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Christie's on Friday auctioned five art works that were created by entrepreneur Gary Vaynerchuk for his VeeFriends NFT collection.

The price tag? Just over $1.2 million.

"It feels like an out-of-body-experience," Vaynerchuk told CNBC. "I view myself as a very creative and artistic person, but this is way bigger than me. ... It represents a paradigm shift and the consumer is intrigued."

Whereas most NFTs auctioned by Christie's are NFT minted, or blockchain verified, these particular works are the original characters that were hand-drawn by Vaynerchuk himself.

The VeeFriends collection is comprised of 10,255 character nonfungible tokens available for purchase via the cryptocurrency ethereum. Each token includes a "smart contract" with metadata that Vaynerchuk can use to interact with its buyer. Token holders also will be given exclusive access to an annual business event called VeeCon for three years after the NFT's purchase. The first VeeCon will take place in Minneapolis in May.

Since launching the series earlier this year, the lowest listed price for one such token remains $50,000.

Vaynerchuk's NFT doodle called "Empathetic Elephant" fetched the highest price at Friday's auction, selling for $412,500. The lowest was called "Diamond Hands," and went for $162,500.

VIDEO3:5803:58Vayner NFT's Gary Vaynerchuk on the future of NFTsSquawk Box

NFTs are a type of digital asset created to track ownership of a virtual item using blockchain technology. Such unique items could be artwork or sports trading cards — a market that Vaynerchuk became familiar with as a teenager, peddling baseball cards for thousands of dollars every week.

"I grew up with collectibles, antiques and sports cards," Vaynerchuk said. "My mom and dad were into that stuff too, and they would have been intimidated even walking into Christie's two decades ago and now their son is selling stuff in it. ... It's the American dream."

The original VeeFriends artwork was featured along with the full set of Curio Cards and Sets 1-3 of Art Blocks Curated in Christie's Post-War to Present live auction in New York. The auction furthers Christie's foray into digital art sales, which have boomed in popularity this year along with a rise in the value of digital currencies like ether and bitcoin. Curio Cards, which is commonly viewed as the first digital art collectible on ethereum blockchain, fetched $1.2 million.

The market is growing rapidly, with some digital collectibles being sold for millions of dollars. In March, Christie's sold a NFT by the artist Beeple for more than $69.3 million.

VIDEO3:5603:56What are NFTs?CNBC ExplainsTVWATCH LIVEWATCH IN THE APPUP NEXT | ETListenTVWATCH LIVEWATCH IN THE APPUP NEXT | ETListen

For years, the blockchain industry has been defined by the excitement around smart contracts, or tamper-proof digital agreements that automatically execute when a certain condition is met. Typically associated with blockchains like Ethereum, smart contracts allow developers to build decentralized applications or “dApps” that recreate all sorts of products without the need for a rent-seeking middleman. However, over the last year, smart contracts have begun to evolve.

While developers are still building smart contracts on top of blockchains like Ethereum, they’ve also begun to combine them with an entirely new piece of technology: oracles. Oracles are entities that enable blockchains to interact with data and systems from the traditional world. 

As a result, “hybrid smart contracts”, or smart contracts that combine on-chain code with off-chain oracles, have taken the world by storm due to the enhanced functionality they enable for dApps. Today, hybrid smart contracts power several new use cases across dozens of industries, and the combination of blockchains like Ethereum and popular oracle networks like Chainlink are now securing digital agreements that handle tens of billions of dollars in user funds.

Here are five exciting ways in which the hybrid smart contract model is transforming the blockchain industry. 

1. Market data for DeFi

Today, the hybrid smart contract model forms the backbone of much of the decentralized finance (DeFi) industry, which seeks to recreate traditional financial products using decentralized architecture to honor financial terms. Hundreds of popular DeFi applications that let users borrow, lend, trade, save, and create assets now rely on an oracle network to fetch, validate, and deliver aggregated data from the real world. This data then determines how smart contracts execute and settle on blockchains. 

For DeFi giants like lending apps Aave and Compound, oracle networks can crowdsource accurate price data in a highly reliable and tamper-proof manner. Price data is the lifeblood of DeFi and is used to execute liquidations, determine lending rates, and verify limit orders by providing the fair market valuation of cryptocurrency, commodities, and more.

Hackers know this and often try to manipulate price data as a way of breaking a smart contract, causing great harm to DeFi apps that rely on low-quality data or insecure oracle mechanisms. To avoid this problem, many DeFi apps have turned to oracle networks that fetch data from premium data providers and that consist of nodes that are operated by professional DevOps teams.

The rise of the hybrid smart contract model has also been a boon for DeFi developers; instead of trying to figure out how to build infrastructure to securely source price data for their smart contracts, they can focus on their products and simply plug into an existing decentralized oracle network for their data when ready. In the same way that apps like Uber combine services like Twilio for messaging, Stripe for payments, and Google Maps for location, DeFi apps are being built by combining on-chain smart contract code with oracles for off-chain price data. 

Related: 4 Ways Your Small Business Can Benefit From Blockchain

2. Weather data for parametric insurance

Beyond DeFi, the hybrid smart contract model is being used to build all sorts of interesting applications that can change people’s lives for the better. Decentralized oracle networks now have the ability to deliver data onto blockchains about the weather from sources like the National Oceanic and Atmospheric Administration via Google Cloud or Accuweather, meaning projects like Arbol can build parametric insurance contracts that automatically pay out when a certain weather condition is hit. The ability to instantly receive an insurance payout when it rains too much or too little is incredibly important for farmers around the world, most of whom do not have access to trusted insurance products with timely payouts. With hybrid smart contracts, a farmer could hedge against weather risk with little more than a smartphone, ensuring just one bad weather season doesn’t cause bankruptcy. 

3. Satellite data for regenerative agriculture

Because hybrid smart contracts can interact with our real world, they can also be used to encourage or incentivize important behavior. For example, the Green World Campaign, in conjunction with Cornell University’s Initiative for Cryptocurrencies and Contracts (IC3), is building hybrid smart contracts that rely on satellite imagery to reward people who help regenerate agriculture on important tracts of land, such as through reforestation. When oracle networks report increased tree cover in satellite imagery, land stewards are paid out for their hard work transparently and fairly.

Related: Regulated Blockchain: A New Dawn in Technological Advancement

4. Dynamic NFTs

Non-Fungible Tokens (NFTs) are blockchain-based assets that represent a unique item. They have taken the world by storm in recent months, with both old and new artists entering this new space. While the first generation of NFTs was static in that they didn't change, the hybrid smart contract model could completely transform the next generation of this popular trend. 

By using oracle networks, smart contract developers can create “Dynamic NFTs”, or NFTs that can automatically change when something happens in our real world. For example, NBA Rookie of the Year Lamelo Ball is creating NFTs that alter based on his performance as a player and the progression of his career, introducing additional utility for holders. Sports cards that develop and change with the player or artwork augmented by the weather could make NFTs a much more meaningful experience for fan reward programs and digital “living” art.

5. Randomness in gaming

By their nature, blockchains cannot securely generate randomness. As a result, many blockchain applications that rely on random number generation are often hacked or exploited, reducing trust from users. This poses a massive problem when it comes to all sorts of gaming and NFT applications that rely on random outcomes, whether they're randomized prize pools, rare NFT drops, PvP battles, or even the creation of in-game items. With insecure or opaque randomness, the outcomes of blockchain games and the rarity of NFTs can be called into question.

To overcome this limitation, popular blockchain games, like Axie Infinity, PoolTogether, and EtherCards use oracles to generate random numbers backed by a cryptographic proof using a Verifiable Randomness Function (VRF). These results are brought onto the blockchain where it can be verified in a fully transparent manner and ensure smart contracts outcomes are random but provably fair. In this case, hybrid smart contracts enable blockchain games and NFTs to retain their trustworthiness throughout all elements of their technology stack and has led to innovative new use cases such as no-loss savings pools, battle royales, “living” or “dynamic” NFTs, and more.

While early blockchain-based smart contracts played a massive role in the creation of tokens and dApps, the next evolution involves smart contracts that can interact with everything outside the blockchain, connecting this new world to our existing world for a power synergistic value proposition potentially on par with the internet’s effect on computers. With more and more interesting datasets being piped onto blockchains through decentralized oracle networks, the case for widespread adoption of the hybrid smart contract model becomes more powerful every day. 

Related: 10 Entrepreneurs Who Are Showing Why Blockchain Is Here to Stay

As investors around the world feel their way through uncharted economic territory, institutional investors are slowly but surely starting to embrace cryptocurrency as an asset class to hold in their portfolios. But even now, they may have more exposure to the risk of crypto assets than they realize.

In a new commentary, MSCI researchers Nigel Fletcher, Siyu Liu, and Aura Toader said that cryptocurrencies are now a part of business for at least 52 companies covered by MSCI ESG Research.

“While Bitcoin remains a focus for many of these companies, the number of coins has exploded in recent years,” they said.

Most cryptocurrencies are only speculative investments and have little evident utility, but some have seen a certain degree of success as genuine currencies, while other have seen eye-watering growth. That growth, they said, has been a driver of both the rise of crypto-exposed companies, and efforts by established companies to gain cryptocurrency exposure.

Even equity investors with major misgivings about cryptocurrencies may experience “creeping” exposure without realizing it, they said. Newly listed crypto companies may get added to indexes, or current index constituencies might announce strategies that include bitcoin or other cryptocurrencies.

Investors stand to take on more ESG risk with that rising exposure, the researchers said. From an environmental standpoint, crypto mining lends itself to greenhouse-gas emissions from energy usage, as well as the generation of electronic waste. Evidence suggests Bitcoin, along with other proof-of-work cryptocurrencies, have a greater impact than others.

“Identifying where mining occurs and what energy sources are used is key to assessing a coin’s emissions profile,” the researchers said.

The social impact of cryptocurrency remains unclear, though there are certain risks arising that centre on investor protection and education, as well as transaction disputes for companies that accept cryptocurrencies as payment. Boards of crypto-exposed companies, the researchers added, may need to adapt existing risk management policies and practices to specific risks arising from cryptocurrencies.

“[T]he governance of cryptocurrencies may present some new challenges for boards and investors alike,” they said. “By design, most cryptocurrencies are decentralized; no single decision-making body oversees a cryptocurrency’s strategy and direction.”

Cryptocurrency-exposed companies can, however, develop informal governance frameworks from communities of software developers, crypto miners, and other actors in the space. Even though the issues they deliberate on are often technical, investors may want to consider engaging more actively with companies that have significant exposure by encouraging the development of cryptocurrency protocols, supporting decentralization within the cryptocurrency’s financial ecosystem, or engaging with other actors within the cryptocurrency’s governance framework.

“Regardless of whether a cryptocurrency-exposed company passively monitors or actively engages in the governance of cryptocurrencies, understanding how it approaches the intersection of its strategic plan and the long-term development of cryptocurrencies may help investors make more informed risk decisions,” the researchers said.

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Purpose Investments has announced the filing of a preliminary simplified prospectus with regulators for the world’s first actively managed cryptocurrency ETFs.

The proposed launches include the Purpose Crypto Opportunities ETF, Purpose Bitcoin Yield ETF, and Purpose Ether Yield ETF. This follows its launch of the world’s first Bitcoin ETF, the Purpose Bitcoin ETF, and the Purpose Ether ETF earlier this year.

“We see a lot of potential value in an active management approach to cryptocurrency investments, and we’re excited to take the first step globally to provide access to investors through public ETF vehicles,” says Vlad Tasevski, COO and head of product at Purpose Investments.

“We have been focused on democratizing access to cryptocurrency investing so that everyone can benefit from the potential of this emerging asset class. We will continue to take on a leadership role and ensure we’re providing investors with the highest quality and most practical solutions they need.”

To achieve its investment objectives the Purpose Crypto Opportunities ETF will invest primarily in publicly listed securities, including investment funds, and derivative instruments that provide exposure to digital assets.

According to a press release, Purpose Bitcoin Yield ETF seeks to provide unitholders with monthly distributions and long-term capital appreciation. The fund will achieve its investment objectives primarily by obtaining direct and/or indirect exposure to Bitcoin and by implementing a derivatives based strategy in respect of portfolio securities. The Ether ETF follows the same strategy but for Ether, naturally.

“The cryptocurrency markets are known for their volatility. We filed to launch these actively managed cryptocurrency ETFs to help investors benefit from active management by seasoned investment professionals who will be well-positioned to generate income, and manage risk and the volatility for investors,” says Greg Taylor, CIO of Purpose.

Purpose will act as manager of the cryptocurrency ETFs and portfolio manager for Purpose Bitcoin Yield ETF and Purpose Ether Yield ETF. Neuberger Berman Breton Hill ULC will act as the investment subadvisor for Purpose Crypto Opportunities ETF.

Purpose also announced it will be launching the Purpose DeFi Opportunities Fund as a privately offered fund focused on providing exposure to the growing opportunities in decentralized finance and the unique DeFi investment universe.

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While Bitcoin hits the $63,000 mark, altcoins like SHIB and UNI show bearish signs. However, TRX seemed to follow in the footsteps of the King coin and showing some signs of recovery on the charts. Nevertheless, all of these coins show weak directional price trends in the near term. SHIB

SHIB saw a 2.26% decrease over the last week and was trading at $0.00002802, showing possible signs of continued consolidation in the near term. The immediate resistance and support levels stood at $0.00002863 and $0.00002424, respectively. The 20-SMA level (not shown) was adjacent to the current trading price, suggesting that neither the bulls nor the bears depicted strong momentum. 

The RSI stood at the 53-mark after assuming a downward trajectory over the past few days. This reading demonstrated the short-term decreasing buying power. The Awesome Oscillator showed bearish tendencies by flashing red signal bars. The +DI Line (blue) marked a sharp decline below the 25-mark by converging with the ADX line (red). This confirmed the decreasing buying strength. However, the ADX line stood at 16.2158, suggesting a very weak price action trend.

Tron stood at $0.100 after noting a gain of nearly 1.28% over the last 24 hours and 4.44% over the week. The price seemed to be marching towards its immediate resistance level that stood at $0.103, demonstrating the increased buying strength in the market, while the support level stood at $0.087. The current trading price stood above its 20-SMA (not shown), affirming the price momentum in favor of buyers. 

The RSI witnessed a recent surge and stood at 57.95, suggesting a preference for the buyer’s market. MACD Line (blue) was just above the Signal line (orange) post-convergence, hinting at bullish price tendencies, confirmed by the green bars on its histogram. However, the Average Directional Index of the Directional Movement Index stood at 13.49, depicting a substantially weak directional trend. 

UNI recorded a 1.05% decrease over the last day and was trading at $25.67. The immediate resistance stood at $27.11, while the support stood at $20.28. The salient technical indicators pointed at bearish tendencies in the near term. 

The RSI was below the 50 mark after marking a substantial plunge from above the middle line. This reading suggested higher selling pressures. The Awesome oscillator was in agreement and reiterated the selling strength by flashing red signal bars. As the +DI Line (orange) surged towards the 25-mark, the bears seem to take control in the near term.

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Over the past 18 months, decentralized finance (defi) has become a thriving alternative to the legacy banking system – an open, trustless sector whose near $200bn total value locked rivals the GDP of many nation states. If ranked on this basis, defi currently sits just outside of the top 50. 

The decentralized applications (dApps) that spread like endless tentacles through the defi landscape allow anyone in the world to permissionlessly lend, borrow, save, trade, and more using digital assets – all they need is an internet connection and a compatible Web3 wallet. The days when one had to make an appointment with a bank manager to open an account or apply for a loan seem to belong to antiquity.

Much of the credit for defi’s meteoric rise goes to the Ethereum blockchain and its smart contracts, self-executing agreements that eliminate the need for a third party. If Ethereum represents the building where the transaction occurs, smart contracts are the name above the door: no smart contracts, no defi. For this reason, they are often described as the backbone of the industry. Yet, there’s a second and perhaps equally important piece of the infrastructure puzzle that makes defi possible: oracles.

Oracles: Why Blockchain Needs Them

Whether it’s lending markets, decentralized insurance products, liquidity aggregators, derivatives protocols, algorithmic stablecoins or something else, the vast majority of defi apps rely heavily on oracles, middleware entities that connect smart contracts to resources outside of their native blockchains. Without oracles, blockchains are like computers without internet access – valuable but largely impotent on the connected and interoperable front.

Often referred to as hybrid smart contracts, the combination of blockchains (immutable on-chain code) and oracles (secure off-chain data) creates a powerful synergy that sets the stage for advanced blockchain applications. Oracles enable formerly enclosed networks to consume reliable external information and interact with legacy systems, resulting in smart contracts that can react to real-world events and integrate with established business processes.

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Oracles are more than just data feeds that connect smart contract networks such as Ethereum to valuable off-chain information. As well as responsively fetching external data (typically up-to-date price feeds) and delivering it on-chain, they represent a filtration system that verifies the trustworthiness of such information – a critical role when external inputs trigger the automation of high-value transactions.

While Ethereum remains the market-leading defi blockchain, it has at times suffered from serious network congestion and skyrocketing gas fees to process transactions. When the cost of obtaining the most recent price data gets prohibitively high, low-cost alternatives – Binance Smart Chain (BSC), Algorand, Solana, etc., start to look more appealing.

The Great Oracle Arms Race

One person who recognizes the need for reform in oracle transaction processing is Ruitao Su, co-founder of Polkadot’s liquidity hub Acala.

In a recent appearance on the ZK Podcast, he explained: "When the Ethereum network is congested, oracle transactions are actually competing with all other transactions out there. So what we do with Acala is, we think oracle transactions are very important. It should be prioritized and it shouldn’t be liable for typical gas costs, because the oracle providers are actually contributing to the network. We should be incentivizing and rewarding them instead of charging them gas fees.

"So that's why we took this customizability and said, oracle transactions on Acala will be free. Once you get listed and you are an oracle contributor, you can submit price feeds on the blockchain for free."

Last month, the Acala platform integrated Chainlink, the most widely used decentralized oracle network (DON) in defi, to power the launch of its parachain. Chainlink’s decentralized network of oracle nodes aggregate multiple external price feeds and provide medianized reference prices to enable developers on Acala to build smart contracts around secure external data.

As with blockchains, competition between oracle providers is fierce: virtually all networks profess themselves to be the safest, most user-friendly, and easiest to integrate. If Ethereum leads the blockchain race, Chainlink is in pole position among oracles at present, with over $40 billion worth of smart contract value secured by its network.

"Tens of billions of dollars are secured by Chainlink across the leading defi, lending and gaming protocols, across multiple chains throughout the blockchain industry," says the protocol’s Co-Founder Sergey Nazarov, "In some chains that are focused on defi, Chainlink secures as much as 90 percent of their value locked within dApps."

A chain-agnostic platform with its own Top 20 native asset (LINK), Chainlink’s oracle infrastructure features a Sybil-resistant network of independent, orcale nodes that fetch data from a range of off-chain sources, before aggregating the information off-chain and delivering it on-chain to be consumed by smart contracts. LINK tokens, meanwhile, are used to pay node operators for their work, with prices set according to market demand for the data itself.

The First Product-Market Fit: Price Feeds

For many, oracles are synonymous with their first product-market fit application – price feeds – which are commonly used in defi transactions, particularly those related to loan issuance, derivatives, and stablecoins. 

Protocols such as Maker, for example, depend on a price feed to determine the value of the underlying collateral backing the asset. Oracles also provide data about the market price of collateral assets in Maker Vaults, enabling the platform to know when to trigger liquidations. 

In this sense, oracles can function as autonomous auditors, monitoring for fraudulent activity in real-time. A swathe of stablecoins – Paxos’ PAX, TrustToken’s TUSD, and even BitGo’s Wrapped Bitcoin (WBTC) – leverage Chainlink Proof of Reserve oracle networks to prove the collateralization of their tokenized assets, ultimately protecting users from fractional reserve practices or black swan events.

As the more traditional commodities come onto blockchains (tokenized stocks, oil, precious metals, etc), proof of reserves is likely to become a necessity for asset issuers.

"Without the external financial market data that oracles provide, you can’t really build defi," explains Sergey Nazarov, "Most of defi is built using the ‘hybrid smart contract’ model, which combines on-chain code and off-chain systems using oracle networks."

Clearly other blockchains developers are singing from the same hymn sheet. No sooner had Cardano launched smart contracts than its Chainlink integration was announced. Ava Labs President John Wu, meanwhile, says many defi projects building on the Avalanche blockchain remain "in integration mode, waiting for functionality such as oracles."

Although there is little to stop smart contract developers from designing their own oracles or querying freely available data feeds, cautionary tales abound: on several occasions defi protocols have lost millions of dollars due to unaudited, centralized oracles being compromised by sudden shifts in market liquidity or flash loan exploits. In the latter scenario, bad actors cleverly manipulate the price of tokens via flash loans, enabling them to buy said tokens at a vastly reduced rate. If oracles are decentralized, such attacks are far trickier to execute.

Of course, price reference data isn’t the only kind of off-chain information oracles can supply.

The Evolution of Oracles

In its formative phase, the vast majority of dApps have been financial, but that’s starting to change with projects increasingly turning to oracle networks for all sorts of events-based outcomes. For example, oracle networks can power parametric insurance contracts by delivering weather data from Google Cloud or Accuweather to trigger the settlement of a crop insurance claim. Indeed, projects such as Etherisc and Arbol are already using hybrid smart contracts to enable farmers to hedge against weather risk. 

"Last year, nearly two-thirds of global weather catastrophe damages were not covered by insurance programs," notes Arbol CEO Sid Jha, "Our platform uses smart contracts and immutable climate data to give farms and businesses that would otherwise not have access to weather insurance the ability to take out a policy covering their land or area against risks like excess rainfall."

In the case of Arbol, Chainlink oracles report when a certain level of rainfall has occurred, triggering the execution of the smart contract and with it, the client’s payout, all without the need for a subjective loss assessment by an adjustor or protracted claims process.

Oracles are also fundamental to prediction markets. Last year, derivatives exchange FTX offered users the unique opportunity to buy futures contracts according to who they believed would win the US Presidential election: Trump or Biden. Elsewhere, dedicated prediction protocols have sprung up, allowing users to trade the outcome of various events: in fact, users can create their own markets and earn a cut of the trading fees. Oracles, of course, come into play by verifying the result. 

According to Sergey Nazarov, "Data delivery is just phase one for oracle networks. As we outlined in the Chainlink 2.0 whitepaper, oracle networks are rapidly moving beyond data delivery and into the realm of off-chain computation. 

"Essentially, they will power any sort of decentralized service that a blockchain simply cannot do on its own, whether that's generating privacy, scalability, randomness and more on behalf of smart contracts."

Chainlink has already started to roll out computational functionality for its oracle networks, with new features like Keepers for automating smart contract functions when predefined conditions are satisfied, Off-Chain Reporting for scalable, low-cost data aggregation, and Verifiable Randomness Function (VRF) or generating provably fair random numbers. The latter has been utilized by a slew of NFT projects such as EtherCards, where verifiably random NFT drops are deemed necessary to ensure fair community distribution.

And what of the future? According to Ethan Illingworth, Head of Blockchain for decentralized cloud computing network CUDOS, the data feeds of tomorrow will easily surpass those we see today.

"Fewer points of failure, more richness of data," says Illingworth, "Oracles will become more decentralizable and thereby secure as technologies improve, while the data they serve from the off-chain world will grow in both volume and complexity due to base-layer throughput improvements and scalable compute chains."

A New Standard for Cross-Chain Interoperability?

With evolution in mind, Chainlink has introduced plans for its Cross-Chain Interoperability Protocol (CCIP), a new standard for decentralized inter-blockchain messaging, data, and token movements that would run atop the eponymous network. 

Chainlink also released details of a Programmable Token Bridge that leverages CCIP, enabling developers to transfer tokens across blockchains in a highly secure way. The first confirmed user will be $16 billion lending giant Celsius, which will use the protocol to participate in defi across multiple chains.

"Interoperability between smart contracts that all run on Ethereum has been a major source of innovation in defi," notes Nazarov, "With CCIP, blockchain applications will be able to interoperate across chains, creating cross-chain smart contracts which we believe will open the doors for all sorts of new and exciting cross-chain defi use cases."

Interoperability is a goal of rival oracle service Umbrella Network too, having just launched on Ethereum, the community-owned, layer-2 platform has developed a cross-chain bridge to connect Ethereum and Binance Smart Chain (BSC), giving users the ability to transfer assets between both networks. 

"As we expand into other chains, we’re going to essentially have a cross-chain messaging component that will allow the transfer of data and assets," explains Umbrella’s Head of Marketing John Chen.

Back To The Future

Evidently decentralized finance depends on more than just blockchain, with smart contracts and oracles representing two indispensable pieces of the puzzle. Of course, it’s also up to individual projects to design applications that people wish to interact with.

Although speculation has been the predominant defi use case thus far, the advent of gamified finance, not to mention blockchain-based insurance, prediction markets, governance, supply chain management and digital identity, hint at an exciting future. 

Teams who overlook the necessity of oracles may be in for a rude awakening. As the old saying goes, “garbage in, garbage out” – so accessing a dependable data feed is critical for long-term success. Data services providers that overlook oracles do so at the peril of their Web3 existence.

Follow me on Twitter or LinkedIn. Lawrence Wintermeyer…

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The world has completely emerged into the blockchain technology which transforms businesses more reliably and secured based on frameworks. It is not always about dealing with Bitcoin blocks and a number of bitcoins to be transferred. A perfect example for this is decentralized finance (DeFi) which does not rely on central financial intermediaries. Considering this as a prominent factor, today’s world is shifting towards DeFi from the concept of centralization.

Centralization is managed by trusted entities or financial sectors where users may feel secure but it does not allow users to control or monitor. In order to avoid these issues regarding security and trustable entities, major platforms are shifting towards decentralization. This concept may help in providing an environment to the users where their data and assets are not maintained by a single authority. This concept is managed by a group of entities with high security and ensures complete control of data.

Significantly, Defi applications use blockchain and smart contracts to provide decentralized, peer-to-peer, and a transparent system. They rely on a large amount of external data into the blockchain in order to function, such as live currency values for real-time settlement, weather data for insurance with farmers, inflation data, and so on. However, accessing and transferring trusted data from the outside world onto the blockchain is a challenge. This is where Oracle comes in.

Additionally, Oracle bridges between blockchain smart contracts and external data sources in a traditional way using API to fetch data. Oracle obtains data from trusted sources and delivers it to the user via the blockchain application. Not every oracle will succeed in acting as a bridge between blockchain and external data sources. The primary feature in oracle is a decentralized infrastructure that ensures reliable data source.

Plugin On XinFin Ecosystem

XinFin ecosystem uses a decentralized oracle platform, Plugin, which offers cheap solutions for any smart contract on the network. Plugin connects the smart contract to the real-time world and ensures that the data it receives from the data feed provider is trustworthy by maintaining a high level of security. It handles off-chain computation by receiving feed from different providers and aggregating it.

GoPlugin.co collects data from various external sources, consolidates it, and ensures that the accurate value is provided to its users at all times. Moreover, PLI token in Plugin ecosystem is a powered token which is built on XinFin’s XRC20 Standard. It was developed mainly to reduce gas fees, increase transaction speed, and to deliver hundreds of Dapps with the ability to connect to Data Oracle and reach millions of individuals globally.

To avoid security problems but provide a blockchain peer-to-peer system, any decentralised oracle provider must depend on the community to select data sources and validators, as well as the rewarding and penalizing mechanism. Besides, Plugin employs a carrot-and-stick strategy to reward the best while penalizing the weakest actors. Furthermore, the primary factor using Plugin is it provides data feeds at a very low cost compared to other oracle providers. Thus, Plugin can be regarded as an cost-effective, scalable and highly trusted, decentralized oracle provider.

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A Senate committee has laid out an ambitious plan for Australia to take a leadership position regulating the global digital economy, including developing a governance model that would allow companies to be run by an internet community instead of executives and directors.

The bipartisan proposals would see Treasury gain powers to control cryptocurrency exchanges under a new category of financial markets licence, creating protections for bitcoin investors including local custody rules.

If adopted, the dozen recommendations in the final report of the Australia as a Technology and Financial Centre (ATFC) committee could help lure blockchain developers and entrepreneurs to the country by offering regulatory clarity and certainty, as other jurisdictions like Singapore, Britain and the United States grapple with oversight of decentralised internet businesses.

“This provides a very clear agenda for Australian leadership on digital assets, in terms of protecting consumers and boosting investment,” said chairman of the select committee, Liberal Senator Andrew Bragg. “The market is asking for regulation, and we are responding while trying to avoid trampling on innovation.”

With the global crypto market capitalised at $US2.5 trillion ($3.3 trillion) and more than 3 million Australians thought to own cryptocurrency, the plan would see requirements for digital assets to be held by professional custodians, who control $4 trillion of assets in Australia.

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Start-ups working in crypto who have struggled to attain banking services in Australia would be able to challenge debanking decisions at the Australian Financial Complaints Authority, while banks will be required to conduct due diligence on players rather than adopt blanket bans on the sector.

With the transition to a cleaner economy in the spotlight in Canberra, the report also suggests the ‘miners’ who safeguard blockchain networks be given an incentive to use renewable energy to generate their computer power, via a company tax discount of 10 per cent.

In the most eye-popping recommendation, the Senate committee calls for ‘decentralised autonomous organisations’ (DAOs) to be recognised by the Corporations Act. This would allow the “governors” of projects to contract in the real economy to hire staff, and provide limited liability protections for DAO members.

The formal recognition of DAOs and ‘decentralised finance’ (DeFi) protocols will provide a strong signal to global developers that Australia is a safe place to build businesses on blockchains such as Ethereum, after some teams moved offshore.

This technology could see companies run without traditional intermediaries like banks, registries or corporate management committees; instead, “tokens” can be created and distributed to an online community allocating various rights, like making decisions for the DAO on products or services.

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“Today is a watershed day for the digital assets sector,” said Steve Vallas, CEO of Blockchain Australia, an industry group.

“The recommendation that Australia look to recognise DAO’s structures is a very strong signal to the world that we are ready to lead this conversation.”

The report, which comes seven months after a previous fintech committee was extended to develop a crypto policy for Australia, also wants Treasury to lead a policy review on how particular tokens should be classified to create a standard taxonomy for all regulators to apply.

Treasury has also been asked to examine the viability of a retail ‘central bank digital currency’ in Australia, something the Reserve Bank of Australia has been reluctant to entertain given it could increase the likelihood of a run on commercial bank deposits in a crisis.

The more prominent role for Treasury over the innovation portfolio is consistent with recommendations in the recent review into payments regulation by lawyer Scott Farrell and interim reports of the Senate committee, which warned regulators to back away from hobbling Afterpay’s growth and called for more government control over the rollout of the consumer data right.

The call for a new licensing regime for cryptocurrency exchanges like Independent Reserve and Coinjar, which are licensed in Singapore and the UK respectively, highlights that the existing Australian Market Licence regime is overly focused on large operators like ASX, and the existing light-touch approach from AUSTRAC is not sufficient to protect investors. The new regime will include capital adequacy, auditing and responsible person tests and be scalable depending on the size of the exchange.

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“We have recommended new licensing regimes which I expect will be much more nimble and light touch than the existing regime,” Senator Bragg said.

In additional comments attached to the report, Labor Senators highlight the ongoing problem of crypto scams and call for AUSTRAC to maintain vigilance over the sector.

“The increased uptake of digital assets requires regulation to ensure the best interests of everyday Australian investors and consumers are protected – first and foremost – and that currently, regulatory shortfalls are leaving Australians at risk,” Labor said.

Labor added AUSTRAC should work with digital currency exchanges to ensure that Australia’s AML/CTF controls “do not create a permissive environment for terrorism financing and cybercrime and that this should include consideration of the implementation of a travel rule requirement”.

Large crypto exchanges, who had been pleading for more regulation to legitimise their business, will support a regulatory regime, but this may be uncomfortable for smaller, under-resourced operators who have flooded to the space recently in search of quick profits, sources in the industry said.

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There may also be disappointment in the crypto community that the report does not recommend ‘safe harbour’ protections to close off the potential for regulatory actions down the track, which was a key part of the Blockchain Australia submission to the inquiry.

But Mr Vallas said the report overall “recognises the maturing of the sector and its place in the Australian government regulatory agenda [and] reflects our shared view that consumer protection can be prioritised without denying Australians and Australian businesses an opportunity to participate in the global shift towards the adoption of digital assets.”

Debunking debanking

After the committee heard evidence of widespread “debanking” of start-ups by the major banks – who typically do not explain why they will not support the sector but are privately concerned about breaching anti-money laundering laws, the committee called for the Council of Financial Regulators to impose due diligence requirements on banks so they at least consider the risks of particular businesses.

Senator Bragg said this provided a Liberal approach, recognising the strategic risk of losing innovation “through mindless debanking”.

“We aren’t forcing any bank to do anything they don’t want to do, but we are going to force banks to go through a process, and we are going to regulate this industry.”

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The report also tackles complex questions about taxation. It pushes back on some calls from crypto investors for capital gains tax to be restricted to ‘on and off ramp’ points, where digital assets are traded for fiat currency. “This approach may risk leakage of tax revenue in cases where significant crypto-to-crypto transactions are occurring in ways that accrue a clearly definable capital benefit,” the report says.

But the committee wants to avoid CGT liability being triggered every time a DeFi crypto-asset token interacts with a protocol, which was raised as a concern by developers. So, the report calls for legal amendments so digital asset transactions “only create a CGT event when they genuinely result in a clearly definable capital gain or loss”.

The Labor Senators call for the government to ensure any new financial arrangements “meet global and community expectations on tax fairness”.

The only other jurisdiction that has created legislation to support decentralised autonomous organisations is the US state of Wyoming. The report said it and the ‘DAO Model Law’ proposed by the Coalition of Automated Legal Applications (COALA) provided a starting point for Treasury to explore reforms that would support new models of corporate governance with radical transparency.

Providing an indication about how the Liberal Party is thinking youth policy as the federal election approaches, Senator Bragg said crypto could allow members to connect with young people in their electorates. Treasury is considering whether to include a response to this report in its broader response to the Farrell review of the regulatory architecture of the payments system.

“My objective is to have this adopted as Liberal Party policy for the upcoming election,” Senator Bragg said. “This gives us a way to talk to younger people in a way that has not always been easy for my party. Having a clear story to tell about DAOs and crypto could make a big difference.”

And with the Liberal party locked in discussions with the Nationals on the country’s Paris targets ahead of the COP26 meeting in Glasgow, the report said those undertaking digital asset ‘mining’ and related activities in Australia receive a company tax discount of 10 per cent if they source their own renewable energy for the activity.

“The Australian public don’t want us to burn up the grid with bitcoin mining,” Senator Bragg said. “We have a unique opportunity to merge digital asset mining with renewable energy.”

writes on banking, fintech and technology. Based in our Sydney newsroom, James is a former Legal Affairs and Capital editor for the Financial Review Connect with James on Twitter. Email James at jeyers@afr.com.au or Subscribe to save articleLicense articleFind out moreRead MoreCryptocurrenciesRegulationBlockchainSkills shortageFintechBitcoinBig fourCompetitionGovernance

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By now you have likely heard about the latest technology craze: Non-Fungible Tokens (NFTs).

In 2021 alone, we have seen A-list names like Michael Jordan, Mark Cuban and 2 Chainz investing millions in NFT-based start-ups and auctions for NFT-linked assets fetching astounding sums of money, including Jack Dorsey’s first tweet ($2.9 million) and collections of digital artworks by Grimes ($6 million) and “Beeple” ($69 million), just to scratch the surface.[i]

While often linked to digital assets, NFTs (and Smart Contracts) can also be used to sell discrete physical assets like one-of-a-kind sneakers, vinyl records and concert tickets,[ii] and the future could see their use in transactions for major purchases like cars and houses. However, before you or your clients start minting, selling, buying or trading NFTs, you should understand what NFTs and Smart Contracts are, the rights involved in NFT transactions, and some lurking dangers.

What are NFTs? A “token” is a digital asset stored on a secure, but transparent distributed blockchain ledger. Non-fungible means one-of-a-kind—like a record-breaking homerun ball, a bootleg concert recording, or collectables like baseball cards. Thus, an NFT is a digital asset that is linked to a discrete and unique asset. In contrast, a fungible token such as Bitcoin is an asset in itself—its value fluctuates relative to other currencies, but all bitcoins are the same and equal fractioned amounts of bitcoin will have equal value against each other. The process of creating an NFT is called “minting.”

Like Bitcoin, NFTs enjoy the security, transparency and immutability of cryptographic storage, but whereas bitcoins are divisible to 10-8 degree, NFTs are indivisible and can store significant amounts of data, including unique information. This is what makes a particular token “non-fungible,” and it is stored in a “Smart Contract,” computer code that automatically executes upon the occurrence of a set of preconditions.

Combining a Smart Contract with other unique identifying metadata — such as the identity of the owner, and secure file links — along with the security afforded by blockchain, provides practically irrefutable proof of ownership and authenticity to prospective buyers.[iii] Smart Contracts can prevent someone from transferring an NFT or accessing an underlying asset unless all preconditions specified in the contract are satisfied, including potentially paying royalties on the resale of the NFT. While most early NFTs can be resold without restrictions, some NFT marketplaces are encoded to enforce Smart Contracts royalty “clauses” which, upon the resale of an NFT, automatically pay a fee to the minter-seller, usually as a fixed percentage of the resale price.[iv]

In layman’s terms, NFTs and Smart Contracts act simultaneously as a “certificate of authenticity” for the underlying asset and as a valuable representation of ownership of a real asset like a stock.

While NFT auctions have yielded jaw-dropping real dollar figures, what does a buyer really possess? Ultimately, an NFT owner has access to the underlying asset, but they may lack exclusive access to or control of the asset, let alone ownership of the asset or any intellectual property (IP). Indeed, the default rule is that a patentee or copyright owner retains all IP unless it is clear from the language of a signed writing (e.g. the Smart Contract) that ownership of an intellectual property right is being transferred.[v] In most cases, Smart Contracts do not transfer IP rights.

In layman’s terms, NFTs and Smart Contracts act simultaneously as a “certificate of authenticity” for the underlying asset and as a valuable representation of ownership of a real asset like a stock.

An NFT owner may have an implied license in the same way that the purchaser of a useful machine is not infringing a patent by using it as intended or how the purchaser of music is not infringing copyrights by privately singing along with their copy of a record. For example, hundreds of people bought the NFT version of the new Kings of Leon album and received exclusive digital and physical collectibles, but the same music was released via traditional streaming and purchase outlets and the Kings of Leon (or their label) still retain all copyrights. In collectible cases like this, owning an NFT is like owning one of the roughly 10,000 copies of Nolan Ryan’s 1968 Topps rookie card, with the added bonus that your version of the card is authenticated and you are provably the owner. Thus, the value in buying an NFT is often in creating a collectible (non-fungible) version of an otherwise a replicable (fungible) asset.

Despite the security offered by blockchain, this new industry is ripe for fraud and misuse, particularly in attempts to mint and sell NFTs linked to assets not owned by the minter-seller, be it a copyrighted work, trademarked brand or celebrity likeness. In a recent example, an NFT auction for a drawing by Jean-Michel Basquiat that purportedly included “reproduction and IP rights…in perpetuity” was pulled after Basquiat’s estate clarified that it still owned all copyrights in the sketch and that the NFT seller had no rights to give away.[vi]

While there are no laws yet relating to cryptographic assets, legal systems should largely be able to adapt existing laws and principles to blockchain technology as was done for online activities. For starters, most disputes between a buyer and seller of NFTs should be easily resolved either by the Smart Contract or by a judge applying traditional principles of contract law. In Internet-based copyright infringement lawsuits between parties of different nationalities, US courts apply a two-step “conflict of laws” analysis, determining the validity of the IP right under the laws of the nation where the work was created, and determining liability for infringement under the laws of the nation where the tort occurred. Similar rules could apply to this context.

While there are no laws yet relating to cryptographic assets, legal systems should largely be able to adapt existing laws and principles to blockchain technology as was done for online activities.

Another issue is that, since NFTs are, in the end, data stored in cyberspace, there is a risk of non-permanency and losing access to digital assets linked to NFTs. In the meantime, the NFT craze is just beginning and we can either continue to gawk at lofty sales or join the fray.

Shane Wax, Associate

Gottlieb, Rackman & Reisman, PC

Address: 270 Madison Avenue, 8th Floor, New York, New York 10016-0601

Tel: (212) 684-3900

Fax: (212) 684-3999

Email: info@grr.com

Gottlieb, Rackman & Reisman, PC is a New York-based firm that provides legal advice and guidance on all aspects of patent, trademark, copyright, and unfair competition law. It is recognised as a Top Ranked Law Firm for the past two consecutive years, receiving a Martindale-Hubbell AV Preeminent® peer review rating.

Shane Wax’s practice focuses on transactional, enforcement and litigation work related to all areas of intellectual property, including patents, copyrights, trademarks, trade dress and trade secrets. Shane also provides general client counseling related to protection and enforcement of intellectual property rights.

References

[i] See Jon Blistein, RollingStone, Twitter’s Jack Dorsey Sells First Tweet as Non-Fungible Token, Mar. 22, 2021, first-tweet-nft-cryptocurrency-1138401/; Gerrit De Vynck and Douglas MacMillan, The Washington Post, He just spent $69 million on a digital piece of art. It’s not his first Beeple, Mar. 18, 2021, available at van-christies/; Danny Nelson, Coindesk, Michael Jordan Joins $305M Investment in Firm Behind NBA Top Shot, Mar. 30, 2021, behind-nba-top-shot; Tim Hakki, Decrypt, Mark Cuban Invests in NFT Tracker CryptoSlam, Apr. 17, 2021, https://decrypt.co/66897/mark-cuban-invests-nft-tracker-cryptoslam; Will Gottsegen, Decrypt, Grimes Just Sold Her Crypto Art NFT Collection for $6 Million, Mar. 1, 2021, https://decrypt.co/59827/grimes-nfts-crypto-art.

[ii] See, e.g., Cam Wolf, GQ, What Is an NFT Sneaker, and Why Is It Worth $10,000? Apr. 28, 2021, https://www.gq.com/story/nft-fashion-sneakers; Samantha Hissong, RollingStone, Kings of Leon Will Be the First Band to Release an Album as an NFT, Mar. 3, 2021, elf-album-nft-crypto-1135192/; Claire Shaffer, RollingStone, The White Stripes Drop ‘Seven Nation Army’ Remix, NFT Release, Apr. 23, 2021, nation-army-remix-nft-1157823/; Jacob Gallagher, Wall St. J., NFTs Are the Biggest Internet Craze. Do They Work for Sneakers?, Mar. 15, 20221, -for-virtual-sneakers-11615829266 (sub req.).

[iii] See Josie Thaddeus-John, N.Y. Times, What Are NFTs, Anyway? One Just Sold for $69 Million., Apr. 13, 2021, https://www.nytimes.com/2021/03/11/arts/design/what-is-an-nft.html; Rakesh Sharma, Investopedia, Non-Fungible Token (NFT) Definition, Mar. 8, 2021, https://www.investopedia.com/non-fungible-tokens-nft-5115211; Jake Frankenfield, Investopedia, Smart Contracts, Mar. 25, 2021, https://www.investopedia.com/terms/s/smart-contracts.asp; Stuart D. Levi and Alex B. Lipon, Harvard Law School Forum on Corporate Governance, An Introduction to Smart Contracts and Their Potential and Inherent Limitations, May 26, 2018), available at ntracts-and-their-potential-and-inherent-limitations/; Melanie Kramer and Daniel Phillips, Decrypt, Non-Fungible Tokens (NFT): Beginner’s Guide, Feb. 4, 2021, learn-blockchain; Matt Hussey and Daniel Phillips, Decrypt, What Are Smart Contracts and How Do They Work?, Jan. 8, 2011, https://decrypt.co/resources/smart-contracts.

[iv] See James Beck, Consensys, Can NFTs Crack Royalties And Give More Value To Artists?, Mar. 2, 2021, es-and-give-more-value-to-artists/; Zach Burks, James Morgan, Blaine Malone, James Seibel, Ethereum Improvement Proposals, EIP-2981: ERC-721 Royalty Standard, Sept. 15, 2020, https://eips.ethereum.org/EIPS/eip-2981#optional-royalty-payments; Eileen Brown, ZDNet, New platform uses NFTs as a gateway for digital rights management, Mar. 4, 2021, digital-rights-management/.

[v] See 35 U.S.C. § 261 (“Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”); 17 U.S.C. § 204(a) (“A transfer of copyright ownership. .. is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights”).

[vi] See Anny Shaw, Art Newspaper, Basquiat NFT withdrawn from auction after artist’s estate intervenes, Apr. 28, 2021, on-after-artist-s-estate-intervenes

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LONDON, April 19 (Reuters) - What do you do with a $69 million artwork that doesn’t physically exist?

That’s the question faced by the Singapore-based investor calling himself Metakovan, who made headlines last month when he bought the digital artwork “Everydays: The First 5000 Days” by the American artist Beeple at Christie’s.

The work is a non-fungible token (NFT) – a new type of virtual asset that has its ownership status and authenticity verified by blockchain. NFTs have exploded in popularity in 2021, with prices skyrocketing.

Metakovan, real name Vignesh Sundaresan, plans to put the artwork on display in four virtual world environments. He is working with architects to design gallery complexes that the public can enter via web browsers or virtual reality technology.

But art is just one part of a new economy of blockchain-based virtual worlds where land, buildings, avatars and even names can be bought and sold as NFTs, often fetching hundreds of thousands of dollars. In these environments, referred to as the metaverse, people can wander around with friends, visit virtual buildings and attend virtual events.

Metakovan's plans are an ambitious undertaking, but he says he is the world's biggest NFT investor. His collection of NFTs and other crypto assets, the Metapurse fund, is valued at $189 million, according to NonFungible.com, a site that aggregates sales history data from NFT marketplaces.

"The current Cambrian explosion of NFTs that you see is all about acquisition – people want to buy up NFTs, gobble as many of them as they can," said Anand Venkateswaran, aka Twobadour, who runs the Metapurse fund with Metakovan.

"But it's just the tip of the iceberg. The real explosion will happen when they're able to ... experience these NFTs as they were intended. If it's a plot of virtual land, you ought to move around in it, have an immersive experience in it."

In what will be one of the biggest names to join the party, videogame maker Atari (ATAR.PA) told Reuters it planned to launch its own blockchain-based virtual world and would soon announce details.

Online environments are going to be "very very big", regardless of fluctuations in the price of bitcoin, said Frederic Chesnais, head of Atari's blockchain division and the company's former CEO. NFT real estate could one day fetch millions of dollars, he added.

Investors caution, however, that while big money is flowing into NFTs, the market could represent a price bubble, with the risk of major losses if the hype dies down. There could also be prime opportunities for fraudsters in a market where many participants operate under pseudonyms.

For a graphic on surging sales of crypto assets, click here

A PLOT OF VIRTUAL LAND: $500K+

The NFT frenzy has heightened interest in blockchain-based online environments. The best known are Decentraland, Cryptovoxels, Somnium Space and The Sandbox, where virtual real estate prices are hitting new highs.

Decentraland has seen more than $50 million in total sales, including land, avatars, usernames and wearables like virtual outfits. A patch of land measuring 41,216 virtual square metres sold for $572,000 on April 11, which the platform said was a record.

Another Decentraland plot sold for $283,567 on March 21, according to NonFungible.com, while Somnium Space said an estate on its platform fetched more than $500,000 on March 16.

Metaverse enthusiasts compare the rush to buy virtual land to the scramble for domain names in the early days of the internet. There are currently a few thousand unique landowners on each of the main blockchain-based platforms.

Their theory is that as more people congregate in these environments, plots of land in central locations will be highly sought-after because of the amount of visitor traffic.

"All of virtual land and these virtual spaces are basically real estate on which experiences will start to centre, on which attention will start to focus," Twobadour said.

"That's where all of the attention is and that's monetisable in a million different ways."

So far, it's a relatively small number of people driving up land prices on these worlds.

In Decentraland there were 334 buyers in March, sending monthly land sales volumes past $4 million, from $767,400 in February with 184 buyers and $246,134 in January with 111 buyers, according to NonFungible.com.

An NFT investor called Whale Shark, whose collection was valued at more than $20 million by NonFungible.com in February, said he spent 200 of the cryptocurrency Ether on land in Cryptovoxels and another 200 in The Sandbox in 2018 and 2019.

Those estates cost around $60,000 each back then but are now worth more than $400,000 apiece, he added, speaking on condition of anonymity.

Some virtual worlds have their own cryptocurrencies: Decentraland's MANA has skyrocketed more than 3500% over the past year, according to Coinbase.

For a graphic on virtual real estate boom, click here

VIRTUAL FESTIVAL, ANYONE?

Some early virtual land investors who bought in early are now selling to companies, said Samuel Hamilton, community and events lead at the Decentraland Foundation.

Atari, ahead of its plans to open its own blockchain-based world, has licensed a retro arcade within Decentraland and is due to open a casino, while an area called "Crypto Valley" is home to various crypto companies.

Decentraland has hosted a virtual fashion exhibition in collaboration with Adidas, where designs were auctioned as NFTs. It is also attracting interest from musicians who can perform in the space, selling tickets and merchandise as NFTs.

"We're going to have several well-known global festivals all doing stages, and when we get to that point we expect hundreds of thousands or even millions of people," Hamilton said.

Last year, American rapper Travis Scott drew an audience of 27.7 million visitors to five concerts within Fortnite, the popular online game owned by Epic Games.

IS 'CRYPTO WINTER' COMING?

Sebastien Borget, co-founder of The Sandbox, described the commercial activity within virtual worlds as a new nation forming and said the NFT-based economy would outgrow the real-world one within a decade.

There are, however, many in the fledgling industry who warn of dangers ahead for investors.

"I expect that there'll be a crypto winter in the next couple of months, the whole NFT boom will explode and then all the value will absolutely collapse," said Ben Nolan, founder of the virtual world Cryptovoxels.

"Doing NFTs as an investment or as a way to make money is really ill-advised."

However he does see a future for virtual worlds and NFTs.

"Do I think most people will use virtual worlds? Probably not, but I think a lot of people will and I think NFTs are a big part of that growth," he said.

"Actually walking around with another person in a virtual space and looking at art together is a really nice way to spend time," he added.

Whale Shark said the vast majority of NFTs had no commercial viability, and expects only a small number to emerge as winners.

But some investors such as Australia-based Mateen Soudagar, aka DCL Blogger, have little interest in moving back into real-world investments.

Soudagar says he has made millions of dollars through cryptocurrency and NFTs, but rather than cash out, he keeps around 75% of his money in crypto assets and reckons many of his peers do the same. Other than upgrading his laptop, he hasn't changed his lifestyle.

“If you’re a believer in the movement then you think that the world will move into this space,” he said. “So when you’re putting it into fiat you’re going backwards.”

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Christie’s is listing a set of 31 Curio Cards and several other prominent non-fungible token (NFT) projects in a live auction on Oct. 1, furthering its foray into digital art sales.

The 254-year-old auction house made history in March when it auctioned a Beeple NFT for $69 million. Christie’s Asia branch is now taking bids for several rare CryptoPunks and Bored Ape NFTs as recent buyer appetite for NFTs approaches manic levels.

Launched in May 2017, Curio Cards is commonly viewed as the first digital art collectible on the Ethereum blockchain, predating both CryptoPunks and CryptoKitties. The set depicts images ranging from mundane objects (#1 Apples) to reimagined corporate logos (#15 DigitalCash) to intricate black-and-white geometric drawings (#26 Education).

“A true full set of Curio Cards is one of the few holy grails as far as art projects on Ethereum go,” said Noah Davis, head of digital art at Christie’s. “It’s the first of its kind, predating Punks, even.”

The set of 31 numbered cards – including the misprinted #17b – is estimated to fetch between 250 and 350 ETH, or between $870,000 and $1.3 million based on current prices of ether.

The rarest of the batch is card #26, according to the Curio Cards website.

“There are only 111 of them. Five have been lost,” Curio Cards co-founder Travis Uhrig told CoinDesk. That puts the number of feasible full sets at 106 – one of which will be up for grabs at Christie’s.

As for the misprinted card, Uhrig chalked it up to a technical error.

“Cards 17, 18 and 19 were all initially misprinted, but there was a mistake that made 18 and 19 unsellable,” explained Uhrig. “Back in 2017, nobody cared that you had test code on Ethereum. We just re-deployed all three after fixing [the error]. People eventually found [card #17b] because it lives on the blockchain. The market has definitely spoken, people think of it as an essential in a full set.”

The Oct. 1 auction also marks the first time Christie’s live bidding will be denominated in cryptocurrency instead of the usual local currency. The bids, which must be placed in ETH, point to a new milestone as Christie’s descends down the crypto rabbit hole.

“I’ve been bidding in auctions on behalf of clients for almost a decade,” said Davis, the Christie’s digital art lead. “I’ve placed bids in USD, GBP and EUR – always fiat. To think I’m going to hear the auctioneer calling out my bids in ETH, that’s just incredible. It doesn’t happen.”

In addition to the set of Curio Cards, the auction will feature a second lot of three complete sets of 31 NFTs from the Art Blocks Curated collection. Art Blocks, a blockchain startup that helps artists create algorithmically generated art, handpicks releases for the popular collection.

On NFT marketplace OpenSea, the current floor price of an Art Blocks Curated piece is 1.7 ETH, or about $5,900.

“Both Art Blocks and the artists involved are incredibly humbled to be receiving this level of recognition,” Erick Calderon, co-founder and CEO of Art Blocks, told CoinDesk.

The first batch of NFT works will be part of Christie’s broader “POST-WAR TO PRESENT” live auction in New York, which will also feature more traditional artists and pieces.

As part of the same auction, Christie’s will also list five of entrepreneur Gary Vaynerchuk’s original doodles of his VeeFriends NFT collection, Davis confirmed to CoinDesk.

Just five days later, Christie’s is set to auction its first NFT photograph as part of its “PHOTOGRAPHS” series on Oct. 6. The auction will include the NFT Twin Flames #83, which will be accompanied by the full 100 physical photos in the collection.

“This can be a bridge between the traditional art collectors and new crypto art collectors,” said Justin Aversano, the photographer behind the Twin Flames project, which is estimated to fetch between $100,000 and $150,000 at auction.

The international auction house appears to be sprinkling NFTs into its traditional live auctions as part of a cross-pollination marketing strategy. The auctions from Christie’s will be mixing digital and real-life art, which would introduce traditional art collectors to NFTs and draw in crypto-native collectors who were not previously clients of the auction house.

“It’s amazing to see so many incredible artists succeed in the NFT space; that was always the dream,” said Curio Cards co-founder Uhrig.

“In 2017, Curio Cards was focused on explaining what NFTs were and why they had value. Now it has become this well-known ecosystem, with artists being showcased at big auction houses like Christie’s.”

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Did you Know?

What’s the world’s most widely used cryptocurrency? If you think it’s Bitcoin, which accounts for about 70% of all the digital-asset world’s market value, you’re probably wrong. It's Tether!

"There's enormous room to run in digital assets and crypto," said Sheftel, who said that he personally owns cryptocurrency coins. "The community is full of people doing interesting things, and Radkl is our way to plant our flag and be a real part of that." Radkl has about 10 employees currently. It expects to ramp up to two dozen by the end of the year and to begin trading during the final three months of the year. This is the first foray for GTS into the crypto world, but digital assets and the technology that underlie them have been growing more mainstream as prices for coins soar. One bitcoin fetches about $46,700 today. That's up from about $10,700 a year ago, but prices can be notoriously volatile, and it's also down from a peak of nearly $65,000 this spring. Cohen, who will not be involved in the day-to-day operations of Radkl, has been making investments in the crypto world through various avenues. A company backed by Cohen's family office led a fundraising round announced Monday for Recur, a company involved in digital collectibles. Last month, Cohen's Point72 Ventures led a $21 million fundraising round for Messari, a crypto data and research firm. In a letter telling investors earlier this year that it's exploring opportunities around the technology that underpins cryptocurrencies, Cohen's Point72 said that it would be remiss to ignore a $2 trillion market. "We can assure you that we will be prudent in the nature of and sizing of our investments, both from an allocation and market standards perspective," it said. "We do, however, believe there is more innovation and evolution to come in the space, and we want to make sure we have a seat at the table."

The United States Securities and Exchange Commission has charged three of Chinese billionaire Guo Wengui’s companies over an initial coin offering (ICO) and initial public offering (IPO) that fetched around $487 million combined.

The infamous Guo, also known as Miles Kwok or Miles Guo, is an exiled Chinese businessman who currently resides in New York. Wengui is known for his controversial political takes and his ties to Donald Trump confidant Steve Bannon.

The SEC submitted a cease and desist order on Monday, with the documents showing that Guo’s companies have agreed to pay a settlement with the SEC within 14 days.

The SEC outlined two unregistered securities offerings from Guo’s firms, with GTV Media Group, Saraca Media Group and Voice of Guo Media conducting an IPO between April 1 and June 2020. Saraca and Voice of Guo, dubbed the “G Entities,” also conducted an ICO over the same period.

The ICO raised $34 million from investors seeking exposure to the firms’ G-Dollars — a virtual currency the issuer claimed could be exchanged for gold or fiat currency or used to purchase goods on the G Entities’ online platform.

The SEC found that the G Entities did not provide investors with information regarding how its purported digital asset and platform would be developed, adding:

“The G Entities have yet to develop or distribute the digital assets sold in the Coin Offering or a platform that would allow users to transact with or sell digital assets.”

Related: SEC chair doubles down, tells crypto firms 'come in and talk to us'

Proceeds from the ICO were commingling with the funds raised in its $453million stock offering that purported to distribute 10% of GTV’s common shares. The unregistered IPO attracted participation from 5,500 people.

The firms have agreed to pay $486.6 million in fines, prejudgment interest of $17.6 million, and a civil penalty of $35 million combined.

The Dallas Mavericks, the NBA franchise owned by Mark Cuban, have started a cashback rewards program to incentivize merchandise and ticket payments in Dogecoin (DOGE).

The rewards program is dubbed “Mavs Cryptomania,” and customers who spend more than $150 worth of Dogecoin in one transaction will receive a $25 e-gift card that they can use for online purchases in the Dallas Mavericks shop.

The program is to run until Sept. 30. At the time of writing, users will need to outlay 505 DOGE in order to receive the e-gift card.

The Mavs started accepting DOGE for payments back in March and were also one of the first NBA franchises to accept Bitcoin (BTC) payments for tickets and merchandise back in 2019.

Cuban is a major Dogecoin proponent and stated in April that while the coin started as a joke, it is “becoming a digital currency” due to its increasing adoption rate.

The billionaire investor stated in May that Dogecoin had outperformed other crypto assets in terms of merchandise purchases, as he noted that “we sell more Mavs merchandise for DOGE on a typical day [...] than we did in a year with BTC or ETH.”

Cuban has become a prominent figure in crypto and blockchain technology in 2021 and has backed various projects such as Ethereum-based scaling solution Polygon, nonfungible token protocol Alethea AI and NFT marketplace providers Genius, to name a few.

The Mavs owner recently fired back in response to Donald Trump’s latest FUD in which he suggested that Bitcoin and cryptocurrencies were a “disaster waiting to happen.”

Related: Doge meme hits $220M valuation, as Sotheby's Bored Apes auction is tipped to fetch $18M

Senior NBA analyst Bill Ingram stated on Thursday that “I’m not one to agree with the former president on much of anything, but I have long wondered whether we really need another form of currency that only has a pretend value because some group of people decides to pretend it does.”

Cuban responded by urging Ingram not to think of crypto assets as “currencies” as he emphasized the underlying tech that drives the sector:

“Think of them as decentralized, secure, networked platforms with features that allow for the development of apps that can have unique utility for individuals and businesses.”

Bitcoin prices are jumping again -- and amid all the crypto craze for normies ... one guy's come out to say he's uber-rich, 'cause he's got a physical copy that's now worth tens of millions.

Great Collections -- a renowned coin auction house -- says they have a client in possession of one of only 6 physical BTC gold coins issued years ago, and each is worth 1,000 bitcoins. Do the math, and this dude's lone shekel is worth around $54 million!!!

Here's the story on how this fella -- who's staying anonymous for now -- stumbled across this coin way back in 2011 ... when bitcoin was in its infancy, and he took a major gamble.

Word is, this dude was considering buying either this one gold 1,000 BTC coin ... or two actual gold bars -- with each purchase running nearly the same in price at the time, around $4,000 to $5,000. He opted for the former -- throwing down $4,905 for the mysterious BTC coin ... which has come to be known as the "Gold Cas" in crypto circles.

Great Collections' client then threw the Cas into a desk drawer at home and literally forgot about it ... that is, until a couple years later, when he heard bitcoin was valued at $1,000 a pop and on the rise.

He raced back to said desk, whipped out that 1,000 BTC coin ... realizing he was holding a literal million-dollar item in his hand. It was then he realized what he'd bought, and laid low for all these years as bitcoin's price continued to rise to its current price of about $54k.

Now, that it's reaching astonishing levels ... the guy figured he'd come out to rub it in our faces -- while also noting he's got this puppy well-guarded in an overseas bank vault. We're told he has NO plans to sell it anytime soon -- as he believes bitcoin's going to the moon.

BTW, GC is auctioning off another one of these physical BTC coins, but it's not worth 1,000 bitcoins ... just 25. Still, we're told they expect it to fetch at least a mil in November.

Money Exclusive Details Viral

Over the last couple of months, layer-two protocols have seen impressive growth in terms of participation and higher network activity. However, amidst the larger market drama, the tug-of-war between L1 and L2 solutions has also gotten tighter.

Ethereum, at the time of writing, was oscillating above $3,200, noting daily gains of over 5%. On the contrary, L2 protocols like MATIC had gained by 8% in 24 hours at the same time. 

That wasn’t it though. The L1 v. L2 debate intensified further as Polygon (MATIC) saw a 330% surge in daily active unique addresses over the last three months, briefly surpassing Ethereum for the first time ever. What did this mean for MATIC though?

Polygon co-founder Mihailo Bjelic recently revealed that the number of daily active unique addresses on Polygon surpassed those on Ethereum. He further highlighted that Polygon had 351,000 daily active addresses whereas Ethereum had 326,000 briefly last Monday.

Notably, the number of active addresses on Polygon has surged by 330% over the last three months, whereas Ethereum’s has declined by 12%

As per data from Polygonscan, MATIC’s active addresses reached the highest number of 423,586 addresses on Monday, 27 September. At the time of writing, however, Ethereum was ahead of MATIC in the count and was up by almost 54k addresses. 

The continuing NFT mania has also been a contributing factor to MATIC’s activity growth. In fact, on 30 September, Dolce & Gabbana’s inaugural non-fungible token (NFT) collection, the Collezione Genesi, fetched approximately $5.65 million in a sale.

The group of nine NFTs was launched on the luxury marketplace UNXD, which is built on the Polygon network.

After the two major market crashes in September, Polygon initially seemed to struggle to keep up with the consolidating market. However, in relative terms, the altcoin was holding up well. MATIC didn’t fall below the crucial $1.05-mark and made higher lows on the 12-hour chart over the last week of September. 

The MVRV 30-day for MATIC highlighted a return from the negative zone for the asset. However, its MVRV still noted a reading of -8.8%.

Seemed like while the recovery was in place, it was comparatively slower as the asset’s MVRV was still down 26% from its high point on 4 September. What’s more, MATIC’s network growth also saw the low levels of June-July on 29 September. However, that too seemed to be picking up at a slow pace. 

Additionally, while MATIC’s total value locked has almost halved since its mid-June all-time high of $10.54 billion, it did see a slight uptick, with the same having figures of $4.27 billion, at press time.

While the surge in activity on Polygon can largely be credited to Ethereum’s transaction fees which skyrocketed again in recent days, other metrics for Polygon showed no major signs of a price hike in the mid-short term.

Ergo, even though recovery is in play, MATIC needs to flip its immediate resistance levels into support and sustain a position above the same for decent gains.

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The last couple of days have been quite eventful for Ethereum. In less than a week’s time, the world’s largest alt’s price has managed to bounce from $2.8k to $3.5k. Whenever Ethereum has pumped in the past, more often than not, the whole altcoin gamut has followed suit.

With most alts registering a fairly decent week, the aforementioned scenario has unfolded yet again.

A twist in the tale

There was a point in time when having Ethereum Classic (ETC) in one’s portfolio made sense if one had Ethereum (ETH). However, that narrative has gradually started to become redundant.

The ETC market has lost the volatility charm and in effect, the alt’s candles on the daily chart have become quite compressed. In fact, even during the recent dips registered in September, its price remained stagnant in its ‘cozy’ $40-$70 bracket.

Ethereum’s price, on the other hand, has been making huge leaps since the beginning of this month.

Even though ETC’s pattern on the chart still coincides with that of Ethereum’s somewhat, it should be noted that ETC has not been able to catch up with the pace of Ethereum’s growth.

In effect, investors have been bearing the burden of the former’s stagnancy. Over the past three months, for example, Ethereum has fetched its investors over 64% returns while ETC’s figures were as low as 7%.

Ethereum’s appreciation catalysts

Ethereum’s organic growth can, by and large, be attributed to its network upgrades and developments. On the macro framework, its developmental activity has been quite consistent.

Conversely, after recording massive spikes here and there in the 2018-2020 period, Ethereum Classic’s activity on this front has been quite unimpressive. Even though the same did register an uptick of late, it should be noted that it has been nowhere close to its previous highs.

For any network to remain relevant amidst growing competition and changing trends, more sophisticated versions ought to be introduced. Ethereum has been able to cater well to the same. The network, for instance, underwent its London hard fork in August. Its Altair upgrade is set to be activated this month.

However, nothing much is in the pipeline for Ethereum Classic. To make things worse, ETC Cooperative recently withdrew its support from the proposed ETC Treasury. It also declared that ECIP-1098 is no longer a viable proposal.

Additionally, Ether has the backing of institutional players. Just last week, the cumulative institutional inflows amounted to over $20.2 million. Alas, the Ethereum Classic market is fairly devoid of such support.

In fact, the withering interest of retail participants has also been quite prominent on the volume traded chart.

Closing remarks

Thus, if volatility continues to remain low, development activity doesn’t pick up the pace, and additional capital doesn’t flow into the market, Ethereum Classic would not be in a position to move in tandem with Ethereum in the upcoming altcoin rally.

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With the recent approval of a Bitcoin (BTC) futures exchange-traded fund (ETF), Ethereum (ETH) might just be next in line, per the crypto social media buzz. Crypto market leaders, such as Lark Davis of the Wealth Mastery newsletter, are convinced of this possibility. Davis noted how Ethereum has been “pumping” as market hopes get on high for a Bitcoin ETF.

At press time, ETH was exchanging hands at $3,875, just $325 shy from its record all-time high of $4,200. The crypto asset has also advanced by over 400 percent year-to-date, and analysts think the bull run has just begun. Technical analysts from Fundstrat research house believe the digital asset is set for a breakout leading to a new record high of $4,900.

Crypto trader and investor behind “The Wolf of All Streets” podcast, also predicted a “coming eventually” of an Ethereum ETF.

Is an Ethereum ETF coming soon?

Additionally, investment management firms have their wheels turning with anticipation of the same. VanEck and ProShares put in applications with the US Securities and Exchange Commission (SEC) for an Ethereum ETF in August. However, shortly afterward, both withdrew the proposals after doubts arose on the approval of such a product this year.

Other firms, however, remain hopeful, with a handful of Ethereum ETF applications based on ETH spot market prices pending with the SEC. These belong to companies such as Kryptoin Investment Advisors and Gemini Trust Company.

Despite great uncertainty looming on cryptocurrencies’ financial classification, SEC officials previously clarified that Ethereum is not a security. The coin also dominates 18.4 percent of the crypto market, according to CoinMarketCap, up from 17.5 percent last week.

Furthermore, since the start of the year, activity on the Ethereum network has surged hugely. Ethereum’s popularity is attributed to the rise of decentralized finance (DeFi) applications and non-fungible tokens (NFTs). ETH has also been driven up by the broader market rally. Therefore, the possibility of an Ethereum ETF is not too far-fetched.

Crypto Futures ETF

SEC boss Gary Gensler seems to lean more on crypto futures ETFs rather than spot market funds. Should an ETH ETF maturate, it will likely follow in the footsteps of ProShares’ Bitcoin futures-based Bitcoin Strategy ETF.

However, analysts still caution that crypto futures ETF will come with extraordinarily high fees compared to directly purchasing the asset. Additionally, a crypto asset’s price may drastically drop should the SEC deny it a futures ETF.

Meanwhile, the SEC’s approval of a Bitcoin Futures ETF has created room for greater investor interest in the digital asset. On Friday, BTC hit the $60,000 mark, a new multi-month high, just $5,000 away from it’s all-time high. At press time, BTC was trading at $62,576, 2.9 percent up in the day.

Bitcoin ETF Bitcoin Futures ETF Ethereum Futures ETF SECSteve Muchoki This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.-->

The traditional financial system and cryptocurrency networks are tipped to marry this week when exchange-traded fund (ETF) providers offer products tracking the price of bitcoin on US equity exchanges.

The US Securities and Exchange Commission (SEC) is not expected to oppose a filing from ETF provider ProShares to offer its Bitcoin Strategy ETF from Monday in the US under the BITO ticker.

The news sent bitcoin’s price to $US62,563 on Monday AEDT, just shy of April’s record high of $US64,863, according to Coinbase.

“The general argument for an ETF is that you bring bitcoin to a traditional marketplace a regulated exchange like the Nasdaq, NYSE, or the ASX,” said Kraken Australia’s chief executive Jonathan Miller.

“It means the boxes are ticked for entities that have risks or controls around the asset classes they invest in. So, it’s a kind of path to market argument.”

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ProShares’ exchange-traded bitcoin fund will trade futures contracts on the Chicago Mercantile Exchange (CME), which is registered with the Commodities Futures Trading Commission (CFTC). It will not own bitcoin directly, but will seek to track front-month bitcoin futures contracts.

This means the short-dated contracts’ value should closely track the spot price, although the prospectus warns the performance of bitcoin futures contracts and fund may differ significantly from the performance of bitcoin. Traders generally buy cash-settled futures contracts to hedge exposure or speculate on future price movements.

The ETF will charge a 0.95 per cent annual management fee and Mr Miller said he didn’t see crypto-tracking ETFs listed on traditional securities exchanges as competition for the bevy of new crypto-only exchanges due to different fees and product classes.

“Kraken has 80-plus assets on its exchange, when you trade on Kraken, you’re trading directly on the market with other counterparties. The fees you pay a business like Kraken are really low. So, I’d say to the extent that there’s more exposure to crypto for people in traditional funds it’s a good thing, but in terms of it being direct competition, I don’t think so.”

Flood gates

Multiple other fiat-based ETF issuers have flagged plans for futures-based or synthetic crypto offerings including Cathie Wood’s Ark Invest, VanEck, Valkyrie Investments, Invesco, and Galaxy Digital. On October 21, the US Financial Stability Oversight Council is scheduled to update the market on a report about the regulation of stablecoins.

In Australia, the Senate Select Committee on Financial Technology and Regulatory Technology will deliver a final report on digital asset and cryptocurrency regulation on October 30.

Last week Chi-X exchange boss Vic Jokovic said the Australian Securities and Investments Commission has taken a cautious approach over the issue to avoid any missteps. Local ETF providers including Betashares and ETF Securities have expressed interest in launching cryptocurrency-based funds.

Tom writes and comments on markets including tech, crypto, software, small caps, banking, payments, and regulation. He worked in asset management at Bank of New York Mellon and is a member of the CFA Society of the UK as an IMC graduate. Connect with Tom on Twitter. Email Tom at tom.richardson@afr.com or Subscribe to save articleLicense articleFind out moreRead MoreCryptocurrenciesBitcoin

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The broader crypto-market has been witnessing a relief rally of late. Despite some corrections at press time, the prices of most top coins seemed to be getting back on track on the charts.

Amidst the broader market drama, the battle between L1 and L2 solutions has also been intensifying. In effect, the price tug of war has been quite intriguing over the past month. Even though token holders have been handsomely rewarded over the aforementioned period, Ethereum, comparatively, has been struggling.

So, would the scenario change anytime soon or will ETH become redundant with time?

L1 versus L2

Layer 1 solutions have been getting back to the center of the crypto-stage. With the space getting even more competitive, tokens associated with such networks have been rallying lately. A few days back, Cosmos, Polkadot, and Tezos were the highlight, and now, the spotlight is back on altcoins like Solana, LUNA, Avalanche, and Fantom.

The recent funding programs launched by these networks have successfully been able to garner liquidity and attract new users to the ecosystem. As depicted in the chart attached, Solana, Fantom, Avalanche, and Terra have all seen notable TVL upticks over the past month.

Solana and Terra’s liquidity has been hovering around the $8 billion-mark of late. Fantom and Avalanche’s growth, on the contrary, has been quite steady.

L2s solutions have undeniably been garnering mainstream traction of late. Arbitrum’s growth over the past few weeks, for instance, has been quite phenomenal.

However, the solutions, in conjunction, account for 1% of the total daily gas spent on Ethereum now. Optimism, along with Arbitrum, has led to the recent surge and accounts for 50% of the total L2 gas consumption. The cumulative rise isn’t a healthy sign as such, and the same might have triggered user migration to L1 networks.

Where does Ethereum stand?

When relative performance is compared, altcoins like Solana, Fantom, and CELO have been able to fetch HODLers over 100% returns over the past month. Other L1 tokens like NEAR, LUNA, ATOM, and AVAX have also been able to confer investors with fairly high yields.

Ethereum has evidently found it difficult to keep up with the aforementioned tokens. In fact, as can be seen from the following chart, ETH’s returns have been negative over the past month.

Even though numbers weave their own story, it shouldn’t be forgotten that Ethereum has its own advantage. The network, on its own, is largely secure. L2 solutions, on the other hand, prioritize transaction speed, confirmation time, and lower gas fees. In effect, they are more prone to attacks.

Other prominent L1 solutions too, like the ones discussed above, come with their own question marks. Even though a few have already started adopting Ethereum’s security model, it should be noted that their respective puzzles still have a few missing pieces.

Migrations and tradeoffs are essentially byproducts of emerging competition. Only if other networks are able to consistently deliver, they can thrive in the space. Else, Ethereum is set to remain the crowned prince.

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