Decentralized centralization? ??; Why do we need a Short Bitcoin ETF? ??; How do you pay in the Metaverse? With Meta Pay ??

???Hey,?Linas here!?Welcome to a????weekly free edition????of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.

If you’re not a subscriber, here’s what you missed this week:

1. FTX is Crypto’s Berkshire Hathaway while its CEO is the new J.P. Morgan ??
2. Why tech layoffs are hitting late-stage startups the hardest? ??
3. Elon Musk sees payments & crypto as part of Twitter’s future ??
4. Monzo’s crypto ambitions & challenger banks’ strategy triangle ??
5. Open Banking is the Next BIG Thing in FinTech since Plastic ??

and more! Don't miss out and join the community here????

Last week (20-24 June) was one of the most interesting weeks in the Blockchain & Cryptocurrency space.?We will look at what the heck is decentralized centralization; see why we need a Short Bitcoin ETF; question how do you pay in the Metaverse? (answer: with Meta Pay!), and other interesting news and developments.

Without further ado, let us dive into what happened in the financial technology sector last week. Let’s connect the dots.

Decentralized centralization? ??

Centralized news ???Users of a Solana-based protocol called?Solend?voted to?take over a user’s account in an attempt to prevent a margin call?that would have liquidated $20M worth of SOL tokens and potentially clogged the Solana network.?

More on this ???The so-called whale (the one that holds lots of tokens), which borrowed $108M in stablecoins against 5.7M SOL tokens (representing about 95% of the lending protocol’s deposits), had gone radio silent as it faced possible liquidation if Solana’s token dropped to $22.30.?

Solend managers pushed through a governance decision granting them “emergency powers” to commandeer the wallet.?Further, a second vote passed Monday morning?reversed that initial decision and granted the Solend team time to take less-drastic measures, though this too was decided by a single wallet representing 90% of the votes.

?? THE TAKEAWAY

Who runs the world? Definitely not code… ?? ???This move received?severe public backlash, and that wasn’t without a reason. Because it passed by crypto’s reigning principle to let code, not humans, rule.?When you zoom out… Celsius halts withdrawals, Bable Finance halts withdrawals, 3AC risks bankruptcy, and now Solend decides to manage someone’s coins staked on its platform to avoid Solana capitulation… This makes you seriously question who runs the world right now and whether Dapps are really decentralized. So much work to do.

Why do we need a Short Bitcoin ETF? ??

The launch ???ProShares, an exchange-traded fund (ETF) provider, just announced a new product that will allow investors to bet against Bitcoin.

More on this ???The ProShares Short Bitcoin Strategy ETF began trading on the New York Stock Exchange under the ticker?BITI on Tuesday and it will provide the opportunity for those who believe the price of Bitcoin will drop to potentially profit or hedge their crypto holdings.

BITI will obtain?its exposure through Bitcoin futures contracts, and will purportedly perform inversely to S&P CME Bitcoin Futures Index. The ETF is?the first in the US to provide short exposure to bitcoin and?launched at a time when most of the crypto market is down.?

?? THE TAKEAWAY

Comical timing ?? ♂??In retrospect, this seems a somewhat strange and comical decision by the SEC… CME futures were approved when Bitcoin was at the top, the same was with BITO, and now BITI is being launched when Bitcoin - and the entire crypto market - has plummeted significantly. As Cory Klippsten well put it, the reason the Short ETF was launched before Spot ETF is that Short Bitcoin ETF isn’t new as it’s constructed using cash-settled futures, which means it’s on the other side of the bet from the existing long futures ETFs. Spot ETF would be new though. All in all, it’s still a good thing and yet another sign of a maturing industry.

How do you pay in the Metaverse? With Meta Pay ??

The relaunch? ???Mark Zuckerberg, Meta’s CEO, has introduced Meta Pay and a digital wallet for the metaverse via a Facebook post.

More on this ???It’s actually a rebrand as Meta Pay was earlier just Facebook Pay. Facebook Pay will reportedly stay the same easy way to shop, send money, and donate to causes people care about on Facebook, Instagram, WhatsApp, Messenger, and anywhere else you could hence use Facebook Pay.

Beyond the current features, Meta is working on a wallet for the metaverse that lets you securely manage your identity, what you own, and how you pay. In the future, there will be all sorts of digital items you might want to create or buy — digital clothing, art, videos, music, experiences, virtual events, and more. Proof of ownership will be important, especially if you want to take some of these items with you across different services, Zuck wrote.

?? THE TAKEAWAY

Trying to make it work…?Since?Facebook?changed its corporate branding to Meta in October, it’s been trying really hard to capture more of the company’s core ambition, which is to build the metaverse. Since then, Meta has started renaming its products to match the new corporate branding as well as introducing new products and features like virtual reality headset prototypes as well been actively exploring digital collectibles aka NFTs on Instagram. That said, it’s clear that payments should be an integral part of their metaverse. The challenge? Making it work. So far, Meta is still relying heavily on ads while payments make only a fraction of their revenues. When it comes to the metaverse as such, it’s hard to believe there will only be one virtual world in the future, so if Meta won’t solve its current challenges, they might not be that big of a player in the Web3 world too.

Extra Reads & Quick Bites for Curious Minds??

• Under investigation ???Securities regulators in a number of U.S. states are looking into crypto lender?Celsius Network’s?decision to pause customer redemptions, Reuters reported. According to Joseph Rotunda, enforcement director at the Texas State Securities Board, state regulators from Alabama, Kentucky, New Jersey, Texas, and Washington are looking into this. Celsius has said it will be pausing withdrawals, swaps, and transfers between accounts, so it can be “in a better position” to honor withdrawal obligations. Rotunda reportedly learned of Celsius’ move from a blog post on Sunday night. The blog said the company wanted to do this to “stabilize liquidity.”?It’s getting messy here… read more about Celsius?here?if you missed it.
• Margin call ???Crypto hedge fund Three Arrows Capital hasn’t met demands by lenders to get more funding since its digital currency bets went south, a Financial Times (FT) report says. The group’s failure to meet the margin calls over the weekend makes it the newest victim of a steep fall in various crypto prices.?This is something we should all keep our eyes on, more?here?in case you missed it.

Money Moves??

• Cryptocurrency exchange?FTX?has entered an agreement to acquire Alberta-based trading platform?Bitvo, pending regulatory approval. Founded in 2018, Bitvo is registered as a restricted securities dealer in all Canadian provinces and with Canada's financial intelligence agency.?Recall what I’ve written about this at the beginning of June.
• Immutable, an Australia-based Web3 gaming firm, launched an inaugural $500M developer and venture investment fund. The capital will be used to fund projects building web3 games and NFT-focused companies on its layer-2 Ethereum-focused platform, Immutable X.

Continue reading by subscribing to?Linas's Newsletter.?You will receive fresh news about FinTech, Blockchain & Crypto with hot takeaways every day.

P.S.?You might enjoy my earlier pieces as well:

?? Bitcoin in 2021: a story in 5 graphs, and what might come in 2022

???A Wise pitch deck that led to London’s biggest and most successful direct listing ever

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About: I am?a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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