In this week’s edition of The Context, we discuss:
Why Vitalik compared Ethereum’s revenue model to Google’s
What it means that crypto treasury companies are buying back stocks
How the US and UK are collaborating on crypto
[Vitalik’s Google-y Eyes]
Ethereum co-creator Vitalik Buterin made headlines after publishing a blog post titled “Low-risk DeFi can be for Ethereum what search was for Google.”
What Media Said 🧑💻:
The Block: Buterin argues that decentralized finance applications for payments, savings, and fully collateralized lending can bring in revenue that subsidizes “less profitable but still important applications” on the Ethereum network in the same way advertising pays for Google’s less profitable ventures.
Cointelegraph: That’s not to say Buterin wants to follow Google’s incentive model, which he believes “pushes the company to hoard user data, conflicting with its original open-source and positive-sum ethos.” Ethereum isn’t centrally controlled, so the hope is that low-risk DeFi apps can actually make money and be ethical.
PR Perspective 🔎:
Putting Google—one of the most recognizable companies in the world—in a headline is a near-surefire way to get more clicks because people care about what the search giant does. But don’t try this at home, kids: Ethereum and Vitalik also have big followings.
[Get Your Own Strategy?]
The Financial Times reported that at least seven crypto treasury companies—businesses that hoard crypto to try to push up their stock prices—are buying back shares to try to lift sagging stock prices.
What Media Said 🧑💻:
Financial Times: The buybacks are “the latest sign that this year’s ‘crypto treasury’ craze is unravelling.” Five of the seven companies are now worth less than the crypto they hold. Although dozens of companies have copied the business model pioneered by Strategy’s Michael Saylor, investors doubt its sustainability.
DL News: Not everyone will survive. On Monday, one Bitcoin treasury, Strive, bought another, Semler Scientific, for $1.3B. Merely buying BTC isn’t enough to drive up the stock price any more; “the path to outperforming the asset itself may run through similar mergers and acquiring smaller treasuries for their coins.”
Axios: In a previous cycle, Bitcoin miners had a similar strategy—holding on to their crypto as part of their argument to investors to hold on to their stock. According to Standard Chartered, miners started to sell when prices fell 20% below what they got it at.
PR Perspective 🔎:
Just two weeks ago, we asked: “Is the crypto treasury craze already over?” The downward slide continues, suggesting this could be a long, bad news cycle for treasury companies. AND: As Axios notes, people have been through a few boom-bust cycles with crypto before, meaning that they’re always concerned that a negative trend in one sector portends the next bear market.
[Taskforce Multiplier]
The US and UK governments are setting up the Transatlantic Taskforce for Markets of the Future. Comprised of finance ministry officials and regulators, it will look for ways to collaborate on digital currencies.
What Media Said 🧑💻:
Bloomberg: “ Even after Brexit, the UK remains a heavyweight in finance and professional services, which contribute more than 12% of the UK’s economic output, according to lobby group TheCityUK. Some in the Square Mile have been pushing closer ties with Wall Street as a way of offsetting London’s somewhat diminished role in the European Union.” It’s also “one of the world’s largest crypto hubs.”
The Block: Industry leaders are in favor of this partnership. Coinbase said the US and UK “can unlock deeper liquidity, broader financial participation, and new capital for businesses.” The CSO of USDC stablecoin-issuer Circle also applauded the move toward harmonizing regulations across the Atlantic.
PR Perspective 🔎:
This is the type of news that could seem a bit boring on the surface. But comments from some of the industry’s biggest companies give it some heft.
[Tweet of The Week]
Credit: @Stanunlocked
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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).
The team: Founder Samantha Yap and consulting editor Jeff Benson, Andrew Wickerson, Nathalie Larrea, Meghna Dembla, Samvidha Sharma, William Knight, Taylor Handler, Abby Notarnicola, Zeke Harker, TJ Thomas and Shajar Qureshi. 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 PR Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and brands through impactful storytelling. Find out more about us here.