📝 Web3 Field Notes #16

“This is the central illusion in life: that randomness is a risk, that it is a bad thing.” – Nassim Taleb

📚 Readings:

• Tokenized communities, a new type of Web3 organization. Link

• Decyphering Web3. By Vayner3. Link

• Ethereum’s Shanghai upgrade and its impact on investors. By Bitcoin Suisse. Link

• What rights come with your NFT? By Forbes. Link

• Bitcoin inscriptions and ordinals. One of the most comprehensive pieces I’ve come across. By Galaxy. Link

• Interview with Pudgy Penguins CEO, Luca Netz. This helps to understand how the big NFT IP holders and communities think and want to grow their franchises (cf. Doodles V2 or Yuga Labs). Link

• Building for the 1% instead of the 99% of users. An example of crypto NFT exchanges. 🧵 Link

• The Silicon Valley Bank fallout makes the case for digital currencies, Financial Times. LinkSubscribe now

🚨 What caught my eyes: 

• Arbitrum, the biggest Ethereum Layer 2 by market cap, launched its own token ARB and it will be airdropped to early users. This is big. Arbitrum's governance token has been speculated about for years. You can check whether you qualify for the airdrop here. Remember: Optimum, the second biggest layer 2, got significant traction in recent months (partly because of their airdrop). This will shake up layer 2 competition once again.

• Silvergate, Silicon Valley Bank, and Signature: the US was hit by a banking crisis. I’m sure you’ve all read about it, so I won’t repeat it. Three key concepts to understand the issue: fractional reserve banking, risk management, and trusted intermediaries. Fractional reserve banking is a system in which banks maintain only a portion of their customers' deposits – it’s an inherent part of a bank’s business model. Without proper risk management, this can swiftly cause a loss of trust, and eventually a bank run (the worst-case scenario for a bank). Why is it relevant for crypto at all? Two reasons: USDC, the second largest stablecoin, stored parts of their reserves at Silicon Valley Bank and lost its peg to the USD. Second, it showcases the fragility of the current financial system and gives room for alternatives. Remember what Satoshi ingrained into the first Bitcoin block? “Cancellor on the brink of bailout” – This recent turmoil was a return to the origin story of Bitcoin as an alternative to the banking system and likely caused the spike in interest.

• Fidelity Crypto went live, giving 37.1 million of its retail users access to bitcoin and ether investments. Trading is commission-free with a spread of no more than 1%. Link

• Meta stopped all Web3 efforts, including digital collectibles (aka NFTs) for Instagram. I think that this is less of a long-term, strategic “no” to Web3, and more of a necessary cost-cutting measure. Meta has laid off tens of thousands of employees in recent months and shifted its investment priority to “advancing artificial intelligence”. Zuckerberg is gradually, quietly escaping from the metaverse. AI is the new crypto. Announcement Move to AI

• The Blockchain Association, one of the largest crypto trade groups, submitted a Freedom of Information Act requests to the FDIC, Federal Reserve, and OCC demanding information about the "de-banking of crypto firms in the United States". The speculation about the US government’s coordinated efforts against crypto banks continues. 🧵 Link

• Ethereum’s Shanghai update is scheduled for the 12th of April. It will enable withdrawals of both staked ETH and accrued staking rewards.

• Beatport, the biggest platform for DJs, enters Web3 together with Polkadot. Link

• Big news in AI: OpenAI released GPT-4 and Google launched AI across its Google workspace apps. Microsoft today announced it will bring GPT-4 to its office suite over the coming months. I occasionally cover AI since it’s also finding it’s way into Web3 (generative art, authenticity of content, etc.). Want to access GPT-4? You’ll have to sign up for a paid account here.

🏊 Deep Dive: Salesforce enters Web3

On Wednesday, Salesforce launched it’s limited release of “Salesforce Web3”. 

Salesforce clients can now connect Web3 data with the existing Salesforce CRM to create personalized, omnichannel experiences across Web2 and Web3. 

Ugh.. . What does that mean?🤔

• Integrate Web3 data into your CRM to identify customers

• Create and manage NFT collections directly through Salesforce, view real-time customer insights, blockchain activity monitoring, and process automation. 

• Manage Web3 engagement by connecting Web2 and Web3 channels, powered by Salesforce Customer 360.

Two products: 

• Web3 connect: Connect blockchain data to your CRM. 

• NFT Management: Create and deploy NFT collections from Salesforce.

Why is this interesting?💡

Web3 analytics & CRM are big opportunities for marketers to engage with their audience in new ways. 

In Web3, your identity is defined by the NFTs you possess and the dApps you connect with — consider it the next evolution of cookies. 

Let’s make an example: 

POAPs (= Proof of attendance protocol). 

With POAPs, brands are issuing tokens at live events to wallet holders, e.g. a Louis Vuitton (LV) fashion show. Later, these wallet holders can then access token-gated experiences from LV based on their affiliation for LV. 

With a Web3 CRM, LV can see other tokens these wallets holders have, giving them information on their interests and the communities they engage with. 

Meanwhile, other brands interested in LV customers can engage with wallets containing LV POAPs as well. 

A lot of start-ups are already working on such solutions: 

• Addressable:

• Kazm

• 3RM

• Absolute Labs

… and now, Salesforce. 

What about privacy?

The vision of Web3 is that users can control what data they'd like to share or not. This would be possible with zero-knowledge proofs (ZKP).

It allows a prover to demonstrate the validity of a statement without revealing any additional information about the underlying data. e.g. you can prove that you own a specific NFT without revealing which one it is or linking it to your public wallet address.StarkWare, for example, is actively building on that.

We’re still at the very beginning of leveraging NFTs to provide meaningful, branded experiences. 

🚀 Interesting Web3 start-ups: 

• CyberConnect: a decentralized social graph protocol  

• Absolute Labs: A Web3 CRM.

• Certhis: Launch and management platform for NFT collections for businesses. 

• Tweed: Fully embedded web3 infrastructure for any application (including one-click set-up of self-custodial wallets!)

💡Word on the street:  

Joe Lubin, co-founder of Ethereum, once said:

Bitcoin (and crypto) have been conceived to become this new foundation of trust through decentralization. This is an anti-thesis to the traditional financial system, built solely on centralized players of trust.

These two worlds couldn’t be farther apart. However, recent events reveal an increasingly intertwined relationship between them: the FED raising rates, the crypto crash, Alameda, FTX, Silvergate, SVB. All of these occurrences highlight the fragile nature of trust.

We find ourselves in truly unparalleled times.

What’s next for trust? How much decentralization is needed? Can we build a trustless financial system? That’s all for now, folks. Back to building! 🚀

– Marc

📈 Awesome charts to share with friends:

🎨 Artwork: “Abstract Study 003” by GLIL