Web3 is hailed as a technology paradigm that is fueled by the creator economy and is in the future, or rather, the next evolution of the internet. As we draw evolutionary comparisons of the technology that underpinned everything from information consumption to content creation, Web2 contributed an unparalleled economic growth and represented a significant era in human evolution with new ways to work, consumer information and progress in human civilization. So with this enormous success of Web2, why is there a need for Web3?
As we rethink the internet, which relies primarily on a few centralized entities that have devices, channels of information that feeds the social media, mobile apps and provides connectivity points between service providers and seekers of these services, the control over these channels provides the custodian of this infrastructure not only monopolistic control but also a “too big to fail” economic choke point. So rethinking the internet, which was designed primarily to move information and morphed into moving value and truth, is a fundamental shift in empowering creators and participants and not just the custodians on the infrastructure.
The drivers that fueled this disruptive thinking were excessive valuation and control of Web2 companies, censorship enforcement by the existing control of information channels and the rapid dissemination of information, which was a force for good as in knowledge transfer but is now weaponized with the velocity and veracity of information and the dissemination of bias, mistrust and misinformation — making it difficult to discern between signal and noise. These drivers indicate not only the dawn of a new era but also the creative nature of the human species to rethink, redesign and renew, shaping the next era of our evolution.
Related: What the hell is Web3 anyway?
So how do we envision this new paradigm taking shape? As Web3 aims at theorizing that the internet takes another step to be self-sufficient — leading to a whole new set of technology and protocol development, which will then be a foundation of a creators-controlled economy that embarks on information and value movement, and has discernable channels with built-in trust enabled by protocol. Blockchain and decentralization are often touted to be the enabling foundational concepts that are deemed essential to the development of such a platform. But before we drink the decentralization Kool-Aid, I think we ought to take a step back and reevaluate the success (and failures) of Web2 and more importantly, a transition to this new paradigm, as I suspect the challenges are not just technology-driven.
To enable a Web3-led creators’ economy that empowers creators and participants, we need to first understand the imperatives of participatory economics, where the focus is largely driven by self-governance, efficiency, sustainability and the creation of a decentralized economic system devised with strong incentives and protected by protocols that entail social ownership, self-managed works and accountability for outcomes.
Participatory economics originates from previous centuries of thought and experimentation around the idea that people should be able to manage their own lives with others (on the same network plane) cooperatively and fairly with rules embedded in the incentive economy that rewards participation and penalizes wrongdoing and activities that the network views as unfair. In other words, for Web3 to work and deliver on its promise, we need participation.
At a very basic level, participation, much like in the real world, can come via commitment of resources — such as systems, protocols, skills, intellectual capital and expertise etc., and value created should have an equitable distribution among the various participants based on the fundamental tenets of demand and supply to address the fairness element. The economic value created would then need to be realized, accounted for, disseminated and exchanged with other fungible and nonfungible assets to maintain a balance in any economic network — all of this without any central accounting system or authority — to address the self-governance and protocol induced equitable structure.
Web3, in its current context, begins to look like a stateful system of tokenized networks. Where these tokenized networks are not only attracting capital, talent and technology giving them a nation–state (with their economic structure and in-network currencies) status but also are market places and laboratories of co-creation between various projects. We have begun to see these manifest in various decentralized finance (DeFi) and nonfungible token (NFT) projects, and in a true sense, they are creating metaversical synergies between various tokenized networks.
To provide a true peer-to-peer, multi-token network (in a true sense, it’s metaverse) where projects and individuals can co-create and bring their participative energy is essentially the foundation infrastructure needed to deliver the Web3 promise. While we have seen unprecedented growth in the token-driven economy and exponential growth in investment and valuation of these projects, I think many of these projects neither embody the Web3 principles of participation nor have an economic output that adheres to Web3 tenets. The fundamental ingredient lacking here is — participation.
Evolution of Web3 economies and current volatility
Two fundamental technology concepts that allow us to discern between data (for validation and truth) and value transfer (for the participation economy) are the Semantic Web and decentralization, which will shape the future and facilitate the transition from the existing rapidly growing Web2 to the newer ownership-driven Web3.
The Semantic Web extends the notion of document/information on the web to data that is of value, facilitating information that becomes more meaningful (and valuable) when semantically linked with data. Data is then converted to things of value — leading to monetization and the accountability elements of Web3 principles.
Decentralization, on the other hand, facilitates peer-to-peer networks such as blockchain and enables us to move tokenized value — be they systemically created (cryptocurrency) or induced (tokens that represent value) — and address the self-governing and protocol-induced fairness elements of Web3 principles. At a very basic level, as we frame various interdependent ecosystems emerging on Web3 principles, it is fair to assume that their economies are interlinked. And as we build a strong foundation of Web3 with decentralized processing, interconnections and storage as foundational building blocks, they resemble the Web2 cloud infrastructure but with a different economic structure and control points.
As projects develop and evolve, these tokenized values would be inclusive of the collective value of the underlying infrastructure, services and talent layers. This interdependent ecosystem as manifested in the natural system will thrive; and a successful ecosystem and economy will attract talent, capital and resources with preserved mutual interest.
For instance, a metaverse project that includes NFTs and liquid crypto assets for fungibility will also have as the source of its success decentralized storage for artifacts, curated data model and analytics for its operation, decentralized processing and so on, lifting all the services ecosystem that would comprise Web3 ecology.
Now, many of these services are centralized so they that the challenges of the current economic system are also inherent in them, meaning they embark on on the promise of Web3 but lack its principles. This is quite evident with the volatility of crypto and increased liquidity provisioning from traditional finance in the form of stablecoin or banking on-ramps that enable the free flow of liquidity from traditional finance, thus preserving not only the growth but also the challenges of the existing financial system. So this linkage of volatility and stability of crypto markets is something we ought to discuss and the impact of this on volatility and what it means for the parallel financial systems of yield and returns.
For instance, a high yield in crypto markets will attract liquidity, and while the risk-on risk-off equation at play will attract capital and issuance of stablecoins, it also inherits the mechanics of global macro, which implies that any shifts in traditional finance capital markets, interest rates, money supply, inflation etc., which plays an important role in calculus that goes into asset valuation, begin to impact the crypto market, which, in principle, is meant to be independent and disruptive. What if we aim for self-sufficiency with truly crypto liquid and fungible assets and let the economic system work and self-correct? I find this equation worth the study and interesting, but also ironic.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Nitin Gaur is the founder and director of IBM Digital Asset Labs, where he devises industry standards and use cases, and works toward making blockchain for the enterprise a reality. He previously served as chief technology officer of IBM World Wire and of IBM Mobile Payments and Enterprise Mobile Solutions, and he founded IBM Blockchain Labs, where he led the effort in establishing the blockchain practice for the enterprise. Gaur is also an IBM-distinguished engineer and an IBM master inventor with a rich patent portfolio. Additionally, he serves as research and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.
Targeted phishing scam nets $438K in crypto and NFTs from hacked Beeple account
Links posted to a fake Louis Vuitton NFT raffle were made to capitalize on a recent real collaboration between Beeple and the luxury fashion brand.
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Digital artist and popular nonfungible token (NFT) creator Mike Winkelmann, more commonly known as Beeple, had his Twitter account hacked on Sunday as part of a phishing scam.
Harry Denley, security analyst of MetaMask, alerted users that Beeple’s tweets at the time containing a link to a raffle of a Louis Vuitton NFT collaboration were, in fact, a phishing scam that would drain the crypto out of users’ wallets if clicked.
⚠️ Beeple’s Twitter account has been compromised (ATO) to post a phishing website to steal funds.
— harry.eth (whg.eth) (@sniko_) May 22, 2022
The scammers were likely looking to capitalize on a real recent collaboration between Beeple and Louis Vuitton. Earlier in May, Beeple designed 30 NFTs for the luxury fashion brand’s Louis The Game mobile game, which were embedded as rewards to players.
The scammer continued to post phishing links from Beeple’s Twitter account, leading to fake Beeple collections that lured in unsuspecting users with the promise of a free mint for unique NFTs.
Bad actors continue have access to Beeples Twitter account and they have now tweeted another phishing domain.
This one just prompts the user to send ETH to an EOA (0xcad7fc974F61A08ADEF110D1BA446fa5b5B5Bb27).
Infra: 22.214.171.124 pic.twitter.com/HzTga1OvNK
— harry.eth (whg.eth) (@sniko_) May 22, 2022
The phishing links were up on Beeple’s Twitter for around five hours, and an on-chain analysis of one of the scammers’ wallets shows the first phishing link scored them 36 Ether (ETH), worth roughly $73,000 at the time.
The second link netted the scammers around $365,000 worth of ETH and many NFTs from high-value collections such as the Mutant Ape Yacht Club, VeeFriends and Otherdeeds, among others, bringing the grand total value stolen from the scam to around $438,000.
On-chain data shows the scammer selling the NFTs on OpenSea and putting their stolen ETH into a crypto mixer in an attempt to launder the gains.
Beeple later tweeted that he had regained control of his account and added to remind his followers that “anything too good to be true IS A F*CKING SCAM.”
ugh we’ll that was fun way to wake up.
Twitter was hacked but we have control now. Huge thanks to @garyvee ‘a team for quick help!!!!
— beeple (@beeple) May 22, 2022
Beeple has created three of the top ten most expensive NFTs sold to date including one which sold for $69.3 million, the most expensive ever sold to a sole owner. This attention has made him a target for hacks.
In November 2021, an admin account on Beeple’s Discord was hacked with scammers there also promoting a similarly fake NFT drop which resulted in users losing around 38 ETH.
Earlier this month, cybersecurity firm Malwarebytes released a report which highlighted a rise in phishing attempts as scammers try to cash in on NFT hype. The firm noted the use of fraudulent websites depicted as legitimate platforms is the most common tactic used by scammers.
Interest in Ethereum Name Service reaching ‘critical mass’
The latest metrics on new registrations and renewals of existing domains on ENS show that interest in the digital identity service has shattered previous records.
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The Ethereum Name Service is having its best month on record for new registrations, account renewals and revenue thanks to community awareness and low gas fees.
Lead developer at Ethereum Name Service (ENS) Nick Johnson tweeted on Monday the metrics for the Web3 domain service through May so far. He noted that numbers were poised to shatter existing records because they were already at all-time highs, “and there’s still a week of May left.”
May is now an All Time High for every single ENS metric we track – registrations, renewals, revenue (ETH & USD) and income (ETH & USD).
And there’s still a week of May left.
— nick.eth (@nicksdjohnson) May 22, 2022
Jonson told Cointelegraph on Monday that the main factor contributing to higher demand in ENS domains is that it is a place where people can “form shared communities without any overarching structure imposed on them beforehand.” This has had astounding results for the domain service:
“ENS has reached a critical mass of awareness and adoption. Most wallets support ENS names, so the usability factor is significant.”
ENS is an open-source blockchain protocol founded in 2017 that allows people to assign a digital identity to their Ethereum wallet. Each name is a nonfungible token (NFT) that ends with .eth and can act as an address, a cryptographic hash or a website URL.
The data shared by Johnson shows that there have been 304,968 new registrations, 13,260 renewals, and 3,165.85 Ether (ETH) in revenue so far in May. All of these metrics leave previous highs in the dust.
Johnson also said that ”low gas fees definitely have an impact” on the higher onboarding and renewal rates. To send a fast transaction on Ethereum costs about 22 GWEI, worth about $0.92 at the time of writing, according to gasprice.io. In periods of high volume, gas fees can be higher than $50, which may act as a deterrent to using the network unless in emergencies:
“You can register a 5+ character ENS name for a year for $5. High gas fees can make the cost several times that, so gas prices have a big impact on the affordability of ENS names.”
Interest in ENS domains has been quickly rising since April, when social clubs such as the 10k Club within ENS gained tremendous attention. The 10k Club was formed by owners of ENS domains numbered between 0-9999. Both new registrations and renewals have nearly doubled since then.
ENS’s record high revenues coupled with a market downturn has sparked plans in the ENS decentralized autonomous organization (DAO) to squirrel away funds for ongoing development. Johnson stated that the income slated for funding development and maintenance “for the indefinite future” would help the project weather further market volatility:
“With that guarantee against market effects, additional funds can be used more freely to help grow the ecosystem.”
However, the bullish metrics have not been reflected in ENS prices. The token has been on a steady decline since its November 2021 launch in which all .eth domain holders were airdropped a portion of the supply. ENS has fallen 86% from its November all-time high to $12.21, according to CoinGecko.
Top 5 cryptocurrencies to watch this week: BTC, BNB, XMR, ETC, MANA
The Dow Jones Industrial Average has declined for eight consecutive weeks, the first such losing streak since 1923. On May 20, the S&P 500 briefly fell into bear market territory, indicating that traders continue to sell risky assets in fear of a recession.
Due to its tight correlation with US equities markets, Bitcoin (BTC) has remained under pressure for many weeks. The bulls are attempting to push Bitcoin higher during the weekend and avert an even longer losing streak.
Bitcoin’s performance in the first five months has been the worst since 2018, indicating that sellers are in control. However, after several weeks of weakness, the crypto markets may be on the cusp of a bear market rally.
What are the critical levels that may signal the start of a sustained recovery? Let’s study the charts of the top-5 cryptocurrencies that may outperform in the near term.
Bitcoin rebounded off the crucial support at $28,630 on May 20, indicating strong buying near this level. The bulls are attempting to push the price above the downtrend line, which could be the first indication that the selling pressure may be reducing.
Above the downtrend line, the BTC/Tether (USDT) pair could rise to the 20-day exponential moving average (EMA) of $31,887. The bears are likely to defend this level with vigor. If the price turns down from the 20-day EMA, the bears will once again try to sink the pair below $28,630.
If they manage to do that, the pair could drop to $26,700. This is an important level to keep an eye on because a break and close below it could open the doors for a decline to $25,000 and then to $21,800.
Conversely, if buyers thrust the price above the 20-day EMA, the pair could attempt a rally to the 61.8% Fibonacci retracement level at $34,823. If this level is scaled, the pair could climb to the 50-day simple moving average (SMA) of $37,289.
The 4-hour chart shows that the price is getting squeezed between the downtrend line and $28,630. The 20-EMA and the 50-SMA have flattened out and the relative strength index (RSI) is just above the midpoint suggesting a balance between supply and demand.
This balance could tilt in favor of buyers if they push and sustain the price above the downtrend line. If that happens, the pair could start its northward march toward the 200-SMA.
On the contrary, if the price turns down from the current level, the bears will attempt to sink the pair below $28,630 and gain the upper hand.
Binance Coin (BNB) recovered sharply from the critical support at $211 and has reached the overhead resistance at the 20-day EMA of $323. This is an important level for the bears to defend because a break and close above it could indicate that a bottom may be in place.
Above the 20-day EMA, the BNB/USDT pair could rally to $350 and thereafter to the 50-day SMA of $376. This level could again act as a stiff hurdle but if bulls thrust the price above it, the pair could rally to the 200-day SMA of $451.
Contrary to this assumption, if the price turns down sharply from the 20-day EMA, it will suggest that bears have not yet given up and they continue to sell at higher levels. The pair could then drop toward $211. If the price rebounds off this level, the pair may consolidate between $211 and $320 for a few days.
The bulls are attempting to push the price above the overhead resistance at $320. If they succeed, the pair could rally toward $350. The bears are likely to defend this level aggressively. If the price turns down from $350, the pair could again drop to $320.
If the price rebounds off this level, the pair could remain range-bound between $320 and $350 for some time. The bullish momentum could pick up above the 200-SMA and the pair may rally to $380 and later to $400.
Conversely, if the price turns down from the current level, the pair could drop to $286 and then to $272.
Monero (XMR) dropped below the strong support at $134 on May 12 but the bears could not sustain the lower levels. This suggests aggressive buying on dips. The price has recovered sharply to the 20-day EMA of $179.
If bulls push and sustain the price above the 20-day EMA, the XMR/USDT pair could rise to the overhead resistance zone between the 200-day SMA of $202 and the 50-day SMA of $212. The bears are expected to mount a strong defense in this zone
If the price turns down from this zone, but bulls arrest the subsequent decline at the 20-day EMA, it will suggest a potential change in trend. Conversely, if the price turns down from the current level, the bears will try to pull the pair to $150 and thereafter to $134.
The 4-hour chart shows the formation of higher lows and higher highs. The bears tried to pull the price below the 50-SMA but the bulls defended the level successfully. This suggests a change in sentiment from selling on rallies to buying on dips.
The pair could next rally to the 200-SMA where the bears may offer a strong resistance. If bulls overcome this barrier, the pair could rally to $225. Contrary to this assumption, if the price turns down and breaks below the 50-SMA, the pair could slide to $150. A break below this level could challenge the strong support at $134
Ethereum Classic (ETC) dropped sharply from $52 on March 29 to $16 on May 12. The bulls are attempting to start a recovery which could face resistance at the 20-day EMA of $23.
If the price turns down from the 20-day EMA, the bears will again attempt to resume the downtrend by pulling the ETC/USDT pair below the critical support at $16.
On the contrary, if buyers propel the price above the 20-day EMA, it will suggest the start of a stronger relief rally. The positive divergence on the RSI also points to the possibility of a recovery in the near term. The pair could then rise to the 38.2% Fibonacci retracement level at $30, where the bears may mount a strong resistance.
The price has been trading between $19 and $23 for some time. This suggests that the bulls are attempting to form a higher low, but the bears continue to pose a strong challenge at higher levels. The flattening 20-EMA and 50-SMA do not give a clear advantage either to bulls or bears.
If buyers drive the price above $23, it will suggest the start of a new up-move. The pair could first rally to the 200-SMA and then to $33. Alternatively, if the price turns down and plummets below $19, the bears will gain the upper hand. They will then attempt to sink the pair to $16.
Decentraland (MANA) turned down from the 20-day EMA of $1.24 on May 16, but a positive sign is that the bulls did not allow the price to sustain below the psychological level of $1.00.
The buyers will once again attempt to push the price above the 20-day EMA. If they succeed, the MANA/USDT pair could rally to the 50-day SMA of $1.72. The bears may again mount a stiff resistance at this level but if bulls clear this hurdle, the pair could start its northward march toward the 200-day SMA of $2.72.
Contrary to this assumption, if the price slips below $1.00, the bears will try to sink the pair to the crucial support at $0.60. A break and close below this level could start the next leg of the downtrend.
The pair is stuck between $0.97 and $1.36, indicating that bulls are buying the dips below $1.00 and the bears are selling on rallies. The 20-EMA and the 50-SMA have flattened out, indicating that the consolidation may continue for some more time.
If buyers propel the price above the 50-SMA, the pair could rise to the resistance of the range at $1.36. The bullish momentum could pick up if buyers overcome this barrier. Conversely, the bears could gain the upper hand if the price turns down and plummets below the support at $0.97.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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