Legs, DAOs, and DAUs

Plus Yuga, CNN, Meta, and more

Author

Dana Hork
October 13, 2022

Hi. It’s Dana. Welcome to the Web 2.5 newsletter featuring news, content, musings, and memes at the intersection of Web 2.0 and Web 3.0. 

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And now, on to this week in Web 2.5! A teaser for what to expect...

 💯 The Top Five

#1: Bored Ape Creators Face an SEC Investigation 

Yuga Labs is being investigated by the Securities and Exchange Commission (SEC) over whether its digital offerings violate federal law. The SEC is examining 1) certain NFTs in Yuga Labs' portfolio, which include collections like Bored Ape Yacht Club, CryptoPunks, and Meebits, and 2) their digital currency, ApeCoin, which has a current market cap of just over $1.5 billion and is the key to accessing the ApeCoin DAO.

So why is the SEC getting in the mix (again)? A 1940s Supreme Court decision ruled that digital asset firms must register their offerings with the SEC if they qualify as a security. So what is a security? Ask Howey. Ok, so Howey is not a person, it's a test (though the test is named after a company). But here's what it means:

The Howey Test consists of four prongs, all of which must be satisfied for the SEC to classify a transaction as a security. The four elements are as follows: [1] An investment of money [2] in a common enterprise [3] with expectations of a profit [4] to be derived from the efforts of others. Source: Bloomberg.

SEC Chair Gary Gensler has repeatedly argued that most crypto assets have the characteristics of a security as defined by The Howey Test and should be regulated by the agency. So this investigation is another example of the SEC attempting to ensure the crypto market follows its guidelines.

Why it matters? This investigation is bigger than Yuga and will be a bellwether outcome for the industry in terms of whether NFTs and/or DAO governance & utility tokens should be regulated as securities. For their part, Yuga stated that "as a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way." The company is at the moment only under investigation and has not been accused of any wrongdoing. But these investigations, one after the next, are enough to keep everyone on high alert.

#2: Reports That No One Uses Decentraland and The Sandbox Caused a Data Definition Food Fight

A data aggregator, DappRadar, reported this week that Decentraland and The Sandbox, two popular metaverse platforms, have less than 1,000 daily active users (DAUs) each, despite having $1 billion+ valuations. For the quants among us, the numbers reported by DappRadar were 38 and 522 active users, respectively, in a 24 hour period.

So here we are again in data definition-land. It depends what you mean by an active user. Turns out that DappRader defined it as the number of unique wallet addresses that interact with a platform's smart contract. But as anyone who goes to the metaverse knows (yes all 38 of us), your trip to the metaverse might not mean you're actually engaging with a smart contract. You might log in briefly to socialize, or to attend events. Or honestly to get stuck trying to get around a railing, which is often my experience. Said simply, and as Arthur Madrid, CEO and Co-founder of The Sandbox, put it, "Imagine you only track the number of people paying for something at a cashier at a shopping mall. That doesn't mean there aren't a lot of [passersby]."

So the platforms were quick to jump in and correct the record by using a much broader definition of DAUs & MAUs. By their count, Decentraland reported 56,700 monthly active users in September and The Sandbox claimed an average of 201,000. 

Why it matters? Bad data definitions make for sloppy reporting, and that just sucks overall. Hopefully we'll start to see companies be more proactive about reporting their own data (and corresponding definitions) before others try to (and get it wrong). AND hopefully we'll see more standardized definitions make their way into the world. But part of me wonders how much DAUs and MAUs matter at this moment, at least for web2 brand partnerships. I would guess that web2 brands launching these metaverse activations are largely leveraging the technology, infrastructure, and development resources from the metaverse platforms, but still plan to leverage their own customer bases to drive traffic and basically BYOC (customers). It's kind of like a store opening in the real world. It's one thing to just open. But someone still has to drive traffic to it, even in web3. 

#3: CNN Abruptly Closed Their NFT Project and Marketplace "Vault" 

CNN issued a press release this week announcing the close of Vault, their NFT project and marketplace that enabled holders to collect digital collectibles of historic news moments. The media company noted that Vault was originally a six-week web3 experiment that quickly expanded due to community support — but did not give a reason for the sudden news that it would no longer be "developing or maintaining" the community. The backlash was swift and fierce, with many calling the move a "rug pull" given CNN had been advertising upcoming drops and exclusive merchandise on their website. 

Why it matters? Turns out in web3, it is better to have never loved at all than it is to have loved and lost. Remember, the mint is the starting line, not the finish line. Brands that don't start, or even finish the race, will not be let off the hook.

#4: Celsius Holders Get Doxxed

Celsius Network, the bankrupt cryptocurrency lending company, exposed personal information of thousands of users amid its restructuring process. The court ruled against many of Celsius' requests to cut back on the customer personally identifiable information, and so it all became available in the public domain. In the wake of the release, a video game-style leaderboard detailing who has lost the most money sprung up. It was also reported that former Celsius CEO, Alex Mashinsky, allegedly withdrew $10 million in May before the company's collapse. He resigned from his position in September and called himself a "distraction to Celsius and its path to recovery."

Why it matters? There are only three certainties in life — death, taxes, and that everything will become public. Even in web3.

#5: Legs, Yes We Mean Legs, Are Finally Coming To Mark Zuckerberg's Metaverse 

Meta announced at Meta Connect that Facebook avatars will now have legs. Along with the full body avatars, the company will soon launch an avatar store where users can buy accessories for their Meta avatars. The company is also using its new high-end headset, the Quest Pro, to track eye movements and facial expressions which allow for more lifelike expressions on the avatars. Here's the full roundup of Meta's VR announcements at Meta Connect 2022.

Why it matters? The addition of legs is just fun and great and it's nice to have news that feels positive and happy and that, yes, has legs.

And now off we go to the easy, breezy, beautiful other stories....

👠 Fashion & Beauty

Designer Rebecca Minkoff collaborated with web3 community Mavion to create a Web 2.0 meets Web 3.0 offering that's minting this week. NFT holders will receive exclusive fashion benefits and access to perks like designing products, gift cards, meet and greets, and future royalties from metaverse and gaming collaborations.

Kenneth Cole is launching a second NFT collection called "The All Together" series. The collection takes inspiration from the Mental Health Coalition's logo, and each collectable will be .08 ETH. 

Urban Decay launched the limited edition 'Naked x Robin Eisenberg' eyeshadow palette, which allows buyers to experience Robin's art through an AR game called 'Beamin Up.' The game will prompt players to 'Aim, Beam, Power Up & Share Good Vibes' as aliens fly towards them. Users can share their 'Vibe Score' on social media using the '#UDRobinEisenberg' hashtag. This one is probably worth clicking through to read because this all makes no sense to me.

🥞 Food

IHOP sent the world abuzz by announcing the launch of an NFT - New French Toast. Customers can purchase the "NFT" with 10 PanCoins, the currency of IHOP's loyalty program at, get this, the International Bank of Pancakes Stack Market within two weeks of the product's launch. Seems like the pun division of the copy department at IHOP has been very busy.

The founder of Eater and Resy launched Blackbird, a web3 loyalty program for the hospitality industry. The company plans to build software products "that [establish] and [enhance] connectivity between individual restaurants and their guests."

🏘️ Home

West Elm entered the metaverse on Roblox. The West Elm Hub and Neighborhood feature a furniture store, coffee shop, and merchandise boutique. Users can customize their homes with furniture, lighting, garden, and decorative accessories that have been created to look nearly identical to actual West Elm goods. This sounds one part fun — and another part like even in the metaverse, I still will need a lot of interior design help.

⚾ Sports

New Zealand Rugby announced this week that it bought 33 World of Women Galaxy (WoWG) NFTs as their first step into the world of web3. 

The New York Yankees launched an Aaron Judge NFT digital collectible with Candy Digital. The NFT consists of a three-panel ticket, and a collage from the game in which he hit his 62nd home run of the 2022 season. 

LootMogul has signed a $10M deal with CowChip Crypto DAO, Bull Riders Only (BRO) and Professional Bull Riders (PBR) & Bull Riding Hall of Fame to create Western Sports, the world's first metaverse Rodeo city. Too bad the IHOP copywriters were too busy to write headlines like "That's Bull" for this announcement. 

🧸 Toys

Barbie has partnered with Boss Beauties to launch a new NFT collection. The series will consist of 15,000 NFTs that will represent the 250 professions that Barbie has held since 1959. Sounds like Barbie needs some PTO.

🍿 Movies & Media

Coinbase has released a documentary about cryptocurrency and its work over the last three years. It is available on Amazon Prime, iTunes, and Youtube. 

🖼️ Art

Damien Hirst burned hundreds of his physical art pieces after a majority of his collectors chose to keep the NFT version of his works. 

The Van Gogh Sites Foundation and Appreciator.io have collaborated to create the first Van Gogh NFT collection. With prices starting at $880, the project hopes to raise funds for cultural heritage preservation and to support local artists. 

Pace Gallery and Artblocks have partnered to launch an NFT collection called "QWERTY." This 500-piece series will focus on 'type' and ways that letters and symbols can create patterns. This will be artist Tara Donovan's first NFT project.

💰 Business & Finance 

Binance, the world's largest crypto exchange, had to suspend deposits and withdrawals after a $570M attack. 

Fidelity launched the Fidelity Ethereum Index Fund, raising $5M in the first week. 

FTX Trading Limited and Visa have expanded their partnership. FTX will now offer FTX-branded Visa debit cards to customers internationally. 

Telegram, the popular messaging platform, now allows users to buy and transfer crypto through the app. 

Adobe is utilizing artificial intelligence (AI) to improve marketing mix modeling. Adobe says the service will reduce the arduous marketing attribution process from months to weeks, which will be very beneficial and appealing to marketers. 

Coinbase and Google Cloud announced a new partnership this week. Coinbase will utilize Google Cloud to expand the reach of its crypto services, while Google Cloud will use Coinbase to enable its users to pay for cloud services via cryptocurrency. Most importantly (or not), Google now displays the ETH balance of blockchain addresses in search.

⚖️ Funds & Fundraising 

Cool Cats secured a strategic investment from Animoca Brands.

Amit Makherjee, a former NEA partner, recently launched the Chainforest DAO to invest in early-stage Web3 start-ups.

A16z Crypto led Justin Kan’s $14M round to build a Shopify for web3.

💼 Web3 Deals, Drops & Alpha

Art Blocks shared details of their roadmap ahead, including a revamped product, brand, and visual identity.

DeGods, the NFT collection, has transitioned to a 0% royalty policy. 

🎧 Movers, Shakers & Market Makers 

Brian Roberts, the CFO of OpenSea, decided to resign after ten months in the role. The web3 executive did not give an explanation on his early departure. This user on Twitter gave his hypothesis. 

Andrew Yang, former U.S. presidential candidate, has joined the Pool Data team as an advisor. The platform helps users monetize their data through tokens and crypto payment platforms.

NFT company Boss Beauties recently hired Yael Afriat as Chief Commercial Officer. Afriat has 15 years of experience in brand marketing and e-commerce with companies such as Bratz, Mattel, and Disney.

🔢 By The Numbers

In the first two weeks since launch, 3.4M people visited Walmart Land on Roblox. The gaming platform will soon welcome music artists Kane Brown, Madison Beer, and YUNGBLUD for a weekend of virtual concerts. 

💀 And Finally 

If you really didn’t like waiting in line at The UPS Store IRL, you can now not like doing it in the metaverse.

🫶 And that’s a wrap!  Thanks for reading Web 2.5. See you out there in the interweb3s. 

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DISCLAIMER: This newsletter is strictly educational. None of this is financial or investment advice — and not a solicitation to buy or sell any assets or to make any financial decisions. Please always Christian DYOR (Do Your Own Research).