Dispatch #54: Paradigm Shifts – Snoop Dogg and Crypto Lending Audits

In this patch of your weekly Dispatch:

• NFTs nudge more and more mainstream
• The significance of Nexo’s attestation
• Signs of the first US crypto ETF

The Big Idea

Well Hello, Cozomo and Hello, Nexo Audit

It is impossible to tell the story of crypto in 2021 without telling two stories: that of NFTs and that of regulators taking interest in crypto lending.

There have been many wild moments in the NFT space this year, but this week might have been the most significant one yet. First of all, we must talk about the funding rounds. Sorare, a global fantasy soccer game, raised $680M at a $4.3B valuation. NFT innovator Dapper Labs also added another quarter billion to their resource pool. The additional funding will allow them to expand beyond their wildly successful NBA Top Shot partnership.

Still, on top of all that, the most interesting news at the intersection of the mainstream and NFTs was when beloved Twitter anon Cozomo de’ Medici doxed himself and he turned out to be Snoop Doggy Dogg. Cozomo became notable over the last few months not only for his 8-figure NFT collection but even more for his interesting, hilarious Twitter threads.

The fact that this interesting account turned out to be one of the most famous and beloved hip-hop artists of all time shows not only how much we need to not ignore anonymous accounts, but also how deep into culture NFTs have penetrated.

And from anonymity to full transparency, let’s speak of the bomb that we at Nexo dropped ourselves yesterday. We announced that Nexo is now the first lender to open its books to the public, allowing everyone – from clients and partners through to regulators – to verify that Nexo’s assets exceed liabilities at all times. Speaking of regulators, this attestation comes at a particularly important time, considering the increased scrutiny by the SEC of the crypto industry recently and chairman Gensler’s emphasis on crypto lending in particular.

Without tooting our own horn too much, this third-party attestation is a maaaajor step in breeding the much-needed customer confidence and investor protection that our space deserves and gets criticized for. No need for fights, no need for “us” vs. “them” because we are showing that some crypto lenders are doing their bit to protect investors and are ready to engage in meaningful regulation. It’s an example for an entire industry and we certainly challenge other lenders to follow our path.

Regulatory Intrigue

This week was supposed to be just a fun exploration of the changes and disruptions crypto is bringing thanks to Messari’s Mainnet conference. On Monday, however, an attendee Tweeted that they had just seen the SEC serve a panelist right before their panel. Twitter and Telegram flew into a frenzy trying to confirm the news and figure out who it was. The next day, SEC Chair Gary Gensler held a webinar with the Washington Post called “The Path Forward” about crypto policy. It was, simply put, a reaffirming of every idea he’s been pushing but also a sign that the SEC might actually be trying to bridge the gap between itself and the people. Not bad.

The Latest In…

Traditional Markets

This week was full of interesting moments of transition. It started with rampant speculation about Evergrande. The massive Chinese real estate company has been in increasingly dire straits, with more than $300B in outstanding debt, 1.5M investors who have put down payments on properties that haven’t been built, and major questions about whether it can remain solvent. After weeks if not months of ignoring Evergrande, western mainstream media finally picked up on the story and investors started the week terrified of systemic implications. By midweek, however, everything had shifted to the latest from Jerome Powell and the Federal Reserve.

The Latest In…

Institutions

While we’re far beyond the days where institutions getting into Bitcoin is going to make big news, the never-ending march of mainstream finance into crypto continues. This week, a story broke that NYDIG’s most recent Bitcoin fund has grown to $17M. The bigger news, however, came from Mike Novogratz’ Galaxy Digital, which announced a deal with investing giant Invesco (who manage more than $471B in ETFs and Index funds) to offer a series of crypto-based ETFs. The industry shows no signs of stopping its push and soon it might come to fruition.

The Week’s Most Interesting Data Story

The Growth of Lightning

Lightning has long been held up as a big part of the future of Bitcoin. This month, when Bitcoin’s El Salvador Bitcoin legal tender law went into effect, the Lightning Network was thrust onto the main stage in a significant way. The good news then is that the overall capacity of the lightning network has increased to 2738 BTC - or about $116M. Somehow, that wasn’t the only big Lightning news of the week, as Twitter announced that they were enabling Bitcoin tipping via Lightning. If ever there were a “gradually, then suddenly” epoch for Lightning, this is it.

Hot Topics

What the Community Is Discussing

A different take on the history of private money.

A (pretty compelling) argument that tokens are the new websites.

How Nexo is preparing for the future.

What to Watch for Next Week:

• Will the Treasury finally release its stablecoin report?
• Scarier, will the Treasury try to designate stablecoins as “systemically important?”
• Will any more anon accounts reveal themselves to be famous?