#59 A New Hope for Crypto. CeFi’s stablecoin war.
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 Hope for Crypto
A week later from the FTX crash (see the previous newsletter for a summary of what went down), we see two main negative narratives:
Crypto is a scam, rat poison etc.
SBF was evil all along, he did [insert evil things here], killing the industry with his deeds.
However, following the line of thought I suggested last week, there is an optimistic narrative taking shape as well, as seen on Twitter and in articles such as these two in CoinDesk. That is, Crypto’s biggest failures so far are not intrinsic, but they are people/corporate failures. Meddling with user funds, taking (and giving!) risky loans, dodging regulation - these are all things that people have done. Some of it even resembles 2008.
The ironic bit is that Crypto (through Bitcoin) came about exactly to address these issues. To make money sovereign and take control out of the hands of big banks and select few and democratize it through decentralization. However, comfort made people use centralized, custodial solutions for their tokens and greed made the custodians do bad stuff with those tokens.
While still scrambling to take care of what is left, there is a new hope (just like Star Wars episode IV):
Regulation becomes the thing for centralized, custodial businesses and the ones that dodge it lose customers.
Decentralized solutions (wallets, DeFi, personal responsibility of funds etc.) get the boost they deserve, fulfilling the vision promised by the Bitcoin whitepaper.
Time will tell.
CeFi’s stablecoin war
On the 5th of September, Binance announced that they would be converting all existing balances and new deposits consisting of USDC, USDP and TUSD into BUSD, at a 1:1 ratio. Their reasoning was to increase liquidity on existing and future pairs - but it definitely played a role in increasing the market share and importance of BUSD, their own stablecoin
Now, Circle’s USDC became a favorite in recent months between crypto investors due to Tether’s history with transparency as well as the fact that Circle is regulated in some U.S. states under their laws, making it a safer choice. However, Coingecko’s Q3 report shows a shift in narrative following the Tornado Cash event:
Circle’s market cap dropped 16% following the sanctions and has completely reverted to pre-Luna fall market cap (the same market cap as the beginning of the year) after Binance’s decision. So why is this important? Well, in light of recent events, Binance has gained even more power (and overall market share of the entire crypto space). Not only this, but it seems that Tether is also having trouble keeping up with its competitor’s moves, and BUSD is the only stablecoin among the three with a positive increase in the last month (+$8,17). DeFiLlama perfectly shows an overview of the entire story: notice how the green line (USDC) shrinks while darker blue (BUSD) slowly eats into the stablecoin dominance.
It’s safe to assume that the rally USDC had is on pause for now and it looks like USDT has another worthy competitor. The biggest crypto exchange (and one of the last ones standing) certainly has more tricks up its sleeve. CZ’s the king and we better watch out.
.SWOOSH: Nike’s Web3 Platform
Apparel company Nike has announced the launch of a web3 platform, .Swoosh .Smoosh is a blockchain-enabled platform and community ecosystem for web3 Nike consumers. Membership to the beta version begins this month, with plans to launch the first digital collectibles in 2023 with input from its members.
The platform will allow members to learn, collect and co-create virtual apparel and related goods which can be worn in the metaverse. Community members will also stand a chance to participate in exclusive physical products and events with world-renowned athletes and designers.
Nike has become a leader in fashion NFTs, largely through its purchase of digital design studio Rtfkt last year. The project sits under Nike Virtual Studios, which is led by VP Ron Faris, the former head of Nike’s Snkrs app.
Thanks to NFT sales from Rtfkt, and with it the Web3-native company’s pre-acquisition NFT collections, Nike has already made at least $185.3 million in revenue on Web3 products and is leading compared to competitors Adidas, which has earned $11 million, and Puma, an estimated $1.3 million. Rtfkt’s CloneX NFT avatar collection accounted for about half of Nike’s total revenue from NFT sales, demonstrating the importance of the acquisition to Nike’s Web3 strategy thus far. Now, with Dot Swoosh, Nike wants to broaden the net of who its Web3 strategy is for, going beyond Rtfkt’s endemic customer base and tapping into its own, who may be less experienced in the world of Web3. The goal is to educate and onboard the Nike community, rather than the Web3 natives, to “level the playing field”, Faris says.
Adidas is competing with Nike for first-mover advantage in the web3 space. Last year, Adidas embraced NFTs by partnering with Bored Ape, The Sandbox, and Coinbase through branding Bored Ape Yacht Club #8774 (Indigo Herz). This year, Adidas expanded its NFT projects by collaborating with Prada on the “adidas for Prada re-source” campaign. In addition, Adidas adopted blockchain solution TrusTrace for sustainable materials sourcing in its supply chain.
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/