Ever felt overwhelmed by the number of things happening in Web3? Don't have enough time to spend on Twitter to keep up with everything? Don't worry, I got you. Kio’s News is here with all the highlights from last week
Index
Crypto & NFTs
🟡 USDC breaks peg from $1. Are we doomed?
🟡 Pokemon is hiring a Web3 expert
🟡 Instagram is disabling its NFT features
Solana News
🔵 XRAY, the first human-readable Solana explorer
🔵 Codename: Project MIDAS
Solana NFTs
🟢 DeLayed
Food for thought
💭 History of Solana NFTs by market cap
💭 Self-custody versus the banks
Web2 corner
🗞️ OpenAI launches GPT-4
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🟡 USDC breaks peg from $1. Are we doomed?
The headline of the week.
Don’t worry. Your crypto is fine, at least for the moment. But we almost didn’t count it. Let me explain.
It was Friday 10th of March when we learned that Silicon Valley Bank (SVG) was insolvent*. What is SVG? You might ask. SVG was the 16th largest bank in the United States and the largest bank by deposits in Silicon Valley. It was no small deal.
How can a bank this big collapse? Among other things, because of inflation.
It might come as a shock to some, but banks make money using the money you put into them. How do they make money? Investing it. And one of the safest investments with an almost certain return is treasury bonds.
Imagine the situation. You have a lot of money from deposits in your bank. And you need to make some money. You buy some treasury bonds from the government that will make you a 1% return in 5 years. But then comes inflation. And the government starts issuing 5-year bonds with a 5% return. For the moment, you are fine. Your bonds will still give you the 1% return in a few years and you will have more money than you started with. However, because of the new bonds, the market value of your bonds goes down as people buy the new ones. And it goes below the price you bought them for.
If you can just wait a few more years you will get the promised return, but at the moment, you have less liquid money than you started with. This means that if everyone who has a deposit in your bank wants to withdraw their money, you will need to sell the bonds at a loss and you still won’t have enough money to pay everyone back.
But come on, why would everyone withdraw all their money at the same time? The answer is panic. The bank realized that they were in trouble. They needed to raise money, which they did by selling shares of the bank, to be able to cover the deposits. When people saw this, they also realized the bank was in trouble and went to withdraw their money just in case. This turned into a snowball of everyone wanting to withdraw their money “just in case” that rapidly evolved into a bank run and they got to the point where they couldn’t give people their money back anymore. So that’s how the bank collapsed.
Okay. Nice story. What does this have to do with crypto and USDC? USDC, unlike the collapsed algorithmic-based stablecoin UST, is backed by real dollars, in a bank. And it just so happens that around 12% of the dollars backing USDC were in SVB. Upsies.
During the weekend, we saw panic in Crypto Twitter as USDC fell below $0.9. This was a problem. If you are a crypto investor and put some money into a coin and it goes to zero, it’s sad, but you invested knowing the risk. Having your savings in a coin that everyone thought was safe and losing them, that’s a bigger problem.
Just imagine for a second the amount of NFT projects that would collapse just because they kept their treasury in USDC. Or the people that would lose everything, who thought that they were safe in a dollar-backed stablecoin. The situation could get ugly really fast.
Fortunately for everyone, tech startups and crypto investors alike, the Federal Reserve came to save everyone and promised to cover all deposits.
Are we in the clear? Not that fast. Although the situation with SVB seems resolved, we don’t know if other banks could be in a similar situation and a contagion is not impossible.
On the bright side, this could be bullish for crypto, as it reveals the cracks in the current financial system and turns on the money printing machine, which tends to bring us green candles for our favorite coins, as we saw right after the news when the crypto market pumped quite a bit.
*Note: Silvergate and Signature Bank were also declared insolvent for similar reasons, but their size is not SVB’s size
🟡 Pokemon is hiring a Web3 expert
Last week we saw a very interesting Linkedin posting from Pokemon. They are looking for an expert in blockchain technologies, NFTs and Web3. The Pokemon collectible cards market is huge and NFTs are just a better version of that.
Does this mean that we will see Pokemon NFTs soon? Who knows. But at least they are willing to learn about the NFT technology
🟡 Instagram is disabling its NFT features
On March 14, 2023, Instagram announced a shocking move to end its work on digital collectibles, better known as NFTs. This came as a surprise to many creators on the platform, especially as the company had only rolled out the features in recent months.
Stephane Kasriel, Commerce and FinTech Lead at Meta, made the announcement in a Twitter thread, stating that the platform would be disabling features that support NFTs. He didn't provide any specific reasons for the decision, but he did say that the company's priority is still to create financial opportunities for creators.
Some creators expressed their disappointment and anger over the sudden move, with Nyan Cat creator Chris Torres even mocking the company for its poorly thought-out plan. Meanwhile, others, such as Connie Ansaldi, CEO and Founder of Carnaval Art, a blockchain-powered loyalty service for companies, criticized Instagram for its lack of foresight and fear-driven decision-making.
However, this isn't the first time that Meta has made such a sudden move. In recent months, the company's Reality Labs division, which works on AR and VR products, has lost over $13 billion, and the company has been cutting costs. In November 2022, the same month it rolled out its core NFT features, Meta laid off over 11,000 employees, the largest cut in the company's history.
It remains unclear whether Meta's financial losses were a part of the consideration for ending NFTs on Instagram, but it seems that the company's plans to take over the metaverse may not be off to a great start. Nevertheless, creators on the platform are left wondering what's next and how they will be able to continue monetizing their content without NFTs.
🔵 XRAY, the first human-readable Solana explorer
Last week we saw the birth of XRAY, the first human-readable Solana explorer. Using the Helius API, which we talked about in a previous edition of the newsletter, the team behind XRAY has designed an immaculate user interface, much easier to read than anything you’ve seen before. And you can start using it here right now
🔵 Codename: Project MIDAS
After the panic with USDC depegging and the general trust in stablecoins at its lowest levels, Hadeswap thought it was a good idea to introduce their newest initiative: Project Midas, the first NFT-backed stablecoin.
Using their unique position to provide NFT reserves it only makes sense to innovate once more in terms of product offering, right? That’s what they thought. However, they couldn’t convince anyone who isn’t heavily invested in ABCs or $HADES and most people on Crypto Twitter just mocked them.
Was this just engagement farming or is there something in this crazy idea?
🟢 DeLayed
What a surprise, DeGods announced that they were delaying another one of their experiences. I call it an experience because it could be anything. We still don’t know what it is.
As DUST emissions came to an end, there was a countdown on DeGods’ website. Tick tack, tick tack. When the countdown got to zero, instead of something crazy, degens found that there was another DeLay. The only thing that they found on the website was “the experiment has officially begun” and “nominations opening in Q2 2023”
It seems that the team is instead focusing on launching the Bitcoin DeGods this week. Let’s see if this time they can deliver before the deadline
💭 History of Solana NFTs by market cap
💭 Self-custody versus the banks
🗞️ OpenAI launches GPT-4
OpenAI just launched the latest version of its AI chatbot, ChatGPT, called GPT-4. It boasts advanced reasoning skills and the ability to respond to images, making it possible to provide recipe suggestions based on photos of ingredients and generate captions and descriptions. GPT-4 can also process up to 25,000 words, eight times more than ChatGPT. Despite its impressive capabilities, OpenAI warns that GPT-4 may still share disinformation and that it has spent six months developing safety features for the new chatbot. The new model will initially be available to ChatGPT Plus subscribers, and it is already powering Microsoft's Bing search engine platform.
Want to see how people are doing impressive stuff with it? Check the thread below