Currently Relevant: Edition 8

Welcome to Currently Relevant, THE RELEVANCE HOUSE’s regular roundup curating the best of news, views, and stories from the blockchain, crypto, and Web3 space.  

This week: Threads’ success shows that decentralization doesn’t sell; Ripple makes waves for the SEC; UK regulators get the knives out for crypto memes.

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WHAT'S CURRENTLY RELEVANT IN THE RELEVANCE HOUSE

Our co-founder and Chief Relevance Officer German Ramirez has been out and about on the conference scene – this time in his home country of Spain, as he delivered a keynote at the Crypto Week Madrid Conference. Having had the opportunity to meet and mingle with those at the frontier of the Spanish blockchain scene, he took to LinkedIn to share his reflections.

Many Web3 projects are looking at the hype around AI and wondering if they should be aiming for a slice of the action – particularly as the crypto markets remain somewhat deflated. However, before you dive straight in, see what the experts think. This piece in Cointelegraph has twelve insightful tips from industry insiders, including German’s view on how your endeavors should fit with your vision and mission:

Read: 12 things blockchain protocols should consider when exploring AI

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THE BIG PICTURE

The rivalry between Zuck and Musk recently stepped up a notch after the former launched Threads, Meta’s shot at a Twitter rival. Despite a clunky user interface and the fact that 500 million EU users are locked out of the app, Threads managed to rack up an impressive 100 million downloads within the first few days of its launch. Even though engagement dropped off over subsequent days, it’s still been one of the most successful launches of all time. It’s a testament to the power of network effects – and a kick in the teeth for those attempting to launch networks based on decentralization.

It pains me to say it, as I was one of the first and fiercest advocates of decentralized technologies and the beneficial changes they could bring to the world. But at this point in the evolution of crypto, we have to recognize that decentralization is not a big enough draw for the vast majority of people.

We do live in a centralized world, and people do complain, but they don’t care or take action. So we need to focus on how we will do something that brings value to the individual because, quite simply, they don’t want to know what’s happening under the hood.

Of course, there is no denying that Bitcoin and Ethereum derive significant strength (and consequently longevity) from the fact that they are decentralized technologies. But the people who will use them purely because they’re decentralized are already there. Decentralization alone isn’t enough to convince the rest of the world.

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A $100k BTC price? Sure.

A DeFi app that offers yields at a rate ten times what I could earn from traditional equities? Sign us up.

Even one day, hopefully soon, a payment network that’s faster, cheaper, and more convenient than Visa?

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But all those things are selling points that have no direct or visible connection to decentralization. Even if the decentralized technology plays an enabling role, it’s not what the vast majority of people are buying.

Take governance – another area that’s central to the push for decentralization. For the crypto community, participation in DAOs and decentralized governance is sold as a perk of being a user.

But the average user doesn’t care about governance – at least, not in the same frame of mind as they care about being a user.

Imagine if Apple tried to sell iPhones on the basis that you get to become a shareholder. Rather than leveraging the fascination with shiny new devices to just sell more shiny new devices and make more money, what if the company decided to urge people to open a brokerage account? Then, they can own some AAPL stocks, attend the annual shareholder meeting, and vote on new board members – all as complementary benefits to being the proud owner of a shiny new device.

Reading this, crypto people be like:

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While users who just want to play with shiny new devices be like:

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Decentralized governance isn’t a selling point any more than decentralization itself. In fact, a recently published academic study found that the larger a DAO becomes, the more likely it is to have real decision-making power centralized in the hands of just a few people – just like the shares of traditional companies are dominated by hedge funds.

So the dream itself isn’t even delivering, at least not yet. That doesn’t mean it’s time to give up on DAOs – with an equitable distribution model in place, they have the potential to be a vehicle for a more equal division of power and voice in any given project. But even if we can reach this ideal, the chances are that most users will still be happy just being users.

Although it may be a painful realization for many of us in crypto, the fact is that we need to deliver value to users in their role as users, and talk to them as such. That’s how you build networks, promote adoption, and engender loyalty.

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A CHANGE OF FORTUNE IN FUNDING?

There’s been good news in funding this week as Coinfund, a New York-based VC firm, confirmed it has raised $158 million for seed investments. The fund, which is Coinfund’s fourth focused on startups, will be used to support early-stage crypto and AI projects.

Similarly, Polychain Capital confirmed it has secured half of a $400 million fund in a “first close” with a view to securing the remaining half.

Overall, the fact that investors are returning to VC for returns is welcome news and could indicate a turnround of fortune after one of the most challenging quarters for funding of recent years.

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WHAT'S NEW IN WEB3?

• Christie’s is teaming up with Gucci (which is continuing its own foray into Web3) for a generative-art-meets-high-fashion collection created by artists including Claire Silver and Emily Xiem which is being sold at auction this week. Even throughout the bear market, the world’s oldest auction house has continued to maximize the opportunities of NFT art as a new and emerging field that can complement its 250-year-old brand.
• Google announced a significant u-turn on its stance towards NFTs as it will lift a ban on the assets across the Google Play Store, paving the way for NFT gaming and trading apps – provided they abide by Google’s T&Cs, which prohibit gambling.
• Web3 infrastructure company Co:Create is back in the news after it announced it is launching a blockchain-based loyalty points app on the Shopify app store. It will allow Shopify’s 4 million active stores access to the app so they can reward customers with token-based points and NFTs.
• The UK Financial Conduct Authority announced it would be clamping down on crypto memes that are deemed to breach financial promotion rules. Bearing in mind that crypto people have been making crypto itself out of memes for many years now, it’s hard to imagine how this one plays out in practice.

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FOCUS ON FINTECH AND DIGITAL ASSETS

• Ripple has dominated headlines over the last week as a judge struck down part of the SEC’s argument that XRP is a security.
• Commentators have generally taken it as good news, but what does it mean for Brand Crypto? German tackles this question in his latest newsletter – don’t miss it!
• DeFi lending giant Aave has launched its own stablecoin called GHO in a bid to challenge the dominance of Maker’s DAI. Perhaps a project with Aave’s clout and longevity behind it could finally succeed in establishing market traction?‍
• Gnosis has launched a Visa-enabled debit card connected to an on-chain wallet, the first of its kind. Currently, users need to have a supply of Gnosis’ native euro-backed stablecoin to spend on their cards, but the move could prove to be a critical proof of concept at the interface of retail TradFi and DeFi.

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INSIDE THE INFRASTRUCTURE

• Is “TradFi hooks up with DeFi” becoming a trend? Chainlink made what could prove to be a game-changing announcement this week – that its cross-chain interoperability protocol (CCIP) has gone live. However, a key twist is that the protocol is based on SWIFT – the same messaging infrastructure used by over 11,000 banks globally. This trend is one we’ll be keeping a close eye on.
• Polygon has released plans to overhaul its governance structure in a bid for more decentralization, including launching a dedicated council for smart contract upgrades and a two-phase community treasury.

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MEME OF THE WEEK

From a personal branding perspective, a cage fight with your biggest rival isn’t something that we’d usually advise as best practice. And given the lack of ongoing news regarding the proposed IRL fisticuffs between Musk and Zuck, there’s every chance that one or both of them has thought better of the idea (or just listened to their mom.)

But the memes live on, so we’re here for it.

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