This week is a difficult one for the ecosystem. FTX, one of the world’s crypto exchanges, went from a $32 billion company to bankruptcy in a matter of days. This event threatens the credibility of the ecosystem as a whole: seeing one of the most important players collapse out of the blue seems to confirm the fear that crypto is fundamentally unserious, unpredictable, and volatile. Combined with mass layoffs at Meta, the FTX fiasco is part of a devastating news cycle for web3 and the Metaverse. To rebuild trust, powerful players will need to prove that these failures are not inherent to the sector, and re-affirm the first-principles value of these new technologies. Yet some positive developments are happening behind the scenes: museums are increasingly integrating digital art, and JP Morgan has executed its first transaction on the blockchain. While the short-term future of crypto looks bleak, its long-term resilience is in the hands of its most fervent believers.
November 14, 2022
Metaverse Highlights: Week of November 14, 2022
- Sam Bankman-Fried’s cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy protection in the U.S. Bankman-Fried has also stepped down as CEO and has been succeeded by John J. Ray III.
- Approximately 130 additional affiliated companies are part of the proceedings, including Alameda Research, Bankman-Fried’s crypto trading firm, and FTX.us, the company’s U.S. subsidiary.
- In the 23-page bankruptcy filing, FTX indicates it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, as well as liabilities in the range of $10 billion to $50 billion. By comparison, Lehman had more than $600 billion in assets and Enron had $60 billion.
- In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company.
New York Times, FTX Collapse Threatens Crypto Ecosystem
- The FTX collapse has sent shudders through the entire crypto industry. The uncertainty around the future of FTX has become an existential threat to young crypto businesses as they struggle to convince Wall Street, regulators and mainstream consumers that they are trustworthy.
- As news spread of FTX’s collapse, crypto markets took a battering, with Bitcoin and Ether both dropping more than 20 percent in value since Tuesday.
- “This episode highlights the vulnerability of the entire crypto edifice,” said Eswar Prasad, a Cornell University economics professor. “Even large and apparently financially solid institutions turn out to have fragile and shaky foundations that crumble at the least hint of trouble.”
- Many of crypto’s foundational myths have already been punctured this year, and FTX’s rapid fall suggests that no company in this freewheeling, loosely regulated industry is safe from extreme volatility.
- Meta is now going through growing pains. The company announced it has laid off 11,000 employees, amounting to 13% of its workforce, and will impose a hiring freeze that will last through the first quarter of 2023, which was detailed in a letter from Zuckerberg to employees.
- In the letter, Zuckerberg admitted that the company’s decision to rapidly expand its business during the COVID-19 pandemic did not play out as anticipated, with online commerce reverting to pre-pandemic levels. Stiffer competition from rival social media platforms, notably Tik-Tok, and a decline in advertising put a dent in company revenue, leading to Meta posting its second quarterly revenue decline and dwindling profits.
- The letter also indicates that Zuckerberg is not going to do an about-face on moving heavily into the metaverse. But it does open speculation on how rapidly Meta can reap the financial benefits of its long-term growth strategy to maintain its market position.
- Multinational banking firm JPMorgan has successfully executed its first-ever cross-border transaction using decentralized finance (DeFi) on a public blockchain.
- The trade was facilitated by the Monetary Authority of Singapore’s (MAS) Project Guardian on Nov. 2 — which was established as part of a pilot program to “explore potential decentralized finance (DeFi) applications in wholesale funding markets.”
- In other words, the pilot was another step into examining how traditional financial institutions can use tokenized assets and DeFi protocols to conduct financial transactions, among other use cases.
- The trade was executed on Ethereum layer-2 network Polygon, using a modified version of the Aave protocol’s smart contract code.
New York Times, Even as NFTs Plummet, Digital Artists Find Museums Are Calling
- The Museum of Modern Art’s lobby will glow this winter, not by the twinkling lights of the holiday season but the swirling datascapes of a digital artist whose popularity rose during the speculative frenzy around NFTs.
- “Being open to new technology is part of our responsibility,” said Antonelli, the museum’s senior curator for the department of architecture and design, who is known for guiding MoMA’s acquisitions of historical video games like Pac-Man and the @ symbol. “We are never jumping on new technologies, but rather realizing that we need to keep pace with the world.”
- Until recently, most museums had spurned digital art collections in favor of the paintings and sculptures that still dominate their galleries. But after budgets tightened and attendance plateaued during the coronavirus pandemic, the industry has started to embrace artistic experiments involving blockchain, virtual reality and artificial intelligence programs.
- Economic Daily, a state-run newspaper in China, has dedicated a whole article to warning Chinese citizens about putting significant amounts of funds into Metaverse investments.
- The article, issued on Nov. 10, states: “The Metaverse industry sounds promising, but it may not fit every region. Be wary of feverishly following suit and betting big on it while detached from reality.”
- The article explained that the current Metaverse hype can be compared to the hype that new green energies saw not so long ago. At that time, many investments were dedicated to this area, creating a surplus of energy where it was not needed.
- The Chinese government has sent mixed signals when it comes to the Metaverse and its development in mainland China. While some publications like the People’s Daily, the official newspaper of the Communist Party, have been critical of the sector, advising people to “stay rational in understanding the current Metaverse mania,” at a local level, several cities have been active in presenting plans to integrate this virtual world in development processes.
- Luxury Swiss watchmaker, Hublot has made its metaverse debut. The LVMH owned brand has unveiled its ‘Hublot Loves Football Metaverse Stadium’ to celebrate soccer’s 2022 FIFA World Cup in Qatar which it sponsors as official timekeeper.
- The virtual arena, in the photorealistic spatial.io metaverse, has been designed by architectural practice MEIS – behind IRL sports and entertainment venues like the Crypto.com stadium, Everton FC and Roma Stadiums. It is inspired by the silhouette of Hublot’s recently launched Big Bang e-watch and is the largest venue built in the Spatial metaverse to date.
- “At Hublot, innovation is the driving force behind everything we do,” said Hublot CEO Ricardo Guadalupe via email. “We’ve decided to explore this new space because we feel that it’s the right moment and that it holds a lot of potential for our brand.”
- In the real world, the construction of the World Cup infrastructure in Qatar has been marred by extreme temperatures and controversies. In the Metaverse, however, a digital replica of Lusail Stadium in Doha has none of that baggage — and the virtual property can be raffled off as a prize for a lucky soccer fan.
- While some superfans may fly to Qatar and shell out for a ticket to cheer alongside 80,000 other people during a game, Metaverse-inclined fans can head to a virtual airport, “fly” to Doha, visit a digital version of the stadium and enter nearby shops in the FIFA World Cup-branded village to buy digital merchandise such as scarves and flags, which they can later use to adorn their virtual houses to express their team spirit.
- That digital journey is thanks to Upland, a metaverse platform based in Mountain View, California, which is partnering with FIFA to provide a blockchain-based metaverse experience during the tournament.
- What does a strip of abandoned land, a former Czech politician and virtual reality (VR) have in common? The answer is the self-declared Balkan micronation of Liberland.
- First founded in 2015, it’s poised to further its ambitions of statehood with the development of a brand new metaverse.
- Liberland will be the first country to be built and inhabited in the virtual world first in anticipation of its realisation in real life.
- What’s more, world-renowned architectural firm, Zaha Hadid Architects, have been working on a vision for a virtual city that will provide a home for the swelling ranks of the country’s citizens.
- If you've ever wanted to perform on The Voice but are too nervous to audition in real life, the 2022 Decentraland Metaverse Music Festival has you covered.
- For the unfamiliar, the Decentraland Metaverse Music Festival—happening November 10-13, 2022—is a virtual music festival that launched in October 2021 with Artists like Deadmau5, Paris Hilton, and 3LAU taking the stage. And this year, The Voice is launching an experience at Decentraland that will make you the star.
- If you attend the festival, you'll have the opportunity to participate in this virtual Voice experience. In a nutshell, it's a Voice-themed game where fans stand in front of Metaverse Coaches and collect “notes” to the beat of a song in order to get a chair turn — and win a Voice collectible.
- Employee onboarding, training and communication. Working from home brings challenges and opportunities both to keeping long-term associates feeling part of a community and making new talents feel welcome.
- Test new designs and expand markets. The metaverse is a place to explore creativity and have fun, offering great potential for brand marketing, advertising, sales and a way to enter new markets.
- Non-fungible tokens. Taking full advantage of the metaverse will require corporations to become savvy on non-fungible tokens (NFTs) because that is the currency that works in the virtual worlds.
- Inclusion for all in an aging world. With all the talk of gaming, computers, technology and new applications, let's not just say this is only for the young. The metaverse is increasingly being designed precisely with an emphasis on older adults who don't have the same ability to navigate digitally.
- Democratizing technology and protecting freedom of speech. The inclusion of those who are aging is an example of how technology promotes democratization. The metaverse is a place with real meaning for all of us. Like the internet, it is owned by all.