Polygon Layoffs Raise Questions: What Happened to $200M in Funding?


Polygon Layoffs Raise Questions: What Happened to $200M in Funding?

  • Polygon announced cutting 100 positions or 20% of its employees. 
  • In Feb. 2022, Polygon Labs raised $450 million in funding. Currently, they have $250 million in cash and 1.9 billion in MATIC. 
  • MATIC fell 6% after Polygon Labs announced layoffs. 

Polygon, a level-2 scaling solution for Ethereum, is showing worrying signs. After spending $200 million in under a year, the company is taking measures to cut its burn rate. 

Sandeep Nailwal, the Co-Founder of Polygon Labs, announced that the company would lay off 20% of its workforce, or about 100 people. 

“Earlier this year, we consolidated multiple business units under Polygon Labs. As part of this process, we’re sharing the difficult news that we’ve reduced our team by 20%, impacting multiple teams and about 100 positions, he said.

“This was a painfully hard decision, but a necessary step in our journey,” Nailwal said, adding that the employees would get three months of severance pay. 

Nailwal also said that he would be joining a community call on Discord at 9 am Eastern Time to “address any doubts any community members might have.” 

Polygon Burns Through $200 Million In a Year

Despite the layoffs, Nailwal claimed that Polygon remains in a healthy position to continue developing its network. “Our treasury remains healthy with a balance of over $250 million and over 1.9 billion MATIC,” he said. MATIC is currently trading at $1.40. 

However, a look at Polygon’s funding history puts these figures in a different context. Namely, Polygon Labs are burning through money fast. 

In February 2022, the startup raised $450 million, at a valuation of $13 billion. Sequoia Capital India, SoftBank, and Tiger Global participated in the funding round. 

In just a year, Polygon Labs burned through $200 million in a year. At that rate, Polygon is left with little more than a year’s worth of runway. 

Polygon could sell its tokens, but that could significantly impact its price. In fact, some traders might have already anticipated as much, as MATIC fell 6.4% after the announcement. 

Where Did $200 Million Go? Jobs, Ecosystem, Partnerships… 

It is not exactly clear where the money went. However, there are several possible options. Back in February 2022, Co-Founder Jaynti Kanani anticipated that Polygon would spend the money on supporting the Polygon ecosystem and acquiring talent

“Secondly, acquiring talent is also very important in the Web3 space,” Kanani said. “However, the whole Web3 space is very competitive. Everyone is competing for a very small pool of talent here,” he added. 

Another potential drain on Polygon’s budget could be its massive efforts in brand outreach. In 2022, Polygon secured numerous partnerships with major brands, including giants like Meta, Starbucks, Adidas, Disney, etc. 

In an interview with Hashing It Out, former VP of Growth Arjun Kalsy explained the importance of these partnerships for Polygon. As major brands partnered with Polygon, others gained more confidence in the network, he said. 

“All of these partnerships take a lot of time to mature, Kalsy said. “For them, it’s a very big deal to choose any particular stack simply because of the scale at which they operate. 

Bear Market Catching Up To Polygon? 

Polygon is just the latest crypto firm to announce layoffs since Federal Reserve started raising interest rates. What resulted was a bear market in both crypto and tech stocks. 

The crash hurt crypto firms hard. In January 2022, crypto exchanges Coinbase, Huobi, and Crypto.com all cut 20% of their workforce. 

Back in August 2022, Polygon Labs Co-Founder Sandeep Nailwal had a different outlook on the bear market. He even called it a great opportunity for crypto firms.

“In the bear market, the best part is that there [are] no buyers. The bear market is the cheapest to hire, it is also in the bear market that it’s very good to do marketing because nobody else is spending that much money,” said Nailwal at Korea Blockchain Week.

Despite its recent setbacks, Polygon has seen some positive developments in the last few months. Earlier this month, Polygon announced the launch date of its zero-knowledge (ZK) rollup Polygon zkEVM

The upgrade promises to be fully compatible with the Ethereum Virtual Machine (EMV). Moreover, it promises to reduce gas fees by more than 90%. 

On the Flipside

  • In 2021, Polygon acquired Ethereum scaling startup Mir Protocol for $500 million, to gain access to the “world’s fastest and most efficient ZK scaling technology.” 
  • Most economists believe that cooling inflation might lead to a slowdown in rate hikes in 2023. This could boost crypto, including Polygon. 

Why You Should Care 

As the biggest layer-2 scaling solution for Ethereum, the largest smart contract network, Polygon plays a critical role in the Web3 space. 

Learn about Polygon’s latest scaling solution. 

Polygon (MATIC) Announces Launch Date of Its Highly Anticipated zkEVM
Read more about what Polygon is and its significance for the future of Web3. 

Polygon: The Second Layer of Blockchain

OKX Wallet Adds ‘Buy With Card’ Option – Latest News On OKX Exchange


OKX Wallet Adds ‘Buy With Card’ Option – Latest News On OKX Exchange

  • OKX Wallet will allow users to buy crypto with a credit card directly from their decentralized wallet. 
  • New wallet feature provides a better user experience while allowing them to keep custody of their crypto. 
  • The exchange also introduced BTC/USDC and ETH/USDC futures trading pairs.

OKX has introduced a feature allowing users to deposit funds in their decentralized wallet directly from their credit card. 

OKX, one of the largest crypto exchanges, has introduced a new “Buy with Card” OKX Wallet feature. Starting Tuesday, the OKX will enable users to link their Visa and Mastercard cards to their accounts and buy crypto directly from their decentralized OKX wallet.

The feature will be available on both iOS and Android apps and supports buying over 50 cryptocurrencies.

The move signals that OKX is moving towards providing a better user experience on its decentralized services. 

The exchange says the new feature would “provide users with a seamless and secure way to purchase crypto” while “keeping full control over their digital assets.” 

Together with the news on its wallet, OKX also announced more trading options for customers. On Tuesday, the exchange listed USDC-margined futures for BTC and ETH. 

Moreover, OKX has enabled FLOKI margin trading, savings, and USDT-margined perpetual swaps on its web and app interfaces. 

On the Flipside

  • While the OKX Wallet is decentralized, the “Buy with Card” feature is not. OKX will manage payments and charge fees for the service. 
  • Since the FTX collapse, exchanges have started offering more self-custodial and decentralized solutions.

Why You Should Care

The “Buy With Card” option offers an improved user experience. This may lead to more people holding crypto in custodial wallets.

Read everything you need to know about crypto wallets:
Cryptocurrency Wallet: Everything You Need to Know

Read about the recent surge of OKX’s native token OKB:
OKB Skyrockets by 32% to New All-Time High as OKX Introduces OKBChain

OKX Boasts $8.6 Billion in ‘Clean Reserves’ – Reserve Report


OKX Boasts $8.6 Billion in ‘Clean Reserves’ – Reserve Report

  • OKX has more than enough Bitcoin, Ethereum, and Tether to redeem users. 
  • The exchange makes the data available on the blockchain for anyone to see. 
  • Most major exchanges have lower reserves. In December, Huobi had less than 59% of its assets as clean reserves. Binance had 89%. 

OKX has more than enough Bitcoin, Ethereum, and Tether to cover withdrawals, the latest reserve report says. The exchange claims to have a better clean asset reserve ratio than other major exchanges. 

The world’s second-largest crypto exchange holds $8.6 billion in Bitcoin (BTC), Ethereum (ETH), and Tether (USDT). 

According to OKX’s latest Proof of Reserves (PoR) report for February 2023, the exchange holds more than enough of these tokens to redeem its users. 

In particular, the reserve rations are as follows: 104% for BTC, 104% for ETH, and 102% for USDT. 

OKX has made this data available on the public blockchain using the “Merkle Tree” method. This allows anyone to verify all the user assets on the exchange. 

OKX reported significant user interest in that data. According to the exchange, some 175,000 unique users visited their PoR page, while 90,000 went to look at their liabilities. 

Why Clean Reserves Matter

In December, CryptoQuant published clean reserve ratios for major exchanges to highlight their importance. OKX was the best performer, at 100%. Binance had 89% clean reserves, while Huobi had less than 59%. 

“Clean reserves” refer to the number of reserves an exchange has that are not in their token. This is important because a lack of clean reserves can harm the exchange’s stability. CryptoQuant said that a lack of clean reserves played a part in FTX’s collapse. 

“One of the major reasons FTX and Alameda failed was the large portion of their assets, FTT, held in reserves,” CryptoQuant wrote. “When the price of FTT collapsed, the value of the assets of FTX/Alameda (which were also pledged as collateral for loans) also plunged.” 

On the Flipside

  • US regulators are cracking down on centralized exchanges that are not transparent with their users. 
  • OKX’s proof of reserves shows that total user assets increased by $602 million. Bitcoin holdings on OKX increased by 9.9% in the last month. 

Why You Should Care

Centralized exchanges still play an important role in the crypto space. Their stability affects the entire crypto market. 

Learn more about the tools to track CEX reserves:
CoinMarketCap Introduces a Proof-of-Reserve (PoR) Tracker for Crypto Exchanges

Learn more about the Merkle Tree verification.
Top CEXes Promise Transparency with Merkle Tree Proof of Reserves

Blur Airdrop: Did Whales Game the System? Report


Blur Airdrop: Did Whales Game the System? Report

  • Twenty-three most active traders got over one million in Blur tokens. One trader received more than 3.2 million BLUR tokens. 
  • Reports suggest that this address traded large quantities of NFTs back and forth. This could indicate that the trader engaged in wash trading or trying to game the Blur airdrop. 

Blur, the professional NFT marketplace, is airdropping Blur tokens to NFT traders. Since Wednesday, eligible traders can get Blur tokens for free, which they can keep or sell for profit.

Most already took advantage of the situation. Traders claimed over 90% of the 360 million tokens, valued at $0.9 each. However, the Blur token airdrop disproportionately benefited a small number of traders. Moreover, reports suggest that these traders might have gamed the system. 

According to Nansen, the twenty-three most active users received more than one million blur tokens. Moreover, one trader received more than 3.2 million BLUR tokens. These tokens are worth about $0.9 each, meaning that the biggest traders received a multi-million dollar windfall. 

The biggest trader got nearly $3.2 million in Blur tokens, according to data gathered by a blockchain intelligence agency Dune. 

It is a relatively new wallet from only three months ago. According to Decrypt, a look at the address shows that the wallet traded the same NFTs repeatedly

Interestingly, the wallets with the second and the third biggest airdrop values (2,9M and 2.5M Blur, respectively) also interacted with the first wallet. This behavior raises concerns over potential wash trading, or an attempt at gaming Blur’s airdrop mechanics. 

Vijay Pravin, the founder, and CEO of NFT analytics firm bitsCrunch, also raised concern over wash trading.

“All of these addresses have been trading NFTs back and forth with each other,” Pravin said about the three biggest winners of the Blur airdrop. “They wash-traded!” he continued. 

According to on-chain data, the second-largest airdrop recipient cashed out 1.7 million in Blur tokens. The other two wallets are still holding all their Blur tokens. 

Blur offered about 12% of their tokens in the airdrop. 86% of Blur tokens are in three wallets associated with the founders. 

Wash Trading: Ongoing Issue For NFTs

Wash trading is when a trader buys and sells an asset to artificially inflate its price. The purpose of wash trading is to feed false information to the market and to sell assets at artificially high prices. 

In traditional markets, wash trading is highly illegal. However, similar regulations are missing on NFT marketplaces, where wash trading is incredibly common. 

Wash trading has been a constant issue in the NFT space, which Blur also highlights. In December 2022, Blur shared a chart showing the relative volume of NFT wash trades since 2020. 

The chart came from data scientist hildobby, who works with the Dragonfly crypto venture fund. He created a filter that separates wash trades from the rest of the market. According to the chart, wash trades made up 44% of all NFT trading volume from 2021 to Nov 2022.  

On the Flipside

  • There is no definitive proof that the wallets in question had the intention of manipulating the market or gaming Blur. 
  • After the FTX collapse, US regulators are currently cracking down on crypto practices that take advantage of smaller investors. 

Why you should care

Blur has become one of the biggest NFT marketplaces, rivaling OpenSea. NFT traders should be worried about potential wash trading on its platform. 

Read more about the token airdrop:
Blur Airdrop: Just 23 Users Received More Than $1 Million in BLUR Each

NFTs have still not recovered from their 2022 crash. Read more about it here:
NFT Trading Volume Has Crashed 97% from 2022 Highs

Crypto Shows Signs of Sustained Recovery: Experts Weigh In


Crypto Shows Signs of Sustained Recovery: Experts Weigh In

  • Crypto market cap surged to $1 trillion in January, as bitcoin climbed to $20,000. 
  • Since then, the total market capitalizations for crypto and bitcoin have maintained their gains. Experts believe that this is a sign of things to come. 
  • Managing Director for Bitget, Gracy Chen, says the exchange is betting on a sustained recovery as it relaunches its launchpad platform. 

After a tumultuous 2022 for the cryptocurrency market, 2023 could be the year of recovery. Several key indicators, as well as a changing macroeconomic environment, suggest that crypto is headed for a bullish year. 

On January 20, the crypto markets reattained a market cap of $1 trillion for the first time since the FTX bankruptcy in November. 

Total crypto market cap chart

source: coinmarketcap

Since Bitcoin’s January surge, the total value of all crypto assets has consistently remained at or above $1 trillion. The leading digital asset led the way, firmly holding on above the $20,000 level and trading at $24,600 at the time of writing. 

Bitcoin to USD chart

Experts credited bitcoin’s rise to cooling inflation figures, potentially leading to a more dovish Fed policy. If all else is equal, lower interest rates could boost institutional crypto investment. 

Major financial institutions treat crypto projects as risk plays, similar to technology stocks, due to the substantial but uncertain returns of such technologies. The digital asset class typically benefits most when interest rates are low. When interest rates are high, institutional investors retreat to safer investments. 

Throughout 2022, the Federal Reserve increased interest rates to combat record inflation levels. In 2023, inflation data is cooling, which may lead to a more dovish Fed. This, in return, is projected to benefit the crypto sector.

Signs of Sustained Recovery for Crypto – Bitget Managing Director

“BTC’s market has become more volatile since January 10,” said Gracy Chen, managing director at Bitget

She added that with markets showing a “strong desire to buy,” the volatility has “recently turned to have a positive trend” as prices and trading volumes reached new highs over a six-month period. 

Bitget itself is betting on a bullish 2023 with the relaunch of its Launchpad program. The program aims to help new blockchain-related projects find investors. The initiative reflects Bitget’s confidence in the sustained recovery of the crypto market, Chen said. 

Bitget initially introduced its Bitget’s Launchpad in February 2022. Though the program launched five early-stage projects, the bear market forced the exchange to put the project on hold. As a result, the Bitget Launchpad has been inactive since June 2022. 

Now, the Bitget Launchpad is restarting. The first launch will be the GameFi project Panda Farm (BBO), which aims to build a fully on-chain game metaverse on the Arbitrium blockchain. 

Improving market conditions mean that projects like BBO will have better opportunities to raise funding through decentralized means. 

“We are happy to support more early-stage blockchain-based projects that can make a real impact in the crypto space,” she concluded. 

On the Flipside

Bitcoin maximalists believe BTC is different from other crypto assets because it is also a hedge against inflation. 

However, Recent BTC performance doesn’t seem to support that view. This suggests that major financial players don’t yet see bitcoin as an inflation hedge. 

Why You Should Care 

Renewed institutional interest in crypto is a bullish sign. Institutional investors helped push up crypto prices to their all-time highs. Moreover, their pullback likely helped cause the crash.

Read about why many institutional investors are still wary of holding crypto assets: 
J. P. Morgan Survey: Only 8% of Institutions Trade Crypto as FTX Shadow Still Lingers

Learn about more reasons to be excited for 2023:
Crypto in 2023: 10 Things to Be Excited About in the Next 12 months

Blur Airdrop: Just 23 Users Received More Than $1 Million in BLUR Each


Blur Airdrop: Just 23 Users Received More Than $1 Million in BLUR Each

  • So far, users have claimed almost 90% of BLUR tokens. 
  • Twenty-three traders claimed more than one million tokens each, currently worth more than $1.1 million. 
  • Daily volume on the Blur NFT exchange shot up past $45 million since the airdrop. 

Blur, a new player in the NFT space, has been the focus of attention among traders. This professional trading platform threatens to overtake OpenSea’s dominance in space. 

That’s why many traders have eagerly anticipated the Blur airdrop. So far, Blur users have claimed 88.6% of BLUR tokens. However, the token drop disproportionately benefited a small number of active users on the platform. 

According to Nansen, the twenty-three most active users received more than one million blur tokens. Currently, these tokens are worth just about $1.1 each. Moreover, one trader received more than 3.2 million BLUR tokens worth more than $3.5 million. 

24.3% of Airdropped BLUR Still in Original Wallets

More than $780 million in tokens changed hands since the airdrop, with most users selling their assets. About 24.3% of BLUR tokens are still in the same wallets they were airdropped to. 

Airdrop wallet holders sold 28.6% of BLUR tokens on decentralized exchanges. At the same time, they transferred 45.6% to exchange wallets, either to sell them or to hold them in their CEX balances. 

About 12% of all Blur tokens were part of the airdrop. According to Nansen, 86% of BLUR tokens are three wallets associated with the founders. Specifically, these are two token lockup addresses and one team multisig address. 

Blur, a zero-fee non-fungible token (NFT) marketplace, announced its long-anticipated on Tuesday. In the last three months, all traders on the professional NFT marketplace would be eligible for the airdrop. Care Package holders and NFT creators were also eligible. 

Blur Sees Spike in NFT Trading

Blur NFT Exchange has seen a spike in activity since its long-anticipated token airdrop.  After reaching more than $780 million in trading volume in Blur tokens, the massive airdrop stimulated activity on the Blur NFT Exchange. 

The daily volume of NFTs on the exchange shot up past $45 million since the airdrop. 

Why You Should Care

On Thursday, Blur’s daily volume was three times that of OpenSea. The platform launched just four months ago.

Daily volume chart on Blur

On the Flipside

  • NFT markets dropped hard in 2022. In September, trading volumes dropped 97% from their highs. 
  • Currently, large, professional players dominate NFT markets. This could be one of the factors behind Blur’s success. 

Think NFTs could make a comeback? This is the article for you:
How to Create and Sell NFTs: A Step-by-Step Guide for Beginners

NFTs never cease to amaze:
Top 10 Weirdest Things That Have Been Minted and Sold as NFTs

FTX Lawsuits Pile Up: Silvergate Bank, Sequoia Capital, Paradigm, Face Litigation


FTX Lawsuits Pile Up: Silvergate Bank, Sequoia Capital, Paradigm, Face Litigation

  • Silvergate Bank is a target of a class action lawsuit for participating in SBF’s “multibillion-dollar fraudulent scheme.” 
  • Venture firms Sequoia Capital, Thoma Bravo, and Paradigm Investments face litigation over promoting FTX. 
  • Earlier lawsuits targeted celebrities, including Tom Brady and Larry David. 

Crypto exchange FTX, which went bankrupt last year, left a trail of lawsuits in its wake. Major banks and venture firms face legal action for their alleged role in promoting or enabling Sam Bankman-Fried’s fraud. Some of the companies recently embroiled in lawsuits include Sequoia Capital, Thoma Bravo, Paradigm, and Silvergate Bank. 

Silvergate Bank Knew FTX Was Comingling Funds: Class Action Lawsuit

On Feb. 14, lawyers representing a San Francisco-based FTX user filed a proposed class-action lawsuit against the major bank. The lawsuit accuses Silvergate of participating in a “multibillion-dollar fraudulent scheme” by Sam Bankman-Fried (SBF). 

According to the plaintiff, Silvergate Bank and its parent company Silvergate Capital Corporation knew about fraud in FTX. They alleged that the companies, and their CEO Alan Lane, knew about Alameda Research’s use of FTX customer funds. Despite that, they allegedly concealed “the true nature of FTX” from its customers. 

In early January, Bloomberg reported that the US Justice Department is looking into Silvergate Capital Corp.’s dealings with FTX and Alameda Research. This is allegedly part of a larger probe to determine what banks and other financial institutions knew about SBF’s fraud

Sequoia Capital, Thoma Bravo, and Paradigm Investments Class Action Lawsuit

Another class-action lawsuit set sights on Sequoia Capital, Thoma Bravo, and Paradigm. According to Bloomberg, the lawsuit alleges venture firms boosted FTX’s legitimacy with their investments. 

Venture firms participated in a 2021 marketing campaign and promoted their multi-billion dollar investments in FTX entities. This campaign added an “air of legitimacy” to the now-bankrupt exchange. 

As a result, the lawsuit alleges that regular investors underestimated the risk of holding their money in FTX. The class action lawsuit claims the venture firms are guilty of misrepresentation, false advertising, and civil conspiracy, among other violations. 

After the FTX collapse, Sequoia attracted massive criticism for its earlier praise of Sam Bankman-Fried. In a since-deleted profile on their site, the venture firm praised SBF for playing video games during his investment pitch. 

All three venture firms in the lawsuit lost millions in the FTX collapse. Thoma Bravo invested more than $100 million in the exchange, while Paradigm invested $278 million. In November, Sequoia marked down its $214 million investment in FTX to zero.

Celebrity Lawsuits: From Tom Brady to Larry David

Previous lawsuits targeted celebrities who promoted the exchange, including Tom Brady, Larry David, and investor Kevin O’Leary. These lawsuits claimed that celebrity sponsors enticed inexperienced investors to put their money in FTX. 

Tom Brady was one of the most visible FTX sponsors. The star quarterback and his wife, Gisele Bundchen, allegedly put their $650 million fortune in the exchange. 

Investor and former “Shark Tank” star Kevin O’Leary was a paid spokesperson for FTX. He defended SBF even after the FTX collapse, saying he would still back SBF’s future ventures

Comedian Larry David promoted FTX in a 2022 Super Bowl ad as a “safe and easy way to get into crypto.”

On the Flipside

  • All individuals and institutions that promoted FTX lost money themselves. However, that does not necessarily absolve them of liability. 
  • The FTX collapse has caused US regulators to tighten crypto regulations, especially targeting crypto exchanges. 

Why You Should Care

These lawsuits show that the fallout from the FTX collapse is not yet over. Moreover, they show that investors want to make institutions accountable for their role in the crash. 

DeFi Defies the Bear Market: How Web3 Projects Build in the Crypto Winter


DeFi Defies the Bear Market: How Web3 Projects Build in the Crypto Winter

  • While potentially a disruptive force, DeFi is still just 1.2% of the crypto market cap. 
  • DeFi adoption won’t stop in the crypto winter, says Lunar Strategy CEO. 
  • DeFi projects should focus on building a community, creating user value, and offering transparency.

Decentralized finance (DeFi) is a potentially disruptive force in finance. This is especially true after the recent failures of centralized exchanges like FTX. More crypto users than ever are now aware of the benefits of decentralized, self-custodial solutions. 

This led to the growth of DeFi in an otherwise unfavorable environment. In January, trading volumes on decentralized exchanges (DEX) were up 27% compared to December. However, DeFi is still a long way from a mainstream appeal. In January, DeFi dominance, which compares DeFi token market caps to the crypto market cap, was at just 1.2%.

Moreover, trading volume is increasingly concentrated on a few major DEXs that provide the most comprehensive service. This consolidation could be a sign that DeFi is maturing. 

The share of five exchanges in trading volume on Ethereum rose 91%. In particular, Uniswap’s dominance rose to 58% as the exchange spread into more networks. On the other hand, the consolidation might result from the crypto winter taking a toll on the smaller projects. 

Crypto Winter Won’t Stop DeFi: Lunar Strategy CEO

The ongoing crypto winter has put many projects to the test. With less capital, developers are forced to build their protocols and communities differently. 

Tim Haldorsson, CEO of Lunar Strategy, says that the crypto winter won’t stop the growth of DeFi. Instead, it will create an opportunity for smaller players with great products to compete for users. 

Lunar Strategy is a Web3-native marketing agency helping decentralized protocols attract followers and build communities. 

Haldorsson shared his insights on the growth potential of DeFi and on building and promoting projects during a bear market with DailyCoin. 

What makes DeFi so important, in your opinion? Where do you see DeFi in 2-5 years?

“DeFi is important because it offers financial inclusion to everyone on the planet with a phone and gives access to hundreds of millions of new users to be able to take part in the financial system.

In 2-5 years, I see DeFi continuing to grow and mature, with more innovative products and greater adoption by mainstream users. I also see DeFi taking a larger part of the trading volume from centralized crypto companies, as the financial system moves more towards trusting code instead of trusting a company.”

‘Web3 and DeFi Marketing Is About Building a Community’

How is promoting a Web3 or DeFi project different than marketing in different industries?

“Promoting a Web3 or DeFi project requires a deep understanding of building digital communities and co-creating the future of the projects together with the community. In most other industries, you are marketing to customers. However, in Web3 & DeFi, you are marketing to attract loyal community members.”

Your company, Lunar Strategy, is one of the largest players in Web3 marketing. Why is marketing important for crypto, and DeFi in particular?

“Marketing is important for crypto because it helps to raise awareness and build credibility for a new project. In particular, DeFi needs marketing to help bridge the gap between early adopters and mainstream users. Large parts of the marketing are focused on educational content in the form of videos, articles, and guides for the DeFi project.”

Some would say that marketing is about storytelling. How are the stories you tell different from those in some other, more traditional industries?

“In some traditional industries, marketing is about creating a brand image or promoting a lifestyle. In DeFi, our stories focus on the mission and its potential to revolutionize finance. We aim to educate and inspire our community rather than just sell a product or lifestyle. In most successful projects, each community member is treated as a partner in the project.”

‘Crypto Winter Won’t Stop DeFi’

In 2022, we saw token prices drop across the board. Small caps fared particularly poorly. As a result, we also saw marketing budgets drop significantly. For example, there were three crypto exchanges with Super Bowl ads in 2022. This year, there were none. How has this decline impacted the industry?

“The decline in marketing budgets has had a significant impact on the industry, with fewer high-profile campaigns and less exposure for some projects. However, we see this as an opportunity to focus on more targeted and effective marketing strategies that build trust and loyalty with our client communities. In this bear market, the prices for articles, and influencer collaborations have also dropped, which opens opportunities to reach the same audience with a smaller marketing budget.”

Blockchain firms, particularly crypto exchanges, have been hoping to push crypto into the mainstream with massive campaigns, sports partnerships etc. How do you think the declining marketing budget will affect crypto adoption?

“The declining marketing budget will slow the adoption of crypto in the mainstream in the short term, but it will not stop it. The best market that crypto has is the Word-of-Mouth marketing between friends and crypto enthusiasts that are driving crypto forward.” 

‘Building in a Bear Market: Focus on Community, Transparency and Value’

You recently wrote a Marketing Guide for the Bear Market, with the headline “Why Your Web3 Project is Irrelevant.” How did you land on that headline?

“The headline “Why Your Web3 Project is Irrelevant” was meant to grab attention and provoke critical thinking. The guide itself is focused on providing practical advice for projects to succeed in a bear market, by focusing on community-building, product development, and effective communication with your marketing campaigns.”

Can you share some key insights from that guide for people trying to build projects and grow their communities? How do they do it in a bear market?

“In a bear market, it is more important than ever to focus on building a strong community, delivering value to users, and communicating transparently about your progress and plans. This will help your project to survive and thrive in the long term.

For one project, then we managed to raise 2 million euros and build a community of around 50,000 people for a DeFi project on Cosmos. We succeeded with this because we teamed up with leading key opinion leaders within the Cosmos community and then had the founders of the project do AMAs & Twitter spaces talking about the vision and the DeFi products that they we building. This created massive trust in a market where many felt like they had been betrayed by exchanges and crypto lenders.”

How To Invest in DeFi in a Bear Market

Many of our readers are crypto investors hurt by the bear market. Naturally, they want to know how to find promising DeFi projects or how to find projects that will survive the crypto winter. Do you have any insights for them?

“To find promising DeFi projects, investors should look for teams with strong technical expertise, a clear value proposition, and a solid community of users and supporters. 

It’s also important to do your own research and due diligence to ensure that the project is legitimate and has a sustainable business model. So many projects have risky business models that rely on raising new funds from current investors.”

Despite the challenges, decentralized finance (DeFi) still has great potential to disrupt traditional finance. While market volatility can make life difficult for DeFi developers, that is still possible to do. Successful builders can leverage the DeFi community, transparency, and innovation to thrive during the crypto winter. For investors, bear markets are a time to focus on projects that create real value rather than hype. 

CZ Downplays Links to BUSD: But 90% of BUSD Is on Binance


CZ Downplays Links to BUSD: But 90% of BUSD Is on Binance

  • New York regulators ordered Paxos to stop issuing Binance USD, the third-largest stablecoin. 90% of the stablecoin is on Binance.  
  • Binance saw hundreds of millions in outflows as markets fear US regulatory crackdown on exchanges. 
  • Binance CEO says that the exchange will continue to support BUSD and is looking for an issuer outside the US. 
  • BUSD Accounts for 21.7% of Holdings on Binance, or $13 billion. In September 2022, Binance delisted several major stablecoins from its exchange to promote BUSD. 

The US’s heavy regulatory hand is rocking crypto exchanges. After a New York regulator ordered Paxos to stop issuing Binance USD stablecoin, markets panicked. Binance has seen hundreds of millions in outflows, while BUSD briefly lost its peg to the dollar

On Monday, Binance saw $913M in net outflows, according to data from Dune Analytics. That is the largest net outflow from an exchange since the FTX crash. 

At the same time, Binance’s CEO is downplaying the links between Binance USD and the Binance exchange. However, Binance’s links to the stablecoin go beyond just the name. 

Binance CEO: Paxos Issues BUSD, Funds Are SAFU

Changpeng Zhao (CZ), CEO of Binance, addressed the situation on Twitter. On Tuesday, CZ stressed that Paxos, not Binance, issued BUSD

“We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS). Paxos is regulated by NYDFS. BUSD is a stablecoin wholly owned and managed by Paxos,” CZ said. 

At the same time, Binance CEO said that user funds are safe, as Paxos has enough reserves to cover all withdrawals. 

“Paxos will continue to service the product, and manage redemptions,” CZ said. “Paxos also assured us the funds are #SAFU, and fully covered by reserves in their banks, with their reserves audited many times by various audit firms already.” 

In the meantime, Binance will continue to support BUSD “for the foreseeable future,” CZ said. At the same time, the exchange would also explore other options. “We will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc,” CZ said. 

Binance CEO also said that the exchange is exploring other issuers and stablecoins, including stablecoins pegged to other currencies. “We are exploring others, and non-USD based stablecoins,” CZ said

BUSD Accounts for 21.7% of Holdings on Binance

Despite Binance’s CEO downplaying its involvement with Binance USD, Binance has significant interests in the asset. 

BUSD currently accounts for 21.7% of current holdings on Binance, according to crypto analytics firm Nansen. About 90% of BUSD tokens in circulation, or $13 billion, are on the Binance exchange. 

Interestingly, this number has risen since Binance’s last audit. On Feb 1, Binance reported that its users held $8,5 billion BUSD on the exchange. Binance had $10 billion BUSD in reserve, a collateralization rate of 120%. 

In September 2022, Binance delisted several major stablecoins from the exchange to promote trading in BUSD. As a result, BUSD market cap surged to $20 billion

However, after New York regulators cracked down on the token, its market cap will likely only go down. Paxos burned over $400 million in BUSD since regulators ordered it to stop issuing BUSD, according to Nansen. 

On the Flipside

  • More trouble could be coming to Binance soon. The US Securities and Exchange Commission issued a notice to Paxos, calling BUSD a security. 
  • As crypto markets are down, stablecoins are taking up a greater share of the crypto market cap. Currently, stablecoins have a combined market cap of $140 billion. This accounts for about 14% of the total crypto market cap

Why You Should Care

Binance is by far the world’s largest exchange. Anything that impacts Binance will also have a systemic effect on the entire crypto market. 

Huobi Quietly Kills iToken; Cloud Wallet That Supported 20 Blockchains


Huobi Quietly Kills iToken; Cloud Wallet That Supported 20 Blockchains

  • Huobi abruptly ended support for its cloud wallet solution.
  • The exchange dropped support for iToken on Monday. Users have three months to withdraw funds. 
  • Earlier, Justin Sun announced that Houbi would cut 20% of its workforce.

After mass layoffs and poor performance, Huobi is showing more signs of distress. The crypto exchange abruptly ended the support for its multi-network wallet solution. On Monday, the exchange announced that it would cease support for the Huobi Cloud Wallet immediately. 

The wallet, which rebranded to iToken in 2022, enabled users to keep funds on 20 blockchain networks. The wallet also allowed investors to keep their tokens without private keys. 

Huobi cited “strategic and product adjustments” as reasons behind the move. Interestingly, no announcements appeared on iToken’s website or Twitter page, or Huobi’s Twitter page

Huobi advises all users still holding tokens in their wallets to transfer them back to their Huobi balance. Alternatively, users can withdraw funds from self-custodial wallets supporting the appropriate blockchains. 

The exchange will allow users to transfer money from their wallets for three more months. The Huobi Cloud Wallet will officially go offline on May 13, 2023. 

The abrupt end to its cloud wallet is just one sign of distress in the exchange. In January, Justin Sun announced that Huobi would cut 20% of its workforce after a surge in outflows. 

On the Flipside

  • Huobi’s owner is likely Tron founder Justin Sun. Officially, he is an advisor to the exchange. 
  • Houbi recently listed the controversial FTX Users’ Debt (FUD) token. The Tron-based token by an unknown DebtDAO has no relation to the bankrupt exchange FTX.  

Why You Should Care

Cuts to programs and staff could be a sign that Huobi is struggling. This may affect the Huobi token and the entire Tron ecosystem. 

‘Staking Services Are Not Securities’: Coinbase Gearing up to Fight SEC in Court


‘Staking Services Are Not Securities’: Coinbase Gearing up to Fight SEC in Court

  • Coinbase asserts its staking services are not securities. CEO Brian Armstrong said they are ready to fight the SEC in court. 
  • A ban on security services would push users to offshore, unregulated platforms, Coinbase said. 
  • Kraken CEO also pushed back against the SEC after settling a $30 million lawsuit over staking. 
  • Earlier, SEC Chair Garry Gensler said that staking services should fall under federal securities laws. 

As the US Securities and Exchange Commission continues to crack down on crypto exchanges, Coinbase is pushing back. CEO Brian Armstrong said that the exchange would face the agency in court. 

“Coinbase’s staking services are not securities. We will happily defend this in court if needed,” Armstrong tweeted on Sunday. He shared a link to a blog post in which Coinbase makes its case for staking. 

Staking is not a security under the US Securities Act, nor under the Howey test,” said Paul Grewal, Chief Legal Officer of Coinbase. “Trying to superimpose securities law onto a process like staking doesn’t help consumers at all and instead imposes unnecessarily aggressive mandates that will prevent US consumers from accessing basic crypto services and push users to offshore, unregulated platforms,” he added. 

As the crypto ecosystem moves to less energy-intensive proof of stake over proof of work, staking has become critical, he added. “Given the importance of this technology, getting regulation wrong could do serious harm to the development of the crypto industry in the US,” Grewal wrote. 

‘Staking Does not Meet the Howey Test’ – Coinbase

Coinbase’s Chief Legal Officer argued why staking should not fall under securities regulation. “Staking fails to meet the four elements of the Howey Test: investment of money, common enterprise, reasonable expectation of profits, and efforts of others,” Grewal wrote. 

Staking customers retain full ownership of their crypto assets, he said, as well as the right to unstake their coins. He added that they don’t fall under “common enterprise” because the assets are on decentralized networks. He argued that they also don’t meet the “reasonable expectation of profits” criteria. 

“Staking rewards are simply payments for validation services provided to the blockchain, not a return on investment,” Grewal said. Moreover, these are not thanks to the “efforts of others” but a result of the underlying blockchain protocol. 

Kraken CEO Pushes Back Against SEC

Coinbase’s case against a staking ban came after rival exchange Kraken settled a lawsuit with the agency over staking services. Kraken agreed to pay $30 million and cease offering staking services in the US. 

On Friday, SEC Chair said that Kraken did not offer full disclosure to investors. He also said that other exchanges should “take note” and properly disclose and register. 

Kraken CEO Jesse Powell pushed back against Gensler. Powell did not believe that giving full disclosure was all it took to avoid a lawsuit. 

“Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? Wish I'd seen this video before paying a $30M fine and agreeing to permanently shut down the service in the US. How dumb do I look? Gosh,” Powell said. 

Gensler: Exchanges Should ‘Take Note’ and Comply

On Friday, SEC Chair Gary Gensler explained why the agency went after Kraken. He said that Kraken did not disclose the full extent of the risk to investors.  

“You can take whatever risk you want,” he said. “Companies like Kraken can offer investment contracts and schemes, but they have to have full, fair, and truthful disclosure,” he explained.

Gensler also rejected the argument that staking is just a form of payment for services. “Labels don’t matter,” he said. “It’s about the underlying economics.” 

“Whether you call it lend, or earn, yield, or an APY, that doesn’t matter. If someone transfers their tokens to a platform and that platform goes bankrupt, guess what happens? They stand in line a bankruptcy court,” Gensler said. 

On the Flipside

  • With crypto trading volumes down, staking has become an important source of revenue for crypto exchanges. For Coinbase, blockchain rewards accounted for 11% of the revenue in Q3 of 2022.
  • The SEC is increasingly vigilant over practices by crypto exchanges following the FTX crash. The bankruptcy of a major exchange put pressure on the agency to prevent that from happening in the future. 

Why You Should Care

Staking services are the easiest way for users to help validate proof of stake networks. At the same time, users don’t really know what the exchanges are doing with their tokens.