Unchained - How Can OpenSea Regain Dominance After Layoffs and the NFT Market Decline? - Ep. 568

Starting point is 00:00:00 What Blur did really well is they allowed, almost like allow for pro trading to happen, right, at scale, which is something was really hard in OpenC. And so, like, I generally don't trade NFTs, but one of the things when I go to sell stuff is that it's hard to sell stuff on OpenC, right? Like, it's a time-consuming process, right? If I have 100 NFTs of a collection and I want to sell some, I have to list each one individually. I think what Blur did especially well right out of the gate was, you know, they allowed for, you know, if I had 100 NFTs, I could list them pretty quickly. You know, they also brought in liquidity on like the bid side. So they incentivize people to buy on their platform. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto eight years ago, and as a senior editor of Forbes, was the first

Starting point is 00:01:00 Neatree meter reporter to cover CryptoGruns heat full-time. This is the November 10th, 2023 episode of Unchained. VaultCraft by Popcorn is your no-code DeFi toolkit for building automated, non-custodial yield strategies. Learn more on VaultCraft.io about how you can supercharge your crypto portfolio. Femex, a prominent crypto exchange, is at the forefront of revolutionizing centralized exchanges. Unleash your unique web 3.0 identity. Discover more at Femex.com. Arbitrim's leading layer two scaling solution offers you ultra-cheap and lightning-fast transactions,

Starting point is 00:01:36 all with security rooted on Ethereum. Visit arbitram.io today. With the crypto.com app, you can buy, trade, and spend crypto in one place. Download and get $25 with the code, Laura. Link in the description. Today's guest is GMoney, NFT collector and founder of 9 DCC.

Starting point is 00:01:56 Welcome, Gmoney. Hey, Laura, how are you? Good, glad to have you. Yeah, thanks for having you. Yeah. Last week, OpenC announced that it had laid off half of its staff. So it was a stunning move for what had long been the leading NFT platform for most of NFT history, especially since this was not OpenC's first round of layoffs in this bear market.

Starting point is 00:02:17 What do you think happened there? Why has OpenC stumbled so hard? To be perfectly honest, I don't really. know what's been happening internally. I can only talk about what I've seen from as an external market participant. And, you know, I think obviously, you know, OpenC was the main platform initially at the beginning of the NFT bull run a few years ago. And I think what ended up happening was they just weren't iterating fast enough, right? There were, I think, a lot of things that people in the marketplace wanted and they had this lead with, you know, a huge amount of volume, percentage of the

Starting point is 00:02:51 volume and they kind of maybe felt that they could kind of rest on their laurels a little bit because I think something that we've seen with other platforms, especially in Web 2, is that once you have kind of like that lead, it's you have to really mess up in order to blow that lead. But I think in the NFT market, just because also the space is just so, so early, if somebody came along that was iterating faster, that was able to give people the features that they wanted, I think, and that's kind of what we saw with OpenC's competitors, and that's what led to the degradation of market share. Yeah, so about a year ago, Blur pulled off a stunning upset. It toppled OpenC, which was really quite remarkable. And so it seems like you're kind of hinting that that was part of the reason. So in a way, are you saying like these layoffs are a delayed response to that?

Starting point is 00:03:41 I mean, I think it's a combination of that as well as the NFT market has been abysmal, right? We're having this conversation right now on Thursday, and I think just this week is the first time we've probably seen signs of life, not just in the NFT market, but probably in crypto in general over the last probably 10 to 14 days. And I think they were probably trying to hold off the inevitable for as long as possible. But I don't think the market just didn't turn as fast as fast as they would have wanted to. Yeah. So we'll talk more about the market in general in a minute because you're right that it has been very visceral. But I also wanted to ask you, because some people say that OpenC's lack of a token versus Blur having a token was also a big driver in OpenC's fault from Grace.

Starting point is 00:04:26 What are your thoughts on that? Yeah, I mean, I could definitely see that argument, right? Because Blur came out of nowhere. They did the two things that probably OpenC wasn't doing really well, right? They were iterating very fast and they launched the token. And so I think because of that, they were able to kind of gain market share. Now, I don't think that would have led to them probably taking, taking over. I don't know the exact numbers of what market share numbers are at this moment,

Starting point is 00:04:50 but I know Blur has come from non-existence, you know, 13, 14 months ago to being probably the market leader at this point. Probably has to do with probably those two things. And I think we've seen that on the timeline over the last week where the layoffs got announced and then pretty much everybody is clamming for an open-sea token. Yeah, I think if I remember correctly, Blur is at about 65-ish percent market share in OpenC's maybe about 25. And I did want to ask also, you know, when you keep saying that other marketplaces iterated, like what are some of the features that caused people to leave OpenC and go to some of the other platforms?

Starting point is 00:05:30 So I think, you know, what Blur did really well is they allowed, almost like allow for pro trading to happen, right, at scale, which is something was really hard in OpenC. And so, like, I, I generally don't trade NFTs, but one of the things when I go to sell stuff is that it's hard to sell stuff on OpenC, right? Like, I have to, it's a, it's a time-consuming process, right? If I have a hundred NFTs of a collection and I want to sell some, I have to list each one individually, you know, it's a much more time-consuming process. I think what Blurred did especially well right out of the gate was, you know, they allowed for, you know, if I had 100 NFTs, I could list them pretty quickly, you know, you know, They also brought in liquidity on the bid side. So they incentivized people to buy on their platform.

Starting point is 00:06:19 So I think that the combination of those things, I think, really made it really allowed them to kind of like really steal that market share pretty quickly. And then the other issue where they differed a lot was on royalties. There was kind of a long battle over how that should be handled in the NFT world. and ultimately open sea capitulated, and they also did not make royalties a priority for creators. What are your thoughts on what happened there? Yeah, I mean, I think that also probably, in all honesty,

Starting point is 00:06:53 probably led to some of their decline in market share as well because I think that if they had maintained creator royalties, they could have stood behind that tenant of we're here for creators and probably would have maintained more market share than they do now. But I think because we're in an environment where I think when you're a venture-backed startup and your number one KPI is probably market share, you know, you're going to do anything to try to retain that. So it became a race to zero. You know, I, you know, I firmly believe that creator royalty should be honored. But, you know, obviously the marketplaces are from a different point of view because they have these different KPIs and different ways of their.

Starting point is 00:07:36 of what they need to show that they're investors. So I think OpenC probably would have done better if they maintain the creator royalties because I think Blur, the competition from Blur and other marketplaces as well, I don't think it was just Blur. That was a race to zero while maintaining their marketplace fees

Starting point is 00:07:55 to me didn't seem right. And so maybe they're also building for whatever the NFT marketplaces in the future and not necessarily what it is now. And that's what led to those decision-making. I don't really know because I haven't spoken to those teams internally about, you know, what their thoughts are on the space three to five years out. And so in your, like if you were to create your own platform from scratch, then it sounds

Starting point is 00:08:20 like you would want to keep royalties. But it seemed like you were saying that, doing that plus the high fees were what killed open, I mean, obviously they're not dead, far from dead. But, you know, what do you think would be a business model that would work that would keep royalties? So it's interesting because obviously I have 90 CC and I've admit one, which I started. And I spend a lot of time thinking about royalties. And I operate on the assumption that royalties are not coming back or if they're coming

Starting point is 00:08:48 back, they're going to be very different. But I do think that you're going to see more individualized marketplaces so that I've already created a marketplace for 90CC. I did this over a year ago because I feel like very similar to the shopping experience when you either go on Web 2 or you go to brick and mortar where you have these megastores where you can go and you buy based on their curation, but then you can also go direct to the brand store and get that brand experience. I think the same type of thing is going to happen in Web 3. So on my 90CC marketplace, it obviously honors creator royalties, but I'm not going

Starting point is 00:09:24 to tell you you can only trade 90CC assets on the 90CC marketplace because it's fully sovereign and you own it so you can trade it wherever you want. But I want to try to incentivize people almost like lead with a carrot instead of a stick in the sense that maybe if you do pay royalties, you get perks, you get extra utilities, you get invites to special events that you don't get if you don't go to those, if you don't pay the royalties. And I think at the end of the day, royalties will always be a social contract, a social contract. There's no way, even when they're hard-coded, right?

Starting point is 00:10:00 all you need to do is really just wrap the NFT in another NFT and you can bypass royalties. So I don't think that hard coding it in is necessarily the right answer. But the key is I think probably trying to build a framework so that people are incentivized to pay royalties. And I'll use an example where it's not apples to apples, but let's say something like a high-end watch or a luxury car like a Ferrari or a Lamborghini where you can be on that list to buy, you know, the new car that comes out or the new watch that comes. out, but if they find out that you flipped it, you're never buying a new car direct from the factory or a watch ever again, right, because you're kind of blacklisted because you violated the social contract, right? And so I think we'll probably see something along those lines develop over time. That's the framework I've been trying to build is like, how do you incentivize

Starting point is 00:10:51 people to want to pay it, right? Because in a bull market, it's much easier. When you're making money, it's easier to be like, all right, well, I'm going to pay the creative royalties. But in a bear market when prices down, like, and I totally agree, it's like, why would you pay the creator royalties if you lost money on it, right? And so I think it's a really delicate question. There's a lot of different actors at stake. There's a lot of different stakeholders. And it's not an easy answer. And I think every project will have different ways to answer that question. Yeah. Yeah, I agree. It's been obviously, I mean, just given how long the debate about it has drawn out, it's been a really tricky issue. All right, so in a moment, we're going to talk about the general

Starting point is 00:11:32 NFT market and what the future looks like for OpenC and blur in other marketplaces. But first, a quick word from the sponsors who make the show possible. Are you ready to dive into the future of crypto? Femex, a prominent exchange, is leading a hybrid exchange revolution with its groundbreaking Web 3.0 ecosystem of Femexia. Get ahead of the game and unleash your unique Web 3.0 identity. Head to Femmex.com now to seize the benefits of early joiner campaigns and secure your stake in the future. Arbitrum stands at the forefront of innovation as the premier suite of layer two scaling solutions, bringing you lightning-fast transactions at a fraction of the cost, all with security rooted on Ethereum.

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Starting point is 00:12:57 used Valkraft to supercharge their crypto portfolios with custom tailored cross-chain yield strategies. Go to valkraft.io and start building. Back to my conversation with Gmoney. So as we mentioned earlier, this year, perhaps until just the last few weeks, the NFT market has just been so sleepy, especially compared to the highs of the 2021 bull market. So why do you think that's happened? Like, why have we seen this massive deflation in the NFT space? I mean, I think it just is correlated with crypto and. general, right? I think my thesis when I first got into the NFT space was that I felt like

Starting point is 00:13:33 NFTs were an option on Ethereum so that the higher Ethereum went, the higher NFTs would go, because that was how people would show off their wealth, right? I think we talk a lot about the wealth effect in traditional markets where when the stock markets at all time highs, luxury homes, luxury cars, watches, jewelry, all these things are at all time highs as well because people have that wealth effect. And I think you see the same thing in NFTs, right? I think it's a very crypto-native way of displaying your wealth. And so when the price of crypto is down 90% from highs,

Starting point is 00:14:09 people are more focused on, you know, how do I accumulate more Bitcoin, more Ethereum, more whatever token they want, as opposed to how do I, you know, buy more JPEGs or NFTs or whatever it is that they want to do with that money of their disposable income. Yeah, I think, you know, when people get shocked at the US dollar sticker price, I always remind them, oh, well, you know, a lot of these people got Ethereum at a really low price. So for them, they're not actually paying that same dollar amount. But, you know, as we mentioned, we're still a far cry from the previous cycles high. So what do you see as the catalyst to the next NFT bull market? Like are there particular innovations you're looking at or is it simply, you know, the prices of the other tokens have to go up or what do you think? I think fundamentally everything's tied to macro and right. I think at the end of the day, if you're long, any, any asset, you're probably short interest

Starting point is 00:15:04 rates. So, you know, if interest rates go down, obviously I think that will lift all asset prices across any sector on the planet. So I think we're all kind of waiting for that trade. And I think that's why crypto is starting to run. But for NFTs in general, I think the metas that I really find interesting are real world assets coming on chain. And part of that is what I've been working on with 90CC in, you know, putting chips in physical products that will link it to the blockchain and then gamifying that experience.

Starting point is 00:15:35 But then also, you know, I just, I think that there are a lot of underserved markets that don't have access to credit, such as, let's say, the sneaker resellers market, right? where I think markets like that will be coming on chain faster than real estate because I think real estate has a very, very good, well, well-planned system that has worked for close to 100 years at this point of how do you get credit against a piece of real estate? And that is a very entrenched system. But I think if you find pockets of people that are big enough, right, because the sneaker resell market is huge, that you can give them access to credit that they other wise wouldn't have, I think that starts to open up use cases, not only just onboarding new people

Starting point is 00:16:20 to the understanding the power of an asset like crypto, but also then opening up expanding like, well, if this works for this, then, you know, it works for other things. So I, to me, one of the most interesting things is obviously definitely the real world asset side of things, because I just think that you need to see the melding of those two worlds at some point. And I think that that starts to happen over the next three to five years. And so just to understand what that means, essentially what you're saying is that somebody owns a physical object that has some value in it. And if it already has something embedded in it that can tie it to a particular NFT on a blockchain, then they could potentially borrow against it and then use that to generate some kind of actual cash use for something else.

Starting point is 00:17:06 But then I guess what I'm wondering is like when they go to get liquidity out of it, basically sell it, then because it's a physical object, I'm wondering how does that work? So let's take a sneaker, sneakers as an example, right? So there's a protocol, and there's a couple of protocols that are centralized custodians where you can send a pair of sneakers to them. They will issue you an NFT, but that sneakers stored in their vault, in a secure facility. And so they verify, one, the condition that it's in, and two, that it's real, right? And so then let's say you deposit your sneakers there.

Starting point is 00:17:44 They send you an NFT to your wallet. Then because you have an NFT that is backed by that sneaker in their vault, you can use that either to post it as collateral to sell it to me. And then because it's basically a bearer instrument, right? Because I own that NFT, I can then redeem. I can then go to 4K and I can get that redemption and sent to me if I want to actually claim the physical, right? And 4K is the vault? And 4K is the vault. Okay.

Starting point is 00:18:13 Got it. All of a sudden, because you have that NFT, which is fungible, obviously, across these different platforms, you can post it, you know, on an NFT lending platform and get a loan against it. And, you know, we recently saw there was a loan against, I believe, I think it was a thousand Supreme T-shirts that were vaulted at 4K that they ended up getting a loan against it through an NFT lending platform, right? And I think it's stuff like that, that again, this is a market that probably traditionally doesn't have credit available to them. And you start opening up opening up these markets to credit that it doesn't have through a traditional sense.

Starting point is 00:18:52 And I think you start to see, you know, you start to see the promise of banking the unbanked that we always have spoken about probably for 10 plus years. Well, I don't know if people buying like incredibly expensive sneakers are the unbanked. But I mean, but giving them access to credit that they don't otherwise readily have, right? Right. I think that that's probably one of the key points there is there's no mature lending market and something like sneakers, watches, right? I'm sure handbags, I'm sure there's a market for them, but it's probably more localized. But creating a global version of that is probably where you start getting lower rates as well as, you know, higher values.

Starting point is 00:19:33 Yeah, I mean, it's super interesting. I really like what you're talking about, but I do have to say, I wonder if that really will catalyse the next bull market, because to my mind, a bull market is when there's just a ton of liquidity, whereas I imagine just even the physical process of putting these chips inside of all these physical objects, it's going to take time. And so I don't know if that will, but we'll see. I mean, certainly you're right that the first company to kind of make that all work, they're going to get a lot of uptake, I would imagine. So, I mean, I guess I'm probably bullish on that. because that's where I've been focusing a lot of my time.

Starting point is 00:20:07 I know a lot of people are speaking about, you know, gaming, which I think has been something that people have been talking about for years. And it's going to be interesting. I'm not much of a gamer myself, so I can't really speak to what I've seen on the horizon. But I know a lot of people are excited about that as well. Okay. Yeah.

Starting point is 00:20:24 Yeah, we'll probably see. I mean, multiple different areas will take off in different ways. One thing I did want to ask about the current state of the market is that it seems to me that Ethereum NFTs, are kind of holding the leading position in terms of, you know, value and interest. But I'm also hearing a lot about Solana NFTs. So what are you seeing in terms of the different chains when it comes to the NFT market? Yeah.

Starting point is 00:20:47 So admittedly, I spend most of my time on Ethereum. I probably have 99.9% of my assets on the area. So I don't really know that much. I think probably, again, I think a function of what we were just talking about, Solana NFTs probably have a lot of chatter around them, the moment because Solana has, I mean, I think it's gone up like four or five X in the last 60 days. So I think it's probably a function of that, of that wealth effect on that chain. But I'm always very open to other chains of what, you know, where I start to hear some buzz and

Starting point is 00:21:23 where I think things start to become compelling. But for the most part, up until this point, I spent the majority of my time just focus on Ethereum because I think Ethereum has become a center of liquidity for. a lot of things and not just NFTs, but also certain tranches of defy and what have you. And so I think that's going to be hard to displace even though there are narratives that build up around other chains. All right. So circling back to OpenC, you know, you did mention that there are other platforms that have

Starting point is 00:21:54 been releasing new features in a faster way. Devin Fincer, the CEO of OpenC, released a tweet Fred where he said, and this is where he announced the layoffs. He said, quote, we're reorienting the team around OpenC 2.0, a big upgrade to our product, including the underlying technology, reliability, speed, quality, and experience. So what do you think that will look like for OpenC? Like if you were to advise them, are there certain features that you would recommend they add or certain incentives they give to traders or just what do you think could kind of give them a boost?

Starting point is 00:22:30 I mean, honestly, probably the easiest thing for them to do is drop a token. I don't know if that's what they want to hear, but that's, that's probably the easiest thing that they could do to probably boost not only sentiment around them, but then also probably bring some sort of volumes back onto their platform. But I just think they have an uphill battle to climb, an uphill battle, just because of the decisions that they made in the past of, you know, getting rid of creative royalties. And it was, honestly, it got to the point with not just open sea, but also blur, where they were kind of going at each other to kind of, you know, one would say something, then the other person, the other marketplace would, you know, counteract that announcement, that as a creator, as somebody that, you know, is listed on these marketplaces, like, it's a full-time job to say, all right, like, how do you have to develop this contract in order

Starting point is 00:23:23 for it to honor royalties on this platform, but not on this. And it became a huge cluster of confusion that I think probably doesn't benefit either of them. But I, I wouldn't, I think I'd probably be able to give them better feedback if I saw the products that they were working on and then just give like certain things. I'm like, oh, I think this would be interesting. But just off the top of my head, probably the best thing that they could do to help sentiment. And I don't know how long it would last though is probably just drop a token. And, you know, I think the fact that everybody has been clamoring for one for two years, whether it's right or wrong, I don't necessarily have an opinion on it because the only reason people want a token

Starting point is 00:24:01 and so that they make money. And so it's kind of like, you know, do you feed the squeaky wheel? Do you fix the squeaky wheel or do you think do things that you think are better long term for the business, right? And I assume that if they haven't dropped the token, there's probably reasons for them not doing so. If not, they probably would have done it already. And we don't necessarily know what's going on behind the scenes to be able to make that decision. Yeah. And, you know, honestly, I feel like they probably just,

Starting point is 00:24:31 even knowing their investors are taking a more conservative approach and because they are an American company, that's probably the reason they're, you know, kind of holding back on that front. And I did want to ask you about Blur because, you know, obviously they're the market leader now, but I also wanted to ask you about a criticism that they have faced, which is that they caused a decline in that NFT market by making it too tradery, essentially. I don't know if you have an opinion on that thesis. So I think what Blur killed creator royalties, in my opinion, it was Blur that I think was the first one to send them to zero, I believe. Or if they weren't, they were the ones that kind of led to a lot of projects going to zero in terms of creator royalties.

Starting point is 00:25:14 I don't know if I necessarily agree with the criticism that Blur caused price decline. I see where that is placed. But then also, I mean, I can't also counteract that with it made that decline happen slower. and it probably would happen faster because there was this fake liquidity because people were farming tokens, right? And so in order to get the tokens, you had to place bids close to offers, I believe. I don't know the exact math of what the equation was, but they kind of like had artificially high bids that people were able to sell into that if those bids weren't there, the price decline might have happened more drastic. It might have been a much more drastic price decline. So I can, I can, I

Starting point is 00:25:58 can see like, I can see both sides to that coin. And, you know, honestly, like as as a trader in capital markets before coming into the space, you know, that liquidity, you know, it's literally, it was subsidized liquidity, right? And so, you know, when people were farming season one and season two, they were placing bids on collections that might not have otherwise had those bids there. So I don't know if necessarily blur is to blame for the price decline. The price decline. The price decline very well could have been way worse if Blur wasn't subsidizing people to bid. But we don't know, right? And I don't think we'll ever know that answer. Yeah. And you're just saying that because of the overall price decline that we've seen,

Starting point is 00:26:42 like just or the decline in the market generally, you're saying. Yeah, I just think the, you know, the market declined in general, but how much more vicious would it have been if there, if there wasn't incentive to put bids on there so close to the offers. So maybe instead of, you know, project declining 80%, maybe it would have declined 95% or instead of declining 90% would decline 98%, right? It's, I don't think we will really know, but I just, I saw in certain moves and certain actions that there were people willing to buy and bid at a certain price because they were farming the token that I don't know if they would have been there willing to buy at that price, but they weren't, you know, trying to partake in

Starting point is 00:27:25 in one of the seasons's airdrops. Right, right. Well, so since they are the market leader now, which, by the way, I realize that the 65% number that I quoted before is from an article from June. So it's obviously probably different now. I'm not sure what it is. But I wondered, since they are the market leader at this point, what do you think they need to kind of keep on their toes about or just look out for in order to retain their dominance? I mean, I think they probably will just keep iterating quickly, which is probably what led them to get to the position that they're in. I would love it if they took a different position on creator royalties. But from what I've seen, I think they ultimately have a different view of the NFT market

Starting point is 00:28:08 of being more than just JPEGs. I think they're trying to position themselves as maybe a center of liquidity for all things, you know, all non-fungible tokens and not just pictures. And so, you know, when I think, when I say that, I think of, you know, bondish, is credit, like all these type of things that trade on OTC banks that they're probably going to try to go after that liquidity at some point. And if they're a market leader in having a lot of liquidity in terms of that, I could see them trying to go for that. And that's that again, I've never spoken to the team. So I don't necessarily know what what their plan is. But I kind of

Starting point is 00:28:46 like from what I see that seems to me, that seems to be to me the situation of what they're they're going towards. All right. Well, we will have to see how it all plays out. G Money, this has been a great conversation. Thank you so much for coming on and chained. Thank you. Thank you for having me. Don't forget. Next up is the weekly news recap. Today, presented by veteran crypto reporter and Columbia University Night Badget Fellow, Michael Del Castillo. Stick around for this week in crypto after this short break. Join over 80 million people using crypto.com, one of the easiest places to buy, trade, and spend over 250 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 5% cash back instantly, plus 100% rebates for your Netflix and Spotify subscriptions, and zero annual fees. Download the crypto.com

Starting point is 00:29:37 app now and get $25 with the code Laura. Link in the description. Hello and welcome to this week's crypto roundup, from numerous BlackRock ETF developments to rumors of a US IPO that could change, the industry, this first full week of November had us on our toes. I'm Michael Del Castillo, a Knight Badget Fellow at Columbia University, and this is your weekly crypto recap. In a one-two punch this week, we learned that asset management giant BlackRock has filed paperwork not only to form a new entity called the I-Shares Ethereum Trust, but paperwork that would result in the first Ethereum ETF if it's approved. The BlackRock declined to comment on the filing, the move suggests the company is serious about expanding its presence in the

Starting point is 00:30:26 crypto space. If the ETFs are approved, they would let investors gain exposure to the two largest cryptocurrencies by market value without having to buy and store the assets directly. This week, a contentious dispute has emerged between market maker Wintermute and the Switzerland-based non-profit NIR Foundation, set up in 2019 to support the NIR Protocol, which has raised $500 million and created a cryptocurrency now valued at $1.4 billion. Winterbute's CEO of Gavoy has publicly accused the Near Foundation and development firm Aurora Labs of reneging on the an $11 million redemption deal involving the USN stablecoin. Gavoy's series of tweets outlined what appears to be a complete breakdown of trust between

Starting point is 00:31:16 firm leadership alleging that the Near Foundation had initially committed to backstopping USN and had earmarked funds for this purpose. That means despite public and private commitments, Wintermut has so far been unable to redeem USN for USDT on a one-to-one basis. After months of waiting, Gavoy alleges the Near Foundation's offer to redeem was reduced to a mere 20% of the original's song. Gavoy's public airing of grievances was apparently intended. it to gain public support. Gavoy said, quote, by not making it public, we would effectively contribute to bad practices being tolerated and repeated, end quote. The near cryptocurrency fell off a cliff on Thursday, dropping over 10% in less than one hour, reaching a recent low of $1.37.

Starting point is 00:32:07 Boston-based Circle, the powerhouse behind the $24 billion USDC stable coin, is reportedly in discussions to go public next year. While the company has kept a close lid on its latest valuation, it's worth noting that in February 22, it was valued at $9 billion during a previous failed SPAC deal. In September, Circle CEO Jeremy Aller told Laura on an unchained episode, quote, we're definitely on the path to be an independent public company, and we've had the benefit of having a number of strategic investors in the company over the years. end quote. Circle's aspirations to list publicly have been part of a long-term strategy as a spokesperson told Bloomberg, though they were framed from commenting on current speculation. Despite the

Starting point is 00:32:57 setback of a failed spec, Circle's growth has been punctuated by substantial investments from financial giants like BlackRock and Fidelity. In spite of Circles promising developments, the USDC market value is down 55% from its all-time high of $55 billion. in June 2022. Over that same period, stablecoin competitor Tether has increased by 30%. The new leadership at FTX, the cryptocurrency exchange that filed for bankruptcy last year, is seeking to sell approximately $744 million in assets held on grayscale and Bitwise trusts. This move is part of the exchange's efforts to repay creditors efficiently and mitigate potential price fluctuations. The assets include $691 million in grayscale trusts, holding $597 million in BTC and $90 million in ETH,

Starting point is 00:33:54 and $53 million in Bitwise 10 crypto index fund. FTX's November 3 filing with the U.S. bankruptcy court indicates that the sale would enable the preparation for, quote, forthcoming dollarized distributions to creditors, and allow the debtors to act swiftly to sell. the assets at a high price. According to the documents, FTC's legal team also hopes to propose sale or reduce the cost and delays associated with separate motions for each sale. This step is another significant move by FTCS's bankruptcy managers to address customer and investor losses following the firm's collapse. The news comes in the wake of FTCS founder Sam Bankman-Fried's

Starting point is 00:34:39 conviction last week on charges relating to defrauding customers and mis-eastern. using client funds. Meanwhile, venture capital firm Proof Group, part of the Fahrenheit consortium that acquired cryptocurrency exchange Celsius, is now a contender to help revive FTX. Also in The Hunt, former New York Stock Exchange president Tom Farley's Cryptoexchange Bullis is among the bidders in the bankruptcy auction, according to a Wall Street Journal report. Cryptocurrency Exchange Cracken is hiring and the position has people talking. The posting for a senior cryptography engineer hints that the company might be developing cryptographic protocols and layer two solutions that make it easier to scale applications built on slower blockchains.

Starting point is 00:35:31 Though the reports are unconfirmed, such a move would not be unprecedented. Coinbase launched its own Ethereum Layer 2 in August. News site CoinDesk cited the proverbial, quote, people familiar with the matter in a report claiming Cracken was in discussions with potential partners, including Polygon, Matter Labs, and the NIL Foundation. Despite the buzz, a Cracken spokesperson maintained a veil of secrecy, telling Telegraph and Coin Desk, quote,

Starting point is 00:36:01 we're always looking to identify and solve new industry challenges and opportunities. We don't have anything further at this time. End quote. We've all heard that before. The crypto community has had mixed reactions, with some questioning the need for another layer two network in an already fragmented landscape. The layer two market is currently dominated by optimistic roll-ups, according to data site L2B. But Cracken's foray into the space could signal a shift towards zero knowledge-proof solutions,

Starting point is 00:36:33 which offer distinct advantages such as increased privacy and immediate transaction validity. The U.S. Securities and Exchange Commission is pushing for a summary judgment in its case against Terraform Labs and its CEO Doe Kwan. In February, the SEC sued the exchange alleging securities law violations. On Friday, that's last Friday, November 3rd, the regulator said there was no need for a full trial, citing, quote, clear, undisputed and overwhelming, and quote, evidence of fraud and misrepresentation in the marketing of, Terra and its tokens.

Starting point is 00:37:11 Kwan and his lawyers asked the case be thrown out, saying they didn't violate U.S. security's laws. The SEC contends that Kwan misled investors about the stability and usage of the Terra-USD stablecoin, which collapsed in a high-profile event that saw the stable coin lose its peg to the U.S. dollar, then disintegrate to almost nothing, triggering a broader market downturn. The SEC also challenges the unregistered public sale of Luna and MIR tokens, arguing that they were marketed as investments that would appreciate based on the company's efforts, a criteria in the Howie Test for Securities Law. Also this week, Jump Crypto President Knav Korea pleaded the fifth when asked about a deal with Doquan to help restore the U.S.T. Stable Coin peg, fueling.

Starting point is 00:38:04 even more speculation about the case. Decentralized finance protocol Ava temporarily suspended several markets due to a reported issue with a feature across its platform over the weekend. The so-called Ava Guardian, a community-elected body, has paused Ava 2 on Ethereum and frozen specific assets on Ava 3.

Starting point is 00:38:29 Cross change including Avalanche, Polygon, Arbitrum, and Optimism. On social media, Ava's team sought to assure users that, quote, no funds were at risk, end quote, and that a governance proposal to resume normal operations would be forthcoming. The proactive measures allow users to manage and withdrawing and restrict new deposits and borrowing. Avis founder, Staddy Kulachov, wrote on social media, quote, Within hours, measures were taken to mitigate the risk, resolve a patch, and review and deploy the first proposal. incident management at its best." Only time will tell of how that works out.

Starting point is 00:39:11 At the time of this recording, the details of vulnerability had not been disclosed, supposedly to prevent potential exploitation, according to the posts, especially considering the existence of multiple Ava forks. Each fork marks a potentially separate target using the vulnerability. Despite the operational pause, Ava's native token, Ava remains stable at the market. A detailed postmortem is expected once the issue is fully resolved. This week, the cryptocurrency market witnessed a significant surge in the Ordi token linked to the Bitcoin Ordnals Protocol, with a 77% increase in value following its listing on the Binance Exchange on Tuesday.

Starting point is 00:39:55 Trading at around $12, Ortiz rise underscores the growing interest in tokens that utilize the Bitcoin. Bitcoin network beyond its traditional use. The Ordinals Protocol introduced in January allows for the inscription of data such as text, images, and even audio or video onto Bitcoin's smallest denomination called the Satoshi, effectively bringing NFT-like fungibility to Bitcoin. Binance has categorized already under its so-called Seed tag, indicating the status as a supposedly innovative but highly risk asset due to its novelty and potential for volatility.

Starting point is 00:40:33 Binance's team has cautioned investors about the risks, advising thorough research and risk management for those considering trading the token. In related news, Ku-coin and gate exchanges announced plans to list the meme coin sats, built using the BRC20 standard for assets that rely on the Bitcoin blockchain. Moody's analytics has reported that large-cap stable coins, each with a market cap of over $10 billion, experienced a whopping 609 depegging events this year.

Starting point is 00:41:07 However, that is in fact a slight decrease from 2022's even bigger total of 707. These depegs, defined as a fluctuation of more than 3% against their Fiat peg in a single day, highlight the underlying volatility in the sector. Notable incidents include U.S. DC's drop to 88 cents, during the Silicon Valley Bank collapse and a 50% plunge of the real USD stablecoin. Moody's new digital asset monitor aims to predict DPEG risks, tracking major stable coins like Tether and USDC. And that's all. Thanks so much for joining us today.

Starting point is 00:41:47 With daily podcasts, videos, and written updates, Unchained is your go-to source for all developments that could redefine the crypto landscape. Visit Unchained Crypto.com and never. miss an update. Unchained is produced by Laura Shin with help from Kevin Fuchs, Matt Pilchard, Juan Aronovich, Megan Gavis, Shawshank, and Margaret Curia. This weekly recap was written by Juan Aronovich and edited by myself Michael Del Castillo. Thanks so much for listening. Looking forward to chatting with you next week. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets,

Starting point is 00:42:27 check out markets daily seven days a week with new host noelle atchison follow the coin desk podcast network for some of the best shows in crypto

Unchained - How Can OpenSea Regain Dominance After Layoffs and the NFT Market Decline? - Ep. 568

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