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- 📝 Web3 Field Notes #34 – Onchain Summer
📝 Web3 Field Notes #34 – Onchain Summer
Web3 development soars 302% Q/Q. Beeple buys Crypto Punk. Coinbase Q2 numbers & "Base" launch. Major DeFi hack. Sequoia slashes crypto fund. ChatGPT for Android. New start-ups, top charts & more.
Hey, it’s Marc. I write about Web3, Crypto, and brands. ✌️ Welcome to another issue of my obsessively curated field notes to help you filter out the noise.
⏱️ Reading time: 5 min
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“Well, I’m not a toy business, I'm not an NFT business, I’m not any specific business. I'm an IP business.” – Luca Netz, CEO of Pudgy Penguins
📚 Key Reads
🚨 What Caught My Eyes
✨ Web3 + NFTs
Web3 developer report Q2 2023: Even as NFT and DeFi trading volume contracted from their all-time highs, Web3 developer activity soars, driving 302% Q/Q growth in EVM chain contracts.1 The number of DeFi users is up 35% Q/Q. Users of active account abstraction (making wallet UX easier) surge 27’360% as ERC-4337 gains traction. Link
Takeaway: While scandals and regulatory uncertainty invoked the current bear market (at least partially), the builders keep building.
Digital art: Beeple, the most famous digital artist known for his $69m NFT sale, bought a Crypto Punk for $208k. Crypto Punks are one of the earliest and most influential NFT collections. Link
Punchline: At times when classic PfP (profile-picture) collections seem to be fading in popularity, Beeple underlines the cultural significance and durability of early collections with his first PfP.
🌎 Crypto & Macro
Ethereum’s birthday: The second-largest cryptocurrency by market capitalization, celebrated its 8th birthday on July 30, 2023. Since its launch in 2015, Ethereum has introduced smart contracts, DeFi, dApps, NFTs, and many other milestones.
Takeway: We sometimes take these innovations for granted. They’re not. While we’re still at the beginning of building the next infrastructure layer for the internet, speed of development is incredible.
Coinbase beat Q2 revenue expectations: A surge in the interest income cushioned a slump in trading volumes. Notable: Institutional trading volume shrank by almost 40% Q/Q, while consumer trading volume shrank by 30% Q/Q. Coinbase also announced the public launch of ‘Base’ layer 2 blockchain and its “Onchain Summer” campaign for next week, 9th of August. Link
Punchline: While Coinbase is under heavy regulatory scrutiny and in a public battle against the SEC, its move to build a layer 2 was widely seen as supportive for the DeFi ecosystem and the industry as a whole. Layer 2s2 are on the rise and will be instrumental to scale blockchains for mass consumer applications. Other layer 2s include Arbitrum and Optimism.
Coinbase vs. SEC: Brian Armstrong, CEO of Coinbase, said the SEC asked Coinbase to halt trading all crypto except bitcoin before it sued, and refused to explain its interpretation of the law. Link
Punchline: We’ve known for a while that the SEC likely classifies all cryptocurrencies except Bitcoin (and Ether) as securities, despite the lack of an official statement. Armstrong’s comments support that view.
Curve hack: Curve Finance, one of the largest decentralized exchanges (DEX) and liquidity protocols built on Ethereum, was exploited through a zero-day vulnerability in Vyper, a programming language for smart contracts. Several pools on Curve were relieved of a total of around $70 million and users have prudently withdrawn nearly $1.5 billion in liquidity (45% of the total TVL). Link
Punchline: We expect the small protocols to get exploited, but not the big ones. Curve is one of the biggest ones: It may be the most structurally important protocol in DeFi.
VC funding: Sequoia Capital slashed the size of its cryptocurrency fund from $585m to $200m. Meanwhile, Polychain Capital, one of the largest and most influential crypto VCs, has raised $200 million for its fourth crypto fund. Link
Takeaway: Crunchbase reported that Web3 funding from VC funds has plunged 76% in Q2 compared to the same period a year ago. Meanwhile, US VC funding across all industries dropped around 70% compared to last year.
Binance: The US Department of Justice officials are weighing fraud charges against Binance and its CEO, CZ. Link
Takeaway: Despite facing an ongoing legal battle with U.S. regulators, the user base of the world’s largest exchange surpassed 150m users, up from 128m in May. Its market share keeps growing to nearly 65% in spot trading volumes.
🧠 AI
Open-source AI: Meta plans to release AI chatbots with personalities, which staff call “personas”, like Abraham Lincoln, as soon as September 2023, to boost engagement. Link
Punchline: Big tech is in an open competition to win users with AI features. Just recently, Microsoft released Bing AI chat and Copilot for Google Chrome and Safari.
ChatGPT app for Android went live.
🚀 Interesting Start-Ups:
Boson Protocol: “Web3's Commerce Layer” that enables tokenization, transfer and trade of any physical thing as a redeemable NFT.
Some.Place: Design Web3 enabled customer journeys through visually impactful, immersive social shopping experiences.
💰 Money Moves:
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That’s all for now, folks. Thank you for being part of the journey.
Back to building! 🚀
– Marc
🐦 Tweet of the week
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📈 Top charts to share with friends
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🎨 Artwork: “Ceremony 54”, by cc0x0x0
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