Welcome back Chain reaction.
Last week, we took a look at Solana’s smartphones and the post-Apple tech industry. This week we are looking at a web3 without Big Tech.
To get this in your inbox every Thursday, you can subscribe to TechCrunch’s newsletter page.
no billionaires allowed
Unlike other moonshot tech categories, it’s increasingly clear that there isn’t a big gap open for Big Tech in defining the future for cryptocurrencies.
This week, Meta announced that it will be shutting down its Novi crypto payment wallet in September. The test, which is only available in a few geographies, is the final foray into the ambitious Diem stablecoin scheme. expectations and leaves the company without a clear path forward for a crypto game that expands beyond its current networks.
This failure is no surprise, Meta has been a punching bag for regulators over the years and it has played out most strongly in gutting their crypto ambitions – which ultimately leads to the sale of Diem’s assets and the departure of its top talents. Meta is not alone, many of the biggest tech companies with over $1T in market capitalization (or at least those that went up a few months ago) haven’t made the blockchain game despite their logical position. thought. For some companies, this may be ideological, but for others, it is clear that the regulatory risks are too present for them to jeopardize their other revenue streams.
Comparing crypto to another moon like AR/VR, it’s clear that governments often don’t know how to regulate internet-based social media companies while they have a pretty solid idea of what they’re doing. when putting financial instruments and vehicles in the right bins. The absence of this diverse tech market support means that the lows could continue to sink quite low for crypto hopes pinned to web3 ambitions. AR/VR has been going through a dry spell for many years but Meta has spent the industry weathering the drought without a clear focus on current revenue, which is not an investment GAFAM will drop into any time soon. web3.
While most in the crypto industry won’t cry over Meta’s lack of inclusion in the core toolkit of cryptocurrencies, relying on the good fortunes of financial companies that are bought purely into money crypto is the reason why the current flavor of crypto consolidation is turbulent. This is likely to be a very difficult year or more for the crypto industry, and the deep war chests of leading tech companies won’t make their lives any easier.
newest group
Last week, while I was away, you received news from our talented colleague Jacquie Melinek. Well, she’s back! Big thanks to Jacquie, who joined in while Lucas was sick this week to help me unpack some incredibly fascinating yet complex topics, including how all the way through the DeFi recession seemed as lead back to the same hedge fund.
Join us as this week’s guest one of the most memorable founders i have met – Tux Pacific by crypto-monitoring startup Entropy. Pacific is a transgender anarchist cryptographer who raised $25 million in seed funding from a16z and other VCs last month. They joined us for a chat about what it’s like to raise venture capital as an anti-capitalist and what they think is wrong with the way digital currencies are typically stored. storage.
Subscribe to Chain Reaction on Apple, Spotify or alternative podcast platform of your choice to keep us updated on a weekly basis.
according to money
Where startup money is moving in the crypto world:
- Echo3D raised $5.5 million for cloud storage and AR/VR streaming in a round led by Qualcomm Ventures.
- Web3 . Scaling Protocol AltLayer closed a $7.2 million seed round with Polychain as the lead investor.
- Crypto game company Cauldron raised $6.6 million led by Cherry Ventures to build the “Pixar of web3.”
- Binance Labs led a $3 million seed investment in Magic squarea cryptocurrency app store.
- DeFi . Platform Growth Lab scored $1 million in seed funding led by Dapper Labs.
- Cryptocurrency Tax Platform CoinX brought in $1.5 million from angel investors including Polygon’s Sandeep Nailwal.
- Game-focused layer two blockchain Oasys raised $20 million in funding from a private token sale to investors including Republic Capital and Crypto.com.
- DimensionXa game company that plays games for money, raised $3 million in a funding round led by Coatue.
- Klang game raised $41 million led by Animoca Brands and Kingsway Capital for its Seed virtual world.
- Singaporean startup metaverse Enjinstarter raised $5 million from True Global Ventures.
this week on web3
It’s Anita here again, back from a week’s absence, during which I’ve had some time to reflect on the strange cognitive dissonance that seems to be taking place on web3. Valuations are looking tough, crypto lenders are declaring bankruptcy almost daily, and the industry as a whole is now worth only a third of what it was at its peak last year. But, As Washington Post columnist Sebastian Mallaby points outThe same financial fate befell so many other technologies that continued to transform the world afterward.
Obviously, the jury is still out on exactly what this downturn means for crypto, but one thing is clear to me as I look back at the industry’s recent rapid rise and fall. this industry. We haven’t really “seen this before”, as a lot of investors and ecosystem participants will believe you. Two major things have changed from past crypto downturns, and both stem from the fact that crypto has gone from a niche niche for geeks to mainstream, casual dining table themes. .
First of all, crypto companies are more interconnected now than they were in the past, just like traditional finance in 2008. Sam Bankman-Fried is the new Jamie Dimon, sponsor of other companies. Cryptocurrency lender C stopped withdrawing last month which could be Lehman Brothers’ moment in the industry. I can’t say I’m completely surprised that the crypto market has rallied a bit, but there are some striking similarities between tradefi’s most famous crisis and the current crypto woes. . Even if the underlying technology is here to stay, it’s still a defining disaster for the industry – let’s not forget, mortgage-backed securities and CLOs still abound despite the carnage. of 2008.
The second big difference that I see between this crypto recession and such cases in the past is that crypto isn’t so weird anymore. Its journey to the mainstream has yielded a great deal of group thought, evidently from cliché, jargon-like phrases we hear over and over again.
They say we’ve “seen this before”, the crash was a “black swan event”, but don’t worry, “it’s still early days.” Cryptocurrencies will eventually achieve “mass adoption” and “reach the next billion users,” as long as the founders hold on to that as “the best time to build is in the middle of nowhere.” recession”.
I’m not saying I’m a crypto OG. In fact, I only started watching it so closely during those grueling lockdown days, when so many people were doing so. But I often recall when I was much younger, listening with curiosity and wonder when a relative of mine who disliked authority and was passionate about mathematics explained to me why blockchain could change the world. gender. It makes me feel a bit nostalgic for a time when crypto was a space filled with opponents, outcasts, and truly independent thinkers. To me, that’s the coolest thing about this space, so I say: keep the crypto weird.
TC + analysis
Here are some of this week’s crypto analysis that you can read on our TC+ subscription service (written by TC’s Jacquelyn Melinek):
Cryptocurrency losses hit $670 million in Q2, up 52% year-over-year
The second quarter of 2022 was a quarter for the books in the tumult of what I would call market madness and the evidence that continues to pile up on the crypto market. In Q2, Q2 saw a lot of crypto “losses” across the web3 ecosystem, around 97% of which were the result of hacks, according to a new report. .
Cryptocurrency trading volume drops in India as additional taxes hit investors
The Indian government on July 1 introduced a 1% tax withheld at source (TDS) on every crypto transaction over 10,000 Indian rupees, or about $127. The new law has only been in place for a few days, but has had a terrifying impact on India’s digital asset markets. The tax hike could also be a barrier for citizens looking to trade cryptocurrencies as the potential for financial gains dwindles.
FTX policy enforcers say ‘their priorities are unchanged’ amid market frenzy
As the crypto market continues its downward trend, the world’s second-largest cryptocurrency exchange, FTX, remains undeterred. Mark Wetjen, head of policy and regulatory strategy at FTX, told TechCrunch: “Our priorities have not changed. “Markets will do what they do, but the reality is that the digital asset market and the digital asset ecosystem are, we believe, here to stay.”
The SEC again rejected a bitcoin spot ETF. So what now?
The US Securities and Exchange Commission has rejected applications by Bitwise Asset Management and Grayscale Investments for a spot bitcoin ETF. Shortly after, Grayscale — one of the largest digital asset managers, with about $20 billion in assets under management — filed a lawsuit with the SEC. But not everyone believes the lawsuit will be in their favor…
Valkyrie CEO says suing US SEC over a spot bitcoin ETF ‘not likely to succeed’
“The SEC’s rejection of both Bitwise and Grayscale’s GBTC spot Bitcoin ETF applications is not surprising as it follows the same precedent that other asset managers have endured,” said Leah Wald, Director CEO of Valkyrie Investments, said in a Twitter stream. “Suing the SEC is unlikely to succeed.” The SEC made it clear in its response that it views the underlying holdings of futures versus spot contracts as fundamentally different, especially since contracts previously traded on a regulated market. while the latter is traded on unregulated markets, said Ryan Shea, crypto economist at Trakx. TechCrunch.
Thanks for reading! And, again, to get this in your inbox every Thursday, you can subscribe to TechCrunch’s newsletter page.
Have a great weekend!
Lucas & Anita
