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

There’s a storage closet – it’s not big enough to be called a room – upstairs at the Sports Castle event center in Denver, Colorado. In 2019 at least, the door didn’t even close all the way, but it was one of the only quiet spots I could find to do interviews for my book Out of the Ether, the story of the people who created and built the Ethereum blockchain. That was EthDenver 2019, its third year, and my oh my how things have changed.

The enthusiasm for all things Ethereum hasn’t changed, people like to say EthDenver is a degen honeypot. The brainpower on display was roughly the same as well compared to four years ago; I’m sure this has something to do with the week-long hackathon that precedes the more general conference and is a huge part of why the event seems to have soul.

What’s gone bonkers is the scale of it all. The Sports Castle could barely hold the 13,000 attendees last year so this year the founders moved the event to the Western National Complex, a venue best known for its annual stock show. It’s enormous. Concrete floors and high ceilings, a lower level that seemed to be an arena of sorts. The crowds swarmed it all, it was an endless stream of people from all over the world. EthDenver co-founder John Paller told Decential  in February that he expected to get 40,000 applications to attend. I would say in 2019 the crowd was more around 2,000.

It's a testament to the belief that underpins the Ethereum community. It’s quasi-religious at times and can come off as wildly naïve, but it’s also fuel. Fuel to keep these people warm during the latest crypto winter. Still, I saw and heard a lot at EthDenver that I either didn’t understand or thought was ridiculous. It’s a big tent, Ethereum, and for every smart contract breakthrough like trillions in repo trades done peer-to-peer instantly there’s a solution in search of a problem. Does money need to move constantly, as in you get paid every second, as a few attendees explained to me about their startup. I still can’t make heads nor tails of that more than a week later.

Anyway, as many people at the event remarked, you’d never know the doldrums in the wider crypto market from within the walls of the Western National last week. This was the network effect in human form, massed together in an industrial part of Denver that smelled of processed cheese being burned. It was amazing and asinine but overall a wonderful show of why people believe so damn hard that Ethereum will continue to change the world.  — Matthew Leising, Decential editor in chief

Another one bites the dust dept.

Crypto bank Silvergate to shut down amid crisis

Somewhat unsurprisingly, Silvergate Capital has announced that it will shut down its Silvergate Bank entity over lack of liquidity. Axios notes that the company was on the hook to repay $4.3 billion in loans yet “its outlook was grim.”Moreover, Silvergate saw consumers withdraw $8 billion from its platform around the time of the FTX implosion.

Another tombstone in the wake of FTX’s collapse. As the industry continues to witness such an ugly liquidity crisis, it does make one realize that crypto banks could benefit from the same benefits and protections that the FDIC offers to traditional banks. – Parker Dresdow, Decential Media

Quick Bits

Crypto Funding: DeFi replaces CeFi as VC Favorite

• Per Blockworks and CoinGecko, there is a shift in investments from Centralized Finance (CeFi) to Decentralized Finance (DeFi). While this may not be surprising given the massive collapse and insolvency of several CeFi players over the last year, it demonstrates the growing awareness of institutional players to the limitations of centralization and the power of decentralization. CoinGecko notes that “DeFi funding rose by 190 percent, while CeFi funding fell 73 percent in 2022.”

• The Blockchain Infrastructure sector attracted the third most investor dollars at $2.779 billion, behind DeFi at $6.102 billion and CeFi at $4.3966 billion.

Yuga Labs’ first Bitcoin NFT auction nets $16.5M in 24 hours

• After hosting its first Bitcoin-based auction for its Ordinal NFT collection, Yuga Labs raked in $16.5 million. The 288 pieces of generative art are inscribed into blocks on the Bitcoin blockchain, a first time the network has been used in this way.

• The method for collecting bids appears to have been rather archaic in that bidders were instructed to send their bids to a single address. Losing bids were promised to have them manually sent back. Understandably, there was a fair amount of ire amongst community members as they noted the potential for hackers and the like.

Multicoin Capital’s Hedge Fund Lost 91.4% Last Year, Investor Letter Reveals

• Multicoin Capital reveals that it has lost 91.4 percent of its value over the course of 2022. The primary driver for the loss was the 10 percent of assets that the hedge fund had tied up with FTX. Coindesk also notes that there was significant exposure to FTT, SOL, and SRM, which all saw significant losses over the fourth quarter of 2022.

• Coindesk also notes, “Despite the massive drawdown, Multicoin’s hedge fund remains up 1,376% net of fees from its inception through 2022.” Multicoin also “reported the fund gained 100.9% in January 2023, bringing the fund’s inception-to-January return to 2,866%.”

Binance’s PoR system shows over $63B in reserves backing 24 assets

• Binance is growing, and so are its assets. The 24 supported assets at the world’s largest crypto exchange are backed by $63 billion in reserves. “Binance held $3.55 billion worth of USDC, while users have a net balance of $64.7 million worth of assets,” according to Cryptoslate reporting.

• Cryptoslate goes on to note that Binance’s Proof of Reserves (PoR) are now backed by zero-knowledge proofs in an attempt to increase privacy and garner trust for the centralized platform as users want more assurance that their assets are safe.

Latest Podcasts

Decent People Podcast With Caitlin Long

On the latest DeCent People podcast, we sit down with Caitlin Long, who founded Custodia Bank in Wyoming to bridge the divide between businesses using or accepting cryptocurrencies and the traditional U.S. dollar based economy. Custodia was denied two applications to become a member of the Federal Reserve banking system and to have what's called a "master account" at the Fed. In response, Custodia has sued the Federal Reserve, claiming it discriminated against it because of its ties to crypto. We talk to Caitlin about how this all came about and what she thinks of her chances of succeeding in court.

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

Lights Camera Crypto With Danielle Davis

On the latest episode of Lights Camera Crypto, Co-owner of Fame Ladies and web3 educational advisor Danielle Davis discusses her desire to help others discover cryptoart and cryptocurrencies and how the intersection of both is propelling her forward in the web3 space.

You can listen and subscribe Apple Podcasts and Spotify.

Big Brother and the Hodling Company With Kat Rodgers

On the latest episode of Big Brother and the Hodling Company, we talk with Kat Rodgers, a music journalist and the community lead of Water & Music, a music research decentralized autonomous organization, or DAO. We chatted about her music journey – one that started and continues with Bjork – and the evolving or perhaps not yet existent role of music journalists in web3. And we get an inside look at the cogs and inner machinations of Water & Music, whose important research and potent, bleeding edge analysis is creating a more transparent and better informed music industry.

You can listen and subscribe Apple Podcasts and Spotify.

And last but not least

DAO gets legal recognition in the US as Utah DAO Act passes

In a promising move the state of Utah has ratified groundbreaking legislation for DAOs. The National Law Review notes, “In short, a limited liability company is not a DAO, and a DAO is not a limited liability company. The Utah DAO Act grants the DAO a form of legal recognition that is unique to DAOs.” The Utah structure includes identifying a “disclosed incorporator” while keeping DAO participants confidential. It also incorporates a new DAO-specific tax language. The law is expected to take effect in 2024.

This sort of momentum is encouraging. With these sorts of parameters established, it is easy to see where there could be potential for growth for DAO infrastructure and future legislation. This sort of action on behalf of a state government body is a good reminder that there is still a great deal of power that states have at their disposal to lead the way in innovation, despite federal bodies or regulators looking to potentially hamper it. —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.