April 1, 2023
Issue No. 48
Welcome to this week's AtherXplorer, covering the latest in gaming, blockchain, and everything in between.
This week’s top picks include:
- AI & Blockchain: Polygon Launches zkEVM; Petition to Halt AI Dev…
- Gaming: New Games on Ronin; Diablo IV Beta Sets Records; E3 2023 Canceled
- Web3 & Metaverse: Gucci x Otherside Partnership; Disney Metaverse Lay-Offs…
- NFTs: Ticketmaster NFT Tickets Start with A7X; Amazon's NFT Plans Teased…
- Legal Landscape: CFTC says ETH is a Commodity; Bittrex Shuts Down US Exchange…
AI, Blockchain, and DeFi Developments
Polygon Launches Final Mainnet for zkEVM Solution to Scale Ethereum
Polygon has announced the final mainnet launch of its zkEVM product, after its testnet launch last October. The product is being hailed as the “holy grail” of blockchain scaling as it offers three important features: scalability, security, and EVM equivalency or compatibility. By batching transactions into zero-knowledge proofs, the technology helps keep Ethereum relatively unclogged with activity.
The proofs are easily compatible with the Ethereum Virtual Machine, making it easier for developers to move projects written using Solidity, Ethereum's programming language, over to the networks. However, the Polygon co-founder has urged caution for users onboarding to the scaling solution, as it is a bleeding-edge technology that is being deployed on the mainnet for the first time and has not yet been fully battle-tested.
Despite the warning, the network has already been through a comprehensive auditing cycle, both internally and externally, and the team has identified several bugs and made many improvements to the network since its testnet launched last October.
This launch comes just days after zkSync launched its scaling solution and joins the competition to make Ethereum faster. While the technology is complex, the potential benefits of blockchain scaling are significant, and the competition to develop scalable solutions for Ethereum is likely to continue as demand for blockchain technology continues to grow.
Elon Musk-Led Petition to Halt AI Development Divides Tech Community
Tesla CEO Elon Musk and Apple co-founder Steve Wozniak were two of the 2,600 signatories on an open letter calling for a temporary halt on any further artificial intelligence (AI) development. The letter expressed concerns that AI with human-competitive intelligence could pose serious hazards to society and mankind.
The petition urged all AI firms to "immediately cease" developing AI systems that are more potent than Generative Pre-trained Transformer 4 (GPT-4) for at least six months. GPT-4 is a multimodal large language model created by OpenAI and the fourth in its GPT series.
The petition has divided the larger tech community over the halt of developments. Coinbase CEO Brian Armstrong was among many notable names that voiced their opposition to the petition. Armstrong stated that “committees and bureaucracy won’t solve anything.” He added that there are no designated “experts” to decide on this issue, and not everyone in the tech industry agrees with the petition. Armstrong reminded us that any new technology poses a certain amount of dangers, but the goal should be to keep moving forward. He added that centralization in decision-making will bring no good.
Brian Merchant, a columnist at LA Times, called the petition led by Musk an “apocalyptic AI hype carnival.” He added that a lot of the stated concerns are "robot jobs apocalypse" stuff.
Satvik Sethi, former Web3 executive at Mastercard, called the petition a “non-proliferation treaty but for AI.” He added that many of the popular signers on the list have a deeply personal vested interest in the AI field and are likely just “trying to slow down their counterparts so they can get ahead."
The debate on AI development and regulation is ongoing, with strong opinions on both sides. While some believe that AI development should continue, others are concerned about the potential risks and hazards that could arise from human-competitive intelligence. It is important to consider the potential benefits and drawbacks of AI development and regulation and to work towards finding a balance that maximizes the benefits while mitigating the risks.
dYdX Reveals Launch Date for Move From Ethereum to Cosmos
Decentralized derivatives exchange dYdX has announced the launch of its V4 private testnet, taking a significant step towards leaving the Ethereum network. By the end of September, the platform plans to be fully running on Cosmos. The Cosmos network allows developer teams to spin up their native blockchains using the Cosmos Software Development Kit (SDK), which enables Cosmos-based blockchains to interact with one another.
The private testnet for dYdX is set to launch this week and run for two to three weeks, followed by a public testnet by the end of July. The platform cited Ethereum's lack of scalability as the main reason for the move. SushiSwap, which acquired the Cosmos-based trading platform Vortex Protocol last month, is also migrating from Ethereum to Cosmos.
dYdX, founded by a former Coinbase and Uber software engineer, currently has around $341.5 million in total value locked (TVL), according to DeFi Llama. While decentralized exchanges like Uniswap, Curve, and dYdX are steadily growing, they still only account for a small share of transactions compared to their centralized counterparts. The trading volume over the past day shows that Uniswap has facilitated more than $642 million in orders, while Binance processed more than $4.28 billion in trades over the same period.
The collapse of FTX last November did not significantly change this proportion, with the companies that benefited the most being other centralized exchanges. According to David Gogel, Vice President of the dYdX Foundation, "People don't know about self-custody, and there's still a lot of work to do to educate them. It's a complicated journey."
Gaming Updates and Insights
Sky Mavis Brings 4 New Blockchain Games to Its Ronin Network
Several game studios are building on Ronin, the blockchain platform created by Axie Infinity’s Sky Mavis. Some of the game studios include:
Directive Games, a gaming studio known for developing large, immersive, competitive multiplayer games, launched the closed beta of its fast-paced hero shooter, The Machines Arena, on the Epic Games Store to Ronin users.
Tribes Studio, founded by a former executive at King and Scopely, is building an open-world MMO called Tribesters: Island of Solas, which will launch with a community engagement platform that enables the community to help build games and be rewarded for it.
Bali Games, which built the Korean smash-hit Anipang series, is leveraging its mobile game experience to create Axie-inspired puzzle games.
Bowled.io, which runs a sports-based social gaming platform that enables fans to discover and play games, own in-game sports assets and interact with their favorite sports influencers.
These game studios are not creating Web3 games at the outset but are adding Web3 elements by working with Sky Mavis to incentivize users to set up a Web3 wallet and earn rewards. The Bowled.io partnership will allow Sky Mavis to tap into a new highly engaged community of India-based sports fans and onboard a different demographic within an emerging market into the Ronin ecosystem. India is an emerging market that Sky Mavis hopes to tap into, as it has one of the youngest populations and is open to exploring gaming. Over time, the dev team hopes to create a full sports game hub. The game studios aim to stay friendly with the app stores, which often block most Web3 features from being deployed in a game on the official app stores. However, these studios are gradually bringing in Web3 elements to create blockchain games that are accessible to a mass audience. The studios will work with the developers and the community members to determine the best places to put these Web3 elements into the game.
Diablo IV Beta Sets Franchise Record, 61.5 Million Hours Played
The open beta for Diablo IV has set a new record for the franchise, with players logging 61.5 million hours of playtime over two weekends. Over 2.6 million players reached level 20, and the Sorceress class was the most played. Many players took on Diablo's iconic bosses, The Butcher and Ashava, with 570,000 and 100,000 players defeating them respectively. However, 1.7 million and 10 million players died to these foes, showing the dedication of Diablo players.
Twitch viewers watched nearly 29 million hours of Diablo IV between March 16 and March 28, with viewership peaking at around 950,000 viewers on March 17. Roughly 84,000 unique channels broadcasted the game. However, Twitch data showed that interest was much stronger during the first weekend compared to the second, as curiosity wore off.
Diablo IV is set to debut on June 6, 2023, on PlayStation 5, Xbox Series X|S, PlayStation 4, Xbox One, and PC.
E3 2023 is Canceled
The Electronic Software Association and ReedPop announced today that their planned summer gaming event, E3 2023, is officially canceled. This follows a series of announcements from game publishers that they would not attend the event as exhibitors.
The event was supposed to run from June 13 to June 16 at the Los Angeles Convention Center. The show was canceled in 2020 and 2022, and the 2021 event was held entirely online due to the ongoing COVID-19 pandemic. The ESA intended to hold the first live E3 event since 2019. This was also the first E3 event organized by ReedPop, the company behind PAX and New York Comic Con.
Kyle Marsden-Kish, ReedPop’s global VP of gaming, said in a statement, “This was a difficult decision because of all the effort we and our partners put toward making this event happen, but we had to do what’s right for the industry and what’s right for E3. We appreciate and understand that interested companies wouldn’t have playable demos ready and that resourcing challenges made being at E3 this summer an obstacle they couldn’t overcome. For those who did commit to E3 2023, we’re sorry we can’t put on the showcase you deserve and that you’ve come to expect from ReedPop’s event experiences.
Web3 & Metaverse News
Gucci Reveals Metaverse Tie-Up With Bored Ape Creator Yuga Labs
Luxury fashion house Gucci is diving deeper into Web3 and the metaverse—and it's doing so in collaboration with Bored Ape Yacht Club creator Yuga Labs.
Gucci today teased out an alliance on Twitter, using an image (above) that shows Gucci and Yuga Labs branding on a bottle that was previously seen in the trailer for Otherside, Yuga's upcoming Bored Ape-themed metaverse game.
"Continuing to explore the Metaverse, the House comes together with Yuga Labs," tweeted Gucci. "Stay tuned as a new narrative takes shape, blurring the boundaries between the physical and digital.”
Details of the deal are relatively scarce, with the CEO of Gucci Vault and metaverse ventures Robert Triefus telling The Business of Fashion that the tie-up will give the fashion label "an active role in Otherside and 10KTF's continuing narrative."
A Yuga Labs representative told Decrypt that it's a "multi-year partnership designed to extend the engagement between their respective communities, by exploring the intersection between fashion and entertainment in the metaverse."
The Yuga rep also confirmed that the "first chapter" of the tie-up begins this week.
Yuga Labs Launches Second Trip: Otherside Metaverse Experience
Yuga Labs completed a successful Second Trip last Saturday, providing members of its community with a preview of what’s to come in its Otherside metaverse world that is slated to launch later this year.
According to Yuga Labs, about 7,200 players attended the 90-minute trial run. Holders of the Otherdeed non-fungible tokens (NFTs) – a collection linked to the land in the Otherside metaverse – were invited to join the experience, along with one guest each.
From the start, the experience was designed to transport players into a sci-fi fantasy world that combined elements of popular MMORPG (massively multiplayer online role-playing game) and NFT culture.
Users began the trip by entering the “Infinity Space,” an empty arena where voyagers could familiarize themselves with controlling their avatars and sending messages to other players. Voyagers were able to gather in small groups and speak to each other directly – a feature meant to mimic a “real life event,” in which players could only talk and hear others when nearby, said Yuga Labs chief creative officer Michael Figge.
After about 20 minutes, large screens appeared over the Infinity Space and broadcasted a message from Bored Ape Yacht Club mascot Curtis, who was “hosting” the experience.
The ape character split the group into four teams based on colors and announced their respective captains: Luster (yellow) was led by Yuga Labs community program manager Lowbellie, Crimson (red) was led by Twitch streamer Brycent, Veldan (green) was led by Snoop Dogg’s son and NFT collector Cordell Broadus, and the winning team, Glacia (blue), was led by gamer Jimmy Wong.
Voyagers’ outfits transformed into their assigned team colors, and players began to assemble into groups. Moments later, a wormhole to the “swamp” opened, transporting players to their team area to complete tasks and earn points. The game involved several wacky directives, including gathering “magic blobs” to give to digital toads that shot flames from their mouths. All the while, voyagers could run, jump, fly, and explore the multidimensional space.
The winners of the game received “winged helmets” that Yuga Labs said would be airdropped to their wallets.
Disney Lays Off Metaverse Team
Disney is questioning the continued value of Web3. The company is in the process of laying off 7,000 staff in an attempt to control costs and develop what CEO Bob Iger calls a “streamlined” business. The cuts include its metaverse team, with its 50-strong headcount being let go, The Wall Street Journal reported, citing people familiar with the matter.
Disney began developing its metaverse strategy in mid-2022, announcing that Polygon had been picked as Disney’s blockchain of choice. Disney appeared to ramp up its resource deployment for the effort in September of that year with a job posting for specialized in-house counsel for non-fungible tokens (NFT) and decentralized finance (DeFi). Disney's metaverse plans were still unclear a year later, according to the WSJ.
The position Disney was looking to hire was calling for an experienced corporate attorney to "work on transactions involving emerging technologies, including NFTs, blockchain, metaverse, and decentralized finance."
In October 2021, Citi released a report that said Disney, alongside Electronic Arts and WWE, was expected to be one of the largest beneficiaries of non-fungible tokens.
Inside the NFT Space
Ticketmaster Debuts NFT-Gated Ticket Sales, Starting With Avenged Sevenfold
Within Web3 communities, NFTs have been used as access passes for digital spaces and live events alike, serving up perks for holders. Now ticketing giant Ticketmaster may bring token-gating to a much larger audience with the launch of a feature that lets artists offer up special access to concert and event tickets for eligible NFT owners.
Ticketmaster announced today that the Ethereum NFT token-gating feature is live for artists, and it was developed in partnership with popular metal band Avenged Sevenfold, which has its own Deathbats Club NFT collection and tested the token-gating feature ahead of the full rollout.
In Avenged Sevenfold’s case, owners of the 10,000 Deathbats Club Ethereum NFTs were offered early access to buy tickets to the band’s upcoming New York City and Los Angeles arena shows in June. Frontman Matt Sanders—who goes by M. Shadows—said that about 1,000 total tickets were purchased between the two shows with the NFT-gating feature.
During the purchasing process, Sanders said, Ticketmaster will prompt users to connect a wallet to verify ownership of one of the eligible NFTs. After that, it’s effectively the same buying process as usual, but with less competition fighting for a small pool of tickets.
“It’s a normal process after that,” he said, “except without the 1,000-person queue and the scalpers and the bots getting in there and taking everything right away.”
Today, Avenged Sevenfold announced the first North American leg of its “Life is But a Dream…” tour, with another 13 shows in Chicago, Montreal, Minneapolis, and beyond. For all 13 shows, Deathbats Club NFT holders will have an exclusive presale that runs from now until Tuesday afternoon, with certain sections reserved in each venue for club members.
Ticketmaster developed the feature in partnership with the band and its Web3 team, Bitflips, which creates artist-centric NFT projects. Sanders told Decrypt that he first connected with David Marcus, Ticketmaster’s EVP of Global Music, at last year’s NFT LA conference, and that the discussion led to the creation of the token-gating feature.
Amazon's NFT Plans Teased in a Receipt Mailed Friday Afternoon
In an email to CoinDesk's Nikhilesh De, Amazon appeared to confirm that digital tokens, an NFT gallery, and resale opportunities are coming to the site.
On Friday afternoon, Nikhilesh De, CoinDesk's managing editor for global policy and regulation, received an email from an official Amazon account appearing to confirm the existence of digital tokens and a gallery on the e-commerce platform. The email was sent to De as a confirmation after an Amazon Prime Video channel subscription was renewed automatically. De had not purchased a non-fungible token (NFT) from Amazon and did not have any prior knowledge of the platform's integration of NFTs.
The email provides new insights into Amazon's plans for Web3 expansion and hints at where these new tools might live on the platform.
Rumors have been swirling for weeks that Amazon is planning to release its own NFT marketplace soon, though Amazon has not yet commented publicly on the reports.
Crypto news site Blockworks first touted the idea in January, citing anonymous sources. According to the report, the new "digital assets enterprise" would focus on "blockchain-based gaming and related NFT applications." Crypto site The Big Whale then followed up with a report earlier this month giving the feature a launch date of April 24. The story, which also cited anonymous sources, said the NFT platform will be available on the site through a tab that says "Amazon Digital Marketplace.”
In January, Amazon's cloud-computing platform Amazon Web Services announced it will work with Ava Labs to expand its enterprise blockchain offerings, though there was no mention of plans for NFTs or a digital collectibles marketplace.
According to the email sent to De, a digital token was deposited into a gallery hosted on the official Amazon website. However, it appears that the link provided in the email does not yet work.
The email also mentions resale opportunities, noting that the NFT would not be eligible for resale "until it's unlocked." The email also said De would need to "register as a reseller" before listing the NFT. But the link provided to the resale page also appeared to be broken.
De was not able to access the digital tokens. It's unclear how NFTs are connected to this subscription renewal, though both the email and the transaction confirmation were received around the same time.
Argentinian Airline Issues Tickets as an NFT
Argentinian low-cost airline Flybondi is integrating Web3 into its ticketing process by issuing e-tickets as non-fungible tokens (NFT).
The new integration announced Thursday is called Ticket 3.0 and is an expansion of its existing relationship with NFT ticketing company TravelX, which launched in September 2022. The NFT ticketing technology, built on the Algorand blockchain, allows passengers to change their name, transfer or sell their "NFTickets" independently.
Flybondi says the NFT ticket "offers a more flexible travel experience that allows passengers to even buy in advance without having to define their travel plans or who the travelers will be." In return, the airline can reduce customer service costs and increase its revenue from trading fees.
TravelX chief blockchain officer Facundo Martin Diaz told CoinDesk in September that the company does not charge a fee when users initially purchase a ticket but it does receive a 2% transaction fee when trades are made on the secondary market. Airlines also get a 2% cut, he said.
Passengers can purchase travel tickets through the Flybondi website using fiat currency, and TravelX issues a synchronized NFT ticket on top of the regular e-ticket. Travelers can then create a Ticket 3.0 account to manage and store their NFTs through Flybondi. Ticket-related rules and conditions are integrated into the NFT's smart contract by the airline.
"With this launch, we seek to generate a positive impact in the aviation industry through innovation and an application of blockchain technology," said Flybondi CEO Mauricio Sana in a press release. "Changing the rules of the game is never easy, but we know that it is our objective to evolve and offer our passengers a new stage of the freedom to fly.”
TravelX partnered with Spanish airline Air Europa in April 2022 to launch a series of NFT tickets linked to special perks and events. Latin American crypto exchange Lemon integrated TravelX onto its platform in October 2022, allowing users to buy and sell airline tickets.
TravelX has also made its infrastructure open so that other exchanges or marketplaces can use the TravelX API. According to the company, over 60 airlines worldwide are also exploring the use cases of its NFT tickets.
Legal Landscape, Policies, and Regulation
CFTC Calls ETH a Commodity in Binance Suit, Highlighting the Complexity of Classification
The United States Commodity Futures Trading Commission filed suit against Binance on March 27 for violations of the Commodities Exchange Act and CFTC regulations. Those violations included transactions with Ether, according to the suit. This claim, at first glance, touched on a notable point of contention between the CFTC and the Securities and Exchange Commission.
The CFTC claimed in its suit that Binance engaged in transactions with “digital assets that are commodities including Bitcoin (BTC), Ether (ETH), and Litecoin (LTC) for persons in the United States.” That was not a new position for the agency. The CFTC claimed ETH was a commodity in its suit against FTX in December, and Chair Rostin Behnam stated his opinion that ETH and stablecoins were commodities as recently as March 8 in a Senate hearing.
The CFTC position on ETH was fairly uncontroversial before the Ethereum Merge. After Ethereum moved to a proof-of-stake consensus mechanism, SEC Chair Gary Gensler commented on staking coins, saying that “from the coin’s perspective, […] that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others.”
Gensler’s comment brought on a slow wave of reactions. In February, for example, Ethereum co-founder and crypto entrepreneur Joseph Lubin told Cointelegraph, “Staking is not a security,” and it would be a “terrible path for the U.S.” to make it so. He added that he thought the U.S. courts would agree with him and that “there would be a tremendous outcry from not just the crypto community but different politicians and certain regulators” if ETH were classified as a security.
UK Government Announces ‘Robust’ Crypto Regulation as Part of Economic Crime Plan
The government of the United Kingdom has laid out plans to step up the regulation of crypto assets in its efforts to respond to economic crime in the country.
In a policy paper released on March 30, the U.K. Treasury and Home Office said it planned to “robustly” regulate crypto to fight the illicit use of digital assets. The focus on regulation was part of the government’s economic crime plan from 2023 to 2026, which also included pooling “the knowledge and abilities of law enforcement agencies” to review and strengthen how crypto assets involved in legal proceedings may be seized and stored.
“These steps will be in keeping with our ambition to make the U.K. an attractive destination for crypto assets and crypto asset innovation in the world,” said the plan. “Challenging as it is, effective crypto asset regulation benefits everyone, including consumers and firms.”
According to the policy paper, the U.K. government said it expected criminals to shift their crypto transactions to “less regulated exchanges and services” in other jurisdictions. The country’s Financial Conduct Authority, or FCA — one of the bodies behind the enforcement of crypto asset regulation — will be working with its international counterparts to exchange information related to its response to the regulation and supervision of crypto. According to the paper:
“The [National Crime Agency]’s National Assessment Centre assesses that based on estimates of UK transaction volumes, illicit crypto-asset transactions linked to the UK in 2021 likely equated to at least £1.24 billion (~1% of total transaction value) with a realistic possibility they were significantly higher.”
As part of its plan of action, the government said it planned to coordinate with various agencies to implement the Financial Action Task Force’s Travel Rule as well as pass the Economic Crime and Corporate Transparency Bill by the end of the fourth quarter of 2023. Other goals included improving communications between the FCA and crypto firms in the second quarter of 2024.
While the U.K. seems to be pursuing a response to crypto on multiple fronts — from law enforcement to regulation — taxpayers in the country face their reporting obligations. On March 15, the U.K. Treasury released a report announcing it would amend the self-assessment forms for crypto assets starting for the 2024–25 tax year.
Bittrex Shuts Down US Crypto Exchange Due to 'Regulatory Environment’
American cryptocurrency exchange Bittrex today announced that it would wind down its U.S. operations.
In a Friday statement, the exchange said that customer funds were safe and should be withdrawn by April 30, while trading will continue for clients until April 14.
The statement added that it would continue operating its Bittrex Global platform—which caters to traders outside of the States.
Bittrex co-founder and CEO Richie Lai said on Twitter that it was not "economically viable" to continue to run the exchange in the "current U.S. regulatory and economic environment.”
"Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape," he said.
Founded in 2013, Bittrex is a small Seattle-based company. It is the 71st largest digital asset exchange, with a 24-hour trading volume of just $11.7 million, according to CoinGecko. That's less than even some decentralized exchanges, such as Uniswap, Pankcakeswap, and Orca.
Bittrex's announcement comes as U.S. regulators launch perhaps the toughest crackdown on the crypto industry yet.
The U.S. Securities and Exchange Commission has hit several American crypto companies with fines—including popular Kraken last month.
Last week, it issued a Wells Notice to the biggest crypto exchange in the U.S., publicly traded Coinbase, because the San-Francisco-based firm's staking products allegedly constitute unregistered securities. The notice means an enforcement action is likely around the corner.
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