NFTs = loyalty cards on crack
GM, we take the latest Web3 news and translate it into plain old English - so you can stay up to date, without your eyes glazing over.
In today’s edition:
NFTs are about to become loyalty cards (on crack)
'Crypto College' is a thing, and it's kind of genius
RESOURCE: Twelve examples of Decentralized Apps (dApps) learn in ~10:30
Beanie Babies, LUNA, and the no good, very bad, 3AC collapse
Terms used (click for translation):
NFTs, Web3, Blockchain, Hodlers, Staking
NFTs are about to become loyalty cards (on crack)
Wowee, this gets us excited!
Imagine if Nike were to offer a loyalty card that offered you more perks, the more products you bought.
Buy a few items and get 10% off your next order. Come back a few months later and get a limited edition tee. Shop loyally for 5 years and cut the line at the next sneaker drop.
Ok, ok, this concept isn't new. Loyalty cards have existed for decades.
But what if there was a global market that tracked the rarity and real-time value of this loyalty card?
And what if there were a place where you could sell your loyalty card, and its accrued points, at a profit?
NFTs fit this description to a tee.
On Wednesday, the e-commerce giant, Shopify, announced they will soon be allowing brands to add 'token gating' to their online stores.
Meaning, customers will be able to go to a brand's website, show that they hold their NFT (or 'digital loyalty card') and access whatever exclusive perks the brand can dream up.
Here's how the 'value flywheel' might take effect:
The greater the perks -> the more folks want the NFTs -> the stronger the brand community becomes -> the more the NFTs are worth -> the more value is returned to the customer for their loyalty.
It's an AWESOME concept, and one that's about to become a reality for any brand with a $29 per month Shopify subscription.
Oh, and an added bi-product of this new functionality?
Quicker adoption of Web3 technology.
Very cool.
'Crypto College' is a thing, and it's kind of genius
As a toddler, you don’t learn the theory of how to walk; you just keep trying until you no longer fall over.
Your younger self may have been onto something there - and the University of Cincinnati (UC), agrees.
UC is introducing two new Web3 programs, that let students skip the theory and jump straight into practice.
Their aim?
“To allow students to practice and participate in the process of trading crypto and working directly with blockchain technology.”
They've even set up the Kautz-Uible Cryptoeconomics Lab which has its own cryptocurrency mining rig.
And while similar labs already exist at MIT and Stanford - those schools are really hard to get into.
Here’s why we think this is a kind of genius:
For one, it’s great marketing.
UC doesn’t have quite the same pull as MIT and Stanford.
Pitching themselves as a forward-thinking, high tech regional college? That's a big brain move right there.
Secondly - and we're not sure if you caught this, but - we’re pretty bullish on Web3.
If blockchain technology is here to stay, college students are not only going to be the ones working for blockchain companies in the years to come, but the ones building them.
'Learning by doing' lets students make mistakes when the stakes are low - meaning, by the time they enter the job market, they'll have years of practical experience under their belt.
Smart!
Resource of the day
Twelve examples of Decentralized Apps (dApps)
Learn in ~10:30
Beanie Babies, LUNA, and the no good, very bad, 3AC collapse
In the late 90's, Beanie Babies were like gold.
They sold (retail) for $5 a pop, but would fetch insane prices on the secondary market.
Some rarer designs re-sold for $6000+.
(1200X return on investment? Not bad).
Some folks thought they would hold their value, so they locked them up in display cabinets and played the waiting game.
Unfortunately for these hodlers, that value didn't keep through The Great Beanie Baby Crash of 1999 (real thing, not a joke).
And if you're wondering where we're going with this, it's here:
Three Arrows Capital (3AC), a crypto hedge fund, put the same faith in Terra Luna, that mom and pop collectors put into Beanie Babies, circa '99.
They bought a bunch of Luna tokens, locked them up (earning ~19% interest on their holdings) and waited for the price to increase. Which it did!
...until it didn't.
When Terra Luna collapsed, it brought 3AC - who had a good chunk of their $10B in funds, locked in Luna staking accounts at the time - down with it.
Here's where it gets a little wild...
As the news broke that 3AC was about to go belly up, the team:
Ghosted any investors asking to take their money out.
Started quietly selling as much crypto as they could, in an attempt to service their outstanding debts.
Went mysteriously quiet on social media.
But, as we now know, it wasn't enough. The fund collapsed.
So how do (seemingly) intelligent investors, like 3AC, misread potential market risks like this?
First up: very few people saw the Luna crash coming, and 3AC were no exception.
Second: 3AC had bought into the 'super cycle' thesis.
Here's what that last bit means:
Every four years, Bitcoin mining rewards are cut in half, which has historically triggered a bull run, followed by a harsh crash ~12 months later.
The super cycle thesis assumes that, as crypto becomes more broadly adopted, prices will become less volatile and the 'big moves up' will no longer be met with such a harsh crash.
The theory will (probably) come true eventually, but, to quote the folks at Bitcoinist:
"When dealing with a volatile market such as the cryptocurrency market, risk management, prudent planning, and wariness cannot be overemphasized."
And such prudence tends to go out the window when you're convinced the market is going to remain stable long term.
...then all of a sudden, you're stuck holding a bunch of worthless Beanie Babies Luna.
(With no way of regaining your initial investment).
Yikes!
Your Daily Dose of Web3
Coinbase to shut down Coinbase Pro to merge trading services
Avalanche Bridge launches native Bitcoin support; AVAX surges 7.4%
Citibank, Swiss crypto firm partner to develop Bitcoin custody services
Solana Labs launches mobile platform and reveals Android Smartphone
Alright, that’s it for this week!
Love to the family,