July 8, 2022
Illustration: Christopher T. Fong/Protocol
Good morning, and welcome to Protocol Fintech. This Friday: the real faces of the crypto crash, Upstart’s bad quarter and CZ’s Voyager shade.
Trend collision dynamics should have predicted this: There is a “buy now, pay later” service for NFTs. Teller is really more like old-school layaway since the NFT is stuck in an escrow wallet until it’s paid off. It’s on the blockchain, though!— Owen Thomas (email | twitter)
The crypto crash is rattling a once hard-charging industry and its investors. But the meltdown could also cause harm to consumers who lost their savings when the crypto market went into a tailspin. The common view of crypto is a realm dominated by young white bros. But the people who could get hurt are actually far more diverse.
Crypto crashed right as it was going mainstream. Crypto holders come from all walks of life and they own it because they see it as an investment, according to a July 2022 report from Morning Consult.
In the U.S., crypto appeals to the banked and the superbanked. Despite crypto’s promise to bank the unbanked, most crypto holders actually use a bank or two or more, according to the report.
Crypto owners “remain relatively confident,” the report said. Despite “market volatility” and “economic turmoil,” crypto owners appear to be holding their tokens and even planning to buy more. This could change “if inflation gives way to a recession and a ‘crypto winter.’” That may be another indicator of how mainstream crypto consumers diverge from the elite: Some industry leaders have said crypto winter is already here.— the Fintech team (email)
You're either real-time or out of time: Applications like this power our daily lives, and if they can’t access massive amounts of data stored in a database as well as stream data “in motion” instantaneously, you — and millions of customers — won’t have these in-the-moment experiences.
On Protocol: Aave announced Thursday that it’s launching a stablecoin, GHO, despite the general mistrust around stablecoins following the crash of UST. While the stablecoin is collateral-backed and pegged to the U.S. dollar, the collateral is made up of other crypto assets.
Upstart revealed its second-quarter results early, and it’s ugly.Unaudited results showed revenue of $228 million, 25% below the upper range of its $305 million guidance. The loan marketplace said it was “funding constrained” and cited the impact of rising interest rates.
Also on Protocol: KeyFi is suing Celsius in another hit for the troubled crypto lender, alleging that it was not paid for its work and that Celsius mismanaged customer funds. Also, that Celsius is a “Ponzi scheme.” You know, that.
Reddit is launching a Collectibles Avatar marketplace. Hosted on the Polygon blockchain, the market will let Reddit users purchase NFTs to use as profile pictures. Buyers must pay in U.S. dollars — hey, no gas fees! — and the NFTs cannot be sold on a secondary market.
The U.S. Treasury Department announced a proposed framework for digital asset regulation. The first document to come out of Biden’s executive order, the framework largely addresses global cooperation in digital asset regulation, as well as mitigating financial risks and illicit finance.
Ken Griffin spent $54 million to fight a tax increase, and it worked. The Citadel CEO launched a campaign for voters to vote against a tax increase for him and other rich residents of Illinois. IRS data shows that the campaign cost him less than a tax raise would have. He also gave away $130 million to Chicago institutions in June as he moved his firm to Miami.
Maybe the problem with PayPal is that it’s prioritizing diligence over delight? “PayPal is an American financial services company that exists to update its agreements,” anonymous account @pourmecoffee tweeted.
Genesis CEO Michael Moro took to Twitter to address the crypto lender’s exposure to Three Arrows Capital, confirming that the “large counterparty who failed to meet a margin call” last month was indeed 3AC, adding that parent company Digital Currency Group will assume some liability.
Binance CEO Changpeng Zhao claims he doesn’t like to criticize his peers, which sounds like something we’ve heard from contestants on “RuPaul’s Drag Race” right before they start reading each other to filth. Anyway, here’s CZ on Sam Bankman-Fried’s Alameda deal with Voyager Digital, which almost immediately went south after Voyager filed for bankruptcy. “I try not to comment on our competitors or industry peers. But I would never do that type of deal … I would just not invest in that company, I'll keep my money,” he said in a podcast.
Here’s a deeper dive on those Morning Consult crypto-consumer numbers. They show that there’s some truth to the “crypto bro” stereotype: Most crypto owners are young, white and male, a Morning Consult survey found. But they are also more diverse and less wealthy than stereotypes might suggest.
You're either real-time or out of time: Many of the challenges facing our world today are increasingly complex and critical, such as climate change, talent shortages and supply chain disruptions. Solving these problems requires analyzing large data sets, quickly. Additionally, organizations must use data to predict future issues and then determine the most effective solution.
Thanks for reading — see you Monday!