Hello and welcome back to the Web3 Rewind! Per usual with the industry, lots has happened this past week so without further adieu, let’s dive into this week’s news.

The Latest

Go touch grass. It’s a common refrain in crypto to remind people to get off their screens, to put the phone down and experience some nature. I took this chance earlier this week when my sons and I went skiing at Mammoth for two glorious days when the crowds were minimal and the snow was amazing.

The sentiment is spot on, though sometimes the tweets you’ll see feel like subtle humblebrag. But anyone in this space knows how draining it can be, how the fear of FOMO can make you feel as though nothing you’re working on will ever hit critical mass. The time to recharge is vital, and maybe a bit easier in a bear market. But even in the Eastern Sierras I couldn’t escape crypto completely as a guy at the après ski bar could be heard loudly proclaiming that a blockchain is nothing but a spreadsheet. As though Satoshi was ignoring the power of Excel when designing the first global permissionless payment network.

It reminded me how far we have to go, that there’s still much to teach about what blockchain means as both a technology and a shift in how traditional systems can be ordered. It’s easy to shit on crypto at the moment, and much of the criticism is warranted. But the continued lack of understanding from prominent people as well as loudmouths at the bar gets tiresome.

On the flipside, I was lucky enough to go to an opening at the Bright Moments NFT gallery in Venice this week. I met the artist, Nat Sarkissian, whose generative landscapes were beautiful and like nothing I’d seen at Bright Moments before. Sarkissian told me he thought he’d be able to explore his art when he retired, yet the advent of NFTs had changed the calculation and he was now making his living as an artist. So this technology can be lifechanging, which for me sometimes is hard to remember. That’s when I need to get out and touch grass and meet people like Nat. I’ll gladly take that positive vibe and work to educate the loudmouths at the bar with stories like his. — Matthew Leising, editor in chief, Decential Media

ZK roll-up dept.

Polygon’s zkEVM Beta Is Going Live on Ethereum Mainnet Next Month

As the ETH roadmap continues to pass milestone after milestone, prominent layer one solutions (L1s) such as Polygon have been busy as well.

Polygon noted, “it will launch its zero-knowledge Ethereum Virtual Machine (zkEVM) Mainnet Beta on March 27,” according to Blockworks reporting. ZK roll-ups help to combine off-chain transactions into bundles that are verified and then settled back on Ethereum. In practice, this frees up computation and storage space on Ethereum.

Despite competition with other L1s such as zkSync and Skroll, Vitalik Buerin noted that Polygon’s zkEVM is a “Type-3” solution. Blockworks clarified that this means that Polygon has, “near EVM equivalence and [the] choice to forgo the use of precompiles.” That’s a powerful endorsement. — Parker Dresdow, Decential Media

Quick Bits

Breaking: Paxos reportedly ordered to stop issuing Binance USD

• More shockwaves are hitting crypto as the New York Department of Financial Services (NYDFS) has ordered Paxios to cease issuing the Binance USD stablecoin. Cointelegraph notes this action comes only shortly after the company was also given notice of planned enforcement by the Securities and Exchange Commission (SEC).

• The heart of the problem is that regulators define securities as any money made in a business by the effort of someone other than the investor. So in the case of stablecoins, profit could come from, “arbitrage, hedging, and staking opportunities,” therefore qualifying it as a security, according to Cointelegraph. The fight over what is and what is not a security in crypto has been a long-standing battle, and while companies like Coinbase are putting up a fight, it’s clear that if this battle is ultimately won by regulators its precedent will have a deep impact on the industry moving forward both in the US and globally.

UK Financial Regulator Cracks Down on Illegal Crypto ATMs

• Countries around the world are all grappling with the same question: how do you regulate a purposely unregulated industry? The UK’s Financial Conduct Authority (FCA) is in the throws of this question, specifically regarding crypto ATMs. While there are no specific guidelines or laws regarding crypto ATMs in the UK, the FCA has also not granted formal approval to any and is now issuing cease-and-desist letters and threatening investigations to the operators.

• One of the main reasons for the crackdown is due to money laundering associated with these machines. As Decrypt noted, “links between crypto ATMs and money laundering are anything but theoretical and potential links between these ATMs and organized crime have been highlighted across the world.”

Ethereum’s OFAC-Compliant blocks drop to 47%

• On suspicion of funds being laundered or used to finance illegal actions, Tornado Cash and other mixers have been blacklisted by United States Office of Foreign Asset Control (OFAC). In tandem, validators on pre-Proof of Stake Ethereum had proceeded to block transactions from certain addresses that were connected to Tornado Cash’s mixing protocol.

• This voluntary censoring of transactions raises concerns about ETH’s censorship resistance. Earlier this week, OFAC-compliant blocks were just shy of 50 percent, the lowest since November of last year when blocks were roughly 80 percent OFAC-compliant, per Cryptoslate. This trend is interesting as it shows that when regulatory pressure is sensed to be higher, validators may feel that pressure and get in line, thereby showing ETH to not be censorship resistant which is, in spirit, contrary to the whole purpose of the blockchain.

Kraken ends its crypto-staking services for US clients following $30M SEC charge

• R.I.P. to Kraken’s on-chain staking program. Following charges from the Securities and Exchange Commission (SEC), Kraken has officially shut down the program and settled for “$30 million in charges for ‘disgorgement, prejudgment interest, and civil penalties,’” according to TechCrunch.

• What’s unclear though is how this will affect others’ staking programs. Certainly, the precedent seems grim. “Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection,” SEC Chair Gary Gensler declared. In response, exchanges such as OkCoin are beginning to preemptively shutter their earn programs.

Latest Podcasts

Decent People Podcast With Dan O’Prey

On the latest DeCent People podcast, we sit down with Dan O’Prey, Bakkt’s Chief Product Officer for Crypto. He most recently served as Chief Strategy Officer as part of the executive team at Digital Asset, where he was responsible for defining the corporate strategy and aligning the top-level product strategy. Bakkt is the crypto futures exchange that delivers actual coins upon expiration of the futures contract, giving institutional or more conservative investors a way to accumulate crypto on a fully regulated marketplace.

You can download and subscribe to the podcast here on Spotify, Apple Podcasts or Amazon Music and Audible.

Lights Camera Crypto With Ruben Rojas

On the latest episode of Lights Camera Crypto, Artist Ruben Rojas shares how his well-paid but unfulfilling career in real estate and finance ultimately led him to start creating murals for himself. Those murals evolved to canvas and to fashion, leading him to create one of the most recognizable brands around love and positivity in the web3/digital space and throughout the world.

You can listen and subscribe Apple Podcasts and Spotify.

Big Brother and the Hodling Company With Kaitlyn Davies

On the latest episode of Big Brother and the Hodling Company, we sit down with Kaitlyn Davies, a Lisbon-based Canadian, who works and collaborates at the forefront of music and technology. We chatted about how her love for music – which started in utero backstage at an Aerosmith concert – has taken her throughout the music industry, across the globe, and into the wild wild world of web3.

You can listen and subscribe Apple Podcasts and Spotify.

And last but not least

AI Sector Surpasses Yield Farming Again to Outperform Market by 12%

Given the hype amidst AI that has seemed to erupt on the back of apps like ChatGPT, it’s no surprise that the AI sector has a market cap near, “$4.08 billion, with $838 million in volume,” per Cryptoslate. The publication goes on: “Data stream aggregator The Graph leads the sector with a market cap of $1.42 billion, while SingularityNET saw the most substantial gains, up 16.2 percent in 24 hours (as of Tuesday).” By comparison, the Yield Farming sector only saw growth of about 4.5 percent. At a high level, this news comes on the back of Bitcoin finding its price steady in the low $20,000’s.

This is important since the narrative around which sector is most trending appears to be changing. While yield farming was quite trendy in the last couple of years, bloated and unsustainable growth from services like Terra’s LUNA yield has become an ominous signal for investors. AI though promises growth, not only in crypto but more secularly in the broader tech market. As AI and blockchain technology grow hand in hand, there’s bound to be more growth in this promising marriage of cutting-edge technology. —PD

Out of the Ether: Special NFT Edition

Have you read the definitive history of Ethereum? No? Well then get your special edition of Out of the Ether while you can. There are only 1,000 that were printed and each copy is an NFT that can be registered on the Lukso blockchain’s Universal Profile protocol.