July 21, 2021 | Issue #178

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MUST READS

The Biggest Private Crypto Deal Ever Just Closed

Crypto exchange FTX has closed a Series B funding round, drawing in $900 million from an array of investors including... well, everyone. SoftBank, Sequoia Capital, Lightspeed, and more than 60 other investors invested in the round.

This marks the biggest crypto investment round to date, dwarfing Circle's $440 million deal from earlier this year.

FTX's revenues have increased 10x this year and 75x since its Series A funding round closed in mid-2020. With over 1 million users and averaging over $10B of daily trading volume, FTX has grown into one of the world's leading crypto exchanges.

It has also grown to become one of the most publicly visible exchange venues, with its sponsorship deals with the likes of MLB, Miami Heat, and more.

So what is FTX going to do with all of that money? According to CEO and Founder, Sam Bankman-Fried, "basically M&A." Sam also says they want to build partners outside of the crypto world.

Overall, FTX is moving at such a speed that there is A LOT more than we can cover in this writeup. At this speed, it appears they are gunning for that #1 exchange spot and a potential public listing. Stories like this are also commonplace about FTX and Sam's customer support and development cycle.

Hopefully, Sam sticks to trading and building a business and less to influencing political campaigns. But in all seriousness, congrats to Sam and FTX!

NFT platform OpenSea Raises $100m at a $1.5 billion valuation

OpenSea, one of the largest digital art marketplaces to capitalize on the NFT boom, is the latest crypto unicorn. The marketplace, which takes a 2.5% cut of sales, posted a record $160 million in digital asset sales in June.

Although growing quickly, the company is running into some roadblocks around Ethereum's currently pricey “gas” fees. To combat this, OpenSea plans to add support for other blockchains with this latest raise, including Polygon, Dapper Labs’ Flow blockchain, and Tezos.

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DEEP DIVE

Pokémoney

In the last month, Axie Infinity — a crypto Pokémon-like game in which players raise, battle, and trade (gotta catch 'em all!) NFT pets called Axies — generated roughly $84.9M in revenue.

As the broader crypto market continues to slump, Axie and its two native cryptocurrencies, Axie Infinity Shards (AXS) & Smooth Love Potion (SLP), have been booming.

A Little Background:
Sky Mavis launched the game in 2018. But the game got a boost from investors including Mark Cuban and Reddit co-founder, Alexis Ohanian, in May. The game runs on the Ethereum blockchain, with most in-game transactions supported on a nifty sidechain called Ronin, which was designed so there could be lower fees.

Want To Start Playing?
All you have to do to join the party is buy at least 3 Axies from the game's marketplace. Just be aware that Sky Mavis takes a 4.25% cut from all Axies, virtual real estate, and other items that users trade with. Players can also “breed” new Axies... but it may cost you some AXS or SLP.

We know, this is beginning to sound like an advertisement (it's not!) But bear with us, because here's where it gets interesting...

Want To Start Making Money?
The "play-to-earn" model can be legitimately profitable for some users. For example, rare Axies can sell for as much as 30 ETH, and desirable real estate in the fictional world of "Lunacia" can go for nearly 270 ETH. The game also rewards hardcore players with as many as 200 SLP a day — often worth over $50 at recent weeks’ prices.

Why It Matters:
The game revenue tops virtually all other crypto protocols, dwarfing popular DeFi apps like Aave, Sushiswap, and Compound combined.

While some critics have noted that Axie Infinity's marketplace fees are many times higher than those charged by most crypto apps — it's certainly a compelling business model that’s already giving rise to competitors. But because the bulk of revenue does go to players/users, “play to earn” might be more than just a slogan. It might even be the start of a new crypto-powered relationship between work and play.

Crypto Google Search Trends Analysis

This week, the team at CoinMetrics takes a look at Google Trends data to decipher retail interest in a variety of cryptoassets.

TLDR:

While searches for "bitcoin" didn't come anywhere close to their 2018 high, searches for "Ethereum" blew past their previous highs
The term "stablecoin" reached an ATH this year, most likely in regards to Circle's SPAC merger
As expected, "Dogecoin" searches surged the week of January 24th, as DOGE price climbed from under a penny to close to 5 cents. DOGE search volume also peaked the week of May 9th, right after Elon mentioned DOGE on SNL and right before the crypto-wide market crash.

Bitcoin's Line In The Sand: Where Whales Are Buying

In a recent issue from the team at Ecoinometrics, we get some fresh on-chain data comparing halving cycles, as well as a beautiful heat map comparing BTC buying trends between whales and the small fish.

The Only Escape Route Left For Your Money

There's a massive market shift coming. And most American's are woefully unprepared...

With all the hysteria going on in today’s “bull market,” a plan for protection is more important now than ever before. It's time to prepare.

This is what I'm doing to protect my family and my finances - I recommend you do the same.

REGULATORY FRONT

SEC Charges Coinschedule; Hester Peirce Dissent

The SEC has unveiled settled charges against UK-based Coinschedule, an ICO ratings website (remember when that was all the rage?).

Per the SEC's order: "The platform claimed to 'list' or profile the 'best' token offerings, such as so-called initial coin offerings (ICOs) and initial exchange offerings (IEOs), and stated that its 'mission is to make it easy and safe for people around the world to join ICOs."

Meanwhile, Coinschedule was taking payment from issuers in exchange for more favorable reviews. The SEC also charged Coinschedule for not disclosing which assets they were touting were securities (Here is Commissioner Hester Peirce dissenting on that point).

Two things here: (1) Was anyone really surprised Coinschedule and sites like it were taking payment?... and (2) there are plenty of websites out there that take payment for exposure and hide disclosure. Heck, we get emails all the time from companies trying to do this (note: we don't take it).

As always, due your own diligence.

New Jersey bans BlockFi interest accounts, CEO denies they’re securities

Crypto banking platform BlockFi has been barred from offering its popular interest account to New Jersey residents following claims it violated state securities laws.

New Jersey’s Office of the Attorney General served a summary cease and desist on Monday, alleging BlockFi used proceeds from selling unregistered securities to prop up its crypto trading and lending operations.

The decision was confirmed but rebutted in a tweet from BlockFi CEO Zac Prince. Expect to see more cases like this...

Dogecoin Fan Sues Coinbase Over 'False and Misleading' Sweepstakes

A San Francisco man has filed a $5 million class-action lawsuit against Coinbase claiming that the company's "Trade Doge, Win Doge" contest was unfair. David Suki said he wouldn't have invested the $100 to enter the contest if he knew there was a free way to enter (by mailing in a 3x5 index card). Suki alleges that Coinbase unfairly hid the free option, hoping most users wouldn't notice and instead invest the $100 to enter.

Yo David, "play stupid games, win stupid prizes."