In This Issue

• Sam shares his thoughts on the Chamber of Commerce firing shots at the SEC, Empower Oversight suing the SEC, vetoes and VCs in the EU, LTC-20 tokens & Worldcoin switching to Optimism.
• This week on chain.
• Rebecca breaks down the latest news.
• Web3 Academy breaks down Coinbase’s Q1’2023 earnings report.

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The News Now

Chamber of Commerce Fires Shots at “Unlawful” SEC

The US Chamber of Commerce is the largest business organization in the world, and advocates for policies that are pro-business and favor job creation and economic growth. Referring to crypto confusion in the US, it last week stated in an emphatic amicus brief that,

“This regulatory chaos is by design, not happenstance. The SEC has deliberately muddied the waters by claiming sweeping authority over digital assets while deploying a haphazard, enforcement-based approach”.

And, in another highlight, declared that,

“The SEC’s actions are not just harmful policy; they are unlawful; and the consequences of the SEC’s continued delay are severe for that reason too”.

The Chamber of Commerce document is in support of Coinbase as it battles with the SEC for clarity on the rules around crypto, and it’s worth reading in full as it pulls no punches. And besides (literally) laying down the law to the SEC, it’s a telling intervention in other ways.

Firstly, it makes clear that criticisms of the SEC are not simply sour grapes on the part of crypto innovators, adding weight to assertions that the SEC is not acting in good faith, and is damaging innovation in the US.

Secondly, the Chamber of Commerce hasn’t minced its words, clearly voicing the opinion that the SEC is not simply making a few errors of judgment, but rather, is deliberately undermining the crypto industry.

And one more inference we can take is that the wider business world, although not directly aligned with crypto, is interested in crypto getting a fair deal and recognizes its potential value to the economy.

Empower Oversight Suing SEC

Relatedly, the SEC is being sued by watchdog group Empower Oversight, which is moving to compel the Commission to comply with Freedom of Information Act requests. These requests were filed in order to establish whether former SEC officials had conflicts of interest when declaring that certain cryptocurrencies were securities.

Part of the case regards a speech given by former SEC employee William Hinman back in 2018, declaring that Ethereum is not a security. According to allegations, he was receiving a pension from a law firm that was a member of the Ethereum Enterprise Alliance while working at the SEC.

It’s a convoluted case that also ties in with Ripple’s clashes with the SEC (Ripple last year acquired internal SEC communications relating to the Hinman speech, and is questioning why Ripple should be subject to securities laws if Ethereum is not), but, overall, it reinforces the critical barrage unloaded at the SEC by the Chamber of Commerce.

Vetoes and VCs in the EU

While the SEC appears stubbornly set against crypto, it’s a different story in Europe, where the EU powers-that-be are implementing MiCA (Markets in Crypto-Assets) regulation. This will be the first comprehensive framework of crypto regulations anywhere in the world, and will be formally signed off this week.

MiCA looks like a win for crypto–and, perhaps, for the EU–as it takes firm steps towards integrating the crypto industry and establishing legal clarity. That said though, concerns are circulating around what authority will be given to European central banks.

Last week, Jose Manuel Campa, the European Banking Authority chairman, stated that,

“Central banks should have the power to veto the widespread introduction of so-called stablecoins”.

He made this comment with regard to stablecoin impacts on public policy, monetary policy and financial stability, but it’s not a stretch to imagine central banks being hostile towards stablecoins, and especially when CBDCs are being explored as a way for our overlords to exercise total control… sorry, I mean… as a way of transitioning to a cashless economy.

Europe Pulls In VC Investment

On a very positive note, VC investment into European crypto projects has increased significantly, rising from a 5.9% share in Q1 2022, to a 47.6% share in Q1 of this year, an increase that is credited to the EU moving quickly on MiCA and showing commitment to regulatory clarity.

LTC-20 Tokens Fuel Surge in Litecoin Activity

Litecoin was forked from the Bitcoin source code in 2011, becoming the second ever proof-of-work blockchain. As such, it has a lot in common with the original cryptocurrency and so when, recently, BRC-20 tokens were developed on Bitcoin, it stood to reason that Litecoin would follow along the same path.

That’s what’s now happened with the launch of LTC-20 tokens on the Litecoin network, which are, like BRC-20, fungible assets. All of which is a workaround version of the ERC-20 token standard on Ethereum, which has been operating for a long time.

LTC-20 developers don’t claim to be doing this as anything other than an experiment, but nonetheless, it’s led to a surge in Litecoin activity, with transactions soaring by over 500% in the first half of May, and a corresponding spike in active Litecoin addresses.

So does this all indicate that Litecoin is gearing up to rival Ethereum as a home for DeFi and NFTs? Well, no, that’s highly unlikely. What it does demonstrate though, is that if any new crypto development can be replicated (in this case, BRC-20 tokens), it absolutely will be replicated (and so we get LTC-20 tokens).

Worldcoin Switches to Optimism

It was announced last week that Worldcoin, in the hope of achieving improved scalability, was switching its World App wallet and World ID identity protocol to Optimism, having been running on Polygon.

Just as a recap, Worldcoin is not your typical crypto project. On the plus side, it was co-founded by Sam Altman, the CEO of OpenAI and a key figure in AI development, it aims to solve what may be a critical issue in the age of AI–how to verify identity, or even just to verify that you’re human–and it makes use of crypto to do so.

On the other hand, and veering into dystopian territory, Worldcoin’s solutions require that you stare into a cold metallic object called The Orb and have your eyeball scanned, whereupon, according to Worldcoin, the tech then “checks that an individual is real and is unique”.

If you think that prospect doesn’t sound very cypherpunk, then you’re not alone, as it comes across like a plotline from Black Mirror/Gattaca/Demolition Man… take your sci-fi pick. Still though, it’s worth paying attention to what Worldcoin is up to since it’s loosely linked with AI development, which is, obviously, a big deal.

That in mind, from a purely crypto perspective it’s significant that Worldcoin has chosen to build on Optimism, a solid Ethereum Layer 2 solution, regardless of whether or not (and my money’s on not) the world signs up to be scanned by The Orb.

This Week On Chain

This Week On Chain

Ethereum burns have accelerated dramatically during meme coin season. With a steady burn rate reducing the supply by 1.5% annually when the last 30 days are accounted for. What is even crazier is that since The Merge to proof of stake happened that Ethereum has burnt 229,000 ETH coins! 142,000 of those have been burnt in the last 30 days thanks to meme coin insanity. That is happening in the current bearish market conditions. What happens when bull run mania comes back? 

Also, right now there is an insane multi week wait to be able to stake Ethereum. What is also shocking is that almost no one is trying to exit. Right now 48,887 validators (32 ETH each) representing 7.79% of all the staked ETH are in the queue to get into staking. Only 1,136 validators out of a total of 623,434 are waiting to exit. These numbers are astonishing. The level of bullishness investors are showing towards Ethereum is insane. 

That being said, Ethereum did have a bit of controversy the other day as on both May 11th and May 12th the network saw over 60% of validators stop working correctly. This resulted in a short degradation of the network. While users probably didn’t notice anything was happening, this event did trigger what is called the “Inactivity Leak”. This is an emergency measure used to recover the chain. 😬

Bitcoin addresses holding 1 BTC or more have crossed over 1 million (this chart shows price data a few days behind, but we did just cross the threshold). This is an incredible metric to reach considering the current market conditions and fear. Since late August last year the total number of holders has gone from 900,000 to 1 million. This is good for distribution of Bitcoin, and shows the strength of demand for the asset. 

Polygon has been quietly leading the crypto gaming revolution. Out of all chains Polygon has had the most active gaming wallets over the last 90 days. But Solana is pretty damn close behind. The message here however is clear. Blockchain based gaming is popular and in demand, but users are rejecting disgustingly high fees and are gravitating towards super low fee chains. A gaming season will come again. It only takes one big game to explode to bring the money in. 

Total value locked on Arbitrum has hit new all time highs in the last few weeks. For reference the last time it was this high was in late 2021! This surge is due in part to interest in defi protocol Chronos. The metrics for Arbitrum continue to impress. Daily active users, TVL, devs, and much more are all showing strength. My ARB bags are packed. 

While PEPE prices and volumes have cooled off, the whole thing was actually crazier than most of us realize. The below chart shows the trading volume in the days after the Binance listing. It averaged around 1.5 billion a day, and some days ever topped 2 billion. For reference the trading volume on SHIB was similar with many 2 billion dollar days post Binance listing. The difference is that SHIB listed on Binance at the euphoric peak of the last bull run, PEPE is doing this kind of volume during the bearish low period. 

This Week’s Trending Coins by Rebecca

Here are my key takeaways from the trends this week and it’s a mix of memecoins, mishaps, and migrations.

1. Ethereum suffered two outages after a technical issue caused the network to stop finalizing blocks. The Ethereum developers have released software updates for Prysm and Teku clients to resolve and restore the network.
2. Sui is a Layer-1 blockchain that’s announced an NFT airdrop for active contributors and early supporters. Registration has also opened for Sui’s Builder House in Seoul from June 3-4.
3. Bitcoin dropped over 10% in a matter of days as memecoin mania appears to have signaled a local top, for now. Bitcoin addresses holding 1 or more BTC have hit 1M according to Glassnode.
4.  Aptos is a Layer-1 blockchain that’s gearing up for its hackathon in Amsterdam in June. 
5. Pepe is a memecoin on Ethereum that’s seen its community boycott Coinbase using #DeleteCoinbase on Twitter. This was after a Coinbase newsletter accused Pepe of being a hate symbol by alt-right groups. Coinbase has since issued an apology.
6. Milady is a memecoin that’s pumped after Elon Musk tweeted a meme featuring a Milady NFT. The floor price of the NFTs briefly hit an all-time high of 7.3 ETH. CryptoCom has also listed the LADYS token. 
7. Ben is a memecoin on Ethereum that’s seen crypto influencer Ben Armstrong announce he will be taking over the project with the founder staying on as an advisor.
8.  tomiNet is a Web3 infrastructure company on Ethereum that’s seen its TOMI token listed on Bybit. The tomi team also featured in a Twitter Spaces with several crypto influencers.
9. Arbitrum is an Ethereum Layer-2 scaling solution that’s outlined a new rewards program. Arbitrum will distribute $6M worth of ETH to its DAO, as part of the rewards generated through fees.
10. Wojak is a memecoin on Ethereum that’s been included in a poll by KuCoin for a potential listing on the exchange.
11. Solana is an L1 blockchain that’s re-entered the top ten cryptocurrencies by market cap, overtaking Polygon. Solana founder Anatoly Yakovenko has been interviewed on crypto trader Scott Melker’s YouTube channel.
12. ArbDoge AI is a memecoin created by AI on Arbitrum that’s announced a partnership with Degen Zoo. 
13. Optimism is an Ethereum Layer-2 scaling solution that’s seen OpenAI CEO Sam Altman’s Worldcoin wallet announce it will be migrating from Polygon to the Optimism network.
14. Gala is a play-to-earn (P2E) gaming ecosystem that’s expected to launch V2 of its GALA token on May 15 with an airdrop. Coinbase has declined to support GALA V2.
15. Polygon is an Ethereum side chain that’s seen co-founder Sandeep Nailwal join a Twitter Spaces with crypto trader Scott Melker.

Follow Rebecca on Twitter and Instagram.

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Coinbase Q1’23 Earnings: More Than a Survival Story by Web3 Academy

The crypto giant Coinbase is on the stage with some staggering stats to flaunt. 🚀

Prepare to be amazed, and proud… Because the most important company in web3 is carrying the industry on its sturdy shoulders.

Unfortunately, we can’t look onchain to get Coinbase’s earnings results, instead, we’ll have to review the old-fashioned way (for now).

• A towering $145B in quarterly volume traded.
• A cool $130B in assets on the platform.
• Operations spanning across 100+ countries worldwide.
• A strong and diversified team of 3500+ employees.

These aren’t just numbers; they’re a testament to the powerhouse that is Coinbase.

As we dive deeper, you’ll see just how robust this crypto giant truly is and why that’s important for YOU and the wider industry. Let’s go!

Crunching the Q1 Numbers

In the world of business, numbers speak louder than words.

And boy, do Coinbase’s Q1’23 numbers have a story to tell!

We’ll dissect this crypto behemoth’s earnings, not just to marvel at the figures, but to understand what they mean for the web3 space as a whole.

After all, Coinbase’s success is like a weather vane for the direction of our entire industry.

Now, let’s unravel the numbers one by one:

• $736M in net revenue, up 22% Q/Q. That’s not just growth; that’s a rocket ship taking off! 🚀
• 24% decrease Q/Q in total operating expenses. Remember the January layoffs? Sad as they were, it seems they paid off in terms of leaner operations.
• $284M in adjusted EBITDA. If you’re scratching your head, EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.

It’s a measure of a company’s overall financial performance and is often used as an alternative to simple earnings or net income in some circumstances.

TL;DR: It’s looking healthy! 

• $362M in subscription and services revenue, up 28% Q/Q. Yes, folks, Coinbase is not just about transaction fees. They’ve diversified, and it’s paying dividends.
• $375M in total transaction revenue, up 16% Q/Q. While trading volume is important, it’s the revenue that fills the coffers, and Coinbase is filling them up nicely!
• $130B in Assets on the platform, up 62% 🤯 Q/Q. Clearly, users aren’t just trading; they’re storing their assets with Coinbase. Trust much?
• $5.3B in USD resources. That’s the kind of cash reserve that could weather any storm.

With these numbers, it’s evident Coinbase is not just surviving; it’s thriving.

But that’s not highlighted in the stock price

Despite being up 70% YTD, $COIN is still down 83% from when it started to trade.

At Web3 Academy, we’re here to help you build and invest. Let’s talk investing for a second.

Now, we’re not saying you should re-mortgage your house or take a loan from Blend to buy Coinbase stocks, but let’s just say it wouldn’t be the worst idea to pay more attention to it.

Just to be crystal clear: this is NOT financial advice! We’re just pointing out that the chicken seems to be laying some pretty golden eggs right now. 🐔💰

In the next section, we’ll delve into what this success means for you, and the broader web3 community. So stick around.

The Big Picture: Coinbase’s Impact 🌍

Why should you, as an investor, builder or early tech adopter, care about these numbers? 

The answer is simple and profound: Coinbase’s success is a proxy for the entire industry.

When Coinbase thrives, it underscores that web3 is more than just a trend – it’s a sustainable, profitable industry that’s here to stay. 🚀

And Coinbase isn’t just about profits and market dominance – it has a noble cause.

The company aims to bring crypto to emerging countries struggling with their banking systems. 

Think of nations like South Africa, where 1 in 4 people are unbanked:

Or Argentina, grappling with 3-digit inflation: 

Or Lebanon, seeing their food prices triple every year:

These are places where people need crypto, and Coinbase is stepping up to meet that need. 

It’s not just about providing a service; it’s about facilitating mass adoption, one small country at a time.

Time to Update the System! ⌛

Coinbase isn’t just a crypto exchange or the pack leader in earnings; it’s also at the forefront of the fight for regulatory clarity.

This giant is tangling with the likes of the SEC and advocating for clear crypto regulations.

An example of their initiative is the “Crypto 435” campaign, a grassroots movement aimed at educating policymakers about the benefits of digital assets.

To commemorate this fight, Coinbase has launched the “Stand With Crypto” NFT. It’s not just a digital token; it’s a symbol of the broader movement for crypto acceptance and a more inclusive financial system. 

Because that’s what this is all about: ‘It’s time to update the system.’ 

At Web3 Academy, we’ve minted the #102946 NFT. Have you? 🤨

If not, head here to mint yours and share it with us on Twitter.

It’ll only cost you around $10 and all of the money is donated to vetted organizations through a Crypto Advocacy Round with Gitcoin.

PS: If you enjoyed today’s edition, you’ll really like the Web3 Academy Newsletter & Podcast where we’re carving a path for DOers to confidently build and invest in web3.

Final Notes

No one selling Bitcoin as the Ethereum supply crisis emerges! Find out morein the video below. 👇

Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.

If you are reading this it means you are on the free version of the Wealth Mastery Investor Report, which is great for news and tips on the crypto markets.

If you really want to take advantage of fastest growing asset class EVER, I highly recommend you to check out my new Altcoin course: Mastering Altcoin Investing

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See you next time!

Lark and the Wealth Mastery Team

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Legal Disclaimer

Wealth Mastery (Lark Davis, and the Wealth Mastery writing team) are not providing you individually tailored investment advice. Nor is Wealth Mastery registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Wealth Mastery is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.

You can find a full disclosure of all my crypto & venture investments here.