Currently Relevant
May 23, 2024

Currently Relevant: Edition #21

This month: Vodafone outlines its vision for blockchain and IoT; Adidas partners with move-to-earn game Stepn; a new project is recycling the code Facebook used to underpin its ill-fated Libra stablecoin; VCs flock to restaking projects despite Vitalik Buterin’s skepticism; and crypto is back in the courtroom with cases concerning Ethereum, Craig Wright, Zhao Chengpeng, Tornado Cash and Genesis.

Web3 meets IoT as Vodafone combines SIM cards with digital wallets

A Vodafone subsidiary called PairPoint is turning mobile devices into a gateway to Web3 services. In an interview with Yahoo Finance, PairPoint CEO David Palmer explained how the company is equipping SIM cards with a hardware module capable of securely generating the private keys used to sign transactions and access digital wallets on blockchain networks such as Ethereum. 

This opens up a number of interesting possibilities, including autonomous IoT transactions, with Vodafone claiming that “Pairpoint… allows vehicles, devices, and machines to autonomously and seamlessly interact and trade with each other". This could be used to enable automation, whereby a delivery fleet can interact with warehouses to provide real-time status updates, for example, or an autonomous electric vehicle can pay for its own charging at a connected station. Vodafone is one of the largest mobile providers in Western Europe by number of subscribers, so if PairPoint can overcome regulatory barriers, it would be well placed to become a significant driver of Web3 adoption. 

Weekly BTC ETF inflows rebound to highest level since March

After a turbulent month, net weekly inflows into Bitcoin spots ETFs regained ground this week, climbing to their highest level since March. According to data published by Farside Investors, Bitcoin ETFs accrued $948 million in net inflows from May 13 to May 17. The results follow weeks of outflows from the segment, totalling $931 million from April 8 to May 10 amid interest rate uncertainty and speculation about the effect of the Bitcoin halving in late April. Bitcoin’s price has also regained ground last week, rising to $67,000 last Friday.

Adidas Steps into move-to-earn space with new partnership

Why is sportswear giant Adidas teaming up with Stepn, a Web3 game that has been criticized by some Web3 sources as having “Ponzi-economics”? It’s all part of the fashion brand’s push into the NFT and “move-to-earn” space.

The collaboration will see Adidas introducing a special line of virtual sneakers for the app, a Web3 game where users need to purchase virtual sneakers to earn rewards for real-life activity like running or walking. Attributes of the virtual sneakers like “efficiency”, “luck”, “comfort” and “resilience” play a crucial role in determining earnings. This is not the first Web3 partnership for Adidas, which has collaborated with Coinbase, Bored Ape Yacht Club, and NFT influencer Gmoney among others in recent years.  

Initial reports suggested that the Adidas NFT sneakers would be sold on the Mooar NFT platform and priced at 10,000 GMT in the native Stepn token, which then equated to approximately $2,500. However, current listings at time of writing show a floor of 19,970 GMT ($4,482) and ceiling of 88,888 GMT ($19,951) for the sneakers, depending on rarity and attributes. 

Up until November 2023, Adidas VP Scott Dunlap had been listed as a strategic advisor to Stepn. It has faced criticism for allegedly having a Ponzi-like economic model, which overly depends on user growth to cover incentive payouts to existing players. Last June, Twitter user DonCrypto told Vice that he was getting about $60 a day for a 10-minute walk after an initial $1000 outlay for a virtual sneaker. In response to the concerns, Stepn says that it is using tokenomic measures and adjusting gameplay to try to ensure that players keep playing for as long as possible, reinvest winnings, and do not cash out in large numbers. Time will tell whether the deal represents a step in the right direction for Adidas or a step too far.

Fast fashion: HUGO teams up RB F1 to launch metaverse experience

In other fashion partnership news, HUGO has teamed up with RB F1 Team to launch a metaverse experience called HUGO GARAGE on the centralized gaming platform Roblox. The space will allow fans to walk around the new RB F1 car featuring HUGO branding, search for patches to customize it, and purchase “exclusive” digital wearables. Earlier this month, our co-founder German Ramirez broke down the most prominent fashion brands in Web3 in a data blog.

Breathing new life into Libra: $38M boost for Movement Labs

You probably haven’t heard anything about Facebook’s stablecoin project Libra in a while. In truth, Mark Zuckerberg was always an unlikely ambassador for a decentralized, privacy-preserving future and he seems to have finally lost interest in Web3 over the last few years, pulling back on most of Meta’s Web3 initiatives. But now a Web3 project is seeking to upcycle some of Facebook’s old blockchain code after announcing a new funding round. 

Movement Labs has raised $38 million in a Series A round led by Polychain. The project is repurposing the code that Facebook created for its now defunct Move programming language, which was originally developed to underpin the Libra stablecoin. First announced in June 2019, Libra was later renamed to Diem before being mothballed and sold to Silvergate Capital Corporation in February 2022, following regulatory challenges. 

Movement, the new layer-2 network based on the Move code, is slated to be Ethereum Virtual Machine (EVM) compatible, which means that apps written for Ethereum will run on it. Movement aims to increase security by preventing reentrancy attacks (which led to the EthereumDAO hack), while using object-based abstraction to try to make it easier for developers to quickly and efficiently realize their vision in code.

Restaking projects continue to attract funding, despite Buterin concerns

Ethereum co-founder Vitalik Buterin seems to have the ear of everyone in the Web3 world, but that doesn’t mean that venture capitalists always follow his advice. Despite his warning last year about the potential unintended consequences of restaking projects, VCs continue to back them.

Aligned Ledger, a protocol secured by the restaking project EigenLayer, has completed a $20 million Series A funding round led by Hack VC. The protocol focuses on verifying zero knowledge proofs (ZKPs) at lower cost. ZKPs have long been considered a key enabling technology in facilitating things like decentralized identity services, anonymous voting mechanisms, and secure information sharing.

The round is one of a number of VC recent investments in EigenLayer services. In late April, Othentic, which provides developers with pre-built components for creating EigenLayer services, announced the close of a $4 million funding round led by Finality and Breyer Capital.

Aligned Ledger is an example of an actively validated service (AVS) on EigenLayer. AVSs seek to take advantage of the pooled security offered by ETH which has been restaked. Restaking enables ETH holders to earn extra returns on assets that have been previously staked within Ethereum. The co-founder of Ethereum Vitalik Buterin expressed concerns about restaking last year, warning that extending the scope of the responsibilities of validators beyond the core network to other external projects could introduce significant systemic risk.

Crypto in the courts: Consensys, Craig Wright, Zhao Chengpeng, Tornado Cash and Genesis

Consensys hits back at SEC with new lawsuit. 

The Ethereum services company Consensys is suing the Securities and Exchange Commission (SEC), claiming that it is attempting to unlawfully regulate ether. The move comes after reports last month that the SEC may be considering an attempt to reclassify ether as a security. In a recent Financial Times editorial, Consensys founder Joseph Lubin claims that reclassifying ether would be tantamount to outlawing it. However, industry specialists like Grant Gulovsen, a crypto-focussed attorney, contend that it is unlikely to happen, arguing that it would affect millions of Americans and would be impractical to enforce.

Wright’s web of lies dismantled by UK judge

“The evidence is overwhelming”, Dr. Wright is not Satoshi. With these words, a UK judge delivered a clear verdict on a case concerning Craig Wright’s long-held contention that he is Satoshi Nakamoto, the creator of Bitcoin. In his written judgment, Justice James Mellor decried Wright for producing falsified documents, lying, and using the courts as “a vehicle for fraud”. The case was the result of an action taken by the Crypto Open Patent Alliance (COPA), a non-profit consortium. COPA launched the case to prevent Wright from continuing to launch lawsuits against Bitcoin developers, companies and influencers. Wright first made the claim to have invented Bitcoin in 2016, but his assertions were met with skepticism by cryptography experts. While not many people took Wright’s claims seriously, the victory for COPA will potentially free up companies from further litigation. 

Former Binance CEO Zhao receives four-month sentence

The founder and former CEO of Binance, Zhao Changpeng, has been sentenced to four months in prison by a US federal court after pleading guilty to charges of money laundering. The prosecution alleged that Zhao had failed to implement effective AML procedures at Binance, which enabled individuals to launder money and transact with individuals based in sanctioned countries. 

Genesis creditors earmarked for $2 billion in compensation

The creditors of bankrupt crypto lender Genesis will receive up to $2 billion in compensation from a “victim’s fund” established by the New York attorney general’s office. The settlement was originally announced in February, but was subject to a legal challenge by Genesis’ parent company Digital Currency Group (DCG). 

Tornado Cash founder receives 64-month sentence

The developer of the crypto mixing service Tornado Cash, Alexey Pertsev, has been sentenced to 64 months for money laundering by a Dutch court. Crypto mixing services are used to obscure transaction histories on blockchain networks like Ethereum. Pertsev’s defense team contended that he was not responsible for how other people misused the open-source smart contracts that he developed. This argument was rejected by the court, however, which stated that Tornado Cash amounted to more than a collection of smart contracts and was “run like a company”.

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