On the evening of Jan 25, longtime non-fungible token (NFT) collectors, developers, and believers witnessed a bizarre, but likely validating piece of blockchain history: legendary collector-whale Pranksy was interviewed on the Fox 5 New York evening news during a segment on NBA Topshot, an NFT-backed collectible highlights project.
NFTs on the nightly news is the culmination of a variety of intersecting trends. For one, it’s a testament to the developmental progress the NFT space has made since CryptoKitties, the last blockchain-based collectibles project to attract a hint of public attention in 2017. The interfaces are sleeker, transactions are easier, the prices often much, much higher — and in Topshot, a use case long thought as niche or secondary is gaining real mainstream traction due to an unusually snug product-market fit.
For Pranksy, however, it marks a celebratory lap for a collector whose rise to prominence and success is possibly among the most remarkable in crypto: on the back of a lone initial deposit of $600, Pranksy now claims to command a NFT collection worth upwards of $9 million, with almost $7 million in Topshot highlights alone.
“I like to think of myself as the working man’s whale,” the 29-year game developer told Cointelegraph in an interview. “I’ve never been backed by large amounts of FIAT, and I didn’t buy Ethereum early.”
It’s a multi-million dollar achievement that itself demonstrates the growth of the NFT space, one which has been on a remarkable tear as of late. To get a sense for how both NFTs and Pranksy came this far — and where everything is going — we sat down the semi-anonymous collector and some of his colleagues to discuss whales in illiquid markets, recognizing successful new products, and the future of digital collecting.
Pranksy making the news through his NBA Topshot collection has a pleasing touch of synchronicity to it: the collector first entered NFT markets because of another project from Topshot developers Dapper Labs, CryptoKitties.
“So I started NFTs in 2017 after getting a tip off from a friend (My now business partner Carlini8) that ‘digital cat pics’ were going viral and selling for loads of money. I took a look at the site, installed Metamask, deposited $600-$800 in ETH and never looked back.”
In just a few weeks, his deposit grew to upwards of $30,000 as CryptoKitty mania took hold and clogged up Ethereum for days on end.
From there, Pranksy branched out to other projects, turning “flipping” into a second source of income aside from game development. His niche was investing heavily into projects at launch, commanding a huge supply of the circulating NFTs and growing “notorious for providing a lot of volume and liquidity to a project.”
Everyday we get closer to this meme becoming reality https://t.co/jgyxn1mvpc pic.twitter.com/xdUJy2jWj7
— fiends.world (@FiendsWorld) September 28, 2020
“Pranked is a market expert and volume churner at the highest level,” said fellow NFT collector and developer Nate Hart. “People hate on flippers because of the downward pressure they put on a market, but the reality is they’re essential since a project with no volume is often a dead project.”
Nate and Pranksy have long been friends and rivals, and in 2020 engaged in a semi-public race to 1000 Ethereum in profits from NFT trades (a race that Hart made sure to specify that he’d won). Pranksy’s cornering of the Topshot market, however, has put him back in the lead.
While Pranksy’s early and aggressive accumulation of NBA Topshot Moments was a tactic he’d developed over years of practice, it wasn’t always an easy journey.
“2018-20 was a hell of a grind, scraping around for an ETH here or there, when ETH was $200,” Pranksy said.
His Opensea and Ethereum address functionally serve as histories of the NFT landscape from 2017-present, with hundreds of projects and millions of NFTs represented in his hoard.
Pranksy’s rise to whale status coincides with a growing number of major traders and collectives looking to replicate his strategies — and possibly do so with more sinister intentions.
In the traditional art world, individuals can amass and effectively control corners of the market, such as the Mugrabi family with Andy Warhol work. Given the sudden interest from retail investors, the same practices could be applied to NFTs with relatively minimal capital.
Just last week, the half billion dollar whale wallet turn Twitter personality 0x_b1 placed a 600 ETH bid for a rare CryptoPunk, the original generative art NFT project, only to be outbid by a group of buyers including FlamingoDAO, a DAO which focuses on NFT investments. The Punk now has a social-media managed personality, a marketing innovation first brought to the fore by Axia, another wildly high-priced NFT.
I look good. Thanks @beeple! https://t.co/Ysz5u1u1wO
— The Alien | Cryptopunk #2890 (@citizen2890) January 25, 2021
Pranksy himself just joined FlamingoDAO in a transaction where he traded 60 ETH worth of Topshot moments for 1% of the DAO’s holdings, and will serve as an advisor on future purchases. He admitted that DAOs or major buyers controlling markets posed “a risk,” but said that FlamingoDO was his first participation in a DAO and that he couldn’t comment further.
Hart also acknowledged that there might be some market manipulation at play, but so far the effect has been minimal.
“I think this already happens to some extent, but just because the average price of something is high doesn’t necessarily mean anyone new will pay it…. I can’t really think of a specific time where a very large holder has came back and completely rekt a market either, so the sellers seem to understand their own positions here,” he said.
Artist Kevin Abosch, who often uses blockchain as a medium, told Cointelegraph that he’s frequently approached by both real-world and NFT funds cooking up schemes, and warned that new entrants to the market should be wary of marketing and hype.
“There are thousands of self-proclaimed ‘crypto-artists’ or ‘NFT-artists’ who see the headlines of big sales on the NFT auction platforms and understandably think there’s a gold-rush. It’s important to recognize that there’s an engineered vacuum being created and inside the vacuum it’s easy to make it seem like there are a few hyper-successful artists in the space and that a sophisticated market is emerging,” said Abosch.
“While I’m obviously deeply involved in the space, I have to tune out all the money-talk. At some point it’s vulgar. Art is for lovers and the art market is for hustlers,” he added.
While it might never again generate the kind of returns that propelled Pranksy to riches, he still believes the NFT market has plenty of gas in the tank. The key is that news reports such as Monday’s — which often strike some grizzled veterans as an obvious top signal — could lead to sustained engagement that brings “new people and collectors to the space.”
It’s not an absurd notion, either. Yesterday, Topshot eclipsed the single-day all-time secondary market activity record.
1/ Dapper Does It Again.
In the last 24 hours, NBA Top Shot has eclipsed the CryptoKitties all-time secondary market volume.https://t.co/aR4eoMGeS8 pic.twitter.com/ouNzgewbIP
— Piers Kicks (@pierskicks) January 26, 2021
Hart agrees that Topshot could be a sustained hit.
“I think if you look at traditional NFTs, you essentially have baseball card collecting without the baseball. I remember collecting cards with my friends when I was a kid and while I always enjoyed tracking their values in the Beckett price guide and keeping up with a mental figure of my cardfolio, I never actually cared about selling them. I think Top Shot is becoming that trojan horse that allows real fans and collectors to collect something that they actually want,” he said.
For his part, Pranksy is angling to capture a new round of popular interest in NFTs with his latest business venture, NFT Boxes. Similar to subscription boxes in the real world, NFT Boxes will deliver to users a monthly “loot box” containing curated NFT collections.
There might still be room for successful solo traders and developers as well, however… so long as they put in the work.
“My advice to developers and collectors is to do their research! Don’t suddenly drop a new project or invest heavily into something without first spending some time in discord and on social media […] Nothing worse than buying items on opensea blind or buying a cheap license and releasing a collectible card game NFT of it.”
1inch announces expansion to Binance Smart Chain, plans to run BSC node
As part of a wider exodus, the highest-profile Ethereum-native decentralized finance (DeFi) project yet has announced an expansion to Binance Smart Chain.
In a press release today, the 1inch team revealed that they’ve ported 10 million 1INCH tokens (currently worth over $40 million dollars) to BSC. The tokens will be used as a liquidity bridge between Ethereum and BSC, and will seed the 1inch ecosystem on BSC, including the 1inch Aggregation Protocol and the 1inch Liquidity Protocol.
“As we at 1inch are always on the lookout for the hottest DeFi projects, the addition of BSC-based DEXes to our aggregation protocol came as a natural step,” reads the announcement.
In a written interview with Cointelegraph, 1inch co-founder Sergey Kunz cited rising popularity and lower gas costs as the inspiration for the expansion.
“Currently, we consider BSC to be an alternative solution to the Ethereum mainnet in terms of lowering gas costs for interacting with smart contracts,” he said. “As gas price stays too high we see a lot of projects, tokens and users coming to BSC, and this is the right moment for the 1inch to expand to other blockchains.”
BSC has been the target of criticism from some members of the Ethereum development community who accuse the layer-1 of centralization. Binance documents report that the network is run by 21 validator nodes, all of whom are anonymous.
When asked about these criticisms, Kunz dismissed them, and indicated that the 1inch team would be taking an active role in the network:
“We don’t know for sure if the BSC is centralized as we don’t know who are the validators of their network. But 1inch plans to run its own validator on BSC.”
Kunz also notes that the 1inch team “didn’t receive any grants or technical assistance in terms of this integration from Binance,” and that the team doesn’t “know for sure” if the bridge used to port 1INCH tokens to BSC was fully decentralized.
The team also said that they did not consult with community governance on the expansion.
“Since nothing changed for 1inch users within the Ethereum network, we don’t think it’s necessary to ask any one about such initiatives from our side. It’s just an expansion of the 1inch Network which is beneficial for all participants,” said Anton Bulkov of the 1inch team.
On the 1inch governance forums, a team member notes that “1inch DAO is a collective of 1inch stakeholders – individuals interested in making the 1inch Network permissionless and decentralized and, therefore, efficient and secure for all users.” This purview ostensibly includes “fundamental changes that could be suggested and accepted via the voting process on the Forum.”
1inch joins a growing number of projects who have either announced expansions to BSC or are planning them. This comes on the heels of Binance freezing withdrawals on ETH, a move that some interpreted as an attack on the rival chain.
Blockchain soccer gaming startup Sorare raises $50M
Sorare, a major blockchain-based soccer gaming platform, has raised $50 million from high-profile investors backing major companies like Twitter, Instagram and Discord
The fresh Series A round brings Sorare’s total funding to $60 million, the company told Cointelegraph Thursday.
The funding round was led by Benchmark, an investment giant famous for funding companies like Twitter, Uber and Snap. Accel Partners was another lead investor, known for backing companies like Facebook and Spotify. The round also included some additional investment from investors like Reddit co-founder Alexis Ohanian, VaynerMedia CEO Gary Vaynerchuk, and Barcelona striker Antoine Griezmann.
With the new funding, Sorare is planning to continue growing its ecosystem, including launching a mobile application and onboarding the top global 20 football leagues. “We’re designing an experience where fans can celebrate, share, and live football moments at a deeper connection. We’re making fantasy football a reality,” Sorare said.
Founded in 2018, Sorare provides a digital collectibles platform based on the Ethereum blockchain. With non-fungible tokens, the platform offers a collective fantasy football experience allowing players to manage their players and earn prizes.
Gerard Piqué, strategic advisor at Sorare, explained that the platform aims to meet the significant shift to online and digital fan experiences:
“As world football has shifted from local supporters to global fanbases, football fans are looking for new ways to be connected to the game, the players and other fans.”
Blockchain and cryptocurrency startups have been actively tapping the soccer industry in order to bring new ways of fan engagement using emerging technologies. Socios and Chiliz represent some of the best-known industry efforts, jointly providing blockchain fan tokens for popular global soccer clubs like FC Barcelona, Juventus and Paris Saint-Germain. Earlier this week, Polish Legia Warsaw became the latest soccer club to join Chiliz and Socios.
Ethereum exodus continues as Binance ‘helps,’ Feb 17–24.
The parabolic rise of the Binance Smart Chain has been all over the news this week, aided by a few seemingly unfriendly moves by the exchange itself.
It started on Friday, when Binance suddenly froze withdrawals of Ethereum-based assets for about one hour. Many interpreted it as a move against the blockchain and its ecosystem, given that the cited reason was “congestion issues” — something one hardly imagines is a problem for an exchange, unless they shoulder withdrawal costs for the user.
The day after, FTX started shaming Binance for excessive promotion of BSC on the exchange. Specifically, FTX was apparently “spending millions” in failed deposits that came over the Smart Chain but were meant for Ethereum. FTX’s accusation toward Binance, one of its investors, is that the exchange put BSC as the default option for withdrawing many ERC-20 assets, which caused a lot of failed deposits to FTX.
I can’t say I’ve ever noticed Binance Smart Chain being “the default option” for withdrawals. BSC is the first listed when you attempt to withdraw something like USDC, though it does not actually select the blockchain for you. Still, I can see how some newbies could get swindled by this. People overestimate the degree to which terms like “ERC-20” are known in the casual crypto community. Testing the withdrawal now, Binance forces you to go through a quiz where you confirm you know what you’re doing by selecting BSC. I have no idea when this was introduced, but it’s not impossible that it’s a response to FTX’s statements.
Overall though, there’s nothing inherently wrong with one company using its products to promote another of its products. From the official responses it seems that the Ethereum congestion incident won’t happen again because they “upgraded the systems.”
Cheap tricks would never be able to undermine Ethereum without there being an underlying fundamental weakness. And I think we’ve all had enough with Ethereum gas fees. I tried a non-Ethereum DeFi product recently, and it felt so good to pay just a few cents for a complete interaction.
Binance Smart Chain is already processing more transactions than Ethereum and has over 5 million unique wallets. Ethereum, with its much longer history, is currently sitting at 140 million wallets in total.
Ironically, Ethereum fans should secretly want the bull market to end right now. The longer it goes on, the more gas fees will remain high, and the more people will want to migrate away and seed other environments.
Second largest liquidation day in DeFi history
Speaking of the end of the bull market, a massive slide in crypto markets triggered some $24 million in liquidations on Tuesday, the second highest loss in DeFi history. It would’ve been the highest if not for that infamous day in November when Compound thought Dai was worth $1.3.
The firesale was triggered by nothing in particular, though I suspect that rising bond yields are having their effect on the riskiest of assets on Wall Street, of which Bitcoin is the quintessential representative. And then Bitcoin dragged the rest of crypto with it.
I don’t normally talk about price because I’m not a financial advisor or even a successful trader. But I am feeling a lot of fundamental and sentimental indicators of a coming correction, ranging from a wavering stock market to, well, the strength of Tuesday’s dump.
To top it all off, my non-crypto feeds are being invaded by crypto stuff, which is never a good sign. I certainly hope that I’m misinterpreting what is actually unprecedented adoption and acceptance, but let’s face it — it’s all about price for now, while fundamentals are still lagging.
With layer two platforms and new blockchains coming online, we may get something useful out of crypto and DeFi soon. But everything could happen before we get there. Be especially careful right now and, most importantly, don’t get liquidated.
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