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Meta CEO Mark Zuckerberg hasn’t been shy when it comes to explaining how costly his march into the metaverse is going to be.

“We expect Reality Labs expenses will increase meaningfully again in 2023,” Zuckerberg told analysts during the company’s last earnings call in October. Meta reported the same day that its Reality Labs, the division tasked with fulfilling the CEO’s metaverse dreams, had lost $3.7 billion during the third quarter of 2022. That’s expected to jump to $4.4 billion for fourth quarter earnings, which will be announced Wednesday after the close.

Zuckerberg’s desire to be a pivotal player in the yet-to-be-realized immersive digital world — envisioned as a mix of virtual, augmented and mixed reality — are expected to result in a full-year loss of $13.8 billion for Reality Labs alone, according to an average of analysts’ estimates compiled by FactSet.

Although Zuckerberg has been relatively forthright and transparent about the tremendous cost involved in investing in his dream to bring Meta into the metaverse, when the company reports its 2022 fourth quarter earnings, its almost guaranteed that many shareholders will continue to feel concerned. Meta has lost more than $600 billion in value since the company’s market capitalization began declining in late 2021.

“Meta’s original outlook for 2023 operating expenses, Reality Labs losses and [capital expenditure] shared on the third quarter 2022 earnings call contributed to a perception that the company’s management was unaligned with the interests of shareholders,” according to a report published a little over a month ago by media analysis firm MoffettNathanson. Led by analyst Michael Nathanson, the firm has predicted Reality Labs would lose $13 billion in 2022, better than the average estimate.

Headsets and headcounts

Meta’s advertising revenue — its largest cash generator — continues to pull in tens of billions of dollars thanks primarily to the social media platforms it operates, Facebook and Instagram. After posting $114.9 billion in advertising revenue in 2021, analysts predict that Meta will deliver $113.1 billion for last year. But due to Reality Labs losses, the company’s operating income is expected to fall by more than $16 billion for  2022, according to FactSet data. That compares to operating income of nearly $47 billion for the previous year.

Beyond the balance sheet, Meta watchers will most likely be curious to see what, if anything, Zuckerberg has to say about virtual-reality headset sales. Towards the end of last year, Meta released a new high model, the Meta Quest Pro, priced at about $1,500. Overall VR headset sales in the U.S. declined slightly in 2022, according to NPD Group.

Shareholders and analysts will also likely be curious to hear any updates on headcount. Like nearly all major technology companies, Meta has been shedding employees in an effort to trim costs. In November, Meta said it was laying off more than 11,000 workers.

© 2023 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.

Explanations for why The Sandbox and Decentraland’s native tokens more than doubled during the beginning of this year may be elusive, but the rebound is certainly welcome news to anyone who bought in at the bottom of the market.

Out of the two metaverse platforms where people can buy and develop virtual land, Decentraland’s MANA token performed the best, leaping to a shade under $0.80 from a Jan. 1 price of about $0.30, according to CoinGecko. That’s still way off MANA’s all-time high of $5.12, which it achieved during the particularly frothy bull run that capped off 2021.

For its part, The Sandbox token SAND hit a January high of $0.84, climbing from $0.38 at the start of the year, according to CoinGecko. SAND also peaked in late 2021, eclipsing $7.00.

The price gains give no clear indication whether the crypto winter is even close to over, or another bull run is lurking around the corner. But like the price gains witnessed by bitcoin and ethereum — both of which are up more than 30% this month — a spot of positivity is definitely welcome news for a digital-assets industry that has been pummeled by months of scandal and value deterioration.

January price performance and volume for Decentraland’s MANA token.

“The market has been very optimistic recently with the lead of large caps like bitcoin and ethereum,” said analyst Steven Zheng of The Block Research. “Typically when large caps lead for a prolonged period of time, traders start to look for newer narratives to trade around.”

Trading volume for metaverse tokens also jumped considerably according to CoinGecko data. Daily trading for MANA hovered at around $50 million for about the first week of January, soaring as high as a $1.1 billion mid-month. SAND volumes exceeded $795 million after beginning January at about $95 million.

Zheng said it’s difficult to pinpoint precisely why The Sandbox and Decentraland’s tokens spiked in January. “It seems like the metaverse narrative is the new flavor of recent weeks with this SAND and MANA pump,” he said.

January price performance and volume for The Sandbox’s SAND token.

© 2023 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.

Bitcoin is no stranger to NFTs, but it’s not been much of a friend to them either. That could be all changing as a new kind of Bitcoin-based NFTs called Ordinals emerge.

The first blockchain-based NFTs were made in 2014 on Counterparty, a protocol built on Bitcoin. The biggest collections that came out of this were Spells of Genesis in 2015 and Rare Pepes in 2016.

When Counterparty was taking off, it led to a debate over whether this was a good use of the Bitcoin blockchain. “Using full nodes as dumb data storage terminals is simply abusing an all-volunteer network resource,” Jeff Garzik, then a Bitcoin core developer, said at the time. 

The core issue is the use of what’s called OP_RETURN, a function that can be used to store arbitrary data in the blockchain. Bitcoin had a limit that meant you could effectively only store 40 bytes of data using this function, but in 2016 it was increased to 80 bytes.

The 2017 upgrade Segwit made it 75% cheaper to store data with this function, while the 2021 upgrade Taproot made it around 10% cheaper and easier to store this data in single transactions (as opposed to spreading it among multiple ones), according to Bitcoin core developer Peter Todd.

As a result, anyone can now store as much data as they like with this function as long as they’re willing to pay for it and the total block size remains under 4MB.

Introducing Ordinals

That’s where Ordinals comes in. It’s still basically a bit of a workaround, but it provides a new way to store NFTs on the Bitcoin blockchain now that it’s easier and cheaper to store larger amounts of data.

There are two things that stand out when it comes to Ordinals NFTs. First, they are comprised entirely of on-chain data. This means the actual image for the NFT itself is stored on the blockchain, instead of simply linking to some image that’s stored on an external website. This matches only a select few NFTs on Ethereum, as the vast majority link to external sites.

Swedish researcher (and former Arcane Assets CIO) Eric Wall estimates that storing fully on-chain NFTs is now seven times cheaper on Bitcoin than on Ethereum.

The second standout is that NFTs are connected with individual satoshis. That’s different from Ethereum, where NFTs are more natively supported and each one has its own token.

It can get complicated, though. Bitcoins are fungible, meaning each one can be used interchangeably and the only way to separate them is through the complex system of transaction inputs and outputs. Ordinals basically set out to find a way to make fungible Bitcoin non-fungible, and to do that, it decided on a shared logic with the project giving every satoshi a number based on the order in which it was mined. It uses that numbering system, and a few other details, to maintain continuity for the NFTs.

None of this is natively supported by Bitcoin software, and if Ordinals NFT holders aren’t careful, they might accidentally spend their NFTs on transaction fees, as Dennis Porto, general partner at Huat Ventures, noted in a blog post.

What are people using Ordinals for?

With a new tool for creating NFTs on Bitcoin, enthusiasts have already started getting creative with all the possibilities. 

Someone paid about $2 a pop to mint a copy of the 100 Ether Rocks — one of the oldest Ethereum NFT projects — on Bitcoin. As Porto noted, each individual NFT has to be minted in its own transaction for its own fee, unlike Ethereum where many NFTs can be minted in one go. You can even see the larger transactions filling up the block they’re contained in.

Wall — and an engineer called Rijndael — took this one step further by mining one of the Trump NFT images onto Bitcoin. Rijndael then transferred it onto a satscard, a device that lets you store and transport Bitcoin like it was a gift card. He noted that the satoshi associated with the NFT was mined in 2009, potentially giving it a bonus attribute.

Other Ordinals NFTs include the Nyan Cat meme, pictures of AI-generated Bitcoin clocks, Rare Pepes cards, Bored Apes and the original dogecoin meme. But so far, these are all unofficial.

© 2023 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.

© 2023 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.

dYdX, the largest crypto derivatives trading exchange, recorded $466.3 billion in cumulative transaction volume and generated $137.8 million in fee revenue in 2022, according to a dYdX Foundation report.

The platform’s cumulative volume rose 140% year-over-year (YoY) compared to $322 billion in 2021, per official data.

Trading volumes on dYdX trended upward even though the total value of tokens locked on the platform fell in 2022 — dropping to about $400 million after peaking at 1.1 billion in October 2021. This suggests that dYdX’s users remained active and continued to use the platform.

Despite strong fundamentals, the inflation of dYdX native tokens had emerged as a source of concern among speculators. This stemmed from the team’s plan to release 150 million tokens, valued at more than $280 million, to investors and employees in February 2023.

This would have doubled the current supply, with more tokens to be unlocked in the following months. Last week, the dYdX team decided to delay its token unlocks until December. The token price recently rose to $2.70 in January from $1.10 at the start of the month.

dYdX currently exists on Ethereum Layer 2 network StarkEx, but soon plans to transition to its own blockchain within the Cosmos ecosystem.

© 2023 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.

Crypto prices remained mostly flat after the market opened on Tuesday, with Dogecoin rising significantly by 8.1%, outperforming the top 10 coins.

Bitcoin fell 0.3% to $23,117 around 9:50 a.m. EST, according to TradingView data.

BTCUSD chart by TradingView

Ether also declined 0.3% to around $1,583. BNB rose 1.1%, while Cardano’s ADA fell 0.7%. Polygon’s MATIC was up 1.7% in the past 24 hours after falling yesterday.

Dog-themed memecoins both rose, with Dogecoin and shiba inu up 8.1% and 0.5%, respectively. 

Crypto stocks

Silvergate shares rose 4.5% to around $13 by 10:00 a.m., according to Nasdaq data, rising alongside most other crypto stocks.

Jack Dorsey’s Block rose 2.2% to trade around $82, while MicroStrategy increased 2.5%. Coinbase was also up, rising by 1%.

© 2023 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.

Leading Swiss crypto platform Bitcoin Suisse joined Liquid Collective to offer Ethereum liquid staking on its platform.

Its clients will be able to stake Ethereum through Liquid Collective and will also receive insurance coverage if slashing — which takes away ETH tokens from validators for bad actions — occurs.

“I think institutions and other enterprises will be watching early movers like Bitcoin Suisse carefully as investors evaluate how to put their ETH to work,” Alluvial’s chief growth officer Mara Schmiedt told The Block. “There’s a real need in the market for enterprise-grade solutions like Liquid Collective that make it easier to participate in liquid staking and provide comprehensive slashing coverage to all participants.”

The Liquid Staking Collective is an independent group of crypto teams that includes companies like Kraken, Coinbase Cloud and Alluvial. It is a decentralized protocol working to create standards for Ethereum liquidity staking. Joining the collective allows Bitcoin Suisse to use the collective’s liquid staking services, which gives back users their own LsETH token for their staked ETH.

Liquid staking allows users to stake ETH tokens and receive back a liquid and usable token. This is beneficial because yield is being earned while still letting users use their ETH for transactions, trades and other actions.

“Institutional and private clients are increasingly looking to participate in staking to earn network rewards,” said Bitcoin Suisse’s head of innovation Michael Gauckler.

© 2023 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.

Structured finance and administration platform Intain launched an Avalanche subnet for issuing and trading asset-backed securities on-chain.

The platform, IntainMarkets, is attempting to simplify the complex structure of financial instruments — making them more transparent, secure and cost-efficient, the company says. The current structured finance market involves several parties that all must communicate with and trust one another. The platform brings all these parties onto its platform and facilitates the tokenization and investment of assets without third party trust assumptions.

“Attempts by the blockchain industry thus far have focused on tokenization,” said founder and CEO of Intain Siddhartha. “Tokenization itself neither addresses the need of transparency nor efficiency.”

Intain said it chose to build its new platform on an Avalanche subnet, a blockchain built on top of the Avalanche network, because of its customizability. Intain needed to build a permissioned network that was also compliant with regulatory frameworks.

Subnets are separate blockchains from the main Avalanche network. The economics of Intain’s subnet are not dependent on the public Avalanche blockchain, meaning transactions and security are not dependent on Avalanche or other subnets. Validators, the network participants who validate transactions on a blockchain, will have to be verified U.S. residents.

Avalanche’s President of Business Development Jon Wu said Intain is the first structured finance platform attempting tokenization, issuance and investment facilitation in one platform. Avalanche’s business development focus is bringing traditional financial assets on-chain, he added.

© 2023 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.

Abu Dhabi-based Venom Ventures Fund is making a $5 million strategic investment in Layer 1 blockchain Everscale.

The investment will be made in stages based on progress and cooperation, according to a company release.

Everscale is one of Venom Ventures Fund’s first publicly announced investments. Earlier this month, the investment fund announced it had raised $1 billion to invest in web3 applications with a mandate to help foster the development of the web3 market in the United Arab Emirates (UAE).

“On the Venom Ventures side, our view is we will do from seed to Series, A, B, C to IPO,” said Peter Knez, Venom Ventures fund chairman, in a recent interview with The Block. “Restricting yourself by stage rather than by quality of opportunity, if you have the capital, doesn’t really make sense — if you can do the homework.”

Everscale is a blockchain that is powered by “an infinite sharding mechanism,” which effectively splits up the blockchain among those running the network — enabling it to adapt to workloads it is tasked with, the release said. Over the past two years, the blockchain has been working to expand its reach in Asia. The new funds will be used to expand its development team and projects.

Venom Ventures Fund is launched in partnership between an Abu Dhabi regulated Layer 1 blockchain, Venom Foundation, and Iceberg Capital, an investment firm. The strategic investment will enable the Everscale and Venom networks to work together. 

“For us, this is a strategic investment aimed at the technological development of projects and teams around technologies that we focus on and actively develop,” said Knez in the release. “In particular, we are talking about the Venom blockchain project and its ecosystem, which is planned to be launched soon and for which Everscale is a potential Layer 2 solution.”

© 2023 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 Kin Foundation has rolled out a solution called Kinetic that will allow developers to integrate Solana into their apps thus enabling them to introduce crypto use cases on their platforms, the foundation said on Tuesday.

Kinetic is an open-source middleware technology for Solana-based in-app integration. It includes both API and SDKs necessary for builders to deploy crypto integrations on their apps. The process will require minimal coding effort, the foundation said. This is to ensure that the software package is useful to both crypto-native and mainstream app developers. Kinetic achieves this by ensuring that implementation details associated with managing token transfers are relegated to the background.

The Kin Foundation’s new open-source software package comes with a wallet manager enabling apps to create wallets for their users. The wallets are non-custodial, meaning that owners retain their private keys. The announcement also stated that Kinetic’s software package is agile across the Solana technology stack. The software package is in line with modern token account creation standards but is also backward compatible with older standards.

As a Solana-based technology, Kinetic may also have to deal with network outages. This is because Solana has experienced numerous outages in the past. Kin Foundation’s Marc Rose, its head of marketing, said that Kinetic comes with a dashboard for developers to see how app transactions are performing. 

“Developers typically implement ways for transactions to fail gracefully so that the user experience is not meaningfully impacted,” Rose told The Block, adding, “Because Kinetic inherits Solana standards, and we return standard Solana errors (in the background), we could quickly incorporate future new solutions and continuous improvements as they become available from Solana.”

The Kin Foundation stated that apps developed on Kinetic are eligible for grants and rewards. App developers who use the software package can submit their platforms to the Kin Developer Portal. Those who win will be issued grants in the Foundation’s kin tokens.

© 2023 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.