💀 Crypto Is Down ~70% From Highs

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What happened this week

👤 Collectibles

Yuga Labs has permanently revoked its ownership of the BAYC smart contract

Yuga Labs could have theoretically minted an infinite number of legitimate BAYC NFTs from a single private key. This was a single wallet, not a multi-sig, that if ever hacked, could have minted and dumped thousands of Apes onto the market. To remove this possibility, Yuga Labs permanently burned the contract owner.

Crypto Punks turned 5 years old

Did Sartoshi rug mfers?

Crypto memer/influencer Sartoshi has stepped away from mfers. Some are calling it a slow rug, others are giving it a pass. Before breaking down what happened, let’s first ask ourselves:

What exactly qualifies something as a rug pull?

Introducing the Zima Red rug test:

Was the value of the project, at least in part, impacted by its creator’s involvement?
Did the creator leave the project in a position to succeed upon exiting?
Did the creator receive financial compensation upon exiting the project?

We will answer these questions in reference to Sartoshi, but first; who is Sartoshi, what is mfers, and what mfing happened.

Who is Sartoshi & what are mfers?

Sartoshi outlines this here but the TLDR is;

He became a well-known NFT memer and collector during JPEG summer ‘21
He memed the degeneracy of NFT speculation with stick figure drawings
These drawings inspired the mfer collection
It is CC0 (inspired by Nouns and Cryptoads)

What happened?

💀 Crypto Is Down ~70% From Highs | Nft News

As many suspected, Sartoshi has stepped away from mfer’s and vanished. He preluded his exit in this blog post.

Here are the takeaways:

The mfers smart contract and largest royalty share will go to the community

The contract was transferred to the unofficial mfers multi-sig wallet unofficialmfers.eth
This multi-sig will get 50% of the royalty
25% will continue to go to Sartoshi
15% will go to the main mfers dev team – westcoastnft
10% for other devs/consultants

Sartoshi has vanished and deleted his Twitter account

The blog post also mentioned some info about the six mfer giveaway, final Sartoshi open edition, and the NFT NYC party

Ok, so did Sartoshi rug?

❌ Was the value of the project, at least in part, impacted by its creator’s involvement?

The value of mfers was, without a doubt, impacted by its association with Sartoshi. However, he always maintained that this was a community lead project. He represented the project but was not its leader.

“sartoshi you need to be in the discord as the leader” – no, i don’t…mfers are leading their own ways (but im happy to get the word out about many mfer creations and ideas)

The apparent goal was for Sartoshi’s involvement to mean less and less as the community around it grew.

❌ Did the creator leave the project in a position to succeed upon exiting?

Yes. Sartoshi moved the contract to the unofficial multi-sig. He didn’t abandon the project, leaving them to pick up the pieces. He left the keys and most of the income stream to the community.

So far we are 0/2 in Zima Red rug test, meaning that we are leaning towards proclaiming that this is not a rug. But before we do:

✅ Did the creator receive financial compensation upon exiting the project?

This is the part that doesn’t sit right with us and most people within the crypto Twitter-sphere.

Sartoshi is keeping 25% of the royalty 😬

It’s tough when the creator is leaving the project while still keeping a 1/4 of its income. With that being said, it’s still hard to call this a true rug pull.

🕹 Gaming

Findings from 80+ web3 gaming studios

Web3 gaming is highly concentrated in the RPG Genre (40%).
80% of web3 games are “in production” (not shipping until 2023-2024)
Interesting finding: The average time between a games “Hello World” moment (first tweet or blog) and first public token raise or NFT sale is 1072 days

Highlights from the Starknet gaming ecosystem

STEPN’s co-founder explains how they’re solving $GMT and $GST issues

STEPN wants to discourage speculation
They are seeing several people hoarding GST to pump up the price
The liquidity of GST is pretty low
The team is implementing a dynamic $GST pricing strategy to curb speculation

Value accrual per capita as a core monetization KPI in Play to Earn economies

Metaportal examined six crypto games that had live treasuries and recurring value inflows from ecosystem activities.

The most common value inflow activities documented were:

Marketplace fees – royalties or taxes on secondary market sales
Recurring primary sales
Breeding fees
Renting fees

Insights:

Axie Infinity DAU’s are down 75% while total NFT holders are down 18%
Crabada’s DAU count is also reportedly 5-6x that of its unique NFT holder count. 92% of all Crabadas are held by what is most likely the Swimmer/Avaz bridge account.
Crypto game that grew really fast are slowing down their growth trajectory
Most game economies are failing to have sustainable value accrual.
In most game economies players began by extracting value from soft currency utility tokens —> the game experienced massive population growth —> The game’s treasury accrues value —> new player growth is not sufficient to perpetuate the cycle —> the game’s soft currency/utility token collapsed

🌐 Virtual worlds

Digital land value drivers

a16z’s Scott Kominers gives a thread following up on his recently published article Metaverse Land: What Makes Digital Real Estate Valuable. Hint: Location still matters in the metaverse.

Holders vote to keep ApeCoin on Ethereum

The vote followed comments by Yuga Labs stating that ApeCoin should be on its own chain in order to scale. These comments were made due to the high gas fees Otherside minters faced due to Ethereum network congestion.

Neal Stephenson, who coined the term “metaverse”, is building a metaverse called Lamina1

💸 Funding

🕳 Etc.

What is a Soulbound NFT?

Vitalik Buterin recently wrote on the topic here back in January. The discussion over Soulbound NFTs is starting to pick up some steam lately so it’s worth a refresher.

Soulbound NFTs cannot be sold or transferred to another wallet.

Most NFTs today are highly transferrable and financialized. Soulbound NFTs open up use cases beyond financialization and speculation.

Vitalik thinks that they would be great for adding

Reputations
Credentials
Relationships
Affiliations

to web3.

How Opensea plans to curb fraud and plagiarism

How to create your own NFT collection from scratch with no coding experience | Pastry.eth

pplpleaser launches an NFT class on Skillshare

The Ball Multicoin Bitwise Metaverse Index

The crypto bill’s impact on web3 and NFTs

The 69-page Responsible Financial Innovation Act (aka the Gillibrand-Lummis Crypto Bill) dropped last week. It could have far-reaching impacts on NFTs and web3 as a whole, here’s how:

The bill suggests that most digital assets meet the definition of a commodity rather than a security.

This means that crypto would be largely overseen by the CFTC rather than the crypto-critical SEC.
CFTC Chair, Rostin Benham, already asked to oversee crypto spot markets
- Spot markets mean that you can only trade assets you own (aka no leverage or margin)
- Spot markets are currently primarily regulated at the state level with the CFTC overseeing bitcoin and ether futures and the SEC regulating funds and cryptos deemed securities.

DAO regulation

The bill specifies certain DAOs as business entities
It would be bad for anonymous projects because it requires all crypto platforms or service providers to legally register in the United States
Creates clear legal protection should DAOs decide to incorporate

Protections for wallets

Check out the full bill here.

Andrew’s market update

We synthesize and share Andrew’s thoughts on the NFT and crypto markets. You can follow these thoughts and musings live on Twitter.

The reason for the “God help us all” is that Jim Cramer from CNBC is a bit of a meme in that whatever he tells you to do, if you do the opposite, then you will probably make money.

Macro markets are still looking mighty bearish and if you want to keep track of what’s happening outside of crypto then follow this great account. They/he/she is even more bearish than I am!

Remember, once again, the Fed is god.

People are worried about ETH blowing through the last cycle top of $1400. But remember Eth was trading at ~$80 during the 2020 Covid crash…

Also, the free mint meta is getting a lot of chatter lately. Keep in mind that this only has to do with collectibles. For most, it would make much more sense to focus on projects with great teams and a war chest of capital that they can use to keep building.

There are still plenty of opportunities to be had, even in a bear market. Here is a simple framework that Andrew uses to evaluate NFT projects.

Team: Does their past indicate they can execute?
Market: Is this the 50th virtual world or a new concept?
Product: Easy to understand & use?
“Game” loop: Behavior driving activity to this project?

Zima Red Podcast

Max is the founder of Chainmonsters which is a free-to-play monster-taming MMO-RPG with a player-driven economy.

In this episode we discuss:

Falling in love with game design from an early age
Prototyping an NFT game in January 2018
Self-funding development and Kickstarter
Building on the Flow blockchain
Creating a social interaction through PVP, collecting and crafting
The core game loops of chainmonsters
And why I call Chainmonsters a hybrid between Pokemon, Minecraft, and Animal Crossing