Tag: EC Blockchain

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Uniswap Labs COO says mainstream crypto adoption hinges on accessibility and ease

Throughout the web3 world, companies, protocols and projects alike are pushing to onboard a billion users — what they see as the tipping point for cryptocurrency use to grow exponentially. But that number is only possible — obviously — through increased adoption.

That means major players in the space must make improvements regarding ease and accessibility for the non-crypto natives who want to use crypto. Uniswap Labs, a company building upon the decentralized protocol Uniswap, aims to do just that.

Although it may seem like “web3” is little more than a buzzword, people in the space believe that there’s a deeper meaning to it.

“Web3 is revolutionizing financial technology and financial infrastructure in one,” Uniswap Labs COO Mary-Catherine Lader said to TechCrunch. “Web3 allows any app, any website, to invent value in a digital economy without having to ask for permission or paying for that service.”

Uniswap Labs COO Mary-Catherine Lader

Uniswap Labs COO Mary-Catherine Lader. Image Credits: Uniswap Labs

Today, crypto users don’t have to go to the bank or work with a payments company every time they want to make a transaction online because they’re able to link their crypto wallets and pay through a decentralized permissionless protocol like Uniswap. “This has never been possible before,” Lader said.

Uniswap is an open source permissionless protocol that developers can use and embed into their platforms so crypto users can swap tokens, while Uniswap Labs is a business that builds products on top of the protocol.

Earlier this week, Uniswap Labs launched Swap Widget, which allows users on NFT marketplace OpenSea and other web3-based applications to exchange or “swap” cryptocurrency on the platform without having to leave the site.

Widgets like this are already implemented into Web 2.0 sites like Amazon, where you can easily pay for items when you check out, but given web3’s nascent stage, a task as simple as making a payment is more complex and involves a number of steps to successfully utilize crypto products and services.

“There are too many steps today [to use crypto],” Lader said. “You should be able to join a DAO in one click. You should be able to support your favorite NFT artists in one click.”

There’s a sizable — and growing — market for one-click web3 use. In December 2021, there were 295 million crypto users globally, up 178% from 106 million at the beginning of the year, according to a January 2022 report by cryptocurrency exchange app Crypto.com. The firm reported that it expects the number of global crypto owners to reach 1 billion users by the end of this year.

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Dallas Cowboys’ partnership with Blockchain.com signals more mainstream crypto exposure

For the first time, a crypto exchange is partnering with an NFL team in a long-term, exclusive relationship that could bring further exposure of digital assets to mainstream audiences.

The partnership between Blockchain.com and the Dallas Cowboys was announced on Wednesday at the NFL team’s headquarters in Frisco, Texas, by Jerry Jones, the football team’s owner, president and general manager, alongside Peter Smith, Blockchain.com’s co-founder and CEO. NFL rules prevented the price or deal length from being disclosed, according to Brooks Wallace, head of communications at Blockchain.com.

This is the first national professional sports deal for the crypto company, which has been around since 2011 and will include branding, advertising, content and event opportunities. However, it will not include naming rights to the Cowboys’ stadium, which will remain AT&T Stadium.

Its stadium holds 80,000 people at capacity and will be adding a QR code on every seat that will link to the Cowboys’ website and highlight Blockchain.com’s wallet so fans can learn more about crypto, Wallace said.

“The Cowboys have built one of the most valuable and treasured brands in America, and one of the reasons we wanted to partner with them is to collaborate on building our brand together,” Smith told TechCrunch. “We’re primarily technology people, not brand people, so learning from the best is something we’re really excited about.”

Millions of Cowboys fans are going to learn about crypto this football season, Smith said. “The Thanksgiving Day game is the most-watched [Cowboys’] TV game and we’ll be there this Thanksgiving Day game.”

In addition, the partnership will provide Cowboys fans with the ability to engage both IRL and online through social media promotions on Blockchain.com’s wallet. The offers range from away-game VIP trips to player-hosted events, it said. The partnership also aims to educate fans on digital assets and will host an educational summit for people to learn more.

“​​They are bringing Wall Street to Main Street by making digital assets available to anyone, anywhere in the world — and that’s a touchdown for our millions of global fans,” Jones said in a statement.

Blockchain.com CEO Peter Smith and

Peter Smith, Blockchain.com’s co-founder and CEO, and Jerry Jones, Dallas Cowboys owner, president and general manager. Image Credits: Richard Rodriguez / Getty Images

This partnership comes a few weeks after the NFL announced on March 22 that teams would no longer be forbidden from sponsorship contracts with blockchain-based exchanges or wallet companies. Individual clubs, however, are limited in signing licensing deals for NFTs and can only put out the digital collectibles “as permitted in connection with League-level NFT partnerships.”

“The League has identified certain blockchain-related businesses that we believe may be engaged for League and club promotional relationships without undertaking excessive regulatory or brand risk,” three league executives wrote in the memo last month, “provided that the companies in question and the specific products being promoted have been properly vetted.”

Regardless of the NFL’s rules, professional players — like Tampa Bay Buccaneers quarterback Tom Brady, who partnered with crypto exchange FTX — are still getting into crypto deals off of the field.

“I think you will see a few NFL [and crypto] deals follow,” Smith said. “This will be the first of many NFL deals.”

Blockchain.com plans to work closely with the Cowboys and NFL to expand the use of crypto over time in the stadium experience and online fan experience, Smith noted. “We’ll start small then expand it over time over the next few years.”

Crypto in sports

Partnerships and deals with sports teams aren’t a new concept, but crypto-related ones have been ramping up in the past year.

Outside of the NFL, there has been a major influx of crypto companies joining forces with U.S. professional sports teams and players in the past 12 months.

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Blue-chip NFT owners explore alternative uses as sales decline

The NFT marketplace is a sector of the crypto ecosystem that saw exponential growth in the past year. But as sales have decreased in recent months, blue-chip NFT holders are looking for other opportunities to scale.

NFT global sales volume hit $4.6 billion in January, but declined almost 50% to $2.4 billion by the end of March, according to data from NFT data aggregator CryptoSlam.

Weak projects with loosely tied communities can be partly to blame for the decline in overall NFT sales, according to the founder of Burnt Finance, who goes by the alias Burnt Banksy.

Although total NFT sales are down, blue-chip NFT projects like Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), and Azuki have increased 169%, 199.6%, and about 146% over the past 30 days, respectively, CryptoSlam data showed.

While a number of NFT owners are selling their digital items, others have “strong beliefs” in their NFTs and want to hold onto them, Banksy said. So there has been a rise in NFT lending because owners want to utilize them as assets to gain liquidity and, in turn, generate additional yield elsewhere or purchase more assets, he added.

The NFT loan volume on decentralized lending NFT marketplaces Arcade and NFTfi have increased 171% from $30.63 million in Q4 2021 to $83.17 million in Q1 2022, according to data by Dune Analytics user gideontay.

“The majority of the lending market is focused on the established high-value NFT collections,” Stephen Young, CEO of NFTfi, told TechCrunch. “While overall NFT sales might be down, the top-tier projects still retain considerable value.”

Similar to any other assets, people are lending their NFTs to get liquidity and to maximize their own capital efficiency, Marco Manoppo, research director at Digital Asset Research, told TechCrunch.

“This can be done either via notable crypto brokerages such as Genesis or via decentralized applications that are trying to facilitate NFT lending through smart contracts, abiding by a certain set of parameters to manage the liquidation risks,” he said.

Arcade specializes in providing NFT owners the ability to get a loan by putting up their digital collectibles as collateral, as opposed to having to provide some other asset like a house or car. The company’s platform has about $17 million in loan volumes and more than $25 million in blue-chip NFTs locked in escrow, Gabe Frank, CEO and co-founder of Arcade, said.

“If there’s a slowdown in primary sales for NFTs and lending is picking up, that’s because there’s more awareness and education about what people can do with their NFTs,” Frank said.

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Crypto is altering the investing landscape for even the most disciplined VCs

The long-awaited re-correction of private tech startup valuations and fundraising expectations has a web3-sized asterisk next to it.

While many funds are returning to more conservative check-writing, with a focus on profitability and business fundamentals, crypto remains a sector in the spotlight that attracts dedicated billion-dollar funds and investment terms that remind us more of 2021 than 2022.

So, is it hype, the promise of innovation in crypto, or a little bit of both? Venture capitalists and founders across all fundraising stages spoke to current investment strategies when it comes to investing in this cohort of startups. The contrasting strategies come down to technical differences in cap tables, the culture of communities that many companies in this space are built upon, and, of course, the non-crypto world’s fear of missing out.

Tokens and the future of future equity

Web3 cap tables typically range across four different categories, Chris Matta, president of 3iQ Digital Assets, explained to TechCrunch. The first is the traditional cap table, which is similar to traditional technology companies and follows a classic business model that’s more “accessible and understandable by investors,” but would not include a token model.

The second is a hybrid cap table that has a core list of traditional equity holders along with some investors who are in a token conversion agreement that will grant them token allotments once the token tied to the company is launched. “These business models focus on the token but use the equity as a transition structure,” Matta said.

Third is a token-first structure, which has a “lean cap table” consisting of the startup founders that’s a pure placeholder on the road to a fully tokenized structure, i.e., the primary capital-raising vehicle, Matta said. “These structures were popular in the 2017-2018 [Initial Coin Offering] days and have become less prevalent today.”

Lastly, decentralized autonomous organizations (DAOs) that have popped up in the past 12 months generally have no centralized entity but have typical rights and governance structures that a traditional non-web3 company would have.

There’s also a simple agreement for future tokens (SAFT), where investors don’t own equity in the company, but see value in its token and will eventually get the company’s native coin, Yida Gao, general partner at Shima Capital, said. Alternatively, there are simple agreements for future equity (SAFE), in which a company provides an investor rights to future equity without specifying the price per share during the initial investment.

Influx of cash-rich attention

“The days are long but the years are short in crypto,” Stan Miroshnik, partner and co-founder of 10T Holdings, said to TechCrunch. “When we started the fund (over three years ago), the premise was really there was no one tooled up to write a $50 million check into the blockchain space at all.”

In the past 12 months, there’s been a combination of traditional growth investors and crypto-focused investors tapping deeper into the space. Then there are strong existing venture asset managers with more dedicated crypto strategies like Andreessen Horowitz (a16z), Lightspeed Venture Partners, Bain Capital and Sequoia Capital, to name a few.

Yet, things are accelerating across the board in crypto. Last year, about $32 billion of capital pooled into the crypto world, and this year, $11.35 billion has been invested to date, according to data compiled by PitchBook.

There’s a clear difference between traditional equity investing and putting capital to work in web3 and crypto companies in terms of ownership, Gao told TechCrunch. “In traditional equity investing you want to have a Series A or seed stage investor have 20 to 30% ownership of the company,” he said. “But having 20 to 30% ownership of a token or of a network is very bad and frowned upon by the community. And web3 is all about the community.”

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What the Binance bailout of Axie Infinity means for crypto’s future

The company behind Axie Infinity, a popular crypto play-to-earn game, raised $150 million in funding this week to help reimburse users who lost funds worth about $625 million in a hack last week. Axie Infinity’s creator, Vietnamese gaming studio Sky Mavis, had garnered wide acclaim for building the most-played NFT game of all time, with 2.2 million monthly active players, according to the company.

What’s interesting about this funding round is that it was led by crypto exchange Binance – the highest-volume exchange globally – although Binance hadn’t participated in Sky Mavis’ prior raises. More on that later, but first, some context. 

Existing Sky Mavis investors, including Andreessen Horowitz, Paradigm, and Accel, joined Binance in this round to help bail out Axie, but once news of the hack broke, their involvement was all but expected. Those investors already had a financial stake in the game’s success, particularly a16z, which led the company’s $152 million Series B round last October. Sky Mavis earned a nearly $3 billion valuation during that round, signifying quite a bit of fanfare for a company that had raised a total of just $7.5 million five months prior. 

The hack, which took place on Axie’s Ethereum-based sidechain, Ronin, marks the largest known crypto heist to date. It was a bad look not only for Sky Mavis, but also for investors like a16z that had hyped Axie as the future of crypto. It begins to look even worse when you consider the demographics of Axie players overall – over 25% are unbanked, the company said, and many are low-income workers in developing countries who rely on Axie for a significant portion of their income.

It took six days before Sky Mavis or any of its investors discovered the hack had occurred, which infuriated a lot of people, and once the company found out, it immediately scrambled for solutions. While Sky Mavis announced it was working with law enforcement to investigate the situation, it’s very rare for funds to be recovered after a crypto hack, let alone returned to users. The search process is just too complex, given that there’s no information about the hacker readily available besides the wallet address they used to transfer funds out of Axie. 

It’s worth noting that the majority of the funds are still sitting in the hacker’s wallet, although the hacker did appear to move some 2,000 ETH out of the wallet to privacy tool Tornado Cash, which allows users to mask their wallet address while withdrawing funds.

So if Sky Mavis couldn’t track down the hacker and recover the funds that way, it had to think of other ways to make up the shortfall or risk the reputational hit of letting its users take a huge financial loss that stemmed from the company’s own security weaknesses.

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Terra’s founder plans to back its stablecoin with a ‘basket’ of cryptocurrencies

There have been many headlines in the past few weeks surrounding the choices of Do Kwon, the founder of Terraform Labs, which created the crypto tokens LUNA and stablecoin TerraUSD (UST).

Kwon previously announced plans to obtain $10 billion in bitcoin for reserves to “open a new monetary era of the Bitcoin standard.” The funds will be used to back UST in a decentralized foreign exchange reserve to keep the value of the stablecoin at a fixed rate.

On Wednesday, a few hours before speaking to TechCrunch, he casually tweeted that he bought $230 million in bitcoin.

Kwon told TechCrunch Terra has purchased $1.6 billion in bitcoin so far and plans to purchase an additional $1.4 billion with capital from Luna Foundation Guard. The Terra protocol will buy the remaining $7 billion of bitcoin through users wanting to mint UST. “Users would put bitcoin into the reserve and then get UST,” he explained.

But what’s more interesting is that these bitcoin purchases are just the beginning of Kwon and Terra’s larger road map to expand and integrate the stablecoin deeper into the crypto ecosystem.

Kwon plans to back UST with other Layer 1 (L1) blockchains like Solana and Avalanche, to name a few, in the short term.

“We’re big believers of Bitcoin, so we’re just going to continue to buy whenever there’s an opportunity to,” Kwon said. “Overtime, Terra is going to be backed by a basket of the top Layer 1 assets.”

He did not clearly note which L1s that would entail, but he said that bitcoin will remain the dominant reserve for UST. “I don’t think we’ll have covers of all the ecosystems within the next few weeks, but we’ll turn on reserves for a few of the popular ones,” Kwon said.

There is a circulating supply of 16.72 billion UST in the market and the current volume of the stablecoin is $672 million, up 9.2% in the past 24 hours, according to data on CoinMarketCap at the time of publication. UST is the 14th largest cryptocurrency by market capitalization.

As the Terra ecosystem begins to grow substantially within other L1s like the Avalanche blockchain, for example, then there’s a possibility that UST will be backed by a lot of Avalanche’s token, AVAX, he said.

“If you’re minting UST on Avalanche, you would trade in AVAX instead of bitcoin and that will in turn improve the size of AVAX reserves,” he said.

By adding other types of collateral, it will expand the potential user base of Terra stablecoins, he said. “For example, if Terra stablecoins were the largest consumer of SOL [Solana] or AVAX and the reserves are that large, then there’s an inherent alignment with the user base from each of those ecosystems.”

Even though the “share of the pie” that Luna takes home gets smaller, the approachable market will get significantly larger, he said.

Stablecoin’s growth is anything but stable

Stablecoins get their name from the fact that they are “stable” through a 1:1 ratio that pegs their value to an external reserve, typically U.S. dollars, but can also be tied to other assets, like UST is with bitcoin. This means every stablecoin in circulation is backed up by $1 held in its relative reserve, whether it be U.S. dollars or another asset.

The stablecoin ecosystem has expanded dramatically over the past year, and even the U.S. Federal Reserve took note by saying in a January 2022 report on the crypto assets that they “experienced tremendous growth in the past year” and that “stablecoins hold the potential to support next-generation innovations.”

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Q1 crypto losses spike 695% on year following massive hacks

We’re a little over three months deep into 2022, and with each month it seems the scale of crypto exploits grows as the sector continues to expand.

Just last week, play-to-earn Axie Infinity’s Ronin Network announced it was exploited for about $625 million, making it the largest decentralized finance (DeFi) hack to date.

While that was the biggest hack in history, a number of massive multimillion-dollar exploits also transpired in 2022. As people and capital flood into crypto, losses are becoming larger, Adrian Hetman, a DeFi expert at web3 bug bounty and security services platform Immunefi, told TechCrunch.

This year’s hacking history

Wormhole, one of the biggest cryptocurrency platforms that offers bridges to Solana and other blockchains, was hacked for about $320 million, or 120,000 ether, on February 2. A week prior to the Wormhole hack, DeFi protocol Qubit Finance was hit by hackers who stole 206,809 Binance Coin from Qubit’s QBridge protocol, worth about $80 million at the time.

“The Wormhole and Ronin hack, both massive in nature, represent serious vulnerabilities or failures in the crypto ecosystem,” Anthony Georgiades, co-founder of NFT and web3 blockchain provider Pastel and general partner at Innovating Capital, told TechCrunch.

There has been a “loss” of about $1.23 billion across the web3 ecosystem in the first quarter of 2022, according to a report by Immunefi. That number accounts for any funds lost due to hacks and fraudulent events, Hetman said.

That total is up 695% from the year-ago quarter’s losses of $154.6 million, the data showed.

As of April 4, there is about $230 billion in total value locked (TVL) across a number of DeFi protocols. That TVL is 170% higher than the year-ago date of $84.91 billion, according to data from DefiLlama.

“So given this number, and the fact that a single mistake in code could mean hackers get immediate access to hundreds of millions of dollars, it makes sense that blackhats are interested in getting a slice of that pie,” Hetman said.

Despite declines, the value of crypto assets in DeFi protocols is up 3x from a year ago

Aside from the rise of adoption, DeFi is still relatively new and developers are still learning how to write safe and secure codes, Hetman noted.

“Many users are still not well-educated on how to safely interact with different projects — or even which projects they should interact with,” Hetman said. Additionally, many developers are still “copying and pasting code from other projects,” so a vulnerability present in one project’s code can oftentimes be spread to many other projects.

A matter of trust

Although hacks and exploits lead to financial and asset losses, they also cause unease in the overall ecosystem, Georgiades said. Hacks and exploits can result in the loss of user, consumer and institutional confidence and trust, which in turn can hamper user growth and discourage new entrants into the market, Georgiades added.

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5 crypto tax tools that could save your ass on Tax Day

If you’re among the 16% of Americans who transacted with or traded cryptocurrency last year, you’re probably breaking a sweat about the looming deadline to file your taxes (that’d be Monday, April 18). And if you’re an NFT aficionado who changed your Twitter profile picture to an image of a hexagonal, nonchalant monkey, chances are that you’ll want some professional advice while filing.

The U.S. Internal Revenue Service is likely to intensely scrutinize, and perhaps even audit, those who transacted with virtual currency this year, Alex Roytenberg, known on Twitter as @TheNFTCPA, told TechCrunch.

“I personally think the IRS was waiting for a big year of wealth and income to be generated, and 2021 was definitely that year,” Roytenberg said.

He added that because of the lack of formal guidance from U.S. regulators on how to file taxes on various crypto products, the process requires the taxpayer to interpret how existing laws intended to regulate traditional assets might apply to entirely new technologies.

Roytenberg, a certified public accountant, has been a tax accountant for nearly 20 years, working at Morgan Stanley, Goldman Sachs, and PwC. Roytenberg first got exposure to the web3 space in 2018 after advising a number of Coinbase employees, and since then, has aimed to double down on the specialty, co-authoring the “NFT Tax Guide” and speaking at industry events including NFT.NYC.

While Roytenberg recommends that avid crypto traders seek professional, one-on-one tax advice to clear up any gray areas, he also shared his thoughts with TechCrunch on a number of crypto tax prep packages that can be useful for filers this year.

Here’s a rundown of some of the more popular platforms available to crypto tax filers today.

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Goldman Sachs’ OTC Bitcoin options trade ‘doesn’t mean much,’ but can pave way for more institutional involvement

Goldman Sachs is no stranger to testing the waters with crypto, with institutional clients looking for more exposure in the space.

Last week, Goldman was the first major U.S. bank to execute an over-the-counter crypto options trade with Galaxy Digital, which some market players say is foreshadowing more institutional adoption of digital assets.

“Crypto markets need large, credible and credit-worthy counterparties to grow the space further,” a source who works with digital assets at a major investment bank told TechCrunch. “Goldman and other Wall Street banks will bring that eventually.”

The 153-year-old firm is headquartered in New York City with offices globally and has $2.47 trillion assets under supervision. Galaxy Digital’s trading unit facilitated and executed the transaction with the investment bank in the form of a Bitcoin non-deliverable option.

This means that the firm isn’t directly engaging or holding the underlying crypto, but taking an option with a payoff that’s settled in cash, Tim Grant, head of Europe at Galaxy, explained to TechCrunch.

“The trade itself doesn’t mean much, but the fact that it happened and opens the ability for Goldman Sachs to trade this risk is massively significant, and this is just the beginning,” Grant said. “As soon as you get into that part, that set of hurdles, you’re intellectually and operationally free to do other things. It’s not the trade itself, it’s that this will allow us to go in a multitude of directions.”

Goldman did not provide additional information requested by TechCrunch before publication.

The firm is no stranger to crypto, or Bitcoin more specifically. It first set up a cryptocurrency trading desk in 2018, but shut it down for three years, only to restart it in early 2021. Since then, the bank dipped further into the crypto world by allowing investors to trade Bitcoin derivatives through block trades on CME Group in May 2021 and providing clients access to an ether fund through Galaxy Digital, among other offerings.

“I expect the [crypto] space to be a lot more institutionalized in the coming months [and] every investment bank will be involved in the space in the next year or so,” Kevin Kang, a founding principal at BKCoin Capital, said. “Crypto will become a part of any bank’s offerings and trade like another asset class.”

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Bitcoin miners are dusting off Kentucky coal towns, spurred by state crypto tax incentives

Bitcoin mining rigs have been arriving in Kentucky by the truckload ever since Governor Andy Beshear passed two laws in March 2021 to incentivize bitcoin miners to establish roots in the southeastern state.

Senate Bill 255 extends the commonwealth’s clean energy-based incentives to miners who provide a minimum capital investment of $1 million, while Kentucky House Bill 230 provides miners a number of tax breaks.

In the year since their passage, Kentucky and mining-focused businesses alike have reaped benefits from the legislation. As of October 2021, Kentucky accounted for 18.7% of the United States’ total Bitcoin hashrate, second to 19.9% in New York, according to data from Foundry Digital, a subsidiary of the crypto giant Digital Currency Group.

Bitcoin mining is a decentralized computational process that allows miners to add new blocks of verified bitcoin transactions to the Bitcoin blockchain. Over the years, bitcoin mining has become more competitive and resulted in miners typically needing expensive equipment and low-cost electricity to profit from their efforts. Out of the 21 million total bitcoin supply, about 90% of bitcoin (about 19 million) has been mined in the past 13 years.

Blockware Solutions, a blockchain infrastructure and cryptocurrency mining firm, announced on Tuesday that it opened its flagship mining facility in Belfry, Kentucky, a town with fewer than 500 people right near the West Virginia border.

“It is my hope that a region known for mining coal will now benefit from this different type of mining,” Kentucky State Representative Angie Hatton said in a statement. “I also hope that its significant electricity needs will help stabilize our steep residential rates. It would mean the world if our families could save money while Blockware Solutions is literally creating it.”

Its Kentucky flagship location is comparable to the size of a Costco and is one of Blockware’s three planned sites in the state, Blockware CEO Mason Jappa told TechCrunch.

“In the economy and region we’re in, the fact that an energy grid exists is awesome, but there aren’t many energy consumers like us in the region, so if we can take down large amounts of energy, we’re adding stability to the grid,” Jappa said.

The data center is repurposing a coal mining site that has been abandoned for decades and will launch with 20 megawatts, which is equivalent to powering a small rural town of 5,000 people annually, he added.

“We found the perfect cocktail of everything we needed: political sustainability, low-cost energy and support in the local economy, as well as it being in an environmentally safe, sound and cool environment,” Jappa said.

Abandoned coal mines aren’t the only locations getting a face-lift. Empty real estate across the country, from steel mills in Illinois to forgotten warehouses in Oklahoma and parts of the Midwest, is being utilized, Nick Hansen, CEO of a Bitcoin hashrate management platform Luxor, told TechCrunch.

“Most of these places have the power capacity built-in by default, which is perfect for bitcoin miners to come in and start using them,” Hansen said. “These old manufacturing towns are turning into bitcoin towns.”