Wags Weekly
What I've Been Reading This Week 3/16/22
Abbreviated WW this week due to travel. Back at it, in full form, next week!
Blockchain, Cryptocurrencies & Digital Assets
Jason Liao: Music in Web3
**Beginner**
Another great read on music in web3 from Wags Weekly Subscriber, Jason Liao.
Looking back on some of the largest revenue generating transactions (see section 2021:The Perfect Storm here), a few things stand out to me:
1. NFTs are not a cure all (at least not yet) to the complexity of the analog music copyright system
2. An abundance of Web3 companies have been built to be a decentralized and more artist favorable version of similar Web 2 business models
3. Web3 companies are creating new forms of digital collectibles for fans to show off their fandom (e.g., digital collectibles, fan and social tokens)
4. Web3 is giving artists more autonomy in creating a music career without needing the traditional music intermediaries that have historically taken $0.88 of every dollar spent in the industry.
One hope is that with the infrastructure of Web3, we will continually be progressing to a world where artists are funded, produced, managed, and distributed by fans. While there may be some tech and entrepreneurial saavy musicians who choose this route, I am not sure if that is the ideal state as the middlemen today do have some expertise in promoting the artist that ultimately warrants some fee (though perhaps not as high as they take currently today) in exchange for creating a larger ultimate pie of revenue for the artist.
The Atlantic: Cryptocurrency Might be a Path to Authoritarianism
**Beginner**
Interesting piece from 2017 examining the libertarian origins of blockchain and Bitcoin, and how, in theory, the decentralization ethos could be highjacked and used to increase the power of centralized entities, like governments. Highlighted PDF below. Shoutout to RA for highlighting!
In certain circles, the technology has been hailed for its potential to usher in a new era of services that are less reliant on intermediaries like businesses and nation- states. But its boosters often overlook that the opposite is equally possible: Blockchain could further consolidate the centralized power of corporations and governments instead.
The same hype driving cryptocurrency speculation has also attracted banks, governments, and corporations—exactly the authorities it was designed to circumvent.
Even if Bitcoin’s utility and value might decline, the distributed ledger offers potential uses beyond simple currency exchange. In theory, any internet-connected device could participate in verified, distributed transactions.
In the extremist libertarian aspiration, smart contracts would allow anonymous actors to trade anything whatsoever in an untraceable way, via unregulatable markets. Instead, actual smart contracts, ICOs, and distributed ledger-backed devices mostly offer new ways to interface with the private technology industry.
Other traumas might yet face citizens like Holloway in a society run by blockchain. A mandated DNA-test could accompany citizens’ blockchainification, allowing their ethnic origins and medical predispositions to become attached to an identity record. Financial assets would also be connected, thanks to an underlying cryptocurrency account through which they make debits and credits. Not to mention all the personal insights already consolidated by services like Facebook... Businesses might subscribe to this data. Thanks to distributed ledger, it could be used to prevent their automated doors from opening for people whom a smart-contract risk- assessment service rates below a threshold of desirability. Left outside, privately- contracted security robots might deploy ledger-backed ID scanners to sweep loiterers from private property. Once delivered and booked into jails, smart courts could automate sentences based on an automated assessment of future crime potential.
Blockchain’s future seems tied to the short-term vision of investors and entrepreneurs willing to speculate on a hypothetical, distributed utopia without hedging against the consolidated autocracy it seems equally likely to realize.
The Verge: Tron founder Justin Sun and his many escapes
**Beginner**
Very interesting read on Tron founder, Justin Sun's, global crypto empire operating in legal gray areas... and gray areas may be generous. It's a history of Sun's foray into digital assets, telling the story of Sun's ICO of Tron, acquisition of Poloniex, and more... so excerpts don't really do it justice. Highlighted PDF below. Shoutout to EL for passing along! Shortly after this article was posted, Sun tweeted a short rebuttal on Twitter (below).
WSJ: Bitcoin Price Surges on Biden’s Crypto Executive Order
**Beginner**
This was more positive for digital assets than anticipated. While we still need much more regulatory clarity for most institutions to start taking steps toward adoption, I would guess there have been a lot more executives, beyond the Telsa, Block, Asset Managers/HFs, VCs of the world, that are having conversations about what their digital asset strategy may look like going forward. It's not a game-changer, but a step in the right direction for crypto-enthusiasts.
The order, titled “Ensuring Responsible Development of Digital Assets,” directed agencies across the federal government to produce reports on digital currencies and consider new regulations. It outlined the risks cryptocurrencies pose to the economy, national security and climate, while also noting their possible benefits.
Crypto advocates welcomed the absence of any imminent federal action in the order and its acknowledgment of the positive elements of the industry, such as fostering innovation and financial inclusion.
The chief executive of Valkyrie Funds, Leah Wald, said she expects the order will lead to regulations that will further help the industry grow. “Clarity spurs adoption, and adoption leads to growth,” she said.
“Ensuring that the U.S. remains the leader in global financial infrastructure for generations to come has never been more paramount for economic and national security interests,” said Sigal Mandelker, a former Treasury official in the Trump administration who is now a general partner at Ribbit Capital, a venture-capital firm invested in crypto. “The president’s recognition of that is an essential step in that direction.”
Q: What is Terra Luna?
Think of Terra as a bank, whose shares, LUNA, are listed on the stock exchange. And think of UST as deposits from Terra’s customers. Terra’s business model is to use 100% of its deposits (UST) to buy its own shares (LUNA).
That is the world’s best business model, as long as customers keep adding deposits. But when customers withdraw, the bank has to sell its own shares to make good on the deposits.
So, the bear case for LUNA is that customers (UST holders) will at some point want their money back. The bull case, however, is that the utility of UST is constantly rising thanks to a whole ecosystem of applications being built on the Terra blockchain. So, customers may not ever ask for their money back.
The sticking point is that much of the UST demand is a function of the unsustainably high yields on offer at Anchor. The current 19.5% yield should, presumably, eventually be normalized to something like 10%. That’s still very good, but there’s a risk that an abrupt cut in the Anchor yield could result in a rush for the exits. Which, returning to the bank analogy, would create a bank run on LUNA.
With LUNA trading at a market cap of $35 billion and TFL having an additional ~$30 billion of LUNA in reserve, that seems like a remote prospect at the moment. But I guess it’s enough of a prospect that a $1 billion reserve fund has been created to defend the UST peg in the event of a run.
That’s given people further confidence in UST and the whole Terra ecosystem. But it may also be an admission that the powers that be at Terra are at least a little concerned about bank runs.
Report: 50% of NFT Holders Have Lost Access to Their NFTs — Blockworks
Ukraine Has Received Close to $100M in Crypto Donations: Ukraine received nearly $100 million in crypto donations as of last Wednesday, Amitoj Singh reports. As previously reported, crypto funds are going to purchase things like bulletproof vests and night vision goggles.
CRYPTO REGULATION: The U.K.’s Financial Conduct Authority (FCA) is ordering crypto ATMs to shut down. The statement made Friday alleged none of the crypto ATMs operating today are licensed or compliant with money laundering regulations, but they can register with the FCA to reopen. Meanwhile, Israel’s central bank has published draft guidelines that will potentially open the country’s financial system to crypto companies. Among the regulation requirements banks will need to examine companies on their own, clarify the source of money used to purchase crypto and track the path of its movement. The new rules would help banks onboard crypto users more easily.
TRADFI DENIES: Fir Tree Capital Management, a hedge fund with $4 billion in assets under management, has put together a sizable short of tether (USDT), according to a Bloomberg report. The hedge fund cites the U.S. dollar stablecoin’s lack of transparency about its reserves, and thinks its bearish bet could pay off within 12 months and may open a separate fund for the tether short, if there’s enough client interest. Elsewhere, the SEC has rejected NYDIG’s and Global X’s spot bitcoin ETF applications. (Talk about being bearish.
CRYPTO DONATIONS: London-based content company OnlyFans has donated 500 ETH, roughly $1.3 million, to UkraineDAO, a leading crypto contributor to Ukraine's government during the ongoing war. The company’s donation catapulted the DAO’s ETH reserve amount, which had stalled at about 1,000 ETH before the donation. So far, the Ukrainian government has raised about $100 million worth of crypto – a process that the nation’s deputy minister at the Ministry of Digital Transformation has called more “convenient” than traditional means.
LOCKED: Over 10 million ether (ETH), worth about $26 billion, is now locked on Ethereum’s Eth 2.0 staking contract ahead of a planned upgrade to its proof-of-stake blockchain. The upgrade is an effort to improve the network’s efficiency, which has been costly and slower during periods of congestion, and has led to exorbitant fee prices of $250 or more.
Ethereum layer 2 infrastructure provider Starkware plans to raise around $100 million at a $6 billion valuation. TAKEAWAY: Starkware plays a critical role in building zero knowledge (zk) rollup technology, a critical piece in Ethereum’s scaling plans. The company has built StarkNet and StarkEx and is known for hosting popular applications, such as perpetuals exchange dYdX. The funding round is expected to triple Starkware’s valuation last seen in a round three months ago.
OPEN BOOK: The civil lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against decentralized media platform LBRY may end up setting a regulatory precedent for hundreds of small-scale crypto projects, according to security lawyers interviewed by CoinDesk. In March 2021, the SEC sued LBRY for allegedly offering and selling an unregistered security in the form of platform token LBC (used to pay its operating expenses) and misleading investors. LBRY has pushed back, arguing the token is more like a currency with limited utility for its platform – an argument that could have ramifications for similar initial coin offering projects.
Canadian Police Seized $28 Billion Bitcoin from a Government Employee involved in Ransomware Attacks. According to his LinkedIn profile, Sebastien Vachon-Desjardins worked as an IT consultant for Public Works and Government Services in Canada. He was extradited to the United States on Wednesday, where he will face multiple charges related to his alleged involvement with the NetWalker ransomware group, according to the US Justice Department. Keep Reading »
Bored Ape Yacht Club Creator Acquires IP for CryptoPunks and Meebits. Yuga Labs is all set to enter into the NFT space. They stated in the announcement that Yuga Labs did this because they admired CryptoPunks and the visionary work of the project’s founders, Matt and John. Their work advanced NFTs, the Ethereum blockchain, and the entire crypto space, and influenced how Yuga Labs will build BAYC Keep Reading »
Dubai passes new crypto law and institutes a regulator to supervise the sector.👀👀 Sheikh Mohammed bin Rashid Al Maktoum’s official Twitter account announced on Wednesday that Dubai’s principal digital property legislation has been recognised, and the Dubai Digital Property Regulatory Authority (VARA) has been established. Keep Reading »
Paxos receives in-principle approval from Singapore Authority(MAS). The Monetary Authority of Singapore (MAS), a leading financial regulator in Asia-Pacific, has given in-principle clearance to the leading regulated blockchain infrastructure platform to run digital payments token services under the Payment Services Act 2019. With this licence, Paxos becomes one of the first blockchain service providers in both New York and Singapore to achieve the highest regulatory standards. Keep Reading »
Personal Information is Scarce, But Does Coinbase Value it? 👀👀 Coinbase’s users are not happy with its recent activity. The online crypto exchange platform, Coinbase has recently sent an email to its users asking to update more personal information. Few users were enraged after receiving this email and found the questions asked by the cryptocurrency company as “privacy-violating.” Keep Reading »
US Senator to issue WAAA- Is it an Internal Clash?🧑💻👩💻 According to our sources, Elizabeth Warren is working on a bill that uses the war in Ukraine to single out and punish the crypto industry. The bill she is working on is Warren Against America Act (WAAA). The bill would give POTUS the ability to slap sanctions on foreign crypto exchanges/transaction processors. This would force firms to effectively “sanction” individuals by blocking suspected Russian-linked wallets. Keep Reading »
Pro-crypto conservative candidate Yoon Suk-Yeol Wins South Korea’s Presidential Election 😶🌫️ After a harsh and fiercely fought campaign characterised by claims of corruption and depravity, conservative opposition candidate Yoon Suk-yeol has won South Korea’s presidential election, signalling a major shift for the world’s tenth-largest economy. Keep Reading »
Polychain, Pantera Lead $10M Investment in Metaverse Fashion House
Another example of fashion's intersection with the metaverse. The brand describes itself as a designer and purveyor of "digitally wearable NFTs through Augmented Reality (AR), collaborating with celebrities and brands." It hints that NFT holders will get various real-life perks too, including the chance to meet and greet Space Runners' athletic and celebrity collaborators.
Now, as crypto goes from programmable money to decentralized everything—thanks to NFTs, games, finance apps and DAOs—it's producing a new crop of innovators, artists, and deal-makers who are putting their own stamp on the industry.
Stripe launches payment services for crypto businesses. Yesterday online payments company Stripe launched services for crypto businesses, including exchanges, wallets, and non-fungible token (NFT) marketplaces. Stripe’s new crypto tools and application programming interfaces (APIs) enable businesses to accept fiat deposits for crypto and payout to users in local fiat currencies. The company also offers know your customer (KYC) solutions and other fraud prevention tools to crypto firms.
Coinbase Rolls Out Test of Fee-free Trading. As Coinbase looks to distance itself from transaction-based revenue, the exchange has begun recruiting the first customers for Coinbase One, a subscription service that comes with $0 trading fees. Perks of the subscription also include up to $1 million in account protection and 24/7 phone support. A spokesperson from Coinbase declined to reveal the price, which will be billed monthly. Coinbase One is currently in its beta launch, the exchange said
Tron Founder Justin Sun Rebuts Bombshell Accusations About Poloniex
Esports Team Misfits to Create Crypto Gaming Platform on Tezos
FTX Enters Music Scene With Tomorrowland Festival Tie Up
Adobe moves to ‘sustainable’ blockchains
Ukraine turns crypto donations into 5,550 bulletproof vests, 500 helmets and more. Read the full breakdown.
Major companies have flocked to NFTs. Some of the highest-profile efforts over the past year include the following:
Playboy began selling NFTs last May (see my colleague Annie Goldsmith’s feature for The Information Weekend here).
Coca-Cola began selling NFTs in July.
Marc and Lynne Benioff-owned Time magazine launched an NFT initiative in September.
McDonald’s unveiled its first NFT in October in “celebration of the McRib’s 40th anniversary.” No, I’m not kidding.
Nike bought Rtfkt, sneaker and collectibles NFT startup, in December, and days later Adidasbegan a sale of 30,000 NFTs in collaboration with Bored Ape Yacht Club, Punks Comic and Gmoney. (Read Malique Morris’ feature about the skepticism sneakerheads have about NFTs from their favorite brands.)
StockX launched a digital goods store, Vault NFTs, in January of this year.
GameStop announced in February a partnership with Ethereum-based protocol Immutable X to launch an NFT marketplace later this year.
Andreessen Horowitz Crypto has tapped former digital assets prosecutor Michele Korver to be the fund’s regulatory head. Korver was previously chief digital currency adviser for the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and spent 25 years working for the government and in law enforcement.
Aptos, a project put together by former employees of Meta who worked on the company’s Diem digital currency effort, raised $200 million in a private fundraising round led by Andreessen Horowitz. The team hopes to develop a blockchain that builds on their work at Meta. Other investors who participated in the round include Tiger Global, FTX Ventures, Multicoin Capital, and Coinbase Ventures.
Elizabeth Warren’s Anti-Crypto Crusade Splits the Left (Politico)
Tweets & Threads:
Messari’s Ryan Selkis on Biden’s Crypto EO
Circle’s Jeremy Allaire on Biden’s Crypto EO
Eth as a Resource
Macro, Markets, Hedge Funds & Private Equity
The Federal Reserve announces its latest interest rate decision. Global stocks rose on expectations of a rise in rates for the first time since 2018.
Ukrainian president Volodymyr Zelenskyy addresses the US Congress. He is expected to once again call for more military aid, and earlier said peace talks with Russia “sound more realistic.”
Russia is set to default on its foreign debt for the first time since Lenin. It has to pay out $117 million in interest payments on dollar-denominated bonds today.
Oil prices fell. Brent crude briefly fell below $100 a barrel, a week after reaching a 14-year high of $130 on March 6, easing fears of an energy-driven recession and chronically high gasoline prices.
Talks between Russia and Ukraine continue. Meanwhile, as Russian forces reach Kyiv, the leaders of Poland, the Czech Republic, and Slovakia are also in Ukraine’s capital on an EU mission.
More major companies suspended operations over China’s lockdowns. Toyota, Volkswagen, and Foxconn are among those affected by severe restrictions in Jilin province and the city of Shenzhen.
US officials said Russia is seeking assistance from China. But White House national security adviser Jake Sullivan warned both sides that “we will not allow that to go forward.”
Russian and Ukrainian negotiators meet for a fourth time. While Kyiv and other cities are still under attack, and after at least 35 deaths at a military base near the Polish border, more talks began via video conference at 4.30am US eastern time.
Russian prosecutors are reportedly issuing warnings to Western companies. According to the Wall Street Journal, they are threatening to arrest corporate bosses and seize assets.
Russia wants to seize assets of departing companies… The country said it could take temporary control of firms with at least 25% foreign ownership, a move the White House called “lawless.” Burger King, Goldman Sachs, and JPMorgan have joined the exodus of Western countries leaving.
…and its foreign minister sees no economic future with the West. Sergey Lavrov told CNBC that sanctions won’t cripple the country’s finances, though the Kremlin said Russia’s economy is in shock.
The EU rebuffed Ukraine’s fast-track membership. Leaders in Western Europe want to deepen their relationship with the country, but cautioned against moving too quickly. Meanwhile, ceasefire talks between Russia and Ukraine failed as the crisis in Mariupol worsened.
US inflation rate hits 7.9%. That’s the biggest year-to-year increase since 1982, pushed by rising prices for energy, food, and raw materials.
Congress passed a budget to avert another government shutdown. The legislation, which now goes to president Joe Biden, includes $13.6 billion in emergency aid for Ukraine.
Bonds, Commodities, Equities
Word of a U.S. ban on the import of Russian oil and energy products sent Brent crude (CO1:COM) to nearly $140 a barrel on Monday, while WTI (CL1:COM) soared 12% to $130/bbl for the first time since 2008. About 8% of American imports of oil and refined products, or about 672K barrels a day, came from Russia last year, according to the Energy Information Administration. U.S. officials also held face-to-face meetings in previously-sanctioned Venezuela, with analysts speculating the OPEC member could be a source of incremental supply as gasoline prices in the U.S. topped $4 a gallon nationwide (Biden advisers are also weighing a trip to Saudi Arabia).
Bigger picture: The clean energy debate, as well as industries of the future, has been getting a reality check in recent weeks as crude oil continues to power higher. It's not that the world won't eventually transition to cleaner fuels, but more about how long it will take to get there and securing ample energy supplies in the interim. Years of underinvestment in oil means Western nations are having a tough time ramping up supply, while the cuts to production are coming at a time of soaring fossil fuel demand.
Things are getting crazy in commodity markets as prices go into overdrive. The London Metal Exchange (LME) was forced to suspend all trading in its nickel contracts (LN1:COM) on Tuesday, saying it wouldn't reopen things until March 11 at the earliest as it balances its books and returns stability to the market. The cost of LME three-month nickel, the key pricing benchmark for the global physical supply chain, shot up to $101,365 a ton on Tuesday, up from $30,000 just sessions earlier.
The big short: It's an unfolding story that reportedly involves China's Tsingshan Holding Group, the world's biggest producer of nickel used in stainless steel and EV batteries. The firm apparently made a sour nickel bet by building up a massive short position, but now faces $8B in paper losses due to an influx of margin calls (it has since secured loans from JPMorgan and China Construction Bank). Nickel was already on a rip due to the commodity rally turbocharged by the conflict in Ukraine when the historic short squeeze pushed things over the edge.
Companies
Shares of Amazon (AMZN) jumped as much as 10% AH on Wednesday as the e-commerce giant announced a rare 20-for-1 stock split alongside a $10B buyback authorization. The last time the company split its shares was before the dot-com bubble in 1999, and since then, the stock has returned over 4,500%. Alphabet (GOOG, GOOGL), Apple (AAPL) and Tesla (TSLA) have also turned to splits recently, with the trend making somewhat of comeback during the COVID-19 pandemic.
Snapshot: While Amazon's decision doesn't affect any fundamentals, it does make the stock (or options contracts) more affordable for retail investors or those that don't want such a holding to be a large portion of their portfolios. A lower price can also mean the stock will be eligible for inclusion in the price-weighted Dow Jones Industrial Average. Amazon further alluded to the benefits for its worker purchase program, saying "this split would give our employees more flexibility in how they manage their equity in Amazon."
Facebook Content policy
Facebook parent Meta (NASDAQ:FB) opened a can of worms last week after temporarily easing its hate speech policies. The social network allowed posts calling for violence against Russian soldiers, and even the death of Vladimir Putin or Belarus' Alexander Lukashenko, in the context surrounding the invasion of Ukraine. The policy, which kept up related posts unless they included "method and location," was only applied to users in Ukraine, Russia and surrounding countries, but has since been modified.
Clarification: Facebook is "narrowing the focus" of the guidance to make it "explicitly clear that it is never to be interpreted as condoning violence against Russians in general." Users will also not be allowed to share a post that "calls for the death of a head of state" - likely a reference to Russian President Vladimir Putin.
"I want to be crystal clear: our policies are focused on protecting people's rights to speech as an expression of self-defense in reaction to a military invasion of their country," tweeted Meta President of Global Affairs Nick Clegg. "The fact is, if we applied our standard of content policies without any adjustments we would now be removing content from ordinary Ukrainians expressing their resistance and fury at the invading military forces, which would rightly be viewed as unacceptable."
Earnings
Inflation & The Fed
Fed Chair Jay Powell will be in the hot seat this afternoon following the conclusion of the Federal Reserve's two-day policy meeting. The central bank is widely expected to raise interest rates by a quarter of a percentage point, bringing an end to the "transitory era" that some are dubbing as one of the worst Fed inflation calls of all time. Currently, markets are pricing in seven rate hikes this year, which would average a 25 basis point hike for each meeting remaining in 2022, though Powell has emphasized that policymakers aren't on "auto-pilot" and need to be nimble in assessing incoming data.
"The Fed is currently navigating in an economic and financial environment that is more complicated than any other in recent history," said Luis Alvarado, investment strategy analyst at Wells Fargo Investment Institute.
Inflation took a turn for the worse in February as U.S. consumer price growth rose by 7.9%, representing the largest 12-month increase since January 1982. Core CPI, which excludes volatile food and energy - and is the Fed's preferred gauge of inflation - even advanced 6.4% Y/Y, according to the Labor Department's Bureau of Labor Statistics. All the numbers were gathered before the supercharged commodity rally driven by Russia's invasion of Ukraine, suggesting the red-hot inflation figures are nowhere close to peaking.
Aggressive tightening? Some had thought that central banks would slam the brakes after the conflict erupted, but the market reaction has been just the opposite. A hefty series of quarter point rate hikes are now on the table, with markets appearing to accept a coming period of "stagflation" (that's when sustained inflation is coupled with lower economic growth). It's a delicate balance for the Fed as tightening policy too sharply risks undercutting the economy and possibly triggering a recession." I don't want to make a prediction exactly as to what's going to happen in the second half of the year," said Treasury Secretary Janet Yellen, former chair of the Federal Reserve (current Chair Jay Powell is under a blackout period before the FOMC's meeting next week). "We're likely to see another year in which 12-month inflation numbers remain very uncomfortably high," she added, stating the Fed was looking at the data carefully and will take an actionable response.
FOMC meeting: The policy-making committee of the Federal Reserve is scheduled to meet March 15-16 to a large expectation that a 25-point rate increase will be announced. Ahead of the meeting, Moody's maintained an assumption that the Federal Reserve raises the target range for the fed funds rate four times this year at 25 basis points a clip. Markets are pricing in even more hikes, just short of seven hikes over the next 12 months. Per Chairman Jerome Powell's testimony to Congress last week, the FOMC appears to be closing in on a plan for balance sheet runoff. UBS says the Fed wants a process that is fast, but controlled, and does not risk market stress. "We think the median projection for 2022 will be revised from three hikes in December, to six or seven in March. By the end of 2024 we expect the median assumption for the federal funds rate will be around 3.0% to reflect a 'whatever it takes attitude' in taking inflation down.
International
China in the Mix
National Security Adviser Jake Sullivan and China's top diplomat, Yang Jiechi, met for seven "intense" hours in Rome on Monday, as the U.S. grows concerned over Chinese involvement in the conflict in Ukraine. Reports suggest that Moscow asked China for surface-to-air missiles, drones and armored vehicles as the lingering invasion exhausts its resources. The Kremlin denied the reports, saying it has ample supplies, while a Chinese spokesman also rejected the "malicious" rumors as "disinformation" before the meeting.
Quote: "Should they provide military or other assistance, that of course violate sanctions or support the war effort, there will be significant consequences," Press Secretary Jen Psaki told reporters. "In terms of what those specifics will look like, we would coordinate with our partners and allies to make that determination."
At the meeting, the White House also warned Beijing not to bail out strategic ally and trading partner Russia, with a pending default on the cards for the nation. "President Putin is being put in a position to make choices about where he is going to have to put his financial resources," stated Deputy Treasury Secretary Wally Adeyemo. "They're in a position where they are going to have to make choices about what debts they pay going forward and those choices will ultimately put him in a position about whether he continues the invasion."
Market angle: Panic selling of Chinese equities has taken hold over the last couple of sessions as coronavirus cases continue to surge in the country, with Dongguan (the fifth-largest contributor to China's GDP) now under lockdown. Stocks in Shanghai plunged 5% overnight and shares in Hong Kong sold off another 5.7%, while Beijing's closeness to Moscow is not helping the situation. Investors are even staying away from the dip-buying opportunity despite Chinese shares being off 40% from a year ago levels.
Miscellaneous, Notes & Headlines
Russian content
Russia is now blocking Instagram, following Facebook and Twitter. It has 80m users there, and is apparently rather more culturally important. WhatsApp remains, as does Telegram, which may partly be because Telegram is an important broadcast channel for the state as well (PSA: Telegram is not 'secure'). INSTAGRAM, INTERNET
The EU ordered internet platforms to take down or de-index all content from Russian state media. So, RT content won't show in Google and if you post a link Twitter will remove your post. This is a huge precedent with consequences that go way beyond the current conflict. Russia can point to it as a parallel to its own blocking, while lots of other autocracies will use this as an excuse as well. LINK
Facebook has updated its content moderation policies in Ukraine to allow people to support the war. This produced headlines saying that Facebook was 'letting us call for killing Russians’ but really it means that Facebook moderators won't take down posts from the Ukrainian president supporting the troops. META, COVERAGE
Cyber and satellites
As I noted last week, there was a major outage in Viasat’s satellite modems (disconnecting thousands of wind turbines), and that coincided with Russia invasion of Ukraine. It now appears clear that this was a case of sabotage, with someone infiltrating the network and bricking a bunch of modems, some of which are used by the Ukrainian military. There is an obvious suspect. LINK
Smartphones to Russia
Apple and Samsung are no longer selling in Russia at all - Chinese OEMs (maybe 60% of the market) are still selling, but with the collapse of the rouble and banking restrictions it has become a lot harder. Sales are apparently down by at least half. (It's worth noting in the context of this and other stories just how small Russia is as part of these companies’ sales.) LINK
US crypto regulation
The US president issued an executive order on cryptocurrencies, requiring various US regulatory agencies to produce a range of reports on different regulatory questions, from central bank digital currencies to consumer protection, as a step towards regulation. This has generally been well received by crypto people, in that it tries to find a balance between high-level policy objectives (financial stability, consumer protection) and enabling innovation and new services, doesn't try to pick winners or make specific technology choices, and presumes that there are a bunch of different, complex issues with different questions. LINK
NFT consolidation
The group behind one popular NFT ‘art’ series (Bored Apes) acquired the rights to two others (CryptoPunks and Meebits), and said that it would give the intellectual property of each NFT to the individual owners. Terms not disclosed. Bored Apes and CryptoPunks have a notional value of something over $3bn, though it’s very hard to tell how much of that is, on the one hand, due to wash trades and ramping, and on the other, to people who made a lot of paper money speculating in other crypto assets trading into this one in the hope of making more. (I don't have a problem with the idea of art NFTs being worth something - I just have a problem with the idea that these are worth anything.) Of course, it's also worth pointing what people said when Instagram was bought for $1bn. LINK, INSTAGRAM
Amazon audio
Amazon is launching a new consumer app, called Amp, which aims to let you host your own radio-style live music show. Live audio remains interesting even as Clubhouse seems to have faded. Beside Twitter’s Clubhouse clone ‘Spaces’ (even a16z partners are using it), Spotify obviously has an ambition to become a global ‘radio’ player. However, Amazon has no track record at all in creating new kinds of consumer app experience. LINK
Covid supply chains
Here in Europe we seem to be on an exit path from the pandemic (we hope), but China's zero-Covid policy plus a new omicron outbreak means it's locked down the the whole of Shenzhen ovenight - 18 million people staying at home at the centre of the global consumer electronics industry's supply chain. LINK
Google has an update on infosec activity around the war, and on its other activities - amongst other things, integrating air raid warnings into Android phones in Ukraine. THREAT, UKRAINE
An interesting FT piece on US efforts to boost Ukrainian infosec in the build-up to the Russian invasion. LINK
Russian military comms are a mess - they spent a lot of money on a secure encrypted system that doesn’t work (guess where the money really went) and are using unencrypted Chinese consumer walkie-talkies and local mobile phones instead, all of which the Ukrainians can listen to. LINK
In other news - Australia’s dishonest and deeply corrupt scheme to extort money from internet companies to subsidise newspaper companies (while pretending that this was ‘paying for news’ and ‘competition’, none of which was true) is, unfortunately, being looked at elsewhere including in the US and UK - here the Columbia Journalism Review explains what a terrible idea this is. LINK
The FT has a post-mortem of Facebook’s Libra cryptocurrency project, mostly blaming regulators’ dislike and distrust of Facebook rather than digging into practical problems with the project itself. LINK
Vogue on fashion brands’ interest in NFTs for avatars. LINK
Interesting piece on efforts to create electro-mechanical ‘hands’ and ‘gloves’ that would let you touch things in VR. LINK
Booking reservations and buying event tickets is now possible on Uber / TechCrunch
Office Depot partners with DoorDash to deliver office and education supplies / DoorDash
Higher gas prices make it more difficult for rideshare drivers to do their jobs. / Boston Globe
Nvidia has agreed to invest $10 million in Uber spinout Serve Robotics. This deal will fund the startup's expansion of its sidewalk delivery robot service to cities beyond Los Angeles and San Francisco. / TechCrunch
Inceptio, a Chinese autonomous truck startup, raises $188 million in funding from Sequoia China and Legend Capital. / Forbes
Russia wants its paintings back from Italy. “Young Woman With a Feathered Hat” is one of the pieces on loan in Milan that’s returning to St. Petersburg.
A 5-cent coin in the US is now worth more than 10 cents. The nickel that makes the coin of the same name is more valuable, thanks to soaring metal prices.
Pack-hunting spiders, oh my. They live in squads of up to 1,000, and hunt with webs that span several meters.
The US Senate voted to end daylight saving time. If it gets through the House, and past Joe Biden’s desk, clocks will be left alone from November 2023.
Trucks Venture Capital's Reilly Brennan:
In most significant AV regulatory step yet, U.S. eliminates human controls requirement for fully automated vehicles (link). A founder in the AV space emailed me and said 'this feels as important as the moment when GM bought Cruise.'
Biden restores California’s ability to impose stricter auto pollution limits (link). California is once again in front as the country's defacto policy lead on emissions standards.
With US car prices soaring and availability dwindling, is this the moment that China's automakers find a foothold? (link). 'You can buy a decent car in China for only about $14,000. That’s the retail price. So even with the U.S. 27.5% import tariff applied a Chinese car could be shipped to America and sold for less than $18,000. That’s 10 grand cheaper than the average used car.'
Vehicle charging ethnography (link). Via Diego. Make sure you see the photo in the second item in the thread. Related: with gasoline prices soaring, owners are getting creative on ways to protect their tanks (link).
To support backing EVs, Biden officials warm to the idea of new domestic mines (link).
Ford will ship and sell vehicles without certain chips (link). The vehicle would be sold without chips 'controlling non-safety critical features' and the chips would be installed within one year. From Mike Martinez at Automotive News who has been covering this: 'Getting a lot of questions on this story regarding price. Ford spokesman says it will sell Explorers w/out rear seat heat controls & customers will receive a price reduction. The feature can be installed for free at a later date.'
Praise for Rivian's CEO's quick reversal on pricing mistake (link).
Video: are OEMs making a mistake by building EVs on top of old ICE platforms? (link).
Tax penalty forces 1000 hp imported truck in Finland restricted to 55 mph (link).
EVs startups raised upward of $20 billion in 2021 (link).
Your next Uber ride will have an extra fee for gas — even if it’s in an EV (link). 'Rides customers will pay a surcharge of either $0.45 or $0.55 on each Uber trip, and Eats customers will pay either $0.35 or $0.45 on each Uber Eats order, depending on their location.'
The cost of LME three-month nickel, the key pricing benchmark for the global physical supply chain, shot up to $101,365 a ton on Tuesday, up from $30,000 just sessions earlier (link). Via Seeking Alpha.
In 2021, US rental car companies received record monthly revenue of $1,320 per vehicle, compared to around $1,000 before the pandemic (link). Via Reuters / Auto Rental News.
The average price of a gallon of gasoline in the US is up more than 10 percent in the last week (link). Via NYT / AAA.
Hybrids and EVs represented 16% of all auto financing in Q4 2021 (link). Via Automotive News / Experian.
Miscellaneous:
Job Opportunities
Desmos Partners: Crypto Fund Job Opportunities
"Interested applicants should submit a resume and cover letter to work@desmospartners.com. Applications will be evaluated rapidly and on a rolling basis.
Additional background on the fund will be provided to candidates as they proceed through the application process."
Other Content: Books, Movies, Podcasts, Etc
Real Vision Podcast: Energy, Food, and War in Eastern Europe
Scary overview of what could happen to energy and food supplies as a result of the war in Eastern Europe... They say Eastern Europe in this podcast because geopolitical strategist, Peter Zeihan, suggests that the Ukraine invasion is just the beginning for Russia.
Tim Ferriss: Morgan Housel — The Psychology of Money, Picking the Right Game, and the $6 Million Janitor (#576)
Compelling listen on some of Morgan's biggest takeaways from researching his recently released book, The Psychology of Money.
Morgan Housel (@morganhousel) is a partner at the Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He serves on the board of directors at Markel Corporation. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism.
Some Fun
Inflation? Arizona Iced Tea Still $0.99
Jonah Hill's Manhattan Loft
The actor has put his 3,280-square-foot Noho residence in The Schumacher building on the market. $10,995,000.
Apocalypse Dark Horse Ford Bronco 6x6
Florida-based Apocalypse applies its signature 6x6 treatment to a 400-hp four-door Ford Bronco.
2022 ASTON MARTIN V12 VANTAGE COUPE
Aston Martin celebrates the final run of its V12-powered flagship with the all-new V12 Vantage
Wordle Derivatives
Wordie Bird - Synonym centric wordle with a golf theme
Quordle - Four wordle boards to fill in with 9 guesses
Nerdle - Math wordle
Actions & Follow-Ups
ATOM/OSMO Airdrops
Before participating in anything, triple check the protocol, websites and what you are approving in your wallets. Shoutout to JW for making me aware!
If you are staking ATOM on your Keplr Wallet, or in OSMO pools at Osmosis, you could be eligible:
Some potential future airdrops:
LikeChain - For content creators, website here
Omniflix - A video hosting page where you can interact with the videos via your crypto wallet, website here
Evmos - An ETH interoperable chain with ATOM, this will also be based on ETH usage as well, website here
Sommelier - A DeFi network coming to ATOM, website here
Acala (ACA) Staking, if you participated in the Polkadot (DOT) crowdloan
Moonbeam (GLMR) Staking, if you participated in the Polkadot (DOT) crowdloan
Some Stablecoin Yields
Anchor protocol (~20%) on UST, can also do this through Terra Station
Orion Money (~13.5-16.5%) for multiple stablecoins