Pudgy Penguins wants to use its NFT-inspired toys to bring IP to the real world

As the NFT sector continues to waddle through a period of frosty consumer interest, some collections are diving deep, exploring new waters and expanding their horizons to the physical realm in hopes of reaching more people and growing their brand.

Pudgy Penguins, an (admittedly adorable) NFT collection that also doubles as a web3 IP company, is releasing a line of toys dubbed Pudgy Toys, Luca Netz, CEO of the company, told TechCrunch+ in an exclusive interview.

The penguin plushies are being made in collaboration with PMI, which also produces toys for Fortnite and Among Us, Netz said.

The company sees physical toys as a “trojan horse” for the web3 ecosystem and NFTs. “Unfortunately, NFT revenue is not sustainable and it’s not really growable,” Netz acknowledged, adding that the toys are meant to make the company more sustainable. “Secondly, we wanted to create an IP that transcends this ecosystem, and the way I know how to do that is through physical products.”

Launched in 2021 and acquired by Netz in April 2022, the 8,888-NFT collection has grown to include real-world products and experiences ranging from live events to physical goods (like these toys).

The company has chosen and licensed 16 SKUs inspired by Pudgy Penguin NFTs from the original collection. The 16 NFTs were picked based on aesthetics, various characteristics and how engaged the owner of the NFT is with the community, Netz noted.

“Every toy is an NFT that lives on the blockchain and that NFT is licensed directly from the holder,” Netz noted. “So every time one of those toys sells, they make a royalty in perpetuity.”

The initial launch will include about 100,000 toys, priced from $5 to $35, that will be sold online and through retailers internationally. Each toy comes with a birth certificate and QR code that unlocks a series of NFTs, or a trait box, on its online platform, Pudgy World, Netz said.

“Pudgy World is where you build your character, play mini-games and interact with other users,” he added.

The company’s endeavors seem to be paying off: it recently raised a $9 million seed round. Of course, this is not the first NFT-focused company to raise capital, but the funding indicates that off-blockchain efforts are a good way for popular digital collections to build on their brand and attract external capital.

Pudgy Penguins wants to use its NFT-inspired toys to bring IP to the real world by Jacquelyn Melinek originally published on TechCrunch

Coinbase launches subscription service with focus on European expansion

Coinbase, the world’s second-largest crypto exchange, is launching its subscription service, Coinbase One, in 35 countries in a bid to retain users and grow its recurring revenue streams as the crypto economy struggles through a bearish market.

Coinbase One was originally introduced in fall 2021 in beta, and will be available publicly today onwards in the U.S., United Kingdom, Germany and Ireland, the company exclusively told TechCrunch+. The company will roll the service out in 31 other European countries in the coming months.

The subscription service offers a host of features, including no trading charges, higher staking rewards, 24/7 customer support, and pre-filed tax return documents, according to Phil McDonnell, senior director of product management at Coinbase.

In the past, a lot of Coinbase’s revenue came from trading fees, especially during the bull market, but as the crypto winter drags on, the company is looking to other areas to drive growth and diversify its revenue streams.

“Maybe 18 months ago, it was very transactional,” McDonnell said. “People come in, trade, pay a fee, and that was the relationship. Through the bull market 18 months to two years ago, there was tons of growth, but we wanted customers to stay […] That was the inspiration. How do we build a longer, deeper relationship with our customers and make it a win-win?”

That strategy seems to be working, at least for now. Coinbase’s subscription and services revenue rose a whopping 138% to $361.7 million in the first quarter of 2023, from $152 million a year earlier. Overall, subscription and services revenues grew over 17x to $793 million in 2022 from less than $50 million in 2020, per the company’s Q4 2022 shareholder letter.

“We are making a trade-off with zero-fee trading to set it up so customers win, and we think we’ll win in the long term,” McDonnell said.

European focus and future plans

Coinbase is specifically focusing on expanding its presence in Europe, McDonnell said.

Coinbase launches subscription service with focus on European expansion by Jacquelyn Melinek originally published on TechCrunch

Even as crypto exchanges exit Canada, Coinbase intends to play the ‘long game’

The world’s largest crypto exchange, Binance, said last week that it would stop servicing Canadian customers due to “new guidance related to stablecoins and investor limits provided to crypto exchanges.” But while the exchange said it will return to the country “someday,” its exit leaves behind a huge gap that its competitors are aiming to fill.

Coinbase is one of the big players in the space planning to do just that.

Coinbase, close behind Binance as the world’s No. 2 crypto exchange, is “open for business,” Nana Murugesan, VP international and business development at the exchange, told TechCrunch+. “We’ve always focused on playing the long game.”

Overall, the Canadian market for crypto is large, but it’s far from the largest. Crypto revenue in the country is expected to reach $1.42 billion in 2023, per Statista. And currently, about 13% of Canadians own or use crypto, down slightly from the year prior and up 116% from 2021, also per Statista.

In late February, the Canadian Securities Administrators (CSA) started requiring crypto exchanges to sign new, legally binding undertakings if they were pending registration with the agency. CSA took action after a number of crypto trading platforms went insolvent, including Voyager Digital, FTX and BlockFi.

Even as crypto exchanges exit Canada, Coinbase intends to play the ‘long game’ by Jacquelyn Melinek originally published on TechCrunch

Binance is banking big on M&A and VC deals

The world’s largest crypto exchange by volume, Binance, is making big bets on M&A this year, paying particular attention to geographical gaps and customer base. And to help the exchange get there is the company’s chief business officer, Yibo Ling.

He joined Binance nearly seven months ago, after stints at Bird and Uber. Ling’s role at the company focuses on VC investments, strategic M&A and business development. And there’s a lot to look at there; Binance Labs, the exchange’s VC arm, has a portfolio valued at about $9 billion right now, Ling shared. “That’s well in excess of 10x return.”

I sat down with Ling at Consensus 2023 to learn more about Binance’s focus for investments, layer-1 blockchains, geographical and product growth for the business, among a ton of other things.

(This interview has been edited for length and clarity.)

I know you just started recently, but what are the profitability metrics that Binance looks at as its North Star? What are the most impressive or important metrics? And how has performance been?

In my role as chief business officer, I don’t primarily focus on operating the exchange, I focus on the deal work that we do. So all the outbound VC investments that focus on strategic M&A, bringing in capabilities to the core exchange, and I focus on our commercial business development relationships. So I’m probably not the right person to talk about that but yeah, the business seems pretty healthy. Clearly the market has meaningful impact, but the business is doing quite well.

When you look at VC investments and strategic M&A, what areas is Binance focusing on and most interested in?

Our VC arm, we call that Binance Labs, and the mission there is really this notion that a tide lifts all boats. So the investments that we do are basically across the board. That’s why it’s actually good for me to be in places like this [at the conference], because there are so many projects, working on different things. And we very generically invested in almost everything. So let me get more specific in that, but we also invest upstream and downstream.

So we invest in the growth stage, we invest in early stage, seed and [Series] A. Our preference and our focus is on seed and [Series] A going early stage, because that’s where we think we can add the most value. But all of that is just to zoom back to the broader thing that we’re focused on from Labs perspective. We think that there’s just so much potential for growth, for disruption, for improvement in many aspects of how people go about their lives. And so that can be enabled by web3 and blockchain technology. And so, ROI and return metrics are important for us there on that side of the house. The value of our portfolio is around $9 billion right now. That’s well in excess of 10x return. Again, mostly in the early stage, some in later stage investments.

For the most part, we don’t exit our investments because we’re able to buy and hold them really, really long term because of the mission. At this point we have probably over 200 portfolio companies on every continent other than Antarctica. We also have incubation, not just sort of direct investments. And so about a quarter of those portfolio companies come out of our incubation programs.

Binance is banking big on M&A and VC deals by Jacquelyn Melinek originally published on TechCrunch

Tensor is climbing to the top of the Solana NFT marketplace totem pole

Just two months ago, NFT trading platform Tensor raised $3 million in a seed round. Fast forward to today, and it is close to regaining its position as the biggest Solana-based NFT marketplace, based on market share.

“A lot of momentum came from the announcement,” Tensor co-founder Richard Wu said, speaking about the seed round, which TechCrunch covered exclusively in March. “When it comes to a marketplace, liquidity is key to attract users, and it had a snowball effect on itself.”

Tensor last week reached 45% of Solana’s NFT market share, surpassing Solana-centric NFT marketplace Magic Eden’s 44% share over a seven-day period, according to data collected by Tiexo. While the 1% difference may seem nominal, it’s a huge jump for a fairly new platform up against a giant with almost 200x the users.

Tensor launched a private beta in June 2022 and opened to the public the following month. In March, it had over 30,000 monthly active users, and by April, its MAU was up about 317% to over 125,000, co-founder Ilja Moisejevs said.

Compared to Magic Eden, which has 22 million unique monthly visitors, that makes its share of the market is substantial.

Magic Eden has since regained the top slot for Solana-based NFT volume over the past seven days with 44.2% share, per Tiexo data, and Tensor isn’t far behind at 40.5%. But market share is “not the top priority” for Tensor, Wu said. “For us, market share is a proxy for what we’re building, but at the end of the day, our goal is to grow Solana 10x.”

“I think a lot of people on Twitter like to dramatize things,” Moisejevs said. “They want to see a battle of marketplaces. There’s healthy competition between us [and Magic Eden], but the point we want to drive home is we’re not here to win 80% of a non-existent market. We want us to win, Solana to win, and we will be a bigger business if Solana as a chain does well.”

Solana is the third-largest blockchain for NFTs by sales volume, with over $3.96 billion in all-time sales, according to data from NFT aggregator CryptoSlam. In the past 30 days, Solana NFT sales volume decreased about 24.4% to $73.3 million, the data showed.

In general, the Solana ecosystem is getting stronger, at least compared to six months ago, Wu said. One prime example of that is the people and projects like Mad Lads, he said, adding that at one point, it was a top collection by volume ahead of some Ethereum blue chip collections. “What they’ve done and demonstrated with their launch on Solana is incredible.”

Tensor is climbing to the top of the Solana NFT marketplace totem pole by Jacquelyn Melinek originally published on TechCrunch

Crypto needs a global view to build better regulatory models

The crypto industry is increasingly worried that U.S. regulators are clamping down too hard on the space. Predictably, that’s making companies in the space look outwards to regions that have clearer guidelines in place, and it seems there are lessons the industry, and regulators around the world, can learn from looking beyond their borders.

“Hopefully, we’ll see the U.S. take a stand,” Denelle Dixon, CEO and executive director of the Stellar Development Foundation, told TechCrunch+ at Consensus 2023. “If we don’t, there’s going to be a lot of chaos.”

She’s not the only one who thinks so. Rebecca Rettig, chief policy officer of the layer-2 blockchain Polygon, told TechCrunch+ that she spends a lot of time in D.C. to meet policy makers, regulatory agencies and other groups for a variety of reasons. Some conversations are to help educate people, while others are “pressing” meetings over crypto policy. “We have a big divide between industry and regulators, and to bridge that gap, industry has to move a bit.”

Among the conversations in Congress: market structure, stablecoins and the industry after FTX’s collapse.

Regulators are applying the law as it is written today and as they see it. Rebecca Rettig, chief policy officer, Polygon

“Regulators are applying the law as it is written today and as they see it,” Rettig said. “That’s why we’ve seen some hostility, or a ‘regulatory crackdown,’ as people are calling it. The industry needs to understand that they need to comply with the ethos we’re talking about where there aren’t intermediaries.”

Regulators and policy makers also want to see non-financial use cases for crypto. Last month, Polygon launched a crowdsourced database called Community Policy Initiative No. 1, which aims to share real-world use cases of web3, ranging from social impact to gaming applications. The database will be published once it has collected enough from the community, according to its website.

“Because we’re building utility around the technology, I think we’re going to see interest and acceptance from regulators around the world, including the U.S.,” Dixon said. “It’s about showing we’re solving problems.”

Crypto needs a global view to build better regulatory models by Jacquelyn Melinek originally published on TechCrunch

Arbitrum co-founder sees DAO’s resolution to voter drama as a “testament to decentralization”

It’s been a little over a month since the Arbitrum Foundation drama, where the foundation transferred funds from Arbitrum DAO without the community’s approval, sparking an uproar. But if you ask Steven Goldfeder, CEO and co-founder of Offchain Labs, that blunder was just one of the early steps on the journey to decentralization.

In late March, Arbitrum’s decentralization mission hit a hurdle: Its foundation had proposed to transfer 750 million ARB tokens, worth about $1 billion at the time, to its own wallets, but before the DAO could finish voting on the proposal, the foundation, a centralized entity, sent the majority of the tokens to itself. That backfired when the community voted against the move.

Predictably, that didn’t go down well with the community. In response, the Arbitrum Foundation proposed to expand ARB token holders’ oversight of the budget as well as their voting powers. At the time, the foundation said it would not move the 700 million ARB tokens that were transferred to its Administrative Budget Wallet until the community approved “an acceptable budget.” It also said it would propose new actions to make governance of the DAO “more accessible.”

This was followed by a couple rounds of votes in which the community approved proposals addressing what would happen to the ARB tokens moved to the foundation’s wallet, and amendments to the DAO’s governance, constitution and bylaws.

The dust seems to have settled now, but these events indicate the DAO’s governance voting model is working (for now) and may lead to greater transparency and community control.

For Goldfeder, the course of events, while damaging, eventually led to a good thing. “It was unfortunate that this was the way it happened,” Goldfeder said. “The right intentions were there and I was hopeful the foundation and DAO community would resolve this.”

Goldfeder’s company helped develop Arbitrum, a layer-2 scaling platform for Ethereum. He’s also a launch partner and community member, but he was careful to note that he doesn’t speak on behalf of the DAO or the foundation.

“If anyone had any qualms or questions about who’s in control there, this situation made it clear to the foundation and Offchain [Labs] that the DAO is in control because the very first governance proposal failed. It’s hard for anyone to bypass it,” Goldfeder said.

Arbitrum co-founder sees DAO’s resolution to voter drama as a “testament to decentralization” by Jacquelyn Melinek originally published on TechCrunch

Mastercard, PayPal and Robinhood dive deeper into crypto as industry shows ‘promise’

As the crypto market works its way through a downturn, more incoming money and users could help it weather the storm.

But right now, it’s sometimes challenging for the layperson to get into crypto. Understanding gas fees and wallets isn’t intuitive, and the perceived miasma of complication that currently surrounds the space is no help, either. To help foster user adoption and the resulting capital inflow, web3 needs smoother on- and off-ramps to make it easier to buy into and interact with blockchains.

Trusted providers with existing mainstream audiences are betting they can help fill that gap.

In recent weeks, a number of brand-name mainstream financial institutions have been rolling out new crypto products and services in an attempt to make the space more accessible. At the end of April, Mastercard, PayPal and Robinhood all independently talked about the measures they’re taking to do so at Consensus 2023 and how they are furthering their moves into the crypto ecosystem.

“Despite the market, we continue to be at the cusp of mainstream adoption,” Jose Fernandez da Ponte, SVP and GM of blockchain, crypto and digital currencies at PayPal, told TechCrunch. “We got into this technology because we believe it contributes to the idea of a faster, more inclusive financial services environment,” Ponte said.

The crypto ecosystem is in a “transitionary period,” according to Raj Dhamodharan, EVP of blockchain and digital currencies at Mastercard. The industry is figuring out the technology and what else can be extracted from it, and “a lot of energy is going to figuring out the next use cases,” he said.

People new to crypto are likely to be more willing to use a platform that they already know and trust to buy into web3 products and services. Household financial names opening their doors to the ecosystem could prove to be the catalyst that pushes crypto from a niche to something more.

On April 28, Mastercard launched “Crypto Credential,” a set of standards and infrastructure that aims to help certify interactions between consumers and businesses using blockchain networks.

“We’re excited about the underlying technology and the promise the technology offers,” Dhamodharan said. “We think public blockchains can be a utility to store and move value over time…and you have to show that you can do it in a regulatory compliant way.”

Mastercard, PayPal and Robinhood dive deeper into crypto as industry shows ‘promise’ by Jacquelyn Melinek originally published on TechCrunch

Investors cheer as Coinbase beats Q1 expectations

Today after the bell, Coinbase reported its Q1 2023 financial results, handily beating expectations. In the first three months of the year, the U.S. cryptocurrency exchange generated net revenues of $736 million, a $79 million net loss, and adjusted EBITDA of $284 million. 

Analysts had expected a far slimmer $655 million in revenue and a larger loss from the company in the first quarter. In after-hours trading, shares of Coinbase are up a little more than 7%.

Certainly, Coinbase’s results are a welcome dataset for both crypto bulls and investors in the company alike. 

Let’s explore how Coinbase beat analyst estimates, and what it is forecasting for the coming quarter. Can the company keep up its return to adjusted profitability? And what does it say concerning Q2 crypto trading activity? 

Coinbase’s Q1 2023 results, explained

If we compare Coinbase’s Q1 2023 results to its year-ago totals, we are presented with an odd set of numbers. Yes, Coinbase’s revenue in Q1 2022 was far greater ($1.17 billion) than what it posted in its most recent quarter. In contrast, however, in the year-ago period, the company’s net loss was far greater ($430 million) and its adjusted EBITDA far smaller ($20 million).

Investors cheer as Coinbase beats Q1 expectations by Alex Wilhelm originally published on TechCrunch

Brett Harrison ‘never lost faith in the business’ while at now-shuttered FTX

It has been almost six months since FTX collapsed, and a lot has transpired since then, including executives being charged to industry businesses facing ripple effects from its demise.

At Consensus 2023, Anthony Scaramucci, former White House comms director and founder and managing partner of SkyBridge Capital, which invested in the exchange and Brett Harrison, founder and CEO of Architect and former FTX US president, shared their experiences during FTX’s downfall and what life has been like since.

“It’s important to talk about it because if I can prevent one person from having that happen to them what happened to us then it’s worth it to me to talk about it,” Scaramucci said.

Harrison resigned from FTX in late September, weeks before it collapsed. In January, he launched his own company that makes trading infrastructure for large crypto investors. His startup raised $5 million and is backed by Coinbase Ventures, Circle Ventures and Scaramucci, among others.

SkyBridge Capital sold a 30% stake to FTX, weeks before the crypto exchange exploded. “We went from hero to zero in that transaction in about eight weeks,” Scaramucci said.

Neither Scaramucci nor Harrison have spoken to former FTX CEO Sam Bankman-Fried in months. Harrison said the last time they talked was when he resigned from FTX US: He said he sent Bankman-Fried a text message telling him he was departing, to which Bankman-Fried replied with a red heart emoji.

Brett Harrison ‘never lost faith in the business’ while at now-shuttered FTX by Jacquelyn Melinek originally published on TechCrunch