5 Things Blockchain You Need to Know for August 22, 2022
CoinFund on the Lookout for Promising Web3 Companies After $300M Raise
TLDR: Web3 has been getting a lot of attention from investors lately. This is because Layer-1 and 2 technologies, as well as DeFi and NFTs, are seen as very promising areas for investment. It’s no surprise that many individuals and organizations want a piece.
Web3 projects are attracting investors despite the so-called crypto winter for a variety of reasons. Most importantly, investors believe that Blockchain, the underlying technology of web3 projects, has tremendous potential and will eventually be widely adopted. The technology has shown promise in a variety of sectors including decentralized finance (DeFi), gaming, Web3 infrastructures such as stablecoins and payments, asset management and exchanges, and on-ramp crypto wallets. The investor confidence is helping drive investment into web3 projects despite the current market conditions and gives web3 projects a long-term opportunity to grow and succeed.
The cryptocurrency investment firm CoinFund has raised $300 million for its latest venture capital-style fund, which will focus on early-stage startups oriented towards Web3. In contrast to seed funding, which tends to side with teams and thesis, venture funds are investing in companies that have already demonstrated some success and appear poised for even bigger returns. The fund’s strategy is to invest in both new firms in the company’s current portfolio, as well as old businesses which they had missed or had no opportunity to meet the team. Such an approach will aid in diversifying the portfolio. This approach will help diversify the portfolio, making the goal of this venture fund to identify teams that want to create large, adoption-related projects.
With the ecosystem’s expansion, new areas for investment will come to light. Rather than constructing centralized computing architectures, developers could instead focus on creating networks and protocols where users and developers can share control of the infrastructure along with its increasing number of subsidiary applications.
Launching a Blockchain In a Bear Market
TLDR: The “trilemma” of previous blockchain platforms might finally have a solution! The absence of gas transaction fees will enable more traditional businesses to shift to Web3.
Launching in a bear or saturated market can be difficult, but if you have an innovation, it can help you grow with the market conditions. For a long time, Ethereum Virtual Machine (EVM) compatible blockchains have been attempting to solve the trilemma — i.e. scalability, decentralization, and security problems, all at once. By using a gasless blockchain, we can prioritize natural scalability in order to optimize decentralization and security. This will eliminate flaws in those areas. The new blockchain’s lack of dependence on gas enables it to be used in a variety of industries that require transactions. People who are frequently involved with blockchain are often hesitant to pay gas fees for every small transaction because it would become expensive over time.
To guarantee a gasless blockchain, the new type of consensus was developed on a Proof of Authority foundation, with a mix of Proof of Stake to spread the burden of risk and enhance the blockchain’s overall security mechanism. With Proof of Authority, it’s possible to remove any unwanted or malicious validators from the network through a secure and decentralized voting mechanism. To compromise a Proof of Authority network, over 51% of its validation vehicles would have to be compromised — making it both difficult and unlikely. Blockchain encryption is quite safe. The most serious problem with crypto “hacks” is the use of human error, which can be avoided with Proof of Authority. Because it is a gasless blockchain, it has automatically eliminated the scalability component of the trilemma, allowing for more attention to be paid to security and decentralization. This development presents an opportunity to introduce blockchain technology into industries that didn’t initially plan on using it.
As SEC Leans on Enforcement to Regulate, Crypto Lawyers Study Every Word
TLDR: Beware! Regulators are addressing recent investor protection issues in the cryptocurrency space.
What is the connection between car manufacturers and crypto lending platforms? As with motor vehicles and investment vehicles alike, consumers and investors deserve protection. Recent market events, such as some crypto lending platforms’ moves to freeze investor accounts or declare bankruptcy, prove how vital it is for crypto companies to follow securities laws. No matter what an investor puts into a cryptocurrency app — whether it be cash, gold, bitcoin or chinchillas — the level of protection they are offered by the law is dependent on how the platform uses said investment. Investors benefit from knowing what lies behind the cryptocurrency company’s promises of a certain return. Disclosure aids investors in understanding how their assets are being utilized. Whether it’s known as a lending platform, a crypto exchange, or a decentralized finance platform, the crypto platforms can’t avoid complying with time-tested investor protections by simply attaching a label to the product or the promised advantages. The Supreme Court has made it clear time and again that the economic conditions of a product — not its labels — determine whether it is a security under the securities laws. Noncompliance is not an inherent issue with the crypto business model or technology. Instead, it’s as if some of these platforms have a choice and are daring regulators to try and stop them.
Is the E-Commerce Sector Ready for the Web3 Revolution?
TLDR: The potential for Web3 to revolutionize e-commerce is enormous! Customers may use cryptocurrencies and NFTs in c-commerce to purchase goods, making the process more convenient than ever before!
Thanks to Web3, we can now attach value and incentives to almost every part of human activity. This has huge implications not only for how businesses interact with their customers but also for how people can self-organize to push for social change. Web3 provides the infrastructure for c-commerce, which is the next step in online shopping. C-commerce allows users to purchase items using digital assets like cryptocurrencies and NFTs. This has major advantages and may revolutionize the online shopping experience as we know it, in multiple ways.
Let’s begin with safety. Decentralized, blockchain-based shopping platforms are more safe than traditional online stores because they use high-tech encryption and distributed storage. When content is decentralized, it becomes much more difficult for a single entity to manipulate or censor that information.
Secondly, Web3 solutions make online shopping platforms more accessible and user-friendly by integrating crypto-based payment methods. This would reduce friction for users who commonly face issues with fiat-based payments.
And finally, Web3 promotes community-oriented purchasing ecosystems in which consumers have a direct influence on the platform’s policies and long-term development. In contrast to the top-down models that dominate traditional eCommerce, this is a huge breakthrough.
There are some obstacles in the way of this future. The wild volatility of crypto-assets, for example, is a major worry. They also create several regulatory obstacles that the sector must overcome in order to achieve reasonable development and maximum dependability. Otherwise, they would significantly impede broad adoption. Another problem is that many cutting-edge solutions are only appropriate for tech-savvy users. They’re not accessible from mobile devices, and the interfaces on web apps aren’t user-friendly enough for amateur or non-technical users, which calls for improvements. Despite these challenges, Web3’s potential to change digital commerce as we know it is tremendous.
Warning Issued Over DeFi Transactions
TLDR: Before joining any DeFi program, investors should study the risks and rewards carefully. These programs are not regulated by the financial and capital markets regulators so there is a higher risk of loss involved.
The Securities and Exchange Commission (SEC) has yet again warned investors to be cautious when conducting decentralized finance (DeFi) transactions, stating that there are risks and that they do not come under the purview of the country’s regulators.
Decentralized finance, or DeFi for short, is a type of financial service built on a blockchain that doesn’t require intermediaries. By using smart contracts, different operations can be automated and conditions set in order to create this decentralized finance ecosystem. Proponents believe that this technology will shape how we do financial services in the future.
Since digital asset transactions, like lending and reinvesting often offer high returns, traders are usually incentivized to enter into them. Although, it’s important to note that these significant rewards come with great risks. Some risks include overleverage (when digital assets are lent for more than their collateral value) and investors not receiving enough information or being tricked by service providers. There are also technical and security risks including terms, conditions and functionality that may have vulnerabilities. Some cons in the DeFi world involve project teams fleeing with investors’ money (aka “Rug Pulls”). And the list goes on. The key message is, DYOR (Do Your Own Research!)
The Blockchain Brief is a weekly email newsletter and podcast that provides you with important insights about blockchain and related technologies.
Stay updated with my analysis of this week’s top stories on blockchain and related technologies. Click the link below to subscribe to Blockchain Brief Podcast via Spotify and Apple Podcast.
➡️ Blockchain Brief Newsletter: https://lnkd.in/dsVT6iKd
➡️ Spotify: https://lnkd.in/dMctGdvA
➡️ Apple Podcast: https://lnkd.in/dZJB3GD6
