Now that everyone is back from EthCC in Paris, let’s catch up on the news. But first:
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
[tl;dr]
The Worldcoin blockchain went live on Monday 🧱⛓️
Judge contemplating gag order in FTX case 🤔
X (née Twitter) limits DMs for unverified users ❌
[Iris-ky Business 👁️ ⚠️]
After several years in development, Worldcoin, spearheaded by OpenAI’s Sam Altman, has officially launched.
What Worldcoin Said 🌎🪙: “More than three years ago we founded Worldcoin with the ambition of creating a new identity and financial network owned by everyone; the rollout begins today,” co-founders Altman and Alex Blania wrote. “If successful, we believe Worldcoin could drastically increase economic opportunity, scale a reliable solution for distinguishing humans from AI online while preserving privacy, enable global democratic processes, and eventually show a potential path to AI-funded UBI.”
What Journalists Said 🧑💻:
Worldcoin, like Altman, “straddles the worlds of AI and crypto,” explained Bloomberg’s Hannah Miller. “The project uses a small device called an ‘orb’ to scan people’s eyeballs in order to generate a unique digital identity. That identity, or World ID, grants its holder ‘proof of personhood’ in the Worldcoin parlance. Altman and his co-founders say the new approach to digital verification is essential in a time when AI is making it harder than ever to determine what’s created by humans and what isn’t.”
“Worldcoin is an attempt to combat a future A.I. dystopia that some argue, through OpenAI, Altman is directly facilitating,” wrote Fortune’s Ben Weiss. Using the orb as its main tool “is pure science fiction—put into reality.”
His colleague Leo Schwartz agreed that the project is out of SciFi, calling it “ambitious,” “audacious” and “one of the buzziest—and weirdest—crypto releases in years.”
Worldcoin is “audacious,” penned TechCrunch’s Manish Singh—and well-funded. It raised $250 million from a16z, Reid Hoffman, and others. But, he added, “the journey so far hasn’t been very smooth,” due to “criticism for exploitative practices in poor countries.”
The project is battling other criticisms. The launch led the UK Information Commissioner’s Office, a privacy watchdog, to say it “will be making enquiries,” as reported by Reuters’ Elizabeth Howcroft and Decrypt’s Connor Sephton. And Ethereum co-founder Vitalik Buterin shared his concerns about privacy, accessibility, centralization, and security related to a “proof-of-personhood” system but ultimately declared that, “while the various implementations have their risks, not having any proof-of-personhood at all has its risks too: a world with no proof-of-personhood seems more likely to be a world dominated by centralized identity solutions, money, small closed communities, or some combination of all three.”
There is a lot to mull over, suggested Coindesk’s Jeff Wilser in a feature about the makings of the orb, but he thinks Worldcoin might be onto something. The project’s “embrace of AI” led to “easily the most frictionless crypto onboarding I’ve experienced in my five-plus years covering the space if you’re willing to overlook the whole scanning-the-eyeball thing.”
Why It Matters ⁉️: Sam Altman has become the face of AI. Can he become the face (or, rather, eyes) of crypto? 👀
[FTX Judge Contemplating Gag Order 🤔]
The judge in the Department of Justice’s case against former FTX CEO and Alameda founder Sam Bankman-Fried has drafted a gag order 🤐 that, according to court filings, would forbid any parties in the trial from “publicly disseminating or discussing with any public communications media anything about the case which could interfere with a fair trial.” It comes days after The New York Times published diary excerpts from former Alameda CEO (and SBF’s ex-girlfriend) Caroline Ellison.
What the DOJ Said ⚖️:
In a letter to Judge Kaplan, the US Attorney for the Southern District of New York wrote: “The defendant has sought to publicly discredit a government witness by sharing her personal writings with a reporter so that these private documents would be featured in a New York Times article published today.”
What SBF Said 🗣️:
Lawyers for Bankman-Fried wrote to Judge Kaplan: “The Government has taken a set of circumstances where nothing improper or impermissible occurred and has unfairly recast the events as a nefarious attempt by Mr Bankman-Fried to ‘discredit’ Caroline Ellison and ‘taint’ the jury pool.”
What Journalists Said 🧑💻:
SBF is already on thin ice 🧊 with the judge, who previously threatened to revoke bail and alter SBF’s “relatively loose” living conditions in his parent’s Palo Alto home, Coindesk’s Elizabeth Napolitano wrote; “in February, the former executive allegedly used a VPN to intimidate former FTX US General Counsel Ryne Miller, a potential witness in the case against him, on Signal.”
If Bankman-Fried did have a hand in leaking the diary (written on Google docs), it may backfire. The New York Times’ David Yaffe-Bellany and Matthew Goldstein noted that “in interviews last year, Mr Bankman-Fried shifted some blame for the collapse to Alameda, saying he had little involvement in the hedge fund’s day-to-day management.”
Former federal prosecutor Moira Penza told the reporters “the ‘power differential’ between Ms. Ellison and Mr Bankman-Fried could make her a compelling voice. ‘This does not strike me as an effective strategy for the defendant to be blaming down.’”
Why It Matters ⁉️:
The FTX bankruptcy remains a black eye on the industry. Headlines for SBF draw attention away from developments in the space.
[Twitter X-Communicates 🗣️]
Over the weekend, Twitter rebranded to X. In a quieter move, it also said it would start limiting the number of direct messages that unverified users can send, but didn’t say what the limit would be.
What Twitter/X Said 🐥❎:
This is an “effort to reduce spam,” @TwitterSupport posted last week. “Subscribe today to send more messages.”
What Journalists Said 🧑💻:
This latest solution follows the implementation of new options allowing users to only receive DMs from verified users or people they follow. According to the social media company, those options have reduced DM spam by 70%, reported ZDNet’s Lance Whitney. “So if the new options are helping to combat spam, why limit the number of DMs that unverified users can send?”
Because this just “doubles as another way to push Twitter Blue,” answered The Verge editor Jay Peters.
Twitter’s rate limits earlier in the month, which prevented many users from temporarily accessing the site, set in motion Meta’s launch of Threads, noted Cointelegraph’s Brian Quarmby. That app “drew in a lot of initial hype and a large user base, only for it to go and introduce its own rate limits on July 18.”
Still, “is it finally time to ’X-it’ Twitter for Threads?” asked Megan DeMatteo of Coindesk. Meta has said it will decentralize the new app so that it is “compatible with the decentralized social media protocol ActivityPub, which would allow users to interact with other social media platforms like the open-source Mastodon network, Bluesky and others.” But while many are pushing for “user-owned social media platforms,” most are skeptical of Threads making good on decentralization.
Why It Matters ⁉️:
Much of cryptocurrency discourse happens on Twitter, er X, but every platform alteration pushes people to explore other, (sometimes) decentralized alternatives, perhaps fragmenting the social network ecosystem. It’s conceivable that Crypto Twitter could migrate to multiple platforms, including Threads, Bluesky, and Farcaster. Crypto firms will have to be flexible with their marketing by being responsive on multiple platforms.
[Tweet of the week]
[Tidbits]
“Ethereum infrastructure service Flashbots has raised approximately $60 million at a valuation of $1 billion.” Story by RT Watson (The Block)
“Era Lend, a decentralized lending protocol operating on zkSync Layer 2, become the latest victim of a reentrancy attack that resulted in a loss of $3.4 million, as confirmed by security analysts at BlockSec.” Story by Vishal Chawla (The Block)
“An American couple accused of laundering billions of dollars worth of cryptocurrency stolen from the 2016 hacking of virtual currency exchange Bitfinex have entered into a plea agreement, court records showed on Friday.” Story by Luc Cohen (Reuters)
[Events]
India Blockchain Tour | 29 Jul | Kolkata, India
ETH Portland | 1 Aug | Portland, USA
Tezos Global Blockchain Meetups | 2 Aug | London, England
[DeFi Definitions]
A segment exploring one particular aspect of DeFi.
This week: “LSTfi” by Tiffany Mac Sherry
LSTfi, or Liquid Staking Token Finance, represents an innovative and promising concept within the Ethereum ecosystem. Its primary objective is to enhance yields, and accessibility, and support philanthropic initiatives by leveraging Liquid Staking Tokens (LSTs) that enable users to stake their ETH while maintaining liquidity. This approach aims to make staking more flexible and appealing to a broader range of users, unlocking the potential for increased participation in the DeFi space.
The development of LSTfi has been shaped by notable upgrades such as Shapella and The Merge, which have laid a solid foundation for its growth. Currently, the liquid staking market is predominantly led by established LST providers, and LSTs have become a significant component of the staked ETH ecosystem.
This dynamic evolution showcases the progress and potential of the Ethereum blockchain ecosystem, promising a bright future for decentralized finance and the opportunities it presents for users seeking diversified and accessible investment options.
The team: founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Andrew Wickerson, Tiffany Mac Sherry and Delon Chan. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and Web3 brands through impactful storytelling. Find out more about us here.