Notes From The Week #16

Yo! Welcome back and I hope you’ve had a good week. I enjoyed a chilled end to my weekend today. I went to lunch with some friends and then went vinyl hunting. It’s been a while since I last went on a rummage through vinyl stores. Collecting the vinyls of my favourite records has become a hobby I’ve picked up over the last few years. I’ll run you through why I started later on. This week we’re heavy on Crypto & Web 3: big news coming from the traditional finance space alongside a discussion of the transition to Web 3 that Twitter is embarking upon.

J.P. Morgan Meets DeFi

The DeFi (Decentralised Finance) ecosystem received a huge nod of approval from traditional finance this week as banking giant J.P. Morgan successfully executed its first-ever cross-border transaction on a public blockchain (Polygon). J.P. Morgan issued tokenized S$100,000 ($71,000) as part of the Singapore central bank’s pilot programmes exploring the use of decentralised finance. DeFi has been floating around for a few years now. In simple terms—DeFi, uses blockchain-based smart contracts to automatically execute a variety of financial transactions without human intervention.

Aave Companies CEO Stani Kulechov said the trade was “a monumental step forward for DeFi.” Kulechov went on to say that: “utilizing the Aave protocol to deploy a liquidity market on the Polygon mainnet for supplying and borrowing tokenized foreign exchange transactions…is the first time the world has seen a real world use case for institutional-grade DeFi protocols.” This is a very strong endorsement for the value that DeFi can provide to capital markets.

The exciting thing about Crypto & DeFi is that there is still so much more building to be done but it’s always nice to have a breakthrough moment on the path to progress. This is such a moment. If you want further context on the trade then feel free to check out this podcast episode from Empire. WAGMI.

Twitter’s Path to Web 3

With this tweet Elon Musk confirmed the long anticipated news. He had completed his $44 billion acquisition of Twitter. It’s been a long 7 months since Twitter accepted Musk’s proposal to buy the social media service and take it private. As the next few months saw doubts of Musk’s intentions to follow through with the agreement the deal looked like it was set to be called off. As Elon maintained a stance that Twitter had failed to adequately disclose the number of spam and fake accounts on the platform. With that all just water under the bridge now it’s interesting to see how Web 3 will look to mesh with Twitter, arguably the most popular social media platform for crypto and Web 3 information and latest happenings.

It’s important to state that it still seems relatively unclear how Musk will finance the deal. At the onset of announcing the deal he had confirmed he had secured some debt financing from a number of investment banks. He has subsequently received the backing of some prominent venture capital investors and technology CEOs. One such CEO being—Changpeng Zhao (also widely known as CZ)—the CEO of the cryptocurrency exchange Binance who confirmed that they are an equity investor in the Twitter takeover.

Twitter has enormous potential. As echoed above by CZ it has become the digital Townsquare for the world. It has provided a unique space for the discussion, diffusion and development of ideas. Twitter has helped launch revolutions such as the Arab Spring while also bringing attention to injustices and turbocharging cries for social justice demonstrated by the Black Lives Matter protests that came as a result of the extrajudicial killing of George Floyd. To translate this potential to be the world’s most important social platform into a viable business model will be the main task of Elon Musk and his team. The path to profitability to Twitter will be a long one. Twitter has been listed on the New York Stock Exchange since 2013. In every year since it has been publicly traded bar two years (2018 and 2019) it has shown a net loss every year. A clear opportunity will be Twitter leading the pack of Web 2 companies looking to make the transition to the Web 3 ecosystem.

Binance’s investment into Twitter provides a very interesting opportunity for the development of the Web 3 ecosystem. In order to truly assess the merit of Web 3 it’s important to understand some of the characteristics of Web 2. Web 2 companies have largely framed their business models around internet platform centralisation and data collection for ad-based revenue. In a new world where there is an increasing demand for individuals to be able to have the opportunity to own their data such a business model faces immense scrutiny. While Elon has expressed that he will not abandon ad-based revenue its clear that some of the feature roll-outs expected in the next few months will embed Web 3. For example, the announcement of Twitter Blue shows a path to Web 3 as it allows the creators and communities on the platform to benefit from the value they create as a result of their content. Twitter Blue seeks to do this by allowing creators to earn income from a Twitter Super Follows feature. Twitter is going to go on an interesting journey as Elon seeks to create maximum forms of value from the platform—but if it is able to navigate accordingly it can help provide a strong case study for the fusion of social media and Web 3.

On Vinyl Collecting

I decided to start collecting the vinyl records of my favourite tapes a few years back. I remember at the time thinking about the consequences of the pandemic and the new normal it ushered in. I thought about how this new normal had made us increasingly more digital as we sought to find new ways to engage with community whilst navigating physical constraints.

I understood this new digital life to be necessary but one that I could see coming with its own challenges. In no ways am I a luddite—quite the opposite I think technology has the potential to correct some of the major ills in our society. I also think that if we can make adequate use of our new digital contexts then it can fundamentally change our world for the better. However, I realised that I needed to invest in offline hobbies to balance out the increased amount of time I’m spending online.

Collecting vinyls has been a fun hobby so far. When I’m back to international gallivanting it will be nice to collect pieces of my favourite artists and pieces recommended to me from across the globe. I’ve also got a friend who has a cool vinyl sourcing company so it’s nice to support him from time to time. The next vinyls on my list are Joy Crookes’ tape Skin and Cleo Sol’s Woman.

This week I picked up:

• Nas - Kings Disease II

• Lauryn Hill - The Miseducation of Lauryn Hill

• John Coltrane - A Love Supreme

I’ll let Lauryn see us out this week.

Until next week. Peace.