NFT Roundup #7: Mike Tyson jumps into the NFT ring; No-code NFTs; NFT insider trading; NFT M&A activity; Solana crashes
Buy the rumor, sell the news
This is a curated newsletter, covering news stories about NFTs. The NFT market is moving rapidly, and this is an attempt to provide some means of keeping up with its developments. Your curator is Dave Friedman.
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Washed up boxer Mike Tyson is getting into the NFT game, and, as with John Cena, it doesn’t sound like it’s going too well:
Mike Tyson has a massive pull in the boxing world and beyond. But as a fan, I’d like to see him throw his efforts into an alternative business than this one.
You’re basically buying a certificate that says you own something that is already in the public domain. It won’t be long until this craze, which is seriously bad for the environment into the bargain, gets completely wiped out.
The horrific situation is that those who paid millions for their NFTs face getting left with nothing.
It’s hard to tell from this article, which is from a boxing news web site, what exactly the objection to Mike Tyson-affiliated NFTs is, but if Tyson’s camp thinks he can merely throw anything into the NFT ring and expect to profit from it, he’ll be disappointed. It’s a competitive market, and mere celebrity, or washed up celebrity in his case, is no guarantee of demand for the product being offered.
Polygon, a sidechain to Ethereum, has partnered with Guardian Link:
The partnership aims to galvanize broader participation in the NFT sector by enabling creators to devise their own ‘branded’ NFT marketplaces and launches without prohibitive transaction fees or extensive code.
Guardian Link empowers brands and creators to easily publish, mint, preview, and manage their NFTs, and provides custom templates and pre-coded smart contracts for brands looking to launch from their own bespoke marketplaces. Users enjoy a range of advanced features, such as automate royalty payments and Guardian Link’s proprietary anti-counterfeiting measure, which automatically hunts down counterfeit NFT copies and informs creators.
This is of a piece with the broader software trend of building powerful no-code or low-code tools, meant to be used by non-technical people who want to build things without having to learn to code. Some no-code tools, like Airtable, have become very powerful, and have allowed thousands of companies to cheaply build sophisticated apps which require little or no custom code.
As impressive as this sounds, I’d note that NFTs use smart contracts to move money, assign ownership, and do a variety of other things for which security and reliability ought to be paramount. If the code is abstracted away in a neat little graphical interface, that’s great for the builder, but how would a buyer be able to audit the NFT’s smart contracts, or even look at its underlying code? Absent the ability to look at the code underlying an NFT, I’d be concerned that it was poorly coded or improperly secured.
There’s something amusing about an organization as traditional as the New York Society of CPAs reporting on NFTs:
A trading platform for non-fungible tokens (NFTs), a relatively new type of crypto asset, has been rocked by insider trading revelations involving a picture of aliens in a ramen shop, Bloomberg reported.
While the scheme involved a novel type of asset, the structure was pretty similar to any other insider trading scandal. An employee of OpenSea, a major platform for NFT auctions, bought the picture in question called Spectrum of a Ramenfication Theory, for a quarter of an Ethereum token, or just under $900. The sale took place in the wee morning hours, right before the same picture was scheduled to be featured on the site's front page. Once the item was featured, the same employee resold it 21 minutes later for a six-fold return.
The company confirmed that it was an employee, but declined to say which one. It called the news extremely disappointing, and said it would from now on ban workers from trading collections while they are featured, and further would prohibit them from using confidential information to buy or sell NFTs on any platform.
Now, this is not to say that what happened at OpenSea isn’t serious—it is. What is interesting to me is watching traditional, hidebound, and slow moving organizations, such as accountants’ professional organizations, contending with something as fast moving and innovative as NFTs. Conservative organizations, and the people who staff them and pay dues to them, will look at NFTs, and crypto more broadly, and see people playing fast and loose. I, on the other hand, see a world of innovation and creativity, occasionally marred by unethical, if not criminal, behavior. The sooner the unethical people are shunned by the crypto community, the better.
Animoca Brands builds blockchain games for major brands. They’ve acquired Bondly, a company that provides services to NFT creators:
The strategic investment in Bondly will position both companies to drive mass NFT adoption across Animoca Brands’ portfolio companies operating in gaming, sports, entertainment, collectibles, and other areas. Bondly’s proven technology -- including NFT swap protocol, marketplace, and cross-chain NFT minting and bridges -- will enable gamers to easily move NFT assets from one blockchain to another.
Yat Siu, the co-founder and chairman of Animoca Brands, commented: “Bondly has developed powerful tools to help onboard brands and individuals to the world of NFTs, and has built valuable relationships with many leading brands and artists. These products and relationships will be of great assistance to Animoca Brands and our portfolio companies, including the Launchpad Luna accelerator, as we drive the shift to the true digital ownership model made possible by NFTs.”
This kind of M&A makes sense, and we should expect to see more of it. Companies want to bring NFTs to market more quickly, for more clients, and given how fast the market is moving these days, acquiring companies that provide tools for creating NFTs is faster than building out the capabilities in house.
As with any nascent market, the NFT space has many hundreds of companies all vying for customers. I would expect a wave of consolidation over the next several years as the market shakes out, and dominant firms acquire weaker ones in order to consolidate their position in the market.
Solana, the highly scalable blockchain, which has garnered a lot of attention this summer, recently crashed due to a programming glitch. Barron’s reports that Solana’s SOL cryptocurrency crashed, as well:
The Solana (ticker: SOL) token was down more than 11% on Friday to $135 before recovering a bit to $143. It has been sliding for days and is off more than 30% from its all-time high of $215 reached on Sept 9.
The token’s core blockchain network suffered a 17-hour outage on Tuesday as it became overloaded with a spike in activity, which spiked to 400,000 transactions per second, or TPS, crashing the system. The spike arose partly due to a flood of transactions for a new social-networking protocol on the network, called Grape. That caused the network to freeze and created a backlog of transaction processing.
There’s not much to say here, other than that software development is complicated, blockchains are relatively new technology, and bugs are being worked out. I wouldn’t conclude that Solana, or blockchain technology, or any other blockchain is doomed to failure merely because of programming errors. I would conclude, however, that until a blockchain proves itself stable and reliable, mass adoption of it is unlikely.