And that’s it for Consensus 2023, folks. It was three days of informative conversations, heated debate and excited product and protocol announcements. Keep an eye out for CoinDesk’s “Consensus @ Consensus” report about the potential solutions to Web3’s lingering issues discussed at the conference.
With the Virtual pass, you can tune into Consensus 2023 from anywhere in the world to hear industry leaders explore all aspects of crypto, blockchain, Web3 and the metaverse. Learn more and register.
Wait a SEC
Coinbase lawyers said the U.S. Securities and Exchange Commission (SEC) is making legal determinations about crypto “on the fly,” in a recently published document responding to the SEC’s legal threats At Consensus, Coinbase general counsel Paul Grewal told CoinDesk the exchange thinks it has an airtight argument that the cryptocurrencies it lists for trading are not securities. Coinbase isn’t the only firm with choice words about the SEC, as BCB CEO Oliver von Landsberg-Sadie said the recent spate of crypto debanking efforts is the agency’s misguided “chemotherapy” for the industry’s “$14 billion Ponzi” problem.Finally, SkyBridge Capital founder Anthony Scaramucci, who served as a business partner and mentor to FTX CEO Sam Bankman-Fried, recounted the story of the exchange’s harrowing final days before its collapse on stage Thursday at Consensus. While Scaramucci said FTX’s cabal of execs were a “small group of people that had done some [bad] things, he also noted the regulatory failings that led to its collapse.
Enterprising Ideas
Mastercard will launch a crypto-based credential service intended for cross-border transfers. The so-called Mastercard Crypto Credential service, announced Friday by Mastercard executive Raj Dhamodharan on stage at Consensus, allows wallets to be identified in transactions that are compliant with requirements such as the Financial Action Task Force’s (FATF) “travel rule.” The system uses tech from CipherTrace, the analytics firm Mastercard agreed to acquire in 2021. Elsewhere on stage, a Warner Music exec said Web3 music efforts, which have taken a hit after NFT markets contracted, need fresh ideas to succeed. Last, Daniel Buchner, Block’s head of decentralized identity, said Vitalik Buterin’s idea of soulbound tokens (SBT) are ”largely a fraudulent meme.” Much like his boss Jack Dorsey, Buchner is skeptical of decentralized identities needing a blockchain or token.
NFTs…in Space!
The original “Star Trek” captain, William Shatner, is moving further into Web3 with a new non-fungible token (NFT) set called Infinite Connections, announced at Consensus. The famed actor worked with Orange Comet, a Web3 entertainment company that recently raised $7 million in funding on the science and space-themed series. SimWeb3 entertainment company Toonstar will soon release a new NFT-backed animated television show called “Space Junk.” The comedy series is written by “Workaholics” producer Dominic Russo and stars “Napoleon Dynamite” actor Jon Heder and “School of Rock” actor Tony Cavalero. Meanwhile, Daniel Alegre, Yuga Labs’ new chief executive and Activision Blizzard’s ex-COO argued that Web3 gaming could be crushed if the metaverse feels like a cash grab.
Though there have been recent signs of crypto winter thawing, developers have continued to make the most of the current builder’s market. NEAR, in particular, has seen significant growth in new projects and increased adoption over the past year.
NEAR’s expansion is due in part to some significant upgrades and announcements from its core team. Most recently, NEAR announced its transition to a Blockchain Operating System (BOS), an industry first that further establishes NEAR as the direct entry point into Web3. With the BOS, NEAR is no longer just a Layer 1 — it’s the OS for an open web, free from the centralized platforms of Web2.
*This is sponsored content by NEAR
The Takeaway: Foresight and Hindsight
(CoinDesk)
Haseeb Qureshi is a managing partner of Dragonfly Capital, a well-watched crypto venture firm, and the moderator of one of crypto’s best podcasts, “The Chopping Block.” Both are roles he takes on with equanimity and poise. In the aftermath of the Terra fiasco, Qureshi wrote one of the most lucid articles about why the blockchain collapsed. Following FTX, he corralled his podcasting partners – including his Dragonfly colleague Thomas Schmidt, Gauntlet’s Tarun Chitra and Compound creator Robert Leshner – into doing a series of informative episodes on the fall of FTX. And as a VC, Qureshi has keen foresight but is afflicted with the same problem all humans share: an inability to foreknow.
Still, when it comes to understanding the current moment in crypto he’s more or less unmatched. Or, at the very least, he’s not afraid to be a little contrarian. At Consensus 2023, for instance, Qureshi argued that CertiK, an auditing firm with a less-than-stellar reputation, was making a mistake by offering to reimburse victims of Merlin, a decentralized finance (DeFi) protocol Certik had recently audited. “This is explicitly insurance,” Qureshi said, arguing that if this move is repeated it would push premiums for audits without necessarily improving their accuracy because firms would expect to have to make payouts. CoinDesk caught up with Qureshi to talk about the state of crypto venture capital, the regulatory environment and why Ponzi schemes will always collapse.
How has your investment thesis changed in a non-ZIRP [zero interest-rate policy] environment?
The biggest change has been the demand for [decentralized finance]-sourced yield. This was a big theme of what made DeFi attractive in a ZIRP environment. Now the appetite for risk has totally changed, so in order to gain traction with consumers, you have to do more than just create synthetic high-yield products.
You’ve said in the past that one of crypto’s particular selling points is permissionless innovation. Are there emerging trends that have developed this past year that you didn’t see coming.
Nope, I predicted everything perfectly. I also knew you would ask this question.
Don’t you have a hot take on the Cosmos ecosystem?
The Cosmos community is an army of generals. A community founded on the basis of radical independence from other chains is, unsurprisingly, unable to agree on stuff.
Following FTX there have been numerous calls to rethink crypto’s market structure. Are there ways to redesign centralized exchanges (like separating trading from custody or adding a centralized clearing house) that you’d support?
Separating trading from custody is the obvious one. Prime brokers like Hidden Road and FalconX are already facilitating this. Post-FTX (and post the Binance Commodity Futures Trading Commission suit), institutional players are no longer comfortable facing risky exchanges directly and taking on counterparty risk. In that regard, we’ll see the same disaggregation of financial layers that you see in [traditional finance].
Do you believe that VCs should be subject to similar lockup periods on token stakes as they currently are on equity stakes?
To be clear, equity stakes are not necessarily locked up. There’s nothing that generally stops a company from selling its equity via a secondary transaction (unless the board specifically prohibits such sales). The thing that usually stops them is the reputational damage of doing so. The same is true of tokens. But yes, in general we push for long lockups when we make investments, both for investors and for the team.
In 100 years, will there be more or fewer monies?
Fewer.
Is it better to be able to do what you want or feel compelled to do what you must?
It is better to feel compelled to do what you must. It doesn’t feel as good, but it leads to a life better lived.
Are there ways of designing crypto systems that have network effects without “Ponzi-like” attributes?
Ponzi schemes don’t have network effects (they are not networks). They don’t even have economies of scale – that is, they don’t get easier to sustain the bigger they get. It’s the reverse – the bigger they get, the harder they are to sustain. That’s why Ponzi schemes that are small can survive for a while, but the bigger they get, the more likely they are to pop.
Do you think mass automation will finally cause U.S. productivity to increase/time spent working to shrink for most people? Bonus: any thoughts on why the past century-plus of techno progress has not increased leisure time?
I think it will cause productivity to increase, but I think it will lead to very unequal effects on time spent working. Poorer people will work less, wealthier people will work about the same I would guess, because wealthy people tend to like their jobs more.I think the way we are measuring increased leisure time is not well-measured. We do a lot more leisure at work now than we did in the past. It’s difficult to quantify one for one.
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