[Daily] NFTs are securities now?

Good morning! Welcome to The Daily Moon. BlackRock is going contra. The investment firm has launched an exchange-traded fund that focuses on metaverse-first companies. Apple, Meta, Nvidia, and Roblox are on the list. Guess no lessons learnt from Meta’s bleeding metaverse project.

As of Thursday, 8PM IST

The markets recovered even as rate hike worries continue. Bitcoin was slightly higher as investors started to buy and hold. Ethereum went up as market participants didn't sell abruptly after the FOMC minutes release. Nasdaq rose on brisk buying. Back home, Sensex and Nifty ended lower as investor sentiments stayed bearish.

ETH Whales Go Underwater

ETH whales decided to cash in. Ever since Ethereum crossed $1,700, there's been a rush to sell. Addresses holding over 1,000 ETH have reached a one-month low.

A pressure to sellA technical metric called MVRV shows whether HODLers are, erm, holding on to profits or losses. A value above 1 means that ETH tokens are trading at a profit, while a figure below 1 indicates losses. Ethereum’s MVRV reached a nine-month-high of 1.25 which signalled to investors that it was time to sell. Regular investors, however, have turned HODLers. This is how a revolution begins.

Validators are interested tooThere is a ~4% increase in the number of Ethereum validators on the network over the past 30 days. This makes sense ahead of the Shanghai update, because it’ll allow users to unstake their tokens soon after.

While we are on validators, new data suggests that just 0.04% of ETH validators have been slashed since 2020. Validators are “slashed” or removed from the network when they violate rules of the proof of stake consensus. A portion of the staked Ether is forfeited.

NFTs Are Securities?

If you go by a US court judgement, that is what it is. A Dapper Labs’ NFT project called “Top Shot” has been classified as securities.

What happened?Top Shots are NFTs of popular clips from the NBA. In 2021, a few Top Shots’ buyers filed a suit against Dapper Labs. They alleged that the company violated securities law by selling unregistered collectibles. The bone of contention was the use of Dapper’s FLOW tokens for the NFT transactions. Interestingly, in this particular case, it wasn’t the SEC that raised concerns but the customers.

A can of worms The judgement presumably states that NFTs have to be registered with the SEC prior to sale. If that is interpreted across the board, it will open the floodgates for a series of lawsuits against NFTs.

ICYMI Speaking of regulation, the Canadian securities regulator is not in favour of algorithmic stablecoins. These tokens will have to be backed by actual reserves.

The Polygon Outage That Never Happened

Wednesday caused some panic in the Polygon community. The network seemed to be down for about two hours. Chaos ensued and investors asked what happened. Polygon says there was no outage. It was Polygonscan that caused the problem.

Polygonscan?Polygonscan allows users to “explore and search the Polygon blockchain for transactions, addresses, tokens, prices and other activities”. It stopped updating Polygon blocks and transactions for a while. It wasn’t really clear what caused this.

FYI Kanani is the Polygon co-founder.

Furious fingersCrypto Twitter was quick to outrage, especially Solana advocates. Finding receipts like this one:

There was also an attempt to tie this to Polygon’s announcement of cutting 20% of its workforce. 🤷

Spotify Wants To Tokenize Music

Who is up next to get on the Web3 bandwagon? Spotify. It’s launching token-enabled playlists.

Wtf does that mean?NFT holders will be able to connect their wallets and listen to curated music. There are also, of course, multiple partnerships. For now, it's partnering with four Web3, metaverse and gaming communities. This is going to be available initially on Android in the US, UK, Germany, Australia and New Zealand.

Ongoing experimentsThis isn’t the first time Spotify is toying with NFTs. In May 2022, it allowed artists to promote NFTs on their profiles. It is calling this recent partnership a part of its ongoing experiments to test new technologies and features.

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