May 6, 2023
Issue No. 53
Welcome to this week's AtherXplorer, covering the latest in gaming, blockchain, and everything in between.
This week’s top picks include:
- AI: Hugging Face’s Code-Generating Model; Nova’s Brand Integrity Protection from Generative AI
- Blockchain: Sui Blockchain Launch; Curve Decentralized Stablecoin
- Gaming: Honkai: Star Rail 20M Launch-day Downloads
- Web3 & Metaverse: Alibaba Cloud’s Metaverse on Avalanche
- NFTs: Blur’s ‘Blend’, NFT Lending Protocol; Sotheby's NFT Marketplace
- Legal Landscape: UK’s Antitrust Watchdog Announces Initial Review of Generative AI
Hugging Face and ServiceNow Release a Free Code-Generating Model
Hugging Face and ServiceNow Research have released StarCoder, a free alternative to GitHub's Copilot. StarCoder, licensed to allow for royalty-free use by anyone, was trained in over 80 programming languages and integrates with Microsoft's Visual Studio Code code editor. The 15-billion-parameter StarCoder was trained over several days on an open-source dataset called The Stack, which has over 19 million curated, permissively licensed repositories and more than six terabytes of code in over 350 programming languages. StarCoder matches or outperforms the AI model from OpenAI, which powers initial versions of Copilot.
StarCoder is part of Hugging Face's and ServiceNow's over-600-person BigCode project. The project aims to develop "state-of-the-art" AI systems for code in an "open and responsible" way. StarCoder's release enables anyone to fine-tune and adapt it to their use cases and will enable countless downstream applications. The BigCode project also provides a way for developers to "opt out" of The Stack, similar to efforts elsewhere, to let artists remove their work from text-to-image AI training datasets.
The BigCode team used Hugging Face's malicious code detection tool to remove files from The Stack that might be considered "unsafe," such as those with known exploits. StarCoder users must agree not to leverage the model to generate or distribute malicious code. Researchers have demonstrated how AI like StarCoder could be used in malware to evade basic forms of detection. The possibility hasn't discouraged Leandro von Werra, a machine learning engineer at Hugging Face and a co-lead on StarCoder. He feels the downsides of not releasing StarCoder aren't outweighed by the upsides.
ServiceNow, a company that deals mostly in enterprise automation software, gets a "strong-performing model and a responsible AI model license that permits commercial use." The Large Language Models Lab at ServiceNow Research is building up expertise in the responsible development of generative AI models to ensure the safe and ethical deployment of these powerful models for customers. StarCoder will eventually be built into ServiceNow's commercial products.
The commercial incentives of organizations building code-generating AI systems like DeepMind's AlphaCode; Amazon's CodeWhisperer; and OpenAI's Codex, which powers Copilot, reflect the commercial incentives of the organizations building them. Currently, only a handful of code-generating AI systems have been made freely available to the public. Assuming the ethical, technical, and legal issues are someday ironed out, code-generating AI systems could cut development costs substantially while allowing coders to focus on more creative tasks. The success of these systems depends on their continued adoption and integration into the gaming ecosystem. The competition in the gaming space is fierce, and they will need to offer unique features to stand out.
Nova is Building Guardrails for Generative AI Content to Protect Brand Integrity
Nova, an early-stage startup, has launched BrandGuard and BrandGPT, two generative AI tools designed to protect a brand's integrity by checking content against brand guidelines and style. BrandGuard runs checks for brand safety, quality, adherence to style, and compliance with campaigns, then assigns content with a score. Companies set a threshold for calling in a human to check content before publishing. BrandGPT is an interface for third parties to ask questions about a brand's guidelines to ensure compliance. Nova has raised $2.4m from Bee Partners, Fyrfly Ventures, and Argon Ventures.
BrandGuard checks content against brand rules to ensure compliance and assigns each piece with a content score. Companies set a threshold for calling in a human to check content before publishing. BrandGPT is an interface that allows third parties to ask questions about a brand's guidelines to ensure compliance. Nova has raised $2.4m from Bee Partners, Fyrfly Ventures, and Argon Ventures.
Nova offers a suite of generative AI tools designed to protect brand integrity. CEO Rob May recognized that companies wanted to take advantage of generative AI technology to create content faster but still worried about maintaining brand integrity. He built a guard rail system to protect brands from generative AI mishaps. BrandGuard and BrandGPT are available in public beta and are designed to help brands police AI-generated content.
BrandGuard checks content against brand rules to ensure compliance and assigns each piece a content score. Companies set a threshold for calling in a human to check content before publishing. BrandGPT is an interface that allows third parties to ask questions about a brand's guidelines to ensure compliance. Nova has raised $2.4m from Bee Partners, Fyrfly Ventures, and Argon Ventures.
BrandGuard and BrandGPT are two generative AI tools designed to help brands protect their integrity. BrandGuard uses five models to check content for brand safety, quality, adherence to style, and compliance with campaigns. It assigns each piece with a content score, and companies set a threshold for calling in a human to check content before publishing. BrandGPT is an interface for third parties to ask questions about a brand's guidelines to ensure compliance.
Nova has raised $2.4m from Bee Partners, Fyrfly Ventures, and Argon Ventures. CEO Rob May recognized that companies wanted to take advantage of generative AI technology to create content faster but still worried about maintaining brand integrity. He built a guard rail system to protect brands from generative AI mishaps. BrandGuard and BrandGPT are available in public beta and are designed to help brands police AI-generated content.
Box is Partnering with OpenAI to Bring Generative AI Tools Across the Platform
Box has announced Box AI, its flavor of generative AI, and is teaming up with OpenAI to deliver the first tools on the platform. Box AI will help generate more content and help people understand that content. The AI features will be added to the platform in the coming months. Box AI will allow people to ask questions about a document like, “Summarize this document for me,” or “What are five key points about this document?” And Box’s generative AI will provide an answer. The other thing you can do is create new content in Box Notes. You could ask Box AI to make a blog post out of that list and it can do it pretty much instantly, working in a similar way to ChatGPT, OpenAI’s generalized generative AI tool.
Box CEO and co-founder Aaron Levie says the real strength of Box AI is helping people understand the content. “These large language models are uniquely good at reasoning through content. And so a lot of the use cases that we’re excited about are ones where you can use the large language model, not as the database of knowledge, but as a reasoning engine to work through your data,” Levie told TechCrunch. Box is currently focusing on a couple of use cases in its initial announcement.
Box is working closely with customers to refine these tools. Over time, you will be able to analyze multiple documents with refinements like the maximum age a document can be. You will also be able to build automated workflows, but these elements are on the product roadmap and are not part of this announcement.
Although the company is working with OpenAI API for starters, the idea is to be flexible enough to accommodate any large language model or even alternative model types that could develop over time. Levie says he’s announcing these products now, even before beta, because he’s been getting a constant stream of questions from customers about the company’s plans for generative AI and he wants them to know what’s coming.
Box is the latest company to announce generative AI. Like many of the other companies making these announcements, they don’t have a product quite ready yet, but they are working with early customers to refine the functionality they have built in recent months.
Other AI News
- Slack updates aim to put AI at the center of the user experience
- Google is letting more testers try out AI features in Workspace
- New Relic launches Grok, its AI observability assistant
Blockchain and DeFi Developments
Sui Blockchain Officially Launches
The Sui mainnet, a layer-1 blockchain platform developed by former Meta (formerly Facebook) engineers who worked on the now-defunct Novi project, went live this week. The blockchain platform reportedly achieves high throughputs between 10,871 transactions per second (TPS) to 297,000 TPS on various workloads. The blockchain's native token, SUI, is used for paying transaction fees and governance purposes. The token is trading at $1.33, per CoinGecko, and the project's market capitalization is $704 million, while its fully diluted valuation (FDV) is more than $13 billion.
Mysten Labs, the development team behind the blockchain, raised a $300 million investment in a Series B round in September 2022. High-performance blockchains, such as Sui, aim to alleviate scalability issues facing heavyweights like Ethereum. Other competitors in this space include Near and Aptos.
The Sui Foundation partnered with centralized exchanges like Kucoin, OKX, Bybit, and Binance to sell the tokens to the project's Discord community and other exchange users. The total supply of SUI tokens is 10 billion, and the initial circulating supply of the token will be 528,273,717, representing 5.28% of the total token supply.
The success of the Sui mainnet depends on its adoption and integration into the blockchain ecosystem. High throughputs and low transaction fees are important features of a blockchain platform. The Sui Foundation has partnered with centralized exchanges to sell the tokens and increase the project's adoption. The blockchain platform's performance on various workloads is encouraging, but its real-world application remains to be seen. The blockchain ecosystem is highly competitive, and the Sui mainnet will need to offer unique features to stand out.
New Cosmos Chain Will Use Liquid Staking Tokens from Other Networks for Security
The developers of a new Cosmos-based blockchain called “Tenet” have announced that the network will use liquid staking coins from other networks to secure its transactions. The network is currently available as a testnet and will launch a mainnet version as soon as testing is complete. Liquid staking protocols such as Lido, Rocket Pool, and Ankr allow users to stake their coins with a network of validators and receive rewards without having to run their nodes. The Tenet network will allow users to “restake” these liquid staking derivatives (LSDs) to earn additional rewards on its network and provide users with tokens that represent the LSDs themselves, called “liquid liquid staking derivatives” (LLSDs). The LLSDs will be usable in lending apps and decentralized exchanges throughout the Tenet network.
According to the developers, using LSDs instead of a native coin to secure the network provides two core benefits. First, it ensures the long-term security of the Tenet chain by leveraging the joint security of each layer 1 ecosystem it services. Second, it should bring additional liquidity and yield opportunities to LSDs. The Tenet network is being developed by former executives of Ankr and Blockdaemon and is advised by members of the Lido, Ankr, and OpenAI teams.
Liquid staking protocols have grown in popularity in 2022 and early 2023, becoming the largest decentralized finance (DeFi) protocol category when measured by total value locked. The Ethereum network's move to proof-of-stake and staking withdrawals have contributed to its growth. Some experts have argued that liquid staking may continue to grow in the future as a result of the Ethereum Shanghai upgrade.
The use of liquid staking coins from other networks to secure the Tenet network’s transactions potentially allows the new network to inherit the security of older ones. Restaking these LSDs to earn additional rewards on the network and providing users with LLSDs that are usable in lending apps and decentralized exchanges throughout the Tenet network may attract users to the platform. The Tenet network's success depends on its adoption and integration into the blockchain ecosystem. The competition in the blockchain space is fierce, and the Tenet network will need to offer unique features to stand out.
Curve Finance Deploys Decentralized Stablecoin on Ethereum
Curve Finance has launched its crvUSD stablecoin on Ethereum. The over-collateralized stablecoin is backed by assets like USDC, and Ethereum, liquid staking derivatives like Frax’s sfrxETH, and liquidity provision tokens of stablecoin pools. Borrowing against Frax’s sfrxETH is currently the only option enabled. Curve Finance founder Michael Egorov executed the first crvUSD loan worth $1 million against $1.8 million worth of sfrxETH as collateral. Another Ethereum user borrowed 5,000 crvUSD against 3.56 sfrxETH, worth around $6,780. An initial crvUSD-USDC pool on Curve was also established, which witnessed a swapping transaction of 49,974.2 crvUSD for 50,000 USDC as collateral.
Curve Finance is a stablecoin-centric decentralized exchange (DEX) that facilitates cheap swaps between stablecoins and other fixed-priced assets such as derivatives of Ethereum. It’s the second-largest DEX by volume after Uniswap. While the smart contract has been deployed on the mainnet, the web UI for borrowing the stablecoin has not been set up. Users borrowing crvUSD now are interacting directly with the smart contract.
The launch of crvUSD has been highly anticipated since it was announced last summer. The crvUSD smart contract has $1.82 million worth of collateral, according to DeFiLlama. The success of crvUSD will depend on its adoption and integration into the blockchain ecosystem. The competition in the blockchain space is fierce, and the crvUSD stablecoin will need to offer unique features to stand out.
Gaming Updates and Insights
Dead Island 2 Developer Dambuster Takes Simple Approach for Successful Sequel
Dead Island 2 has had a tumultuous journey to release, with multiple developers taking on the project over the years. The latest developer, Dambuster, recently revealed why they decided to start from scratch with the sequel rather than building upon the previous developers' work. As creative director James Worrall explains, the decision wasn't so much down to the content or the tone of previous iterations, but more due to the team's desire to go back to basics and focus on what Dead Island does best; bloody, disgusting zombie-slaying action.
According to Worrall, the original developers took "a too complex approach" when creating the sequel. He believes that one of the problems facing games, in general, is the "blossoming complexity," which comes back to bite the studio when they're trying to get the game out the door. Therefore, Dambuster decided to focus on making the combat visceral, tactile, and in-your-face, with a gore engine that allows players to hack and slash zombies to their hearts' content.
One of the most notable changes that Dambuster brought about was a scaling back of the game's size. Originally, Dead Island 2 was going to take place across various locations in California instead of just LA. It was also supposed to feature co-op for up to eight players, and the final version reduced this number to three. However, despite these changes, the game has received a generally warm reception from fans and critics alike.
Dambuster focusing on fun above all else might be the right way to go. While complexity can be a good thing, it can also bog down a game and make it difficult for players to pick up and play. By scaling back the scope of the game and focusing on visceral combat, Dambuster was able to create a game that's easy to pick up and play but still provides a satisfying experience for fans of the series.
Of course, not everyone will be happy with the changes made to Dead Island 2. Some fans may be disappointed that the game is now set in just one location and that co-op is limited to three players. However, these changes were necessary to ensure that the game was fun to play and didn't suffer from the "blossoming complexity" that Worrall mentioned.
Microsoft Gaming CEO Apologizes for Poor Redfall Launch and Disappointing Fans
Phil Spencer, the CEO of Microsoft Gaming, has expressed disappointment and contrition over the negative reviews and quality issues that have plagued the new video game Redfall. Spencer spoke about his disappointment in a new interview with the Xbox podcast Xcast. He said there was nothing more difficult for him than disappointing the Xbox community, and he was upset with himself for allowing the community to lose confidence in the company.
Redfall is a vampire shooter developed by Arkane Austin, a Bethesda studio that has received critical acclaim for its previous games. However, Redfall has received poor review scores and social media posts have highlighted strange bugs and performance issues. This has caused disappointment among fans who were expecting more from Microsoft's first $70 Xbox Series X/S game.
Spencer addressed the negative reviews and questioned the state of the game's release. He admitted that there were quality and execution issues that Microsoft needed to address, but he also stressed the importance of allowing creative aspirations for game development teams. He did not believe in forcing teams to do only what they have a proven track record for. He stated that he wanted to give teams the creative platform to push their abilities and aspirations.
Spencer distinguished between criticism of the game's level of polish versus its underlying gameplay and design. He said that the game had a goal to do one thing, and when players were playing, they were not feeling that. He stated that Microsoft and Arkane remained committed to Redfall and were working on shipping updates to address bugs and add features like the previously promised 60fps performance mode. He also acknowledged that the games were expensive and that he would not take full responsibility for launching a game that needs to be great.
It is understandable to see Spencer's remorse and commitment to improving the game's quality. However, it is concerning that Redfall was released with such critical issues and bugs that detract from the game's overall experience. It also highlights the importance of game development teams having the creative freedom to pursue their aspirations, while also ensuring that there is a quality assurance process in place to prevent the release of games with glaring issues. In terms of Game Pass, it's clear that the service's success is tied to the quality and quantity of games available on the platform, and it will be interesting to see how Microsoft addresses this going forward.
Honkai: Star Rail Races to 20 Million Downloads on Launch Day
Hoyoverse's latest mobile game, Honkai: Star Rail, has become a sensation, exceeding miHoYo's previous hit Genshin Impact's day one download figures of 17 million. The game is currently only available on Android, iOS, and Windows. It is reportedly the most downloaded iOS title worldwide and achieved a massive 30 million pre-registered users, 21 million of which came from China alone. The success of Honkai: Star Rail can be attributed to miHoYo's pedigree in the gaming space and the Honkai series' legacy.
miHoYo's Genshin Impact has become one of the world's biggest cross-platform games, achieving three consecutive nominations for Best Mobile Game at The Game Awards, taking home the prize in 2021. This has given the company a significant pedigree in the games space, especially on mobile. The Honkai series has a legacy all of its own with the previous entry, Honkai Impact 3rd, reaching a milestone of 35 million downloads in 2018. While Genshin Impact is the company's biggest success so far, Honkai has a legacy all of its own, and the newest entry could take it to new heights, with mobile leading the charge.
The primary release of Honkai: Star Rail focusing on mobile and PC points to the company's continued success on mobile devices. China's strong preference for mobile gaming is echoed in the continued focus given to the platform by the country's developers, including miHoYo. The download figures are likely to continue to climb, with ten million pre-registrations unaccounted for in the day one figures, and the game seeing its one-week anniversary tomorrow. The success of Honkai: Star Rail depends on its continued adoption and integration into the gaming ecosystem. The competition in the gaming space is fierce, and Honkai: Star Rail will need to offer unique features to stand out.
Web3 & Metaverse News
Alibaba Cloud & Partners to Deploy Metaverse on Avalanche
Alibaba Cloud, in partnership with Avalanche and metaverse architect and middleware provider MUA DAO, has built Cloudverse, a one-stop, end-to-end solution for businesses to customize, launch, and maintain their own metaverse space. Cloudverse's blockchain elements, including digital land, wearables, and other digital assets, are built on Avalanche. The solution offers fast development, high traffic volume, an open ecosystem, and professional land planning and governance. With Cloudverse, businesses have a powerful entry point into the Web3 opportunity.
Alibaba Cloud will provide scalable, highly efficient, and secure cloud infrastructure offerings, including computing, storage, database, and networking, while Avalanche and MUA DAO will provide solutions for building metaverse spaces. Cloudverse is now available to millions of Alibaba Cloud clients and billions of users worldwide.
The release of Cloudverse, Alibaba Cloud, Avalanche, and MUA DAO bring a simple, high-touch, cost-effective metaverse solution to the industry. Depending on their scope, metaverse spaces can be ready for businesses as soon as one month from initial outreach, and no land purchase is required for businesses to join Cloudverse.
Cloudverse's launch reflects a deepening relationship between Alibaba Cloud and Avalanche, which began in December 2022. Alibaba Cloud provided infrastructure technology and tools to enable Asia users to launch validators on the Avalanche network, including plug-and-play and node-as-a-service initiatives. With the strong support from Alibaba Cloud, Avalanche is powering blockchain adoption in Asia, where it has been developing more brand recognition and a greater presence.
Cloudverse is expected to attract businesses in the Asia-Pacific region planning to enter the Web3 world. Raymond Xiao, Head of International Web3 Solutions at Alibaba Cloud Intelligence, said, "Through the launch of the metaverse launchpad on Avalanche for CloudVerse, we are excited to offer businesses a way to kickstart their metaverse journeys and drive innovations and new possibilities for their businesses while elevating customer experiences." John Wu, President of Ava Labs, said, "Cloudverse powered by Avalanche offers millions of consumer-facing businesses a quick, low-overhead, one-stop gateway into Web3."
The release of Cloudverse highlights the potential of metaverse solutions to transform the way businesses engage with their customers. By leveraging blockchain technology, Cloudverse provides businesses with a unique and personalized experience for their customers. With its fast development, high traffic volume, and open ecosystem, Cloudverse is well-positioned to become a leader in the metaverse space.
Mastercard Launches Web3 User Verification Solution to Curb Bad Actors
Mastercard, the global financial services giant, has launched a new Web3 solution called the “Mastercard Crypto Credential” aimed at enhancing user verification standards and reducing opportunities for bad actors in the digital asset space. The solution provides a unique identifier to users, enabling them to instantly verify if an address they want to send funds to has been vetted by Mastercard and is operating in compliance with the firm’s standards. The solution also supports compliance through the exchange of metadata, required to meet regulations. Mastercard has partnered with various crypto wallet providers and blockchains, including Bit2Me, Lirium, Mercado Bitcoin, Uphold, Aptos, Avalanche, Polygon, and Solana. The firm will also use CipherTrace’s suite of services to verify addresses and support Travel Rule compliance for cross-border transactions.
Mastercard has been increasing its exposure to the crypto sector over the past couple of years. The latest announcement comes just a few weeks after it launched a nonfungible token (NFT) gated musician accelerator program in collaboration with Polygon, offering free access to materials, unique artificial intelligence tools, and other experiences to holders of Mastercard’s Music Pass NFT. Mastercard’s competitor, Visa, also made a crypto move by announcing a new stablecoin payments-focused project. Visa is building the next generation of products to facilitate commerce in everyone’s digital and mobile lives and is on the lookout for someone with strong experience in Web3 and blockchain tech.
Mastercard’s “Mastercard Crypto Credential” solution mitigates the risk of funds being lost for good and reduces opportunities for bad actors. Even if bad actors obtain a unique identifier, Mastercard can move quickly to revoke their verification if they have been found to have engaged in nefarious activity. The solution is designed to support compliance through the exchange of metadata required to meet regulations. The partnership between Mastercard and various crypto wallet providers and blockchains, as well as CipherTrace’s suite of services, strengthens the solution’s verification standards.
The Mastercard Crypto Credential solution is expected to boost the crypto sector’s integrity and security. As more firms enter the crypto space, the need for strong user verification standards and compliance with regulations becomes crucial. Mastercard’s solution helps to ensure that only legitimate and compliant users participate in the crypto space, thereby reducing risks for users and enhancing the sector’s reputation. The solution’s success will depend on its adoption and integration into the crypto ecosystem. Mastercard’s solution is a significant step towards establishing a secure and compliant crypto space, and it aligns with the crypto industry’s objectives of achieving mainstream adoption.
Inside the NFT Space
Blur Introduces ‘Blend’, NFT Perpetual Lending Protocol
Non-fungible token (NFT) marketplace Blur has launched Blend, a peer-to-peer perpetual lending protocol that supports NFT collateral. Developed with venture capital firm Paradigm, developers cite Blend's rationale as a means of "financialization to scale." Blend has neither Oracle dependencies nor expiries, allowing borrowing positions to open indefinitely until terminated. Developers claim that the protocol would collect zero fees from borrowers and lenders.
Blend matches users who want to borrow against their nonfungible collateral with whatever lender is willing to offer the most competitive rate, using a sophisticated off-chain offer protocol. For as long as some lender is willing to lend that amount against the collateral, Blend automatically rolls a borrowing position. No on-chain transactions are required unless one party decides to exit the position or there is a change in interest rate.
If a lender wishes to terminate the loan against the borrower's wishes, an interest-rate "Dutch auction" for refinancing is held when the borrower has not repaid the debt at expiration. The auction begins at 0% refinance interest with a steadily rising rate. An NFT may be liquidated whenever a lender triggers a refinancing auction and nobody is willing to take over the debt at any interest rate. However, borrowers can repay the loan at any time on Blend.
Launched in the third quarter of 2022, Blur has rewarded users with "care packages," redeemable for BLUR tokens since Feb. 14 to increase trading activity. The platform has since surpassed OpenSea in terms of trading volume. By using a perpetual lending protocol, borrowers and lenders extend the loan expiration time by a predetermined period by default.
Blend's launch highlights the potential of NFTs to be used as collateral in decentralized finance protocols. The lack of Oracle dependencies and expiries in Blend enables borrowing positions to open indefinitely until terminated, thereby providing greater flexibility to borrowers and lenders. The protocol's use of a "Dutch auction" for refinancing ensures that NFTs are liquidated in a manner that is fair to both borrowers and lenders. The launch of Blend by Blur is a significant step forward for the use of NFTs in decentralized finance and could pave the way for the development of similar protocols in the future.
Sotheby's Launches On-Chain Secondary NFT Marketplace
Art auction house Sotheby's is expanding its non-fungible token (NFT) art offerings through the release of a specially curated, peer-to-peer secondary marketplace. Sotheby’s Metaverse will now offer direct transactions between collectors on its platform, fully on-chain via the Ethereum and Polygon networks, with payments in either ETH or MATIC. Sotheby's Metaverse says it will continue to honor artist royalties through smart contracts on its resale platform that automatically pays artists according to their selected on-chain royalty rate. The platform aims to emphasize Sotheby's commitment to the NFT community and to creating a space for discerning collectors.
The secondary marketplace will launch with works from 13 leading digital artists, including Tyler Hobbs, Claire Silver, XCOPY, Diana Sinclair, Pindar van Arman, and others. Artists featured on the platform will rotate every few months. The opportunity to expand Sotheby's Metaverse with a fully on-chain peer-to-peer market is an important step forward in the auction house's evolution within the digital art and collectible space, according to Michael Bouhanna, Sotheby’s vice president and head of NFTs and digital art.
Sotheby's first entered the NFT market in April 2021 and has made over $120 million in total NFT sales. The platform has facilitated several record-breaking NFT sales, including a "Covid Alien" CryptoPunk that sold for $11.7 million in June 2021, the World Wide Web source code that sold for $5.4 million in July 2021, and a rare Bored Ape Yacht Club NFT that sold for $3.4 million in October 2021.
Sotheby's commitment to honoring artist royalties comes amidst a larger debate about royalties within the NFT community. The platform's artist-first ethos further signals its commitment to the NFT community as one of the only major NFT marketplaces committed to artist resale royalties. Sotheby's Metaverse plans to launch a digital art gallery through the Metaverse platform Oncyber in June, with different rooms curated by different artists and collectors, including the pseudonymous Cozomo De Medici.
Sports Illustrated Launches Polygon-Based NFT Ticketing Platform
Sports Illustrated's ticketing subsidiary SI Tickets has launched the "Box Office" platform, a self-service event management and a primary ticketing solution powered by the Polygon blockchain. Developed in partnership with Web3 software developer ConsenSys, Box Office enables owners, organizers, and hosts to create, manage, and promote a fully scalable, paid, or free ticketed live sporting event. SI Tickets and ConsenSys are partnering to develop a "Super Ticket" that allows hosts to remain connected to their attendees through highlights, collectibles, exclusive offers, and loyalty benefits via NFT technology.
Through Super Ticket, attendees can scan their NFTs for expedited entry passes, drink coupons, and music downloads before the event and can receive post-event video content and rewards thereafter. Guests will keep their tickets to the event in their digital wallets forever. SI Tickets CEO David Lane said, "Blockchain is the future of ticketing."
Launched in June 2021, SI Tickets has grown to over $2.5 billion in marketplace inventory. The platform claims to charge zero transaction fees on any purchase and guarantees a 100% refund if an event is canceled for any reason. Box Office said it would charge $1.40 and 3% commission per ticket plus 3% merchant pass-through fees for event organizers.
The use of blockchain in ticketing provides several benefits, including increased transparency, security, and efficiency. By leveraging NFT technology, Box Office enables hosts to create unique experiences for their attendees, such as access to exclusive content and rewards. The platform's use of blockchain technology ensures that tickets are tamper-proof and can be easily verified, reducing the risk of fraud and counterfeiting.
Box Office is poised to disrupt the primary ticket market by offering a self-service event management and primary ticketing solution that is fully scalable and customizable. The platform's partnership with ConsenSys to develop Super Ticket highlights the potential of NFT technology to transform the ticketing industry by providing attendees with a unique and personalized experience. With its zero transaction fees and 100% refund guarantee, SI Tickets is well-positioned to become a leader in the ticketing industry.
Legal Landscape, Policies, and Regulation
UK’s Antitrust Watchdog Announces Initial Review of Generative AI
The Competition and Markets Authority (CMA) in the UK has launched an initial review of "AI foundational models", including large language models (LLMs) and generative AI models that power AI art platforms. The review aims to assess how these models are developing and produce guiding principles to support competition and protect consumers as AI foundation models evolve. Its deadline for interested stakeholders to submit responses is June 2, with the review expected to be published in early September.
The CMA is examining how the competitive markets for foundation models and their use could evolve, as well as what opportunities and risks these scenarios could bring for competition and consumer protection. The regulator is also in line with the UK government's instructions to issue guidance to encourage the safe, fair, and accountable use of AI.
In the coming years, the CMA's Digital Markets Unit is set to gain legislative powers to apply pro-active "pro-competition" rules tailored to platforms deemed to have "strategic market status" (SMS). Providers of powerful foundational AI models may be judged to have SMS, meaning they could face bespoke rules on how they must operate vis-a-vis rivals and consumers in the UK market.
The EU is in the process of deciding a fixed set of rules that are likely to apply to generative AI, and negotiations toward a final text for the EU's incoming AI rulebook are ongoing. EU data protection law already applies to AI, and privacy-focused investigations of models like ChatGPT are underway in the bloc, including in Italy and Spain.
The ICO, the UK's data protection watchdog, has also been tasked with paying special mind to AI under its plan for context-specific guidance to steer the development of the tech through the application of existing laws. Stephen Almond, the ICO's executive director of regulatory risk, suggested that "Organisations developing or using generative AI should be considering their data protection obligations from the outset, taking data protection by design and by default approach. This isn't optional — if you're processing personal data, it's the law."
New White House Standards Strategy Could Have Implications for Crypto Industry KYC
On May 4, the Biden administration released a national standards strategy for critical and emerging technologies, outlining that the US would prioritize standards development in eight areas. Among the prioritized areas are digital identity infrastructure and distributed ledger technologies, which increasingly affect a range of key economic sectors. The strategy aims to protect US consumers and the country’s role in developing international standards and will bolster investment in pre-standardization research in the key areas identified, encourage private-sector and academic participation in that research, invest in training, and ensure integrity and inclusivity.
Digital identity is the unique representation of a subject engaged in an online transaction, according to a National Institute of Standards and Technology (NIST) document now under review. Digital identity is unique in the context of a digital service but does not necessarily need to uniquely identify the subject in all contexts, the document added. This type of identity verification has obvious applications in economic sectors such as Know Your Customer (KYC) and Anti-Money Laundering (AML), where blockchain solutions are being actively developed as regulators and enforcement agencies demand greater AML compliance in the US and around the world in the crypto industry.
Innovations such as zero-knowledge KYC verification, based on the blockchain’s consensus mechanism, have been proposed to carry AML verification, credit scoring, and similar information. Passporting techniques have been deployed using soulbound nonfungible tokens (NFTs) to make off-chain identity accessible. However, privacy issues are deeply intertwined with digital identity and are areas where the government and crypto industry have yet to reach an accord.
The Treasury Department’s Office of Financial Research leads the government’s work on digital identity, digital assets, and distributed ledger technology in federal and international agencies. The National Institute of Standards and Technology (NIST) is the federal agency that coordinates government standards activity. Its document on digital identity is currently under review.
As blockchain technology continues to evolve, the US government is looking to ensure that it keeps pace with innovation and remains at the forefront of blockchain development. The prioritization of digital identity infrastructure and distributed ledger technologies in its national standards strategy is a reflection of this effort. By investing in research, encouraging private-sector and academic participation, and ensuring integrity and inclusivity, the US government hopes to safeguard its role in developing international standards and protecting US consumers.
SEC Steps Back from Defining Digital Assets in New Hedge Fund Rules
The United States Securities and Exchange Commission (SEC) has delayed ratifying the definition of "digital assets" in rules that govern reporting disclosures for hedge and private equity funds, despite proposing to do so nine months ago. On May 3, the SEC published amendments to Form PF, which requires SEC-registered funds to disclose basic information about their fund so the regulator can assess potential systemic risks. The SEC originally included a digital assets definition in an August 2022 proposal for the changes, which would have been the first time the SEC defined digital assets. However, the regulator is now holding off from adding the definition, at least for now.
The SEC's proposed definition for digital assets was an asset "that is issued and/or transferred using distributed ledger or blockchain technology" and included other commonly used terms such as "virtual currencies," "coins," and "tokens." The SEC proposed the definition to obtain separate and more accurate reporting on digital assets, stating that "it is important to collect information on funds' exposures to digital asse to understand better their overall market exposures."
The latest updates to the SEC's Form PF rules now require SEC-registered funds to report the occurrence of key events that could indicate systemic risk or harm to investors, as well as details of their fees and expenses. The SEC's move to cast a light on the multi-trillion dollar sector comes in response to the US banking crisis.
The SEC has not always shied away from crypto-related definitions, announcing in mid-April that it would revisit its definition of an "exchange" to possibly include decentralized finance (DeFi). However, SEC Chair Gary Gensler has long claimed that cryptocurrencies are securities under his commission's remit and that the US crypto sector is acting afoul of securities laws.
The proposed definition of digital assets in the SEC's Form PF rules would have provided greater clarity to firms on how to report digital assets. However, the SEC's decision to hold off on ratifying the definition, for now, leaves the industry in a state of uncertainty. The regulatory landscape for cryptocurrencies and digital assets is rapidly evolving, and it remains to be seen how the SEC will define and regulate the sector in the future.
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