All Been Crypto — Week 11 Mar 2022
A down week across the board mostly sparked by risk off and the continuous geopolitical limbo caused by Ukraine situation. Macro is dominating our asset class and with the war its impact on inflation (yesterday’s 40 year record US CPI print at +7.9% YoY) and the resulting response of central banks top of minds. In crypto world we had an unfortunate departure of a lead dev causing the FTM eco system to suffer and saw interest in privacy coins returning for the first time in a while with XMR and ZEC outperforming. Biden released the long awaited Executive Order on crypto and on the institutional side we had major developments, with TradFi giants entering custody and multiple raisings and deals announced. Hard to see a crypto winter coming with abiding institutional interest. Enjoy reading!
Bat Tai Chi — firstname.lastname@example.org
Lead Dev leaving tanking an entire ALT L1 ecosystem
If you’ve been involved in Fantom, Andre Cronje is certainly no stranger to you but even for outsiders he’s a well respected developer and has contributed to multiple projects — Yearn Finance one the most successful ones for example. This week his Business partner Anton Nell announced in a Tweet they are calling it quits on contribution to ~25 apps and services they were supporting. This has lead to a wide range of speculations on motives and of course to many people upset by the tokens dropping. Both FTM and TLV in the ecosystem is down >30% and many smaller projects even more. The Fantom foundation and Yearn were quick to point out that there’s larger teams behind the projects and Andre departing will not have material impact but market seemingly thinks differently. I’ve read multiple views on why he quit but before we go into that you have to ask yourself the questions: Is this really DeFi if one lead dev leaving shuts down the project? What part of it is Decentralized then, aren’t we doing this so to avoid single points of failure? I think many new entrants in the industry haven’t really realized the importance of true decentralization, in my opinion one of the core value propositions of our industry.
But now let’s speculate on why. Some jumped quickly to calling it a rug which i don’t believe is the case and actually just showed you what the real reason behind it might be. Andre has been complaining openly for a while about the toxic culture for devs. Exactly two years ago he already wrote a blog here on Medium called Building in #DeFi sucks where he complains about the sense of entitlement users have and the hostility within the community. So you could say the writing was on the wall already literally. Defi Edge had a good thread on how the troubles of WONDERLAND discussed in my Weekly from 28 Jan might also play a part in triggering his decision now. Others pointed to the fact that regulation is getting more stringent and will also encompass DeFi so lead devs will be in the cross-hair for sure, this combined with the fact that he is already financially independent could have contributed to his decision as well. We won’t know for sure and it was probably a mix of many things. I just hope this serves as an example of the importance of decentralization and mitigating key man risk. And I also have the romantic wish that he might come back as an Anon Dev. He loves building after all — he just (understandably) hates all the rest that comes with it. So if you read this Andre just wanted to say thanks again for all your incredible work and pls continue what you do best — just build!
Ok so upfront I have to admit I’ve not read the paper in its entirety but just the Fact Sheet and comments from how that was received in the media. Overall I got the impression that it tried to include everything. Just for the first sentence ‘Outlines First Whole-of-Government Strategy to Protect Consumers, Financial Stability, National Security, and Address Climate Risks’ you can see they went really wide. Which is probably why it got delayed a number of times — and so arguably there is something in it for everyone too. For the critics it talks about challenges to consumer protection, financial stability and illicit use of financial assets as threats towards national security. For the supporters we have language about US driving leadership in technology and promotion of safe and equal access as well as the importance of a US CBDC. Since it’s not a surprise i’m more in the pro crypto camp i might be a bit biased in my take but overall i like that the order outlines a holistic approach which tells me that they are taking it seriously. The second point I take comfort in is on the R&D focus, we are going down the education (and hopefully rabbit whole) lane across basically all departments that could possibly touch on digital assets. Maybe I’m a bit too optimistic here but i would hope that with more scientific research we’d be able to convince more US lawmakers of the positive impact our asset class can have. Just as an aside in South Korea the newly elected president made crypto deregulation one of his key campaign promises.
Ok yes we are not talking about CEXs like Crypto dot com terminating lending product over night in some +30 countries we are talking about Open Sea and Metamask, that came under critique for strictly abiding to US sanction policies and banning users in Iran for example from access. Both companies confirmed they are blocking and deleting accounts based in countries sanctioned by the U.S. Many new entrants to Web3 were taken by surprise that this is possible though believing they are dealing with decentralized permissionless networks. It’s a reminder that even if the underlying blockchain you trade on is permissionless the APIs are ‘private’ and these companies based out of the US have no chance not complying with US regulations. Remember how major CEX CEOs were telling users to get tokens OFF the exchange to avoid asset seizure during the Canada Truckers protest just last week back. Not Your Keys Not Your Coins.
We believe everyone deserves access to basic financial services — Unless the law says otherwise
Brian Armstrong, CEO Coinbase
The scale that Russia would need to circumvent all financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state
Carole House, US National Security Council’s director of cybersecurity
Some of the military suppliers have accounts in crypto. Actually, some of them have companies and bank accounts in jurisdictions where cryptos are allowed. And they can just get crypto in ethereum, bitcoin and, of course, in some stablecoins
Alex Bornyakov, deputy minister at the Ministry of Digital Transformation Ukraine
That State Street, one of the world’s largest custodians, is creating a new digital asset service is a hugely important development for institutional engagement in this new asset class,”
Sabrina Wilson, COO, Copper.co