Artemis Weekly Wrap-up (8/30/2024)
your go-to source for weekly fundamental updates
This week, Telegram cofounder, Pavel Durov, was arrested in France and is under investigation for charges relating to criminal activity on the platform he created (CNN), Maker rebrands to Sky, with DAI rebranding to USDS (Blockworks), and Donald Trump takes to X to announce plans to make the US the crypto capital of the planet (X/realDonaldTrump).
🌞 OpenSea receives a Wells notice from the SEC
💫 Ton network sees 2 outages in one week
The markets this week erased most of last week’s gains. While ARB and MATIC had both increased 33%, this week’s 22% loss puts them right back where they started. The only winner this week was Tron, who’s memecoin ecosystem has begun to grow with the launch of SunPump, a pump.fun copycat. The market decline may be attributable to continued derisking as macro uncertainty remains high, with eyes on the CPI announcement in 1.5 weeks.
In more exciting news, there are now $2 billion in tokenized treasuries - a new milestone for the tokenization of financial assets (X/rwa_xyz). This comes amid a number of big fund raises this week: ParaFi raised $120m, Robot Ventures raised $75m and Lemniscap raised $70m.
🌞 OpenSea receives a Wells notice from the SEC
OpenSea, founded in 2017, has become a cornerstone of the NFT ecosystem, facilitating millions of transactions and playing a crucial role in the explosive growth of the NFT market over the past few years. The platform's user-friendly interface and wide range of NFT offerings have made it accessible to both crypto enthusiasts and mainstream users, contributing to the broader adoption of NFTs. In fact, OpenSea was responsible for +85% of all NFT trading volume during the NFT fury of 2021.
OpenSea received a Wells notice from the SEC this week, marking a significant escalation in the regulatory approach to NFTs. The SEC's stance that NFTs traded on the platform could be considered securities is a novel interpretation that has sent shockwaves through the crypto and art communities. This classification, if upheld, would subject NFTs to the same stringent regulations as stocks and bonds, potentially requiring registration with the SEC and compliance with complex securities laws.
The implications of this move are far-reaching. For artists and creators, it could mean increased legal and financial burdens when minting and selling NFTs. For platforms like OpenSea, it might necessitate significant changes to their business models, including implementing more rigorous Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. The broader NFT market has already seen a cooling which could be worsened by regulatory uncertainty. The platform used to generate tens of millions in weekly royalty fees. This past week, the entire NFT industry generated only a quarter million in royalties, of which OpenSea generated $96k.
OpenSea's response to the Wells notice has been robust. Beyond expressing disagreement with the SEC's position, the company's pledge of $5 million to help cover legal fees for NFT creators and devs that receive a Wells notice demonstrates a commitment to defending the NFT ecosystem. This move also highlights the collaborative nature of the crypto community in facing regulatory challenges.
The timing of this action is noteworthy, coming amidst a series of regulatory crackdowns on various aspects of the crypto industry. The SEC has recently taken action against major cryptocurrency exchanges like Binance and Coinbase, alleging violations of securities laws. This broader context suggests a coordinated effort by regulators to assert authority over the rapidly evolving digital asset landscape. This also comes at a difficult time for OpenSea, who raised $300 million in funding in 2022, and has since seen its market share evaporate to competitor Blur.
Critics of the SEC's approach argue that applying traditional securities frameworks to NFTs could stifle innovation and creativity in the digital art world. Supporters, however, contend that increased oversight is necessary to protect investors and prevent fraud in a largely unregulated market. As this situation unfolds, it will likely set important precedents for how NFTs and other digital assets are regulated in the United States and potentially globally. The outcome could shape the future of digital ownership, creative expression in the digital realm, and the intersection of art and technology for years to come.
💫 Ton network sees 2 outages in one week
The Open Network (TON), a blockchain protocol integrated with the popular Telegram messaging app, experienced significant disruptions this week, highlighting both its growing popularity and the challenges it faces in scaling to meet demand. TON, designed to provide fast and scalable blockchain infrastructure for various applications, suffered two major outages within a 36-hour period. The first occurred on August 27, 2024, lasting about six hours, while the second began on August 28 and persisted for over six hours (Coindesk). These outages were primarily triggered by an unexpected surge in network activity following the launch of a new TON-based memecoin called Dogs (DOGS), inspired by Telegram founder Pavel Durov's pet dog, Spotty.
The DOGS token launch created an unprecedented level of congestion on the TON network, with trading volume skyrocketing to over $2 billion in less than a day. This sudden influx of transactions overwhelmed the network's capacity, leading to the halting of block production. The incidents not only affected the functionality of the network but also had broader implications for the TON ecosystem. TON-based asset withdrawals and deposits were impacted, with user funds locked onchain with no ability to access them. Additionally, the native token of the network, Toncoin, experienced a significant price drop of 14.25% over the week, reflecting investor concerns about the network's stability and scalability. Total Value Locked on the network also dropped steeply this week, following a month-long trend as TVL has more than halved since its peak in late July of this year. In stark contrast, the network’s revenue has increased massively this past week, driven by increased gas due to the DOGS launch.
These outages have sparked discussions within the crypto community about TON's infrastructure robustness and its ability to handle rapid growth and unexpected spikes in usage. As blockchain networks continue to gain mainstream adoption, the ability to maintain stability and performance under high-stress conditions becomes increasingly crucial. The TON team now faces the challenge of addressing these issues, potentially through infrastructure upgrades or improved load management systems, to prevent similar incidents in the future. The outcome of these efforts will be closely watched by both users and investors, as it could significantly impact the network's long-term viability and its position in the competitive blockchain landscape. This event serves as a reminder of the growing pains often experienced by emerging technologies as they scale to meet increasing demand and highlights the ongoing challenges in building robust, decentralized systems capable of handling global-scale operations.
Liquid Token + Crypto VC Roles
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Note: Revenue represents fees that go to the protocol’s treasury or are returned to tokenholders via a burn mechanism.
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