55 – Eth Pump, Aptos Blockchain, NFT Royalties and regulation speculation from Sam Bankman-Fried discussed.

Tracey: [00:00:19] Welcome to the Crypto Curious podcast designed to help you navigate the dynamic world of crypto currency. We're here for anyone who is interested in crypto at all. Maybe you're ready to dip your toe in the water, or maybe you don't know anything about it. And this is the very beginning, but we recommend heading back to the early episodes to get your footing. However, if you think you're ready to dive in headfirst, then let's do it. Coming up in this week's episode, we talk about the newly launched app Toss Blockchain. We have a look at what Sam Bankman-Fried thinks about how crypto should be regulated. We also have a look at the NFT space and what's happening with royalties, so let's get into it. My name is Tracey and this week it's Blake and I again holding the fort as Craig is in his second week of holidays. Will he ever come back? We don't know. No, he will. He'll be back with us next week. But welcome, Blake. How has your week been?

Blake: [00:01:11] Fantastic, Tracey. Lots of excitement in the market, so, yeah, plenty to chat about today. But before you said Sam Bankman-Fried, I think it's Sam Bankman-Fried and Freed. 

Tracey: [00:01:21] It is Bankman-Fried. I actually said. 

Blake: [00:01:24] That last week and. 

Tracey: [00:01:25] I was listening back to the episode and I keep saying it, but it's bankman-fried, which is the whole point of changing his name. That Sam Bankman-Fried. That is his name, correct? All right. We mentioned having a good week and it's been a good week because the crypto price has done well, hasn't it?

Blake: [00:01:45] Yeah, has done well, which is a surprise and obviously a welcome surprise. 

Tracey: [00:01:51] But not so much of a surprise because we did kind of call it. I'm going to take a little bit of credit. Not really. But we spoke last week about something which was the Bitcoin Historical Volatility Index or the Bowl B Vol, and we just mentioned that we're expecting some kind of volatility, whether that was up or down. And we've certainly seen it because Ethereum's been pumping. It reached 1500 for the first time in five weeks and since recording last week it's actually 23% up. So yeah, it's done well. 

Blake: [00:02:24] I think what's really important to point out here is that, you know, we reference the Bitcoin volatility index. However, you know, the rest of the market often increases in value in percentage terms more than Bitcoin because their market caps are smaller. So, you know, often when we're looking at this sector, we might use indicators on Bitcoin to figure out what's happening in the rest of the market just because it is so dominant. So just probably a distinction was drawn there, trace. 

Tracey: [00:02:53] Yeah, it is. And we look at bitcoin from recording, it's been nearly 10% up as well. So we know that hasn't happened in the last week. I'll have to double check that actually. In the last nine weeks. So a long time since we've seen that kind of movement for Bitcoin. But look, let's get into our first story blankly. A new blockchain dropped this week, so you might have heard of app toss and I'll give you a bit of a crash course. They raised 400 million from VCs like FDX Ventures, Binance Labs, Coinbase, Jump, Crypto, A16z, Multi Coin Capital, just to name a few. So a lot of people jumped in on this one and they have a $2 billion valuation, which is huge. It was created by the guys who were part of the Facebook team that worked on Dime. 

Blake: [00:03:46] I think it was. DIMYeah. 

Tracey: [00:03:48] Is it, is it DIM, which was but that was the failed crypto stablecoin project that Facebook were pushing. So they have a bit of a premium here. And the people were calling it the next Solana killer and everyone was really excited and jazzed about this. But the launch didn't go as planned. In fact, it was pretty shit. Blake, do you want to tell us what happened?

Blake: [00:04:11] Yeah. So, firstly, the network performance crashed just after it launched, and it was marketed. It was said to be able to process 100,000 transactions a second or a TPS. However, I think they were doing four transactions per second. You know, I think we could pass messenger pigeons faster than that Tracey.

Tracey: [00:04:36] Team did so well.

Blake: [00:04:39] Secondly, a majority of the tokens were owned by the team. Now this is a big red flag. Whenever you're looking at, you know, potentially you're participating or purchasing a token to figure out who owns a majority of the tokens. Because, you know, obviously, if it's the team, then, you know, it's not a community driven project. You know, it's very centralized and it can be controlled from, you know, potentially just a few large token holders. And finally, there were no community run validators in the network or nodes in the network. You know, and really the strength of Bitcoin and things like Etherium is that they have, you know, tens of thousands of nodes running globally to make it very hard to attack and for it to be secure. Decentralisation really contributes to the security of those networks. Now, the app team handpicked the validators and apparently you had to sign an agreement that was based out of a Cayman Islands entity in order to be a validator. And I have no doubt that these validators were getting paid pretty good sums of money for processing transactions on this platform. And, you know, it really kind of reminds me of iOS or, you know, diatom where, you know, it's highly centralised.

Tracey: [00:05:58] So like you said, some red flags. 

Blake: [00:05:59] There are many red flags here. 

Tracey: [00:06:02] So it didn't go as well. And I think they had to be kind of putting their heads in the sand a bit as all these things poked up and a bit of chatter was going around and then they even muted their Discord Channel. You know, just users were all asking questions and they were demanding answers. And what was going on with this launch from instead of answering them, they decided to put their users on mute, which was, you know, that's really dodgy as far as, you know, PR goes. But after all that, as you can imagine, the token price plummeted within the first hour of being listed. The app just token tanked 30% and dropped as low as 46% on the day. So, you know, I don't think Solana is in any danger just yet. Craig will be happy. Moving on. He's back in the news again this week. Sam Bankman-Fried just published his thoughts on the future of regulation in a paper that has been very widely debated this week.

Speaker 1: [00:06:59] Let's talk about what's going on with Sam Bankman-Fried. In just the past five years, management went from buying his first Bitcoin to becoming a multimillionaire. The founder is now worth an estimated $11 billion. His exchange is now worth $32 billion, and it brought in about $1,000,000,000 in revenue just last year.

Tracey: [00:07:17] Sam suggests a lot of things and we'll give you a few key points here. Firstly, he talks about sanctions, allow lists and blacklists. So when it comes to censoring addresses, Sam thinks that blacklists have preferable to allow lists. Sam suggests that blacklists can be created and updated in real time. So I'm not 100% sure where he's going here with this blanket and whether you looked into it a little bit more. 

Blake: [00:07:45] Yeah, yeah. I'm just assuming that, you know, a blacklist would be a wallet that's received stolen crypto. And then, you know, the exchanges, you know, obviously have a cross reference. Yeah, they have an anti-money laundering regime that they have to follow. And, you know, it's just going to make their life easier if they can identify funds that are coming in that have been used for nefarious. Purposes. So that's really practical. And, you know, the same thing happens in the banking system. And I think, you know, certainly some regime around that would be beneficial. 

Tracey: [00:08:20] Okay, what's next? 

Blake: [00:08:22] He then goes into KYC. So KYC is when you hand over your ID like your passport or your driver's licence to verify your identity. So they know your customer for Defi, which is kind of a bit of an oxymoron or a little bit counterintuitive because you're the whole. 

Tracey: [00:08:41] Point of. 

Blake: [00:08:42] The idea of defi is for decentralised finance is for it to be permissionless, which means that you don't need to ask anyone's permission to use these platforms. Now, of course, that means that all sorts of people can use it for good purposes, for bad purposes. However, the idea is that anybody can use it. So this is a very touchy subject because it definitely will push the crypto industry in a very distinct direction. And you know, it kind of reminds me of the early stages of the Internet where, you know, initially everything was open source, everything was free to use, there were no licencing agreements. And then, you know, companies came along and tried to privatise large sections of the Internet for profit. And, you know, I think I'm just making an assumption here, but I assume that Sam is trying to, you know, make it harder for people to use Defi and potentially and potentially safer to then, you know, bolster his business or his businesses. 

Tracey: [00:09:44] You're right. I mean, obviously, he's coming from an exchange, a centralised exchange point of view and looking at Defi. Again, out of this paper that he put forward, this was the most hotly debated topic from all the points he made around DEFI. And it is going to be very hard, you know, to put any kind of, you know, legislation or regulation around this defi without it becoming more like the traditional side of things. Yeah. 

Blake: [00:10:09] And, you know, the more regulation that comes in, you know, it's just going to push some of these platforms more underground, you know, like. Yeah.

Tracey: [00:10:17] Yeah. Look, in the final section in his post, Sam touched on Stablecoin regulation, and he makes several reasonable points. For instance, he advocates that Usdc peg stablecoins be backed by at least 1 to 1 by the dollar while adhering to transparent reporting requirements. So, you know, like this goes without saying. I guess that's pretty reasonable.

Blake: [00:10:38] Yeah, that definitely seems reasonable. I think everyone that has one stablecoin wants to know that it's backed up unless you're buying an algorithmic stablecoin. But yeah, I think that's really practical and makes a lot of sense.

Tracey: [00:10:51] Yeah. Look, I think Sam deserves a bit of credit for starting this conversation and putting his own thoughts out there. And he's also been pretty open to community input. And I was just reading last night that he's even revised some of his points following some community pushback. So good on him for this. And regulation is certainly coming. We all know that super important and everyone should have the opportunity to speak their mind and make sure that the policies that do eventually get put in place suit all the players, like we just said, not just the centralised exchanges, but also, you know, those in Defi as well.

Blake: [00:11:25] Moving on to the next story, trust you do use Reddit. 

Tracey: [00:11:28] I do a little bit, not as much as you. I think you go in the weeds a bit on Reddit, but there are a couple of forums. I do follow that. Yeah. You're a bit more into your Reddit than me, is that right? 

Blake: [00:11:37] Yeah, I am. And I thank.

Tracey: [00:11:39] You.

Blake: [00:11:40] I'm sorry. 

Tracey: [00:11:41] You are that hard. Oh, well, that's going to go into this one. So in July, we actually told you all about Reddit launching NFT. So they had digital avatars that Reddit users can customise and set up as their profile pictures. And it's been successful, to say the least. 

Audio Clip: [00:12:00] Reddit has become an unlikely Trojan horse for former NFT haters embracing digital assets just as if they were any other bored ape or a crypto punk holding bro. 

Tracey: [00:12:10] Like do you want to tell us all the stats and maybe tell us, are you using one of these profile pictures? 

Blake: [00:12:15] Mm hmm. Yeah, I think I am, actually. I did create one. I don't remember setting up a wallet for it, but maybe that's just embedded. However, I will circle back on that and have another look. But there are 3 million wallets which have been created. I don't know how many daily users Reddit has, but I'm going to suggest it's in the tens or hundreds of millions of people. So, you know, they might have had a few per cent of their user base started using these NFTs. And for reference, the top marketplace Opensea, which buys and sells Nfts, only has 2.3 million wallets, so they've really come in over the top and become one of the biggest NFT platforms. 

Tracey: [00:12:59] 52 million users. I just googled it. Wow.

Blake: [00:13:02] Yeah. Okay. So 70% of their user base has a. Add this, and I assume that many more will over the coming years. So 86,000 NFTs have been launched and 40,000 were bought at an initial price of 10 to $100. I didn't buy mine, so maybe I don't have this, but.

Tracey: [00:13:23] The rest were given out free. I think so. 

Blake: [00:13:25] Okay. The Nifty now have a market cap of over $100 million, which is a big win for Reddit. And as well as that, they're one of the top ten collections on Opensea. Now, it's amazing. You know, they've embraced this technology. They did take their time with it. But I think as a result, they could now implement different blockchain technologies. And it's amazing to see the communities and the sub communities adopt it and embrace it. And I think, you know, these guys are really going to innovate and show, you know, other platforms how this technology can be integrated successfully. 

Tracey: [00:14:03] Yeah, and I think this is actually big a feat for more reasons and one because they've kind of done a bit of a three CC on this with their users because a users before were really kind of NFT haters and now they've kind of all flipped and they're all kind of using these, these props, which they're all calling collective avatars. They're not actually calling them yet. So they've actually rebranded it, renamed it because and that's great. Because they knew their audience. They knew their audience wasn't really big on NFT. So they collective avatars and they've all changed their tune. But it's really funny because I saw a meme which is like a Trojan horse, and it made the point of saying that Reddit have done this really well because they kind of got people into NFT and I don't even know, like you even said, you don't even know how you did you do a wallet, did you not? Because these people have done it without actually realising, you know, that they've used the Polygon network and did they get a wallet? Because there's no seed phases involved, there's no real gas fees. So they've got this whole they've got 3 million people using, you know, NFTs. But half of them don't even know they're there. They're using an NFT. So it's kind of been , it's really well done. 

Blake: [00:15:07] Yeah. Now seamless and the perfect, perfect execution. So congratulations on the Reddit team. 

Tracey: [00:15:14] Well done. Let's take a break here. And when we come back, we'll find out how much money has been made in NFT royalties since inception. Hint: it is a lot. Welcome back. You're listening to the Crypto Curious podcast. NFT creators have earned a whopping 1.8 billion in royalties since the beginning of NFT. In a report from Galaxy Digital, researchers also found that NFT creator royalties have doubled over the past year, so Open CS is one of the top overall marketplaces for trading volume. So when I say has doubled, it's jumped from 3% cut to up to 6%. So an interesting point is what they also found from royalties. Amongst just 10% of entities have amassed more than 20% of all creator royalties. This data also suggests that the NFT economy may be a little bit more centralised than some have thought. Now we spoke about this last week, Blake, when we mentioned Magic Eaton and they were the ones who have decided to I think it was not payout the option of all their royalties on their marketplace after I think they were losing a lot of their market share to rival platforms. So they gave the option of not paying their royalties out to themselves. So what are your thoughts here on this? Because it's getting quite competitive in general. 

Blake: [00:16:42] So just through the stats, Trace, it is they suggesting that there's more secondary market sales or that there's more creators turning on royalties.

Tracey: [00:16:54] There's more creators that are asking a higher percentage at the beginning. So there's two things here. There's the percentage that goes to say Open Season and Magic Eden. And then users say, I'm going to sell my piece of art. I'm going to get a 3% cut for the life cycle. But they're actually saying no, I want 6% for the life cycle. 

Blake: [00:17:15] So yeah, so they're just turning it up a bit. 

Tracey: [00:17:18] Yeah, yeah. 

Blake: [00:17:19] Interesting.

Tracey: [00:17:20] Yeah. 

Blake: [00:17:21] But you know, what we'll find is, you know, it comes to an equilibrium and the market will find, you know, what's an appropriate royalty that people are happy to pay. And then that form, I guess, I guess a standard, right?

Tracey: [00:17:35] Yeah. I mean, I've got to admit, it wasn't something that I had considered much until I went to sell a few of my larger ticket NFT items. Not recently, maybe a few months ago, and I looked at exactly what that 5% cap was and I was like, wow, that's actually a fair bit.

Blake: [00:17:53] You know, so that the commission comes out of the sale process and on top. 

Tracey: [00:18:00] Yeah, so it is, it is a bit of a whack and then you got your cut that goes to opensea and that. So you know it all kind of adds up. 

Blake: [00:18:09] Yeah. And then you've got your network fees as well, you know. Yeah.

Tracey: [00:18:12] So yeah. Interesting. I think historically royalties have been, you know, praised because it's really important because it's part of the NFT ecosystem and you know, especially with some of the smaller creators, it provides them with not just a steady income stream, but then also it gives them income moving forward. Like if someone wants to produce an album or do something and then they little and they need the cash to move forward, you're kind of happy to do that and distribute some royalties. But when it's these big guys like bored apes or one of the women taking a clip, actually one free I don't mind so much because they put their royalties to some really good use to a lot of really good projects. But, you know, again, you've got to really know where that money's going and you have to take a good look. So I think that this debate around the NFT royalties will continue to burn for a little bit longer. Right now to our short, sharp news bytes for the week. Blake, you're up first. Your turn. 

Blake: [00:19:11] Yeah. So FCX put in a 1.4 billion USD bid to acquire Voyager, which is a crypto investment platform and it has been approved by the courts. And this means that Voyager users are expected to receive 72% of their funds back. But there's a twist: they have to create an account to receive the compensation. And there's approximately 3.5 million creditors or users. So, you know, if we just calculate the acquisition costs there from FCX have done pretty well I think to do that. 

Tracey: [00:19:47] So the good news is Voyager is going to get there. The Voyager users are going to get 72% of their funds back. 

Blake: [00:19:52] So yeah, yeah, at least three and a half million people aren't burnt.

Tracey: [00:19:56] Like the Celsius people. So good news. Yep. Moving on. There's a new sheriff in a London town, and this guy is crypto friendly. Rishi Sunak is now the Prime Minister of the UK. During his time as finance minister he actually unveiled plans to turn the country into an international hub for crypto. So he's definitely behind it. And he actually also tasked the Royal Mint with creating an NFT. This was last year. It hasn't come to fruition yet, but yeah. Definitely very crypto friendly. 

Blake: [00:20:31] Yeah. Might have something to do with his age. I think he was 42 or 44 years old. So certainly in touch with technological innovation. 

Tracey: [00:20:39] Same. Same age as us, Blake. Awesome.

Blake: [00:20:43] So crypto winter is hurting Google's ad empire. Google has blamed the company's slowdown in revenue growth, in part on crypto companies who have reduced ad spending.

Tracey: [00:20:54] Which is so. 

Blake: [00:20:56] Rich. The company's overall AI growth for the quarter was the weakest of any periods since 2013. I expected one quarter at the beginning of the pandemic. So Google recently announced that it will accept payments in cryptocurrency for its cloud services starting in 2023, which is awesome. And is this the partnership with Coinbase to help process those transactions for them? 

Tracey: [00:21:23] Yeah. 

Blake: [00:21:24] Incredible stuff. And maybe they'll make it easier for crypto companies to advertise. 

Tracey: [00:21:29] The floor price for the board eight Yacht Club. Other deed Metaverse NFT collections dropped by 25% last week. Yigal Labs sold land rights for its metaverse project as NFT for around $7,000 each, excluding gas fees, which cost buyers thousands on top. This was going to this app and this was earlier in the year. It was a huge, big and a huge, big week. Everyone was so excited. It was all happening. Grab the land and the gas fees were enormous and they stayed pretty high for a long time. And now they're worth roughly, you know, one and a half thousand. So we're not exactly sure why this happened last week. I've been keeping up with it in the last 24 hours, and it's still not sure why it had that big dump. But yeah, so if you keep an eye on that other deed land is pretty cheap right now.

Blake: [00:22:19] So the trading app Robinhood has added cryptocurrency of a. We spoke to the CEO of AAVE A here on the podcast Stanley earlier on and they also added Tezos to its platform. Now Robinhood offers 19 crypto tokens for trading in its app like Bitcoin, Ethereum, Solana and Poco. But you know, is this option trading on AAVE or is it spot buying and selling? 

Tracey: [00:22:47] Tracey I believe it's spot on. 

Blake: [00:22:48] Okay. Okay. Well, that's good. Yeah. 

Tracey: [00:22:51] It's good for us. Moving on, Disney launches a web3 experience to celebrate 100 years of Disney music. The experience was launched this week to give Disney fans access to a virtual storefront with individual displays that highlights various soundtracks from the Disney movies and shows like Encanto, Tomorrowland, Star Wars, Lion King, all those fan favourites. So you can click through to the site and learn about specific titles, listen to the music and CDs, and I'm sure there's online carts, so obviously you can buy lots of different bits and pieces. So there you go. Disney and a Web3 experience coming at you. 

Blake: [00:23:32] So far, Okcoin has created a platform for people to store their carbon credits on, obviously storing carbon credits and being able to verify where they come from and when they were minted and all these sorts of things. It's really important for COIN believes that this is a growing market and has built a product for it. So really interesting to see if there's actually any uptake of this. And I don't know anyone that's actually using foul coins, to be honest. I know people that are using IPFS, the interplanetary file system, which is the protocol that it's built upon. But Trace, have you actually heard of anybody using file code for decentralised storage?

Tracey: [00:24:11] No, I haven't. But I do know a lot of people talking about it. I do know someone else using I think it's Sia, the other competitor to this one. But I know that, you know, both of them are going really hard at the moment with their growth and their marketing in the marketplace. 

Blake: [00:24:27] So yeah.

Tracey: [00:24:28] This is an interesting development from them. So I might even do a little bit more reading and look into it a little bit further. 

Blake: [00:24:33] Yeah, definitely. And maybe we can try and use our file coin and see if it works.

Tracey: [00:24:38] Yeah, interesting. Let's do that. I think that's it for all the short, sharp bits this week and we'll leave it there. But keep your questions coming via the email, which is podcast@getbamboo.io. Check us out on all of our social media spots and don't forget to write and review us in the podcast you are listening to right now. But that's it again and please join us next week. Bye for now.