The Crypto Insider Report #14: Let's put an end to it and start over again
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.
One of the coolest times of the year is between Christmas and the New Year. Most of us take a break from the daily fuss, and I feel that this allows me to slow down a bit. I continue to work every day, but with less pressure, which helps me take a step back and draw the conclusions of the year that is just ending.
2021 was crazy. After a year in which we learned to live in a pandemic, another one followed in which we thought we would roam freely, and it proved almost as tiresome sprinkled with restrictions, debates about vaccines, and successive waves of fears. Among all of them, we skied with crypto sticks in hand. For many, it was the place where we found enthusiastic communities that discuss things other than yellow or red codes. I, at least, by the nature of my job, ended up becoming completely immune to the pandemic around me. I empathize with everyone panicked by the story, but Crypto doesn't sleep. It doesn’t wait for you to blow your nose and roll up your pajamas.
I am convinced that 2022 will be much better even if, with the end of the severe COVID cases, we will witness an awakening to reality on the part of those who lead us. On the economic side :) Inflation in the United States is already close to 7%, given that almost ¾ of the dollar inflation is absorbed outside the US borders. And it couldn't be otherwise when 80% of all the dollars in circulation were printed recently. That can't go on forever, and the longer it is, the more painful the aftermath will be.
I recently read that bitcoin is not the bubble but the needle that breaks the bubble. I liked the figure of speech, and I think that's exactly what we're going to see in the second part of 2022. Both bitcoin and ethereum will prove to be those safety rafts that Raoul Pal talks about in most of his interviews. I don't want a crisis because that affects many people’s lives, but if by the nature of the policies of the last 18 months that's what we're going to end up with, at least let's be left with something useful for the future.
I firmly believe that web3 and crypto, the fuel of the economy of the "new digital,” will show their true valencies in troubled times. That's when we're going to have to be more humble than ever and quietly admit that we were right. As Razvan wrote in the last PRO newsletter, then everyone will know that we won. We already feel that by looking around. The genie is out.
Beyond that, I want to thank you for joining us number by number, episode by episode, and, more recently, release after release at Stakeborg DAO. Launching a crypto project is MUCH harder and more stressful than I ever imagined and the support you have from a smart and understanding community is of overwhelming importance. We'll navigate together through the good and bad times that will come. We're going to hug at milestones but also swear at each other in nerve-racking times.
All that matters is not to forget why we embarked on this journey together. The road is long, arduous and we need each other to make the fruits of our labor something to tell the grandkids about.
Happy holidays to all and see you soon!
Take care,
Vlad
P.S. This is this year’s last free newsletter. The next one will come on January 3rd. The PRO newsletter comes on December 25th and then on January 8th.
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The first steps in crypto: What Is Web 3.0?
To better understand Web 3.0 and what sets it apart from the Internet we know and use, we must first look at Web 1.0 and Web 2.0.
Web 1.0
Called the Static Web, Web 1.0 was the original internet that offered access to limited information. In the 1990s, the websites were built with static HTML pages, so they only displayed information, with users being unable to change the data.
As a result, there was little to no user interaction, and the first internet was more like a one-way highway where only a select few created the content and the information came from directories. Web pages were designed for information consumption and served from expensive servers.
Web 2.0
That started to change toward the late 1990s. In the following years, Web 2.0 made the internet more interactive. Mobile, social, and cloud were the three core layers that led to the rise of this new Web.
Known as the Social Web, Web 2.0 enabled the development of interactive platforms such as Facebook and YouTube due to advancements in web technologies such as HTML5 and Javascript. This allowed for user-generated content and made it possible to distribute and share data between various platforms and applications.
What Is Web 3.0?
Even though the current internet generation has changed things considerably, it has drawbacks, such as centralization, surveillance, and exploitative advertising. Here is where Web 3.0 comes in.
The third generation of the internet is aimed at being an open, intelligent, decentralized internet. It is thus also referred to as the Decentralized Web, where data will be interconnected in a decentralized way. Internet applications and services will be powered by distributed ledger technology, with the most common one being the blockchain.
Also, AI and machine-learning algorithms will play a crucial role. The aim is to use them to provide faster, more relevant data to end-users. That is why Web 3.0 is also called the Semantic Web.
Websites using AI should have the ability to filter the available data and provide the user with the information that it finds appropriate. The aim is for AI to enable machines to interpret the meaning behind the data, that is, their semantics, and, therefore, deliver considerably smarter user experiences.
Advantages of Web 3.0
The first steps toward Web 3.0 have already been taken, with decentralized infrastructures and application platforms being the focus for many developers and internet users. Here are some of the benefits of Web 3.0 as we envision it now:
Decentralization – Web 3.0 will have no central point of control, which will displace centralized tech giants and enable individuals to regain ownership of personal data. Decentralization and blockchain technology will thus change the way data will be used and monetized, with the individual being the one in control of it.
Greater information availability and interconnectivity – given the decentralized nature of Web 3.0, larger data sets will be available, which means there will be more information for algorithms to analyze. This will further help the individuals get more accurate information that will cater to their specific needs.
Increased browsing efficiency – the developments we’ve seen in the last few years have made search engines better at showing relevant results. However, some of the systems used, such as the social tagging systems, can still be manipulated. With Web 3.0 and smarter algorithms, AI should be able to filter even manipulated results and provide users with unbiased data.
A personalized internet experience – by applying semantics in the Web and enabling machines to decode meaning through data analysis, Web 3.0 will deliver a personalized internet experience. For example, by leveraging smarter AI systems, Web 3.0 can improve advertising and provide users with ads that are useful and relevant to their needs.
Conclusions
Large corporations and centralized repositories have dominated the internet, leaving individuals with reduced control. Web 3.0 aims to change that by making the individual a sovereign. Its decentralized protocols will enable individuals to connect to a new internet generation where they will not only own their data but will also control who profits from their time and information.
Furthermore, the use of smarter AI algorithms and machine learning will ensure a more relevant user experience.
Animation of the day: Avalanche explained with animations.
For more animations: Cryptomatics
Tania
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The Altcoin Pulse
1. Aave Arc, the DeFi platform for institutional investors developed by Aave, is starting to gain traction.
2. Yearn Finance launches a proposal to change several tokenomics elements. Among them is an initiative through which $YFI tokens will be repurchased from the market, similar to a share buyback system. Repurchasing shares is a form of stimulating the investors’ return but also a way to let the market know that the current trading price is below potential (from a management perspective).
https://thedefiant.io/yearn-tokenomics-change/
3. BitGo, one of the largest digital asset custody, trading, and finance platforms, has announced that it will add Avalanche (+ the assets natively developed on Avalanche) to the scope of its services. BitGo has $64bn of assets in custody and processes about 20% of Bitcoin's on-chain traded volume (USD).
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Interesting Headlines
1. The last week stood out by net flows of $142m in the digital asset funds tracked by CoinShares, the first week of outflows after 17 consecutive weeks of inflows. The outflow of funds represents 0.23% of the total assets (AUM) and is below the historical record registered at the beginning of 2018 when there were weekly outflows of 1.6% of AUM, given that 2021 comes with a record number of inflows with a maximum of $9.5bn. Most volumes were withdrawn from Bitcoin funds ($89m) and Ethereum ($64m). The funds for altcoins and diversified strategies have seen net inflows, with the funds on Solana ($7m) and Polkadot ($3m) standing out.
MTD=month-to-date (November), YTD=year-to-date, AUM=total assets
2. Instagram is teasing the NFT realm.
https://cryptopotato.com/instagram-actively-exploring-nft-integration-says-ceo/
3. BBVA Switzerland becomes the first traditional bank in Europe to introduce the possibility of trading ETH for its clients in the private banking area.
4. JP Morgan's blockchain division, Onyx, is working with Siemens on the development of a blockchain payment management system.
https://www.cityam.com/jp-morgan-develops-blockchain-payments-system-for-siemens/
5. After an aggressive marketing phase, Crypto.com will focus on education campaigns in the near future.
https://blockworks.co/crypto-com-cmo-on-how-company-went-from-app-to-global-brand/
6. Binance and Dubai authorities are working on developing a crypto hub. The discussions are still in the early stages.
https://decrypt.co/88942/binance-signs-agreement-dubai-authority-establish-crypto-hub
7. Multiswap (ex-Anyswap) conducted a $60m funding round that valued the project at $1.2bn. Among the investors: Binance Labs, Sequoia China, and Three Arrows Capital. Multiswap allows assets to be transferred between 25 public blockchains, including Ethereum, BSC, Fantom, Avalanche, Polygon, Harmony, and Arbitrum.
8. The M&A series of CEXs continues, as they are necessary for the introduction of new services, new features, entering other markets, or obtaining new licenses. Kraken acquires the Staked staking platform with the aim of expanding the range of available networks and providing a non-custodial solution for staking assets.
https://blockworks.co/kraken-acquires-staking-platform-staked/
9. Figment, a company that develops Web 3.0 applications and offers staking services with approximately $7.5bn of assets so far, conducted a Series C round of $110m, at a post-money valuation of $1.4bn (post-money= including the money raised in the round).
https://decrypt.co/88841/figment-raises-110-million-in-series-c-to-grow-web-3
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Tweet of the week:
Elon's tweet about cognitive biases. It is worth reading, printing, and hanging on the wall.
Business book of the week: Difficult Conversations: How to Discuss What Matters Most by Douglas Stone. About the importance of emotional intelligence and how to have conversations that matter so that the best outcome is reached.
Youtube clip of the week: Speaking of Naval -