Non-Fungible Fall?
(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
Gm, and a big welcome to all of our new subscribers this week. If you’re in the US, we hope you enjoyed the long weekend and final days of summer. As we wind down what was a depressingly slow summer for the NFT market, we conclude another week where we hit a yearly low in OpenSea $USD trading volume. In a market where opportunities are thin, we’re keeping our heads up for the hope of a *more fun fall* for us jpeg enthusiasts. The game plan has not changed: stay liquid and vigilant. Let’s dive in.
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Housekeeping
A quick note: We will continue hosting our weekly show “Friday Jpegs” on twitter spaces from 2-3pm EST on, you guessed it, Fridays. Follow us on twitter to stay up to date.
NFTs In The News
Sudoswap Is Getting a New Governance Token
TV maker LG Electronics launches NFT platform with Hedera
After The Merge, nearly all NFTs will be environmentally friendly
OpenSea commits to 'solely supporting' NFTs on proof-of-stake Ethereum blockchain
Golden State Warriors’ Co-Owner to Start Fantasy Sports-Style NFT Game
NFT Software Company Dust Labs Raises $7M During y00ts Release
Ticketmaster Chooses Dapper Labs' Flow Blockchain for NFT Tickets
Binance to stop supporting USDC, the second largest stablecoin
a16z crypto's 'Can't Be Evil' licenses aim to fix NFT copyright confusion
Star-studded digital avatar startup Genies launches NFT fashion marketplace
Market Update
Boring, boring, boring week. Another week of “actually nothing” despite the 3-4 weekly narratives that absorb the space such as the Digidagaku airdrop and Castaways. Quick note: This post was written before the y00ts launch so we won’t be commenting on this collection for now. Not in the DeGods ecosystem and are transparently not the most up to date on the Sol NFT ecosystem. There is a lot of hype around Y00ts and we hope the project has a successful launch as we know many folks involved.
With that, let’s take a look at what the heck has been going on (or what hasn’t been going on) in NFT land over the last week.
Chart: Nansen
Week-over-week volume is essentially flat and the only thing notable here is the uptick in Sudoswap vol which is adding to the overall ecosystem and continuing to take mark. Some quick notable statistics and trends to watch are that Sudoswap did 5x+ the amount of transactions as LooksRare this week and X2Y2 continues to take away more market share from both LR and OS.
Moving on, USD volume is absolutely abysmal and continues to trend down as we approach the merge in the next 10 days. Right now, 15 ETH of volume traded or ~$24,000 USD would get you in the top 100 volume on OpenSea. Sad!
Chart: Hidobby/Dune
Moving on to blue chips. Funny enough, all of the FUD around the BendDao and ape liquidations ended up being wrong, and we’ll give a huge shoutout to YZY who predicted this in our guest post 2 weeks ago. As we can see in the chart below, the bottom seems to align with the peak BendDao FUD. Notably this week, Azuki and Doodles have stood strong in the mid 7 ETH range while Clone X has taken a beating and racking in some sales below 6 ETH. Moving along, ever since the Moonbirds CC0 announcement, this project can’t seem to catch a break. MBs are now below 12 ETH for the first time since their first week post mint.
Apes and mutants have rebounded well and continue to hold strong in the face of a dead market. Punks look relatively strong here as well.
We’ll also touch on Pudgy Penguins here (and think this should age well). While they have not been able to break the 4 ETH floor they hit on August 22nd, the project has been consolidating in the 3.2 to 3.5 ETH range since and is slowly grinding up. Notable perseverance from the penguins.
Chart: Nansen
Finally, we’ll end this update looking at the total # of NFT traders. We’ve now been making the argument for almost 2 months that despite the fact that we have little to no new entrants, there are not many *new* people leaving. What we mean is that everyone who has been trading NFTs since the depths of the bear market in June, are still here doing the same. In the chart below, we can see the total # of NFT traders has been flat for some time.
Chart: Hidobby/Dune
Unfortunately, this is a zero sum game. With all of the quick narratives, flips, pump/dumps - we are all battling against each other for who can stack the most ETH. Quite hyperbolic, but like a lot of crypto, we’re in a true PVP environment of trading. If you’re deep in the weeds, we wish you the best of luck.
Every week we get a new tweet like this. Remember when this was #1 on OS for a few days during the bull market. This is one of the worst we’ve seen and is always another reminder of how down bad some projects (and their bagholders) are.
Musings & Specific Project Notes
New mints (mainly free mints) are still the main source of alpha for quick flips and making money in this market. In the words of our very own Chuck Bannister, “Digging NFT market lately and the biggest trend is that projects are not instantly going to 0 after they mint which they have been for months. This is probably a combo of generally higher quality collections but also there seems to be better sentiment. It’s more common to see sustained volume on collections over a longer period for them to break out vs 1 pump post mint and then dumped and forgotten like it was for pretty much the entire summer. It's much higher EV to ape into a new-ish project that has proven demand over the first few days post-mint vs. immediately after minting out.” Essentially, what he’s saying is that new mints that survive a few days and can make it into the top collections on OS for that week have been a good way to achieve “quick wins”. It’s tough to always get WL or even get on many of these stealth mints, but using free tools such as Icy Tools is a good way to track volume.
A new trend we’re seeing is gamified discords. Projects like Lost Realms and Spells.Quest have been able to keep super engaged communities by converting their entire discord to these unique social games where you have to enter bot commands to get points (or White List).
The second trend we’re seeing is around IP rights. Pudgy Penguins made waves last month when they announced you can license out your IP of the NFT you own to create a stuffed animal that will be sold in big name stores under the Pudgy Penguin umbrella. Multibeasts is looking to use the same approach by creating their own IP marketplace where holders can license out their IP to real brands. Overlord has taken a similar approach as well, partnering with Seth Greens studio to produce a TV show, where we assume holders will be able to license out their NFT to be a character in the show. This is a super unique concept but adds a new meaning to the word ownership. Something to watch closely, especially the successes and failures of the *businesses* exploring new methods.
But, at the very least, you can now say your cute PFP has “real life utility”.
Sport betting Meets Web3
It’s quite interesting that it took as long as it did to get some viable form of sports gambling on the blockchain, as it is such an obvious use case. We’re friends with the founders of SafeSharp and got to chat with them about what they’re building.
What exactly is SafeSharp? Basically Draftkings/Fanduel on the blockchain, but instead of real money you can use your crypto “casino chips”. Right now they have NFL Pick Em and soon will have head to head betting where you can wager ETH on NFL games. Expect this to become a larger and larger industry after seeing the behavior in the general crypto/nft market.
Here’s our referral Link for early access.
If you have friends who love to gamble on sports, the site is live - anyone you share it with will be tracked back to you through an invite code, and you receive 18% on the fees collected from lifetime bets of anyone you refer.
Rugs R Us (Guest Post 0xAndrewWise)
MM Note: If you aren’t familiar with a “rugpull” in crypto - the idea of a rug comes from the DeFi world, when the developer sells all of their tokens and removes an LP from a liquidity pool and runs away with the money or *pulls the rug out*. In NFTs, rugs exist in the forms of but not limited too: wallet-drainers, faulty contracts, team members scamming for seed phrases, founders gambling treasuries, team ghosting and abandoning projects etc.
Andrew Wise is the Co-Founder of doxd and lays out a compelling message around whether doxxed web3 founders (revealing identity) would reduce crime. As pseudo-anon founders, we don’t believe project founders need to be doxxed in order to be successful but we do agree with Andrew that many scams in this space are due to the fact that there are little to no consequences for scamming in web3. The industry will never be able to reach the mainstream with the current number of scams/rugs happening every day.
We are here to provide an open platform to hear both sides and Andrew lays out the facts of how prevalent rugs and scams are in the NFT space while sharing his unique approach of “doxxing, without doxxing.” Projects with doxed developers are not immune to *rugs* and we see doxxed founders rug projects every other day at this point. However, for things such as a smart contract that drains your wallet if you connect, these are almost always created by anon devs. As we continue through the depths of the bear market, we think rugs and scams will become more and more prevalent, which makes for a good time to discuss this issue while things are slower.
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Last year rug-pulls raked in $2.8B. So far this year, we’re up to $1.4B and all this is with Opensea being down 87% from last year. We’re fuxed.
web3 will never go mainstream if we allow this level of theft to continue.
Blockchain is a tool that can solve the world’s problems.
But if blockchain can’t fix itself, it’ll never fix the world.
Can we use this hammer to chisel the world or will there be?
A History of Crime
It’s no coincidence the rug was invented in Armenia.
Kim Kardashian has “never had any plastic surgery”, according to herself.
Rugs are nothing new. They’re the same old grift, packaged on the blockchain.
Thought Crime
Crime comes in all forms. Physical crime and thought crime.
When someone breaks into your house and steals your X-Box, that's a crime.
When someone invades your Grandma’s head and fills it with fake news:
…that’s Thanksgiving.
It’s never been easier to acquire a seed phrase and steal.
We’ve given every crook a gun, and honestly, it’s surprising the number isn’t higher than $7.7B.
How bad is it?
9 out of 10 NFTs are rugs.
There are more than 8000+ projects created per month.
The Southern District has prosecuted one, two, three NFT fraud cases so far this year.
Leaving 8000987654321 to go -
What is the root cause of rugs?
You can’t fix stupid.
People will always give up their seed or sign that transaction they shouldn’t.
Which means you need to find a way to get in-between the rugger and the victim.
Here’s what we know about rugs:
What happened
When it happened
How much was stolen (Z)
From whom (X) it was stolen and who stole (Y)
We were all a bystander to the theft. We gave it a consensus.
The only thing we don’t yet know is X.
How do you solve for X?
Web2 cybercrime is pretty easy to catch.
You have an IP, a Merchant Account, an email that is tied to a person.
Match a person to a wallet and you solve for X.
“But wait, I’m not gonna dox myself to stop rugs.”
Rugs are a cost of doing business. If 1 out of 10 times I get rugged, so be it.
If 2 out of 10 projects hit, it’s worth it.
You’re doxxed
Last week I took a trip to Dallas. Flying Delta.
I forgot my boarding pass. Well, I left it at the bar when I rushed to the gate.
As it turns out, you don’t need your boarding pass anymore. All you need is your face.
They use ML to match your face to your boarding pass and that’s now your boarding document.
I never gave consent to give my picture to Delta to be used to track my every move.
But it’s out there. They know everything. They have everything.
Realizing you’ve already been doxxed is a relief.
If whatever you’ve done that you think nobody knows you did hasn’t been prosecuted at this point, you’re probably in the clear. Whew.
Doxxing solves for rugs
Let’s recap where we are:
X is the person who was rugged
Y is the person who did the rug
Z is the amount that was rugged
Time and date are on-chain
Once we solve for X, we have everything we need to create a Proof of Theft (POT).
(POT has no enforcement today, but in the future, we can see our legal system adopting it to track and solve cybercrime cases.)
So if we want a future where rugs are a thing of the past, then the first and easiest step for us to take is to get doxxed. At the very least, we’ll know who the good guys are.
And over time, we’ll be able to identify, track and eliminate the bad actors.
Fixing blockchain, so it can be used to fix the world.
Okay, so who’s in charge of getting us doxxed?
Law enforcement and compliance aren’t exactly the most glamorous of careers.
Serious jobs that matter and have consequences aren’t respected nor paid the amount of stress and grief they come with.
Which results in our worst being in positions of power in our Society and Government.
Putting the X in sey
When I first discovered NFTs, I saw endless possibilities.
A chance to change the world. A chance to strike it rich. Both at the same time.
I set out to find the smartest person I know and make them my Co-Founder.
Together, we could figure out how to flip Yuga.
It turns out, when you can do anything, it’s hard to do anything.
One brilliant idea turned into a completely different brilliant idea.
Start. Stop. Pivot. Pivot-back.
It turns out, the best idea is the simplest idea:
web3 is broken. why not fix it? then we can get back to the fun stuff
Instead of creating the next Bored Ape, we’re now making boring seXy.
We’re going to solve for X and make it feel as exhilarating as Minting.
We are building the trust badge of web3 and invite you to get doxd and fix blockchain, then the world. Follow me on Twitter to learn what’s on my mind today and what will happen tomorrow. To add an on-chain KYC to you or your project’s wallet, visit doxd.io.
Conclusion
As fast paced as the crypto and NFT world is, it seems that over the last few weeks we have finally got a breather. This will of course end shortly as we approach “the merge” date and expect some upcoming volatility.
We’re now 8-9 months deep in the crypto bear market and NFTs have been down-only since May. If you’ve made it this far (in the newsletter and in this market) it’s definitely not time to give up. Going mainstream is still far away, but it's gone from feeling like just a dream, to what inevitably will be a new reality.
Summer was tough. Here’s to stacking more fake internet tokens this fall.
Cheers,
MM Team