#2 - Web3 news, but differently

Welcome to Edition #2 of “Brands in Web3 & Web3 in brands“. This is your chance to catch up on the latest news from the Web3 space and get marketing and branding insights with a pinch of spice.?

This week: The SEC’s ire for altcoins; Ethereum devs mull a dramatic increase in the minimum ETH stake; Deutsche Bank diversifies into digital assets.?

Layer 1s need a Layer 1

The meme above paints a thousand words following the SEC’s decision to launch legal action against Binance and Coinbase. Platform tokens, in particular, have taken a beating. Solana’s SOL, Cardano’s ADA, and Polygon’s MATIC all posted significant losses after the US regulator labeled them securities.?

Most industry insiders strenuously deny this allegation. In fact, many blockchain developers previously shunned the idea that token prices or markets are important, pointing instead to the value of their tech, which they neatly summarize as follows:

• Scalable.?
• Decentralized.?
• Robust governance.?
• Super fast.?
• Very secure and reliable.?
• Developer-friendly.?
• Interoperable.
• Energy-efficient.
• World-changing.?

WAIT... Did I miss anything??

If you want people to stop focusing on one thing – token price, in this case – then you need to provide a clear alternative narrative.?

In a piece I recently wrote for Cointelegraph, I argue that just as blockchain serves as the foundation for ecosystems of applications and users, branding is the Layer 1 of a successful marketing strategy. The problem for many of the Layer 1s affected by the SEC's shock decision is that they’re missing the Layer 1 of their own marketing and communication strategy – making it hard to change the conversation.?

Read “Branding: The layer-1 of a successful Web3 marketing strategy”

Is Ethereum about to swerve off-brand??

In the last edition of this newsletter, which you can read here, I talked about the contrast between Bitcoin and Ethereum, and highlighted how the emergence of NFTs and memecoins on Bitcoin alongside rising institutional interest in ETH staking is flipping the traditional narrative of the two networks.?

However, the long queue of institutional stakers could end up being a catalyst for a more existential shift for Ethereum. This week, news emerged that core developers are mulling the idea of increasing the minimum stake to become an Ethereum validator from 32 ETH to a massive 2,048 ETH –?an increase of 6,300%.?

To put these numbers into context, most commentators agree that we are in a bear market, and the ETH price this week has hovered around the $1,700 mark. In current market conditions, the stake increase would raise the minimum cost of becoming a validator from around $50,000 to around $3.5 million. If ETH ever recovers to reach its previous all-time highs, that would equate to $10 million.?

Now, I’m not an Ethereum developer, and if this proposal passes, it will be because a sufficient proportion of the community believes the benefits outweigh the drawbacks.?

But Ethereum’s entire ethos is about being decentralized and community-run. Those very words are the first you read at the top of the project’s homepage. If the barrier to entry moves from thousands of dollars to millions of dollars, shrinking the pool of potential validators so that only enterprises, financial institutions, and ultra-high-net-worth individuals can realistically participate, are those claims still credible??

Possible versus sensible

Despite the increasing presence of institutional money around the Ethereum ecosystem, there is still plenty happening on the platform for those who enjoy its more innovative and anarchic tendencies. Earlier this week, the “Ethscriptions” protocol launched on the platform, offering similar functionality to Ordinals, which allows users to create NFTs on Bitcoin.?

Of course, it was already possible to create NFTs on Ethereum using ERC-721s. Ethscriptions simply makes it possible to create Bitcoin-style NFTs on the network. Some suggest that this might be cheaper than the old way, but given that Ordinals actually caused Bitcoin transaction fees to spike, that might not end up being the case.?

Working in this industry is a daily reminder that not everything that makes sense is possible, and not everything that’s possible makes sense.

Advancing adoption

Despite the fact that the headlines continue to be dominated by SEC-related doom and gloom, there are still plenty of encouraging signals.?

In a confirmation of rumors that have swirled since 2020, Deutsche Bank announced that it has applied for a license from the German financial regulator BaFin to provide custodial services for digital assets.?

Mastercard, which has exhibited something of a stop-start approach when it comes to crypto, is once again moving forward, this time with the confirmation of a trademark filing for software to handle crypto transactions.?

Also this week, a new institutional crypto exchange has launched in the US with Wall Street backing. EDX Markets is an API-only, non-custodial platform developed in collaboration with Fidelity, Schwab, and Citadel.?

HSBC has also reportedly made trademark filings for developing products related to NFTs and metaverse banking.?

NFT-related activities are still continuing to draw attention elsewhere, albeit in a far more understated way than during previous hype bubbles. The news that Sotheby’s auctioned blue-chip assets previously owned by the now-defunct hedge fund Three Arrows Capital attracted headlines in top-tier financial publications, as did a NFT-focused documentary featuring Damian Hirst at Art Basel.

Queen has become the latest big-name artist to venture into the NFT space. Queen Productions Ltd submitted a trademark filing for NFT-authenticated media, software for VR and metaverse experiences, and creating virtual merchandise. Given the global and intergenerational appeal of a superband like Queen, their ability to introduce new audiences to Web3 should not be underestimated.?

If the SEC is intent on stopping crypto, they may need another playbook.?

Out and about on the conference scene

In my capacity as a professional speaker, I spend a lot of time out and about at conferences and events. I was recently honored to open the recent NFT Art Day in Zurich by welcoming guests and giving a keynote. One thing that has struck me is the enthusiasm and resilience of the industry despite recent headwinds and last year’s market turmoil. It’s inspiring.

However, given some of the stories that have emerged from the US regarding shady practices like comingling of customer funds, I do wonder if the industry has learned enough from its mistakes to avoid history repeating itself yet again.?

Although some people find the learning experience easier than others.?

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A word from my sponsor ;)?

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