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Web3 Drama: The Chainsaw Weekly Wrap

8 min read

This article is for general information purposes only and isn’t intended to be financial product advice. You should always obtain your own independent advice before making any financial decisions. The Chainsaw and its contributors aren’t liable for any decisions based on this content.



Web3 Drama: Gm legens. Another wild week in Web3. 

This week’s Web3 drama kicked off with a number of reports suggesting that Bitcoin (BTC) and other cryptocurrencies were officially becoming less volatile than stocks – that crypto was finally entering into the ‘mature’ phase of its development. 

These hopes were dashed pretty quickly when what started as a Twitter fight between two of the largest CEOs in the business rapidly devolved into a full-scale financial meltdown that nearly took the entire crypto economy along with it. 

We’ll dive into the FTX saga in a bit, but first, let’s take a proper look at other Web3 drama that happened in this week’s edition of The Chainsaw Weekly Wrap. 

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While cryptocurrencies have been getting slaughtered in the more speculative Western markets, there have been a number of interesting use cases crop up in the ‘real world’. Lebanon’s domestic currency, the Lebanese pound has shed more than 95% of its value over the past few years. 

Military police in Lebanon protecting local banks

Now, people have turned in growing numbers to crypto as a way of transacting. Lebanese locals have reportedly been using BTC and the slightly less volatile US Dollar-pegged stablecoin USDT for everyday purchases. 

In luxury news, Rolex is warming up to the metaverse after the luxury watch maker filed a number of patents relating to NFTs and “virtual goods”. While Rolex looks set to bring some added opulence to NFTs, OpenSea tempered the fears of NFT creators after announcing it would still enforce royalties on existing collections. 

The Web3 creator royalty debate pops off

More Web3 drama. While crypto exchanges waged war, the NFT community saw their own marketplace conglomerate show-downs. While OpenSea has become the most recent NFT marketplace to abandon enforced creator royalties moving forward, through a new tool that will allow creators to set optional royalties, the move to protect existing projects shows some “light in the darkness” for NFT creators, at least according to popular NFT influencer Farokh Samad. 

Nifty Gateway, a popular NFT marketplace in its own right, announced the release of a tool that will allow digital artists to prevent the sale of their NFTs on marketplaces that don’t support compulsory royalties. In the same vein, the co-founder of Rarible, Alex Salnikov said that he will do whatever it takes to support royalties for NFT creators.

Meta drops a record number of staff

Meta, formerly Facebook, had a tough week after its CEO Mark Zuckerberg announced that the company would be firing 11,000 employees, reducing the headcount at Meta by a whopping 13%. Zuck said the layoffs were necessary for the company to become “more capital efficient”, but other critics have argued that he could probably be spending a little bit less on his (very expensive) vision of the metaverse. Meta’s Q3 report posted a US$9.4 billion loss. Ouch. 

Mark Zuckeberg playing a friendly game of UNO

In some bad news for Bitcoin holders, the Grayscale Bitcoin Shares Trust (GBTC), a fund that allows major financial institutions to invest legally in Bitcoin, is struggling to keep its head above water, with the fund hitting a record discount of 40%. This means that the value of GBTC shares relative to the price of the underlying assets is trading at a 40% discount. This may suggest a low demand for Bitcoin investment among institutional investors. 

Grayscale is however embroiled in a battle with the Securities and Exchange Commission (SEC) for denying the conversion of its unit trust fund into an ETF (exchange traded fund). If successful, the rather horrific looking discount to net asset value may end up looking like a steal. 

Elon wants to turn Twitter into a fintech company?

Elon Musk is making it clear that he wants to start integrating payments and financial transactions within the Twitter platform as quickly as possible. The news first came to light when it was revealed that the social media platform had filed a registration with the US Financial Crimes Enforcement Network.

In a Wednesday Twitter Space, Elon admitted that he wanted to bring payments to Twitter, saying that users would soon be able to integrate their bank accounts, and sometime in the near future, gain access to a “high yield” investment account through the app. Kinda seems like nobody asked for that, but it might be a desperate move to save Twitter from potential bankruptcy

CBDCs are back on the menu

In Europe, CBDCs (central bank digital currencies) got put back on the menu, with multiple leaders from the European Union saying that a Euro-denominated CBDC could help to protect “euro dominance”. The Euro is down 10% against the US dollar in 2022 and 14% over the past year.

European Central Bank President Christine Lagarde said that big tech’s dominance of payments threatens the economic well-being of state actors. So, she said that a CBDC would allow the EU to “get ahead of these developments and ensure that confidence in the monetary system is maintained and innovation is nurtured”.

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Christine Lagarde, speaking at European Digital Currency summit

WTF happened with FTX?

Because The Chainsaw has already covered the saga extensively this week, we’ll keep this explanation clean and simple. The FTX meltdown all started when a report from CoinDesk revealed that FTX and its sister hedge fund Alameda Research may have been printing large amounts of its own FTT token to falsely prop up its finances. 

Binance CEO Changpeng Zhao had one look at the report, said “no thanks” and began selling large amounts (roughly US$550 million) of FTT to reduce Binance’s exposure to FTX. This spooked the market and customers of FTX rushed to withdraw their funds from the exchange, fearing the worst. This caused the value of FTT to plummet more than 80%. 

After customers withdrew more than US$4.5 billion from the exchange in a single day, FTX announced that withdrawals were halted due to a lack of liquidity. Because of this, it was quickly revealed that FTX had been using its clients’ funds to prop up its own trading activities and simply didn’t have the money on hand to return funds to its customers. Binance briefly calmed markets down, saying that it would acquire FTX but decided to pull out of the deal after taking a closer look at the financial health of the exchange. 

Leaked calls

On Wednesday, leaked calls between FTX’s CEO Sam Bankman-Fried revealed that there was a US$8 billion hole in the books, and the exchange would most likely be forced to declare bankruptcy. On Thursday evening, SBF took to Twitter to apologise. A couple of hours later, the Securities Commission of The Bahamas (where the FTX headquarters are located) announced that it would seize FTX’s assets and had called in the liquidators to help return funds to customers as quickly as possible.

At the time of writing, another major crypto platform BlockFi has halted withdrawals quoting liquidity issues of its own, suggesting that the financial contagion may be more spread out than first thought. 

The situation is still developing and there are whispers that more drama may be on the horizon… 

Cash remains king 

In a tumultuous week for crypto markets – and that’s putting it lightly – there were still some signs of optimism with a series of fundraising announcements. The highlights included: 

  • Crypto exchange Coinmetro secured a US$7 million funding round with a view to expanding into the US, Europe and other markets. 
  • Abrdn, one of the U.K.’s biggest asset-management firms, led a US$28.5 million Series A funding round into digital asset exchange Archax to expand its crypto ETF products. 
  • Blockchain intelligence firm TRM Labs raised US$70 million in a Series B extension round. TRM Labs will use the capital, which brought total funding up to US$130 million, toward product development and hiring.
  • Ramp Network, a startup offering payment infrastructure to connect crypto and traditional finance raised US$70 million in a Series B funding round to pursue global expansion and hiring. 
  • NTT Docomo, Japan’s largest mobile-phone network, pledged to invest up to 600 billion yen (US$4 billion) into Web3 infrastructure. 
  • Xternity raised US$4.5 million in pre-seed funding led by NFX. The startup provides a “no-code” platform to help Web2 game publishers adopt Web3 technologies.
  • Crypto venture firm LeadBlock Partners completed the first close of a new fund, which has a target value of US$150 million, backed by Yuga Labs, Bitpanda and BlockFi.
  • Wemade, a leading South Korean game developer, raised US$46M to expand into blockchain gaming in a round led by Microsoft. 

Things have slowed down a tad over recent weeks, however given the levels of investment, its evident that crypto bulls remain unperturbed. 

Web3 drama: Pour one out for the crypto market

With the New York Times labelling this week’s insanity crypto’s “Lehman Moment” it should come as no surprise that markets bounced around like mad. Bitcoin started the week holding steady above the US$20k like (it’s strongest position in weeks). 

Web3 Drama

However following the FTX chaos, it plunged nearly 20%, briefly dipping below US$16k, its lowest point since November 2020. At the time of writing, it’s down 15% for the week, and with financial contagion spreading throughout the crypto market, it may take some time for the price of BTC to stabilise. 

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Ethereum (ETH) felt more of the volatility than Bitcoin, plummeting a touch over 30% over the news of FTX’s insolvency. It’s currently regained some ground but overall ETH is set to close the week down 20% overall. 

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Web3 drama: Winners and Losers

Unfortunately for all the investors reading this, the winners this week were certainly hard to find. Only 2 tokens actually closed this week in the green. The first token was PAX Gold (PAXG) which is a stablecoin pegged to the price of gold. It’s currently up 7% for the week. In second place comes the Trust Wallet Token (TWT) which gained a mere 0.73% in the past seven days. 

Unsurprisingly, the biggest loser of this week was FTX’s native token FTT, which is currently down a cringe-inducing 87% from this time last Friday. Despite bouncing hard off the bottom last night, Solana (SOL) followed FTT into the void closing the week down 47%. Solana was one of the biggest holdings for FTX and Alameda, so it makes sense that the token is down by such a significant margin. 

Anyways, with all of the insanity that’s gone down it’s important to at least try and have a bit of a laugh, so we’ll leave you with Crypto Twitter’s best memes.

That’s all from this week’s edition of The Chainsaw Weekly Wrap. 

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