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Top Headlines for 6 May, 2022

Twitter's Decentralized BlueSky Releases First Code

BlueSky, a Twitter-sponsored project aiming to create a decentralized protocol layer for global social media, gave the world a glimpse at its source code on 6 May 2022.

The code, known as Authenticated Data eXperiment (ADX) includes a developer kit, server implementation information and basic commands, actions on a social media network such as post, like, share and comment. In describing the initial release BlueSky developers said, “Before you get too excited, this is not the launch! There’s no app or network only a command line for testing”.

Releasing the code at such an early stage is part of the team’s commitment to “build in public and share their progress”. Consequently, several features of ADX already give an idea about how the full rollout will work. For example, the protocol uses “self-authenticating data,” allowing BlueSky users to port their data across different networks. On BlueSky, users will control their data instead of a corporation.

In Web 2.0 the current generation of social media networks (Instagram, Meta, TikTok and Twitter) operate on the company control principle in which a centralized organization has ultimate control over access and distribution of content created by the platform’s users. In Web 3.0 the next iteration of the Internet, users will retain ownership of their identities and have more complete control over how their content is used. BlueSky developers nevertheless warn that building a usable social network is impossible without some form of moderation as it will be challenging to sort ‘signal from the noise’ on an uncensored platform.

NFT Market Surges; Zora Raises 50M

In December 2021, a16z veteran Katie Haun made waves by raising $1.5 billion to launch her Web 3.0 VC fund, Haun Ventures.

On 4 April, 2020 she led a $50 million investment round for NFT marketplace Zora. The new crypto art platform seeks to take on industry champions like OpenSea and Magic Eden and is valued at $600 million by participating investors Kindred and Coinbase Ventures.

Launched in 2020 by three Coinbase employees, Zora enables artists and musicians to sell tokenized versions of their physical artworks. The digital art marketplace has since pivoted to develop an protocol based on Ethereum that will allow anyone to launch an NFT market. The startup sees itself as a decentralized version of Web 2.0 infrastructure providers like WordPress and Shopify, which allowed millions to develop their own websites or web shops; Zora intends to provide a similar service for NFT marketplaces.

After two months of relatively slow performance in February and March of 2022, the NFT sector began to pick up steam. New research by Dappradar confirms that trading volume for NFTs grew 45% to $3.5 billion in April compared to March 2022. Despite being more expensive, Ethereum-based NFTs still dominate the market, and OpenSea maintains its position as the top exchange for NFTs, representing nearly $3.4 billion of April’s total trading activity. Dune Analytics reported that OpenSea itself observed a 40% increase in volume in April, 2022.

Since its release in April 2022, MoonBirds, generated nearly $500 million in sales, making it the biggest collection launched that month and scoring a big win for Kevin Rose’s Proof NFT studio. DappRadar noted that the Solana-based collection enjoyed a 91% month-over-month increase

The biggest NFT project launched during the month was MoonBirds developed by Kevin Rose’s Proof NFT studio. The crypto art collection has generated nearly $500 million in trading volume since its release. While Ethereum dominates the NFT market it’s not the only blockchain network that saw its NFT trading volume explode in April 2022. According to DappRadar, the total volume of Solana based NFTs saw a month over month increase of nearly 91% with OkayBears and DeGods reportedly leading the growth on the network.

Despite mainstream media outlets calling the NFT market a fad at the last end of its run, the sales data for these digital assets has shown that interest has been gradually increasing. Chainalysis reported that NFT collectors have spent over $37 billion on digital art marketplaces in the first quarter of 2022 alone, nearly $16 billion more than the total NFT sales volume from all of 2021.

The analytics firm said that the NFT market observed an explosion in trading volume based on market sentiment. While the market had experienced a downturn since mid-February, it showed signs of resurgence in April with the launch of several high-profile collections.

LFG Adds $1.5B Worth BTC

On 5 May 2022, Luna Foundation Guard (LFG) added 37,863 BTC worth $1.5 billion to its Bitcoin reserve. This acquisition, its biggest to date, doubled its bitcoin holdings from 42,530.82 to 80,394.

LFG reportedly bought the cryptocurrency by swapping $1 billion worth of UST tokens through Genesis Capital and an additional $500 million worth of BTC in an over-the-counter sale facilitated by Three Arrows Capital. LFG was established by Terra’s co-founder Do Kwon to promote development of the Terra-Luna ecosystem. One of the organization’s first moves towards that goal was to build a Bitcoin reserve for Terra’s native stablecoin, UST.

TerraUSD or UST is an algorithmic stablecoin; it consequently keeps its price pegged to a more stable asset, in this case the U.S. dollar, by reducing or increasing its liquidity based on the supply and demand for the coin. However, Do Kwon and the LFG believe that this price stabilization method may not be sustainable in the long run, and have decided to build a $10 billion treasury crypto reserve to back the stablecoin.

The Bitcoin acquisition has increased the size of LFG’s treasury to a total of $3 billion. BTC forms the lion’s share of the reserve while other smaller blue-chip altcoins such as AVAX, LUNA, USDT, and USDC make up the rest. Do Kwon claims that the LFG will hit the $10 billion reserve mark by the third quarter of 2022.

Binance Commits $500M to Musk's Twitter Acquisition

Binance, the world’s largest cryptocurrency exchange, has pledged $500 million to Elon Musk’s $44 billion acquisition of Twitter, according to a filing with the United States Securities and Exchange Commission (SEC).

Per SEC filing, investment firms like Binance, a16z, Sequoia, Qatar, and Fidelity contributed to Musk’s effort to purchase Twitter. The document indicates that these external investors pledged a total amount of $7.1 billion, with Oracle founder Larry Ellison alone contributing a billion dollars. Changpeng Zhao, Binance’s founder and CEO, called the move a “small contribution to the cause”.

SEC requires an entity to submit a specialized Schedule 13d filing if it acquires more than 5% of a company. Musk began his acquisition of Twitter by buying a 9.2% stake in the company. The tech entrepreneur claims that Twitter has become the defacto townhall of the Internet, and such a platform should be promoting free speech, not censorship.

Musk was offered a seat on Twitter’s Board of Directors which he promptly relinquished and made a counteroffer to buy the whole company for $43 billion. Twitter finally agreed to sell for $44 billion on 25 April, 2022.

33% of Britain's Consumers Invest in Crypto

According to research conducted by Coinbase in 2022, over 33% of Britain’s consumers have previously invested in crypto assets.

The country’s rate of crypto adoption is second only to The Netherlands in Europe, which already has a consumer base of 47% of crypto investors.

The Coinbase study finds that 60% of British crypto investors plan to expand their holdings by 2023. Two-thirds of those surveyed aim to increase the size of their holdings in the cryptocurrencies they already own, while 23% intend to diversify into other types of digital assets.

Bitcoin and Ethereum are the preferred crypto investments for consumers in Britain, with ownership rates of 75% and 25%, respectively. Besides retail investors, the cryptocurrency sector has also attracted the interest of Her Majesty’s Treasury, despite a relatively weak price performance by these assets in 2022. The HM Treasury announced the development of a Royal NFT collection in April 2022.

The Coinbase survey also tested the perceived understanding of various digital assets among crypto investors. It found that nearly 11% of those questioned claimed that they knew a lot about cryptocurrencies other than Bitcoin.