Can VCs play the crypto game out of this downturn? – TechCrunch

Welcome back Chain reaction.

Last week, we saw Musk wielding doge power. This week, we’re talking about where all this crypto VC money could go.

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maybe it’s all just a game?

A weekly dispatch from the crypto editor’s desk TechCrunch Lucas Matney:

The reality is that the dreams of web3 investors and founders are getting a little rough – the overall crypto downturn means less hype, less conversation between friends and consumers are generally less involved in the consumer experience. This is no longer ideal for venture capitalists who have seen the consumer web dream at their fingertips, but fortunately they already have a great deal of money thanks to recent large sums raised. with crypto staking as their sole focus.

However, it’s been a tough time for the core audience of consumer cryptocurrencies, with recently minted accounts going bad and many people likely discouraging spending more time, money, or money. silver or effort for new web3 projects. The question is how to get this VC money to work during the bear cycle; many will spend reduced attention spans pouring into infrastructure and “hoe and shovel” toolkits. Others may go on, advocating for consumer projects that are further disconnected from the wider crypto world but expose users to aggregate economies, wallets, and technical goods. numbers, an area that is particularly well served by games that use cryptocurrency.

Gaming seems like a great consumer for crypto and I would expect many of these dedicated crypto funds to pour significant amounts of their money into the studios and platforms that pursue this. There are significant challenges, including generally negative user sentiment and platform acquisitions – as NFTs are still treated with a high degree of hostility by app stores and gaming platforms. .

The self-contained world of gaming titles with dedicated tokens disconnected from the more self-referential corners of crypto may be the easiest place to find new eyeballs. And as the overall cost of customer acquisition increases, VCs may be willing to subsidize customers directly as part of the user transition, back to the contract economy of VCs. bribe new users to sign up.

It’s been a strange bullish cycle for the crypto game. While a lot of money has been poured into play-for-money titles and SNES-quality DeFi games, it’s fair to say that nothing has come up as really good. Most games are over-indexed in terms of margins and cut ponzinomics that have driven growth to the harshest ends without regard for stability. Great games take time to build, and fun games have a level of user interest that’s hard to optimize when you’re trying to maximize short-term profits on both ends of the deal.

newest group

We think winter has come for crypto, but US regulators just make it seem so much colder. First, the US Department of Justice arrested three people, including a former Coinbase employee, for alleged insider trading on the exchange. After that, Securities and Exchange commission accuse them of securities fraud, argued that some of the coins they traded were in fact securities — an identifier that comes with a set of rules that Coinbase and other exchanges don’t necessarily follow. We shared our informal thoughts on how the laws could be interpreted and what this could mean for major crypto exchanges (more on this in the “weekend” section. this on my web3” below).

We also talked about the bitcoin-related situation that might eventually be enough to turn Elon Musk heads into video game skeptics and lovers. Minecraft cancels NFT, at least for the time being. Our guest is David Nage, a portfolio manager at digital asset management firm Arca, who helped us understand the mess that was going on on the market.

Subscribe to Chain Reaction on Apple, Spotify or alternative podcast platform of your choice to keep us updated on a weekly basis.

according to money

Where startup money is moving in the crypto world:

  1. Decentralized Social Media Platform (DeSo) DSCVRbuilt on Dfinity’s Internet Computing ecosystem, has raised $9 million in seed funding led by Polychain Capital.
  2. Unstoppable domaina popular blockchain identity platform and naming system provider, has raised $65 million in a Series A funding round at a $1 billion valuation led by Pantera Capital.
  3. Aptos LabsA blockchain project from former Meta employees, raised $150 million in a Series A round led by FTX.
  4. Blockchain Ecosystem Topl raised $15 million in a Series A funding round led by Mercury, Republic Asia and Cryptology Asset Group to help companies track and monetize social impact initiatives.
  5. Cryptocurrency Lenders CLST raised $5.3 million for its seed round from investors including Coinbase and Kraken.
  6. Solana-based NFT ownership platform Pinky announced a $4.4 million seed round led by Prot Characters and Solana Ventures.
  7. Game Company Web3 Mighty Bear received $10 million in a funding round led by Framework Ventures for the game Mighty Action Heroes.
  8. FTX CEO Sam Bankman-Fried led a seed round for Trustless Mediaa startup that’s building a community-owned web3 program.
  9. Cybersecurity blockchain protocol Naoris raised $11.5 million in an equity and token-based funding round from investors including Draper Associates.
  10. Korea metaverse company Anipen secured ~$12 million in an ongoing B-chain funding round from Medici Investment and others.

of the week on web3

Weekly window of web reporter thoughts3 Anita Ramaswamy:

After a former Coinbase employee and two of his associates were arrested this week by order of the U.S. Department of Justice for allegedly operating normally on a cryptocurrency exchange, they have been indicted by the SEC. securities fraud. Shortly after, Bloomberg revealed that the SEC was investigating Coinbase for its ability to allow securities to trade on its platform without full filing and disclosure.

Interestingly, the SEC’s fees, at least in the case of securities fraud, depend on some pretty niche coins. Tokens they choose to use after saying much, in some ways, as well as those that they don’t use. Despite that, Coinbase was quite upset and said it checked all the tokens on its platform before listing them to make sure they weren’t securities.

If Coinbase gets nailed in this lawsuit, it will have ripple effects throughout the industry. Currently, other major crypto companies are facing similar allegations, including Binance, Ripple Labs, and Yuga Labs, in the form of disgruntled investors filing lawsuits against them in the hopes of get them into trouble for illegally selling securities or under investigation by US regulators, as was the case with Coinbase.

Until we know more about how regulators and legal experts are likely to handle each individual token, you should check the applicable securities laws and how they may apply to Coinbase. . That’s exactly what I did in my latest article with Alex Wilhelm for TechCrunch+, in which we dived into the four-part “Howey Test” to try and determine if the SEC or Coinbase have a Stronger argument here or not.

TC + analysis

Here are some of this week’s crypto analysis available on our TC+ subscription service from senior reporter Jacquelyn Melinek:

Crypto Valuations May Drop Until September As VCs Play a Waiting Game
“Tons of capital have been raised in the crypto industry in recent months, but there has been a significant pause in implementation. That could change in the coming months. Follow David Nageventure portfolio manager at Arca. “

Investors focus on DeFi as it remains resilient to crypto market volatility
“As many sub-sectors in the crypto market continue to suffer heavily from the recent volatility, some market players see decentralized finance (DeFi) as potentially resilient and gain traction. profitability despite the negative macroeconomic environment. Centralized financial institutions are similar to traditional companies, with people running their operations and managing their funds. In contrast, DeFi protocols use technology – not people – to execute services through things like smart contracts.”

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