#36 NFT Mass Adoption: Not Even Close. A New Crypto Bill.
Disclaimer: Everything we write in "The Crypto Insider Report" is an x-ray of the industry as we see it, through the lens of publicly available information. We are not financial advisors.
A New Crypto Bill
US Senators Cynthia Lummis (Republican) and Kirsten Gillibrand (Democrat) put together a bill titled Lummis-Gillibrand Responsible Financial Innovation Act that aims to introduce some regulations with regards to digital assets in the United States. It is 69 pages long 👀, so you’ll need some time to read it.
As Reuters writes, the goal is not for the bill to become law in this session of Congress, but for it to be a starting point for discussions on the subject. Furthermore, Coindesk assumes that the bill will probably split into several pieces after the midterms, giving room for ample discussion about each covered topic.
Here are a few highlights that might catch your interest - again, these are just proposals in the bill:
[Section 601] Stablecoin issuers would need to maintain high quality assets to cover no less than 100% of the issued amount - note the phrasing on assets vs 1:1 dollars or equivalent;
[Section 201] Transactions under 200$ equivalent would be tax-free, in an attempt to make [some] tokens behave more like currency;
[Section 403] A proposal for the CFTC to oversee digital assets (as opposed to the SEC), making some tokens commodities rather than securities
[Section 208] Miners would no longer need to pay taxes for mining rewards until they actually sell those rewards
It’s great to see such well documented endeavors, showing that there are legislators making the effort to understand and cater to the particular needs and implications of digital assets. Not to mention that this is a bipartisan bill.
Mihnea
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Unbundling airdrops
Following the Optimism airdrop, the team at Kaiko released an interesting article on airdrops and what a successful one would entail.
Firstly, airdrops have become a popular mechanism in the industry for allocating crypto assets to users. One of the earliest examples includes Stellar’s distribution of XLM to holders of bitcoin in 2016.
They are generally used for marketing and bootstrapping projects, along with decentralizing governance by spreading out responsibilities. These are generally retroactive and essentially reward early adopters. The token amount received is often a function of an address’s activity level and involvement.
A study by CoinMetrics on a number of airdrops on Ethereum has highlighted some patterns:
Addresses claiming large amounts tend to claim relatively early - possibly being more incentivized or more on top of news.
By looking at the token balance 1-week after airdrop, many recipients chose to move (probably sell) their tokens immediately from the address. If they do move them, they tend to move all of them. Very few airdrop recipients increase their balance in the first week.
Airdrops create / reward a user base, but their design needs to be carefully balanced with the token’s utility and the project’s growth stage. A number of reasons would incentivize a user to hold on: a belief that the price would go up, willingness to participate in governance, fondness for the project and utility coming from holding / staking / other activities.
The Kaiko paper suggests a few attributes for a “perfect” airdrop:
Clarity of purpose: what does the team want to achieve?
Utility: what can you do with the token?
Carefully-selected criteria for eligibility: reduces risk of Sybil attacks (one or a few people pose as many by creating multiple addresses to farm the airdrop).
Sufficient liquidity and staggered distribution: vesting and/or multiple claim windows.
Transparency around token emissions and unlocks: over-communicate and clearly highlight.
Flawless execution.
Towards the end, the article includes a few examples with commentary. A good and light read.
Razvan
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NFT Mass Adoption: Not Even Close
"NFT", the word that more and more people start to hear, yet the numbers show us we are still so early. Nothing compares with some great graphs that can help us understand where we stand.
6.71M ETH since the starting of 2022 means less than $20 billion altogether, done by 1.76M wallets. Compared to the total of around 300M crypto wallets, that's just approximately 0.6%. So, next time when you stand in place with, let's say, 12000 people, and you know that statistics say 600 of them have heard of crypto (close to accurate as a worldwide percentage), just understand that from those 600, only 4 are using NFTs. That's the math behind it.
Now, if you look at the charts above, you realize that out of those 1.7M NFTs Wallets, only 20-25% are making transactions regularly. You realize that out of the 4 NFT people in the room, only 1 is active in the matter. At least you have someone to have a conversation with 😁
Adoption is not here yet, and maybe the graph below explains why: 78% of the top 500 Nansen NFT Projects are Social Projects, meaning that the primary purpose is being a part of an exclusive community as the primary utility.
I'm not saying this is bad, but it is far from enough to help mass adoption. 15% Metaverse Projects, most of them selling Land in their metaverse projects, well, that's a start. But when gaming is only 3.53%, this shows how far we are because on this planet; there are around 3 Billion people who can consider themselves gamers, occasional or otherwise.
The fastest way for someone to understand a new thing is through gamification, no question asked. You just need to find the proper game for each category.
And me, growing up as a gamer, can't wait for my category to get the games that will sweep us away and put that checkmark for good: NFTs are here to stay.
Cosmin
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Blockchain technology- at the top of Britain’s agenda
Back in April, Britain announced for the first time its plans to become a ‘global hub’ for the crypto industry. Since then, this topic has climbed to the top of the country’s agenda with different players making significant moves.
The FCA started truly listening. The British regulatory agency held the first CryptoSprint back in May where they focused on digital asset information disclosure, custody and other regulatory obligations. Over the course of two days, participants worked in mixed-discipline teams to explore the challenges facing the crypto industry, including how the FCA, the U.K.’s financial regulator, can support and balance innovation with standards that protect consumers, said the FCA on its website.
Additionally, Gwyneth Nurse, the ministry’s director general for financial services, said the use of blockchain technology is a key priority for making financial market infrastructure more innovative and efficient for users. According to Reuters, Britain will launch a financial market infrastructure “sandbox” next year for testing decentralized ledger technology projects under control of regulators, a model pioneered by UK regulators for nurturing fintech firms. A sandbox is a testing environment for projects involving real customers.
The European Union is also finalizing its own sandbox for markets and new rules for crypto markets. “The EU is making a lot of progress,” said Julia Kolbe, Head of Markets Policy, Government & Regulatory Advocacy at Deutsche Bank.
Evelyne
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For more educational crypto content, check out the links below:
The Stakeborg DAO Talks on YouTube: https://www.youtube.com/playlist?list=PLOrFZZifNn4Nx4nSQL3WS52ALPXgrTSVG
Discord channel: https://discord.com/channels/901898461568442458/903006233584341052
StakeborgDAO Quarterly Reports: https://docs.stakeborgdao.com/reports/dao-quarterly-reports
Stakeborg Academy: https://academy.stakeborg.com/
Thank you 🙏📝🥸🤔🦾