Russian Central Bank Calls for Crypto Ban

The biggest crypto news and ideas of the day

Jan. 20, 2022

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Welcome to The Node.

In today's newsletter: Calls to ban crypto in Russia. Dan Larimer, EOS OG, is back. IBM is doing public blockchain key management. FDIC-insured banks test their stablecoin. AND more brands hop on NFT hype.

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Today’s must-reads

Top Shelf

RUSSIA BAN: Russia must ban cryptocurrencies, the country's central bank said in a report titled "Cryptocurrencies: trends, risks, measures," released Thursday. Elizaveta Danilova, the director of the Bank of Russia's Financial Stability Department, added in a broadcast that the country needs new laws to effectively ban crypto-related activities from trading to mining – but not private citizen’s ownership – to prevent capital escaping the national economy. Meanwhile, whether or not they are geopolitical rivals, there’s one thing the U.S. and Russia certainly agree on: stepping up crypto reg. Yesterday, SEC Chair Gary Gensler again signaled his desire to bring crypto exchanges within “the investor protection remit.”

BLOCK.DONE: Dan Larimer, the EOS co-founder who quit EOS developer Block.one with sound and fury, has engineered a “Mandel” hard break to put the smart contract blockchain on the right track. The EOS Network Foundation is bankrolling Larimer’s dev plans with token grants paid in EOS. Block.one is the company that raised EOS’ $4 billion token sale in 2017, and has since divested some tokens, bought bitcoin and shifted focus to the crypto exchange Bullish, which is preparing to go public through a special purpose acquisition company (SPAC). In November, an EOS Foundation exec said the blockchain “stands as a failure,” largely due to Block.one’s mismanagement.

TWO HACKS: The sum lost in the Jan. 17 Crypto.com hack keeps climbing, and now stands at about $34 million, though all affected users have been reimbursed, the exchange said. The Singapore-based exchange said Thursday that 483 accounts were hit, with 4836.26 ETH, 443.93 BTC and $66,200 going missing. The exchange introduced a Worldwide Account Protection Program (WAPP) which provides $250,000 in security cover for future attacks. Separately, hackers continued to exploit a disclosed security hole in Multichain, stealing about $3 million in crypto total. One hacker – motivations unknown – has returned 259 ether, worth $813,000.

BRAND BUILDING: Prada and Adidas Originals are allowing fans to submit photos to turn into NFTs on SuperRare, which will later be auctioned to support artists and creators. Fashion brands like The Gap and Crocs are not alone in cozying up to crypto, as the Ultimate Fighting Championship (UFC) has partnered with Dapper Labs for mixed martial arts’ own version of NBA Top Shot. Separately, all-star quarterback Tom Brady’s NFT platform, Autograph, raised $170 million from Andreessen Horowitz (a16z), Kleiner Perkins and a16z alum Katie Haun, among others.

WEB 3 DEVELOPMENT: Privacy-focused blockchain Secret Network raised $225 million for an ecosystem fund and $175 million for an accelerator pool, building on the recently revealed initiative called Shockwave that's aimed at making the network a key part of “Web 3.” Meanwhile, a16z is panhandling for $4.5 billion for new funds. The venture capital firm that is heavily exposed to the crypto industry and the idea of a third web iteration reportedly seeks to plow $3.5 billion more into crypto.

BANKS, PLAYING IT SAFE: Philippines-based UnionBank will use cryptocurrency safekeeping technology from IBM and Swiss custody specialist Metaco, something of a novel turn for Big Blue – once enterprise blockchain’s biggest advocate – in providing key management for public blockchain projects. The crypto-friendly bank with $15 billion in assets under management has partnered on blockchain payments with Visa, works on remittances with ConsenSys and is launching a stablecoin. Meanwhile, the first test transaction of a public, permissionless stablecoin developed by FDIC-insured banks, USDF, went well.

AUTO-MATIC: Bitfinex said it will receive $189 million worth of Polygon's MATIC tokens to sponsor enhanced staking, the process of securing and verifying blockchain transactions that also pays out rewards to those who put up their tokens. Bitfinex’s beefed up MATIC staking could pay 41% in annualized staking rewards to users, it said in a blogpost, adding returns that high would be "available for a limited time” and is purely “hypothetical” and not “a prediction or guarantee."

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What others are writing...

Off-Chain Signals

When did crypto become Republican? (Slate)

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Putting the news in perspective

The Takeaway

Simpin' Ain't Easy: The Logic Behind IreneDAO

Simplicity. Integrity. Meaning. Purpose.

Apart, these are empty buzzwords. But together, they’re something more: S.I.M.P., a kind of online commandment, and the meme at the heart of a new NFT project called IreneDAO, which has become a case study in how crypto is monetizing a certain kind of obsessive relationship between fans and content creators.

Structurally, IreneDAO resembles most other pricey NFT collections: a limited set of pictures tied to tokens on the Ethereum blockchain, all sort of the same, but sort of different. DAO is short for “decentralized autonomous organization,” an online investment club based around cryptocurrency; the tokens grant buyers access to the DAO.

Each IreneDAO NFT features an image of the Singapore-based influencer Yuqing Irene Zhao, pasted onto a minty green background and flanked by popular crypto slogans. “Damp it,” reads one, referring to a meme about the late Bogdanoff brothers. “Have fun staying poor,” proclaims another.

This one, in which Zhao holds up the word “simp” on a sign, recently sold for 4 ETH, or over $12,000.

Simp, of course, isn’t just an invented acronym. Merriam-Webster defines it (sorry) as “a stupid or foolish person,” sort of like a “simpleton.” But for a more precise definition of “simp” as it’s used in this context, we’re better off turning to Urban Dictionary, an online compendium of slang terms, which frames it as an explicitly gendered concept.

Online, it refers to a certain kind of hardcore fan (usually a man) who goes out of their way to lavish attention on the object of their fandom (usually a woman). It was originally used as an insult, since the psychology of “simping” can border on the obsessive, though simps have since attempted to reclaim the term.

That’s essentially what’s happening with IreneDAO, and one of the reasons the lowest listed price for any of these NFTs is now 1.35 ETH, or around $4,400. Logan Paul, the YouTuber turned amateur boxer, is among the investors as is the billionaire Mike Novogratz.

The images began as a sticker pack on the messenger app Telegram, as a way for Zhao and her business partner Benjamin Tang to generate buzz around the online “Irene” persona. SO-COL, short for “social collectibles,” is the formal name for Zhao and Tang’s business.

When the sticker pack took off, SO-COL decided to turn the images into an NFT collection.

Like so many other NFT projects and online get-rich-quick schemes, IreneDAO managed to capture lightning in a bottle. The rise of so-called meme stocks like GameStop and AMC set the stage for this sort of thing at the dawn of the 2020s, putting real value behind viral jokes. For Zhao and Tang, the self-conscious “simp” mentality is part of the brand.

Simp psychology already proved lucrative for other influencers: a streamer named Belle Delphine famously sold her bath water to fans for $30 a jar, and Stephanie Matto recently caused a stir with her “fart-in-a-jar” NFTs, which she’s said can be redeemed for actual farts in actual jars. On the streaming platform Twitch, subscribers regularly tip their favorite gamers and commentators in the hope of getting an on-air shoutout.

Those four words – simplicity, integrity, meaning, purpose – now a crucial part of SO-COL messaging, are meant to emphasize the absurdity of it all.

But even if the success of IreneDAO is absurd, it’s indicative of crypto’s ability to quickly capitalize on hype and turn fandom into cash. Belle Delphine announced her bath water sale in 2019, well before NFTs hit the mainstream; would she have done things differently in the NFT era?

“Stan culture” has normalized parasocial relationships between fans and celebrities, with a financial component crypto seems poised to magnify. Of course, fandoms could be exploited with or without an individual influencer’s permission, as this reasoned piece from Vice explains.

In the case of IreneDAO, things appear to have worked out. In a recent Q&A session on YouTube, Zhao explained that SO-COL could mark the beginning of a sort of “social finance,” or SocialFi, application. It could work a little like a social token, where fans purchase creator coins as a form of investment in a star’s popularity.

“That’s why we started SO-COL,” she said. “Irene DAO is just a proof of concept for SO-COL, because people [are] really skeptical about this fan economy, and whether it’s really gonna be bullish in the Web 3 ecosystem.”

It may collapse, as NFT projects often do. But as long as simps exist, and fans continue to shovel money toward influencers for a little attention, crypto will remain a tantalizing cash grab.

–Will Gottsegen

The Chaser...

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