joining the board of Genies and, according to the WSJ, made a sizable investment in the company as well.

What's Genies?
Genies is an LA-based startup that celebrities and others are using to create NFT avatars and digital goods in the metaverse. They are the “official avatar and digital goods NFT provider” for Universal Music Group and Warner Music and have created avatars for musicians such as Justin Bieber, Migos, and Cardi B. The company also runs an NFT marketplace, The Warehouse.

Alright, So What?
This is just another suit and tie getting exposure to the metaverse trend, right? Yes. But there's a bigger story here...

Bob Iger isn't your typical board member. As the CEO of Disney from 2005 to 2020, there really hasn't been anyone more successful in managing IP in the 21st century. Iger essentially took creative ideas (movie pitches), and with them, created legacy characters, products, and entire theme parks that go well beyond just entertainment. Not to mention that during his 15-year stint at Disney, the company's market cap rose from $48 billion to $257 billion.

While it's still very early (aka we're just speculating here), you have to wonder what this might mean for the entertainment industry going forward. The marriage of an already established NFT/metaverse entity, and Bob Iger, the mastermind of entertainment IP and franchise-backed worldbuilding, could very well make Genies one of the hottest companies of Web3 in the years to come.

So, despite whatever wacky avatar experience comes next, Iger's step into the metaverse is still a massive endorsement for the space.

A New Way To Invest In Real Estate

LEX turns individual buildings into public stocks via IPO. Now you can invest, trade, and manage your own portfolio of high-quality commercial real estate.

Any US investor can open a LEX account, browse assets, and buy shares of individual buildings.

LEX opens up direct and tax advantaged ownership in an asset class that has previously been inaccessible to most investors.

Explore LEX’s live assets in New York City and upcoming IPO in Seattle today for free... and get a $50 bonus when you deposit at least $500.

DEEP DIVES

Stablecoins Shine as Safe Haven Crypto Assets

The past couple of years has been quite volatile for investors. Covid, supply chain issues, and now the war has created distress, leading investors to seek safe-haven assets.

Traditionally, gold fulfilled this role by offering investors stability, security, and sovereignty. And even in recent weeks, we have seen the yellow metal reach near record highs on the back of the market and the world's volatility.

When Bitcoin entered the scene, many wondered if the intrinsic characteristics of gold were reflected in BTC, with some even calling the cryptocurrency "digital gold." Those people highlighted one aspect of BTC that perhaps even outshone gold: transportability.

But in recent months, BTC hasn't acted as a safe haven asset at all, having tracked more closely with risk-on assets, like tech and growth stocks. This could evolve with BTC decoupling from traditional markets and maturing into a safe-haven asset, but for now, a different crypto asset is fulfilling that role: stablecoins.

According to data from Coinmetrics, addresses holding at least $1 of a dollar-backed major stablecoin has recently passed 12 million – three times more addresses that were reported last year. But as inflation is slowly eating away the dollar's purchasing power, investors are looking for other (perhaps even more stable) stablecoins.

Hence, the growth of investors placing their USD into gold-backed stablecoins.

In recent months we have seen a steady increase in the number of Ethereum addresses holding gold-backed stablecoins such as Paxos’ PAX Gold (PAXG), where each token represents one troy ounce of a 400 oz gold bar. Therefore, as the price of gold has increased in recent weeks, so has PAXG. And at a current market cap of ~$600 million, we are seeing PAXG slowly move into becoming a top 100 token based on market cap and begin to compete with other USD-based stablecoins such as Pax Dollar (USDP) at ~$1 billion market cap.

Other gold-backed stablecoins include Tether Gold (XAUT) and Cache Gold (CGT). With Tether of course, you get the potential sketchy business surrounding the parent company (check this out). With Cache Gold, you are betting on a smaller market cap gold stablecoin, but one where each token represents one gram of gold. Cache also has some gripes with Pax Gold and Tether Gold around their transparency, backing, and redemptions, so caveat emptor.

DeFi Saver Introduces Riskless Yield Earning for MakerDAO Users

DeFi Saver introduced Automated Strategies, a major overhaul of its flagship Automation service. The update brings more general approach to automated DeFi management.

The first automated strategy at user disposal connects MakerDAO with DeFi yield farming protocols such as Yearn, mStable, and Rari. The new Savings Liquidation Protection strategy automatically pays back the MakerDAO CDP owners' debt with stablecoin assets supplied in the yield protocols, instead of repaying borrowed debt from supplied collateral, during market crashes, as was the case with DeFi Saver’s Automation service until now.

This automated cross-protocol interaction showcases the new approach and revamped system behind the creation of Automated Strategies. Each strategy consists of a set of triggers, and actions from different integrated protocols that are executed once conditions are met. The first phase of the new service provides users with premade, team-built strategies, while in the 2nd phase the system will allow users full customization and creation of unique automated strategies and approaches to DeFi investing and position management.

Users interested in enabling and trying out this new form of CDP liquidation protection, should:

1. Have a Maker CDP
2. Have DAI deposited into one of the aforementioned yield protocols available in the DeFi Saver Smart Savings Dashboard
3. Find and enable the DeFi Automated Strategy here

DeFi Saver is a one-stop dashboard for creating, managing and tracking your DeFi positions.

REGULATORY FRONT

EU Attempts To Ban Proof-of-Work?

Nice try. On the heels of the (mostly positive) Executive Order from President Biden last week, crypto investors get to celebrate another dodged bullet this week.

A proposed rule that could have, in effect, banned Bitcoin mining across the European Union (EU) has been squashed. The European Parliament’s economic and monetary affairs committee voted 32-24 on Monday to keep the provision out of the Markets in Crypto Assets (MiCA) framework, the EU’s comprehensive regulatory package for governing digital assets.

The provision, which was added to the draft last week, sought to limit the use of cryptocurrencies powered by an "energy-intensive computing process," also known as Proof-of-Work (hint: PoW is how bitcoins are created/mined), across the EU’s 27 member states.

Patrick Hansen shared a breakdown of the vote and what it means for PoW in the EU going forward here in this thread.

TWEET OF THE WEEK

Exploring 2022 Market Megatrends

What are the biggest trends to watch in 2022? Are we close to a crypto bottom? Will value stocks continue to outperform growth stocks in 2022?

All important questions you can find the answer to with The Average Joe – a free 3x-weekly newsletter covering stock market and crypto trends, news and opportunities.

Become a better investor with a 5 minutes read that's concise and simple – with a touch of humor.

Subscribe here for free and see why over 27,000 investors start their day off with TAJ.