The final issue 50: Look again
As always, I have no answers.
Disclaimer: This newsletter is not financial advice. We buy what we like, and you should buy what you like.
Hello, yes, that’s right—it’s a bit abrupt but this is the last issue. We don’t want to make this email long, but we explain a little more on this goodbye post on the website.
Long story short: doing this is a lot of work, and we really don’t have a why to keep it doing. 😞
The cupofnft.com domain will expire in March, but the Substack will still be around.
So, on to the issue.
On February 8th, a user spotted the LooksRare team washing $73M through Tornado Cash.
For those who don’t know, Tornado is a mixer. As transfers can easily be traced on-chain, Tornado mixes deposits and withdrawals so that it makes it harder to connect two addresses.
It definitely has been used to launder criminal activity on-chain, but for some people, it really could just be a way to preserve privacy and anonymity. Both could be true.
But this news sent people thinking that there was something fishy going on.
The team stepped forward to defend themselves, saying that they had been building the marketplace for a while, without any compensation. They weren’t hiding anything.
But it definitely sparked a lot of controversy, especially as the timing coincided with the halvening of marketplace rewards.
Remember, LooksRare pays you in LOOKS tokens for your activity on the marketplace. As long as the rewards were greater than the 2% marketplace fee, there was definitely an incentive to washtrade. And since that 2% fee goes to LOOKS token stakers, there was some incentive to stake it to earn wrapped ETH.
As the rewards halved, the trading activity also declined. ETH rewards declined, and some people have sold their LOOKS and the price of token has dropped. And if token price is down, then people are very quick to regard a project as bad.
It was funny watching the fallout. A lot of the space talks about decentralization, which, in part, should also decentralize how things get funded. If the same people who won with the Web2 startups are the only people allowed to invest in Web3 companies, then is Web3 really decentralized?
But after the mess that the LooksRare team suffered, I wonder if it just makes teams want to be funded even more by VCs. Undeniably, it looks simpler.
Or, you know, what other alternative ways are there to get teams funded? Opening it up to everybody to put money in just sounds messy—there’s too many people who won’t take responsibility for their own actions as is.
I also really liked this take. There is a general free-rider problem in the way that some tokens are created.
I don’t know what the answer is to that, but all in all, the space needs more anonymous teams trying different things, in public. The space needs more experimentation in how teams can get funding, and we probably shouldn’t point fingers too quickly at builders.
But unfortunately, the space might be too big for all that experimentation to happen without repercussion. Most people unfortunately don’t have the time to fully comprehend tokenomics or incentive designs in the space.
Remember what I said about crypto probably just enhancing existing positions of power? :)
Other news
🌱 YG Entertainment announced their interest in NFTs. The company is best known for its popular K-pop groups like Big Bang and Blackpink, and it’s pretty cool to see companies outside of the West digging in.
🌱 3D and VR gallery Cyber now has marketplace features! While checking out a virtual gallery, visitors may now buy the NFT without leaving the platform as long as it is listed on Rarible.
🌱 Sci-fi trading card game Parallel revealed the details for their upcoming Pack Drop III. There is only one pack type, for 0.075 ETH, dropping on February 26th at 5PM EST.
Reading List
Vice interviewed the creator of Line Goes Up, that 2-hour critical video essay against NFTs. For what it’s worth, Dan Olson is a pretty good thinker, so it was an interesting interview.
There’s so many exploits happening this week, so please always watch your cyber-security.
Creative Corner
On our last Creative Corner, we want to feature CIPOTE (a.k.a. Roger Galvez), a Salvadoran-Canadian artist, director, and photographer.
His works focus on glitch video art, and we think it’s the best way to close the newsletter. The loss of a signal, or a journey through the unknown.
If you like what you’re seeing, check out more of his works on Objkt, and follow him on Twitter and Instagram.
Try This
Parallel is a sci-fi NFT card game on Ethereum, and they’re giving away a card this weekend.
GO GET ‘EM FREE CARDS.
