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Quick Take

• The growth of optimistic rollups in 2022 has been significant, largely due to the spike in Optimism’s growth after the launch of its governance token, OP.
• Arbitrum saw significant growth too, as speculators started interacting with Arbitrum more in hopes of being eligible for Arbitrum’s potential airdrop.
• Boba saw a relative decline in TVL and on-chain activity, likely due to the ongoing bear market.
• Metis may have seen a decline in TVL but has continued to onboard users and developers to their ecosystem with their Metis Marathon initiative.

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Solana’s biggest NFT marketplace, Magic Eden, has followed in the footsteps of OpenSea in releasing code that allows creators to enforce royalties on new NFT collections.

The move appears to be a change of heart from its previously stated stance on creator fees. Earlier in October, the marketplace announced a switch to an optional royalty model — a move that meant those buying or selling NFTs on its marketplace could choose what percentage cut of the sale is returned to the original artist.

The decision was controversial and sparked criticism from a plethora of collections. At the time, co-founder Zhuoxun “Zedd” Yin likened the decision to a case of prisoner’s dilemma.

Dubbed the Open Creator Protocol (OCP), the new tool is built on top of Solana’s SPL managed-token standard. From Dec. 2, creators launching new collections who opt into using the protocol will be able to protect their royalties and use customizable token transferability, the company said. 

The 411

OCP will allow creators to ban marketplaces that have not enforced royalties on their collections. For new collections that don’t adopt the code, royalties will remain optional on Magic Eden.

Customizable transferability could include a collection’s tokens remaining untradable before the mint closes, or limitations on tradability by time, the total number of trades, or metadata text. Creators are now able to gamify the rules of their own collection’s trading behavior, Magic Eden said. At the same time, the marketplace is rolling out bulk transfers on the platform — so collectors can move their NFTs freely for collections using the Open Creator Protocol. 

The code will enable a dynamic feature, which specifies a relationship between an NFT’s sale price and royalty amount via a linear price curve. This will potentially reduce the nominal value of royalties for buyers who pay a higher price for the NFT.

“The Solana community has been waiting for solutions to NFT royalties,” Jack Lu, CEO and co-founder of Magic Eden said in a statement. “We have been in active conversations with multiple ecosystem partners to identify solutions for creators in a timely manner.” 

On launch day, there will be a free mint, which will supply a couple of thousand gift boxes — some of which will contain prizes that include a free MacBook Air laptop, whitelist access to Tomorrowland’s December mint (The Symbol of Love and Unity), access to Genopet’s game, and free NFTs from Degen Trash Panda and Liberty Square. 

The context

As the debate on creator remuneration in web3 has reached a fever pitch, Magic Eden follows marketplaces such as OpenSea in attempting to find ways to enforce creator royalties on-chain. The code in OpenSea’s smart contract restricts NFT sales to marketplaces that enforce creator fees. In the coming months, the company will produce additional tools serving a similar purpose and solicit community feedback on the developments. 

Meanwhile, other marketplaces have moved to different models. Stepn’s new NFT marketplace Mooar launched with a subscription-based service for trading. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Apple blocked the latest version of Coinbase Wallet until a feature that allows users to send NFTs over iOS is disabled, according to the exchange.

“Apple’s claim is that the gas fees required to send NFTs need to be paid through their In-App Purchase system, so that they can collect 30% of the gas fee,” Coinbase said in a tweet thread. 

If Apple does intend to take 30% of gas fees related to any blockchain transactions it would need to integrate a Web3 interface on its operating system, which iOS currently does not appear to support.

“For anyone who understands how NFTs and blockchains work, this is clearly not possible,” Coinbase said. “Apple’s proprietary In-App Purchase system does not support crypto so we couldn’t comply even if we tried.”

“This is akin to Apple trying to take a cut of fees for every email that gets sent over open Internet protocols,” the company continued, adding that users who hold NFT wallets on an iPhone will now have a more difficult time transferring that digital asset.

MetaMask developer and former Apple software engineer Dan Finlay publicly condemned Apple’s decision, likening it to an Orwelian foil.

“Oh I’ll absolutely stand in solidarity here, I assume MM and every other wallet is next. I’m ready to dump the Apple ecosystem. The 30% tax is an abuse of monopoly. @tim_cook has donned the Big Brother screen,” he tweeted.

Apple and Coinbase did not immediately respond to requests for comment from The Block.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

While November has been a rough month for a lot of people with the fall of FTX reverberating around the crypto space, most NFT and gaming firms have so far been spared the brunt of the fallout.

Amid the chaos, NFT marketplaces are continuing to battle it out for market share. Blur has surpassed X2Y2 in terms of transactions and sales volume, while Magic Eden’s gamble on removing royalties appears to have paid off.

We also take a look at some of the data behind NFT collections that hit the headlines last month. What happened when the hype around Art Gobblers died down? And does it pay to be doxxed? Read on.

But first, more on FTX

Of the mint revenues of the top 45 NFT projects, 15.4% of the funds were sent to FTX, according to The Block research. Of that, 94.9% belonged to Yuga Labs and was earned from the Mutant Ape Yacht Club Launch. The remainder came from the Taiwanese king of pop Jay Chou’s PhantaBear collection.

Yuga Labs denied it had funds on FTX on Nov. 9. Two days later it said that it had used FTX US in the past but had moved 19,700 ETH off the exchange on the same day it denied having funds on it.

Star Atlas had less luck, with about half of its treasury now stuck on FTX. It said it’s looking for investors, but it’s also launched four NFT mints for this month, selling ships for its as-yet-unreleased game at heavily discounted prices.

In terms of investments, about 25% of Alameda and FTX Venture’s portfolio is tied to NFTs and gaming.

One firm in which it invested, Solana-based Metaplex, has since laid off some staff but said it was not a direct result of the FTX collapse. 

Frank gets doxxed, DeGods floor price rises

Frank, founder of Dust Labs and its NFT collections DeGods, t00bs and y00ts, was doxxed at the end of November. In real life, he’s 23-year-old Rohun Vora, a former student at UCLA and former fellow at Y-Combinator. He said he’s decided that he likes the name Frank and is going to keep it.

The revelations led to several Solana NFT influencers doxxing themselves in solidarity, and it seems to have had a positive impact on the floor prices of the collections.

DeGods’ floor price (above) rose from 311.69SOL ($4,159) on Nov. 29 to 382.69SOL ($5,414) by Dec. 1, according to data from Solana Floor.

Companies file fewer metaverse trademark applications

As of the end of October, companies filed 4,997 metaverse-related U.S. trademark applications. The number already dwarfs 2021’s total of 1,890 for the entire year.

But things are decelerating. Application filings peaked in March with 773, according to trademark lawyer Mike Kondoudis. For October, the number was less than half that at just 334.

The totals aren’t yet tallied up for November, but among those Kondoudis has flagged as submitting applications are Nike, Mastercard, BMW, Home Deport, the University of Alabama, Enterprise and Rolex.

Meta filed four new trademark applications claiming plans for virtual and augmented reality hardware on Nov. 4.

Men may run the metaverse, but women spend more time in it

Around 41% of women had used a primary metaverse platform or participated in a digital world for more than a year compared to 34% of men, data from McKinsey reveal. A further 35% of women surveyed spend more than three hours a week in the metaverse versus 29% of men.

Women are more likely to engage in hybrid use cases in the metaverse, traversing both physical and digital worlds to take part in activities such as gaming, fitness, education, live events, and shopping via AR/VR technologies.

“By contrast, men are using the metaverse to participate in purely digital experiences such as gaming, trading non-fungible tokens (NFTs), and attending social events,” the company said.

But while female executives were also more likely to implement multiple metaverse initiatives at their companies, metaverse companies themselves are still dominated by men.

Of all the companies that the study looked at, namely members of the Metaverse Standards Forum and the Open Metaverse Alliance for Web3 (OMA3), only 8-10% are led by women.

That’s roughly the same as the percentage of Fortune 500 companies run by women, McKinsey said.

Blur flips X2Y2 in transaction numbers and sales volume 

Newcomer NFT aggregator Blur has taken the number two spot on the Ethereum NFT marketplace leagues tables from slightly older newcomer X2Y2. In November, Blur had $131.19m in sales volumes compared to $119.64m at X2Y2.

The dethroned X2Y2 held the spot for the past seven months, with only OpenSea claiming more transactions and a higher sales volume on Ethereum.

Does supporting royalties cost you market share? (Yes)

Despite attempts by other markets to lure away its customers with low-or-no transaction fees, removing royalties and tempting customers away with airdrops, OpenSea remains the most popular platform for NFTs on Ethereum.

It has generated over $1 billion in royalties for creators from Jan 1. and stood by the royalty system even as other prominent marketplaces said they had no choice but to make them optional.

But its market share has shrunk substantially in the face of its aggressive new competitors.

At the start of this year, it had 95.9% of the Ethereum NFT market. By the end of November, that had fallen to under 45%.

On Solana, Magic Eden faced a similar dilemma of shrinking market share earlier this year. But it made royalties optional, even while singing their praises and pledging to find ways to enforce them.

But the switch to optional royalties on its own platform had the desired effect, and it has clawed back market share from competitors. Since Oct.14, it has expanded its share from just under 80% to 93%.

Remembering the hype that was Art Gobblers

You may have already forgotten, but Art Gobblers NFTs were all the rage at the start of November. After launching on Oct. 31, they reached a floor price of 13 ETH within 12 hours, peaking on Nov.2 at 20.4 ETH, according to OpenSea. A few days later, the floor price was down to around 4 ETH, where it’s sat ever since.

Designed by Rick and Morty co-creator Justin Roiland, Art Gobblers faced criticism for handpicking individuals for initial allowlist spots for its mint. Others claimed influencers promoted the project without disclosing their arrangements with the Art Gobblers team. Proponents of Art Gobblers have denied this.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Several web3 companies are now making it easier to use their services through a new partnership with fintech titan Stripe.

Solana-based NFT platform Magic Eden, blockchain music streaming platform Audius and wallet provider Argent are among the first partners, according to a blog post from Stripe. 

The API integration created by Stripe means that customers will now be able to make fiat purchases of crypto directly on the platforms and will no longer have to navigate offsite to transfer assets into crypto before making purchases.

The onramp is a customizable widget that developers can embed directly into their decentralized exchange, NFT platform, wallet or dApp, according the blog. Stripe handles all the KYC, payments, fraud and compliance, removing the need to integrate multiple third-party services. 

Stripe’s push into web3

Stripe formally announced this service in March of this year. It was the startup’s first big move into providing services to the crypto industry having only previously announced plans to form a crypto-focused engineering team in October 2021.

Stripe’s CEO and co-founder Patrick Collison previously said he’s “very skeptical of anyone who’s adamant that crypto’s gonna work” but also acknowledged that companies should try new things, even if they have a good chance of failing. 

The startup, which is valued at $95 billion, most recently raised $600 million in a Series H funding round in May of last year.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

After crypto exchange behemoth FTX imploded in a matter of days, the chair of the Commodities Futures Trading Commission walked a fine line in continuing his call for the same legislation Sam Bankman-Fried lobbied for as a means to prevent future failures. 

“We lacked the authority to comprehensively regulate the digital commodity market,” Behnam said. “To prevent this from happening again, we must be provided appropriate authority by Congress.”

CFTC Chair Rostin Behnam appeared as the sole witness at the first Senate hearing on the FTX catastrophe, sitting in the spotlight to continue to lobby for the legislation he’s pushed for following the collapse and contagion it has sent through the digital asset industry. 

FTX applied to the CFTC last year to serve as a derivatives clearing organization while permitting direct margin trading. The firm pulled its application last month. Behnam said he met with FTX officials 10 times to discuss its application and was personally involved in the process due to the sensitivity of the issue. 

“It’s really important to understand that by law, by statute, we needed to address and respond to the application. We did not have flexibility to put it on the side of the desk or disregard it. We had to respond to it,” Behnam said. 

Keeping crypto close 

Behnam argued that digital assets will exist even if the U.S. government were to decide to push the entire industry offshore. 

“I don’t think we can regulate this out of existence,” he said. “Even if we try to regulate it [to] outside the borders of this country, it would still exist elsewhere, and that risk would inevitably come back to us through retail or institutional [investors].”

More crypto firms might move to the United States if policymakers establish a federal framework around the market, Behnam argued, with more structure around the entire industry, including the enforcement of audited financial disclosures that would help safeguard against the mixing of customer funds with proprietary ones. 

That is a core argument in favor of the legislation from the most senior members of the Senate Agriculture Committee that Behnam appeared before on Thursday. Sen. Debbie Stabenow, D-Mich., and ranking Republican Sen. John Boozman of Arkansas, co-authors of the legislation Behnam wants, have pledged to move forward on the bill. 

“At best, these events uncovered an alarming lack of internal controls and egregious governance failures. At worst, Sam Bankman-Fried and his inner circle lied to and stole from over 1 million customers,” Stabenow said.

Boozman echoed the sentiment. 

“I remain committed to advancing a final version of the bill that will allow for the creation of safeguards the market desperately needs,” said the Arkansas Republican.

Filling the gaps

Behnam also spoke positively about the legislation, which proponents of decentralized finance oppose.

Without new authority for the CFTC, Behnam repeated a point he has stressed in the past, saying “there will remain gaps in a federal regulatory framework.” He pointed to issues of conflicts of interest at FTX, along with allegations of commingling customer funds, the failure to keep sufficient records, and a lack of risk controls. 

“The DCCPA does address these issues and would have prohibited those actions from occurring at FTX,” Behnam said. 

The CFTC boss also pushed back on the perception that his agency is more lenient than the Securities and Exchange Commission, and emphasized that he would continue to work with the SEC if the legislation becomes law. A draft of the bill obtained by The Block, before FTX’s collapse, would keep the SEC as the authority over whether digital assets would be determined to be securities or commodities — with only the latter falling under CFTC jurisdiction.

SEC Chair Gary Gensler has said that most digital assets, potentially including ether, fall under the definition of a security, while also implying that the DCCPA could complicate his agency’s enforcement role. 

“If individuals took a harder look at our record,” Behnam said. “They would understand we’re the farthest thing from a light-touch regulator. We’re one of the strongest, most respected regulators in the world.”

“We need to bring these principles into this market to protect customers,” Behnam added. 

The CFTC chair noted that his agency is coordinating with the SEC on an investigation into FTX. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Galaxy’s CEO Mike Novogratz thinks Sam Bankman-Fried is “delusional” and will spend time in jail.

After watching the former FTX CEO’s live interview with the New York Times on Wednesday, Novogratz alleged that Bankman-Fried is “just spewing more lies.”

“It was delusional, let’s be really clear,” Novogratz told Andrew Ross Sorkin on CNBC. “Sam is delusional about what happened and his culpability in it.”

Novogratz said that the ramifications of the FTX collapse would spread beyond crypto to all markets in general. He also said he didn’t think that Bankman-Fried had acted alone.   

“You don’t pull this off with one person,” he said. “I’m not saying he even planned this all like a criminal mastermind. What they did was criminal and they need to be prosecuted for it.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Compound community is set to vote to increase the supply cap for wrapped ether (WETH) in the Comet market as the current limit is soon to be reached.

Comet, or Compound III, is the third version of the DeFi lending protocol. Launched in August, it is the first iteration of the platform to go multi-chain with support for EVM-compatible networks.

The Compound vote is based on a recent proposal filed by Paul J. Lei, protocol program manager at DeFi risk manager Gauntlet. Lei’s proposal called for a 100% increase in the WETH supply cap on the Comet USDC market.

Compound III launched with a supply limit of 75,000 WETH ($97 million) on the Comet USDC version 3 market. Data from the Comet dashboard shows the supply cap is only 14 WETH ($18,000) away from reaching the limit. If Lei’s proposal passes, the limit will be increased to 150,000 WETH ($194 million).

Compound Finance founder Robert Leshner said that the community has already discussed taking such a step. According to Leshner, there appears to be “widespread support” for increasing the WETH supply cap as a means of increasing the growth of the Comet USDC market.

Supply caps are important for DeFi lending protocols as they determine the amount of a token that users can supply as collateral to obtain loans. DeFi lending platforms use supply caps on collateral assets to guard against price manipulation attacks that can see malicious actors can target tokens with inadequate liquidity profiles to launch sophisticated attacks on DeFi lending pools.

DeFi lenders like Compound and Aave have recently taken steps to limit their exposure to these attack vectors by either suspending the use of some tokens as collateral or significantly reducing their supply caps.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Sam Bankman-Fried claimed that he didn’t spend time doing any risk management at FTX in yet another interview following the exchange’s collapse.

The now disgraced FTX co-founder struggled at times to answer questions from ABC News’ George Stephanopoulos during a TV interview filmed in the Bahamas. Asked what he would say in court regarding allegations around the misuse of client money, he paused before replying. ”I did not know there was any improper use of customer funds.”

Asked by Stephanopoulos about his claim to be an expert of risk management, Bankman-Fried replied. ”I wasn’t even trying, like, I wasn’t spending any time or effort trying to manage risk on FTX.”

”I don’t know what to say, like, what happened, happened,” he added. Bankman-Fried made similar comments about lack of diligence around risk management during an interview at a New York Times conference yesterday. 

The sit down with ABC continued a theme of rambling Twitter threads, media interviews and messages exchanged with reporters that has marked Bankman-Fried’s unorthodox approach to public relations since his firm’s collapse. Bankman-Fried has unusually courted publicity in the aftermath, repeatedly apologizing for what happened. The public admittances will likely make it easier for prosecutors to build a case against him, legal experts told The Block last month.

Despite Bankman-Fried’s post-collapse press tour, some questions remain about the lead-up and aftermath of the collapse of his business empire. The 30-year-old has also been inconsistent in his answers, for example, telling Andrew Ross Sorkin on Wednesday that he first knew there was a problem on November 6. However, his now deleted Tweets from November 7 said ”FTX is fine. Assets are fine.”

When explaining how FTX collapsed, he repeated comments made to New York Magazine that blamed a huge client margin position that got liquidated leaving a massive hole in the balance sheet. That client was Alameda Research, the trading firm he also owned a controlling stake in, he told the magazine, adding, “The effective position was billions of dollars bigger than it appeared to be.”

He also denied earlier media reports of drug use and polyamorous relationships by FTX staff. He had a six-month relationship with Alameda Research CEO Caroline Ellison, Bankman-Fried told ABC.

With assistance from Lucy Harley-McKeown

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Cryptocurrency exchange volumes jumped in November from the previous month as the collapse of FTX roiled markets, with decentralized platforms seeing an increase of 93%.

Centralized (CEX) exchange volumes, which include platforms like Binance and Coinbase, rose by 24% to $673 billion, up from $543 billion in October, according to The Block’s data. Decentralized (DEX) exchanges, excluding layer 2’s, saw a substantially bigger increase, with volume doubling to $65 billion from $34 billion.

The Block Research’s Lars Hoffman attributed the increases to the “collapse of FTX and subsequent de-risking from CEX’s to on-chain.” Crypto holders are likely losing faith in centralized exchanges and moving to decentralized exchanges where they self-custody their keys.

Curve, an exchange liquidity pool on Ethereum, saw an increase of 371% in volume during the month.

November marked a recovery for crypto exchange volumes, which reached an almost two-year low in October. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.