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Metaverse + Web3 Reports / MiCA + TFR / Keynote / Kernel
Hello and welcome to MadeMeThink! Once a week I send out this newsletter with curated content, events and examples that have sparked my interest. It's a review of my last 7-days in Web3, NFTs and the Metaverse. Want to follow my thoughts on a daily basis? Then connect with me via Linkedin and Twitter. This article is also available in German.
Like every week in the world of Web3, NFTs and the Metaverse, a lot has happened. In terms of perception, more happens in this field in a week than in other fields in a month. You can find the most important topics of my last 7 days in this post.
Metaverse / Web3 Reports
First, I'd like to talk about two interesting reports that came out and that I read this week. The "Value Creation in the Metaverse" report by McKinsey & Company is well worth reading. Right at the beginning of the report, the authors clearly take a position on the metaverse:
„There continue to be questions around the longevity and potential of the metaverse, with an extreme view regarding it as merely a rebranded gaming platform of little wider interest. We do not share that skepticism and believe the metaverse has the potential to be the next iteration of the internet.“ (McKinsey & Company, 2022, Value Creation in the Metaverse)
The report is interesting for those who are new to the topic of metaverse as well as for those who are already more deeply involved with it. For those who are new to the subject, the following historical background of the metaverse is certainly interesting.
For those already deeper in the subject, the authors' structuring into four metaverse building blocks and 10 layers is worth looking at.
„The metaverse’s technology stack has four core building blocks: content and experiences, platforms (such as game engines), infrastructure and hardware (including devices and networks), and enablers (such as payment mechanisms and security). Ten layers span these components, providing the critical building blocks on which all metaverse experiences are based.“ (McKinsey & Company, 2022, Value Creation in the Metaverse)
The second report I read this week is called "State of Web3" by Chainalysis and has an interesting section on DAOs starting on page 47. For those who don't know what the acronym DAO means, either read this article or check out this playlist. In a nutshell: DAOs are (in theory) democratically run projects / initiatives / companies without central management; the community is in the lead and decides on important strategic decisions and investments. Often voting rights are weighted by the number of tokens, i.e. for example 1 token owned = one vote; 100 tokens owned = 100 votes. Chainalysis has now looked at the top 10 DAOs and comes to the following conclusion:
„By analyzing the distribution of ten major DAOs’ governance tokens, we find that, across several major DAOs, less than 1% of all holders have 90% of voting power (...) This has meaningful implications for DAO governance. For example, if just a small portion of the top 1% of holders worked together, they could theoretically outvote the remaining 99% on any decision. This has obvious practical implications and, in terms of investor sentiment, likely affects whether small holders feel that they can meaningfully contribute to the proposal process." (Chainalysis, 2022, State of Web3 Report)
This concentration of voting power in a DAO is, in my opinion, an enormous problem. After all, the basic idea of Web3 is decentralization. However, such a high level of voting power leads to a strong centralization of power. However, there are DAOs that have decided against token weighted voting power, but more on that at a later time (will write a detailed article on DAO governance when I get a chance).
Crypto Regulation in Europe
The European Union has agreed on crypto regulation with MiCA (Markets in Crypto Assets) and TFR (Transfer of Funds Regulation). Stablecoins will not have an easy time in the future. What the regulation means for NFTs seems to be not yet finalized, but they are more likely not to be covered by MiCA. But more about this, for interested readers, in the media (MiCA; TFR) or for the very interested, on the page of the European Parliament (MiCA; TFR).
On his Twitter Account, Berger, who serves as rapporteur for MiCa in the European Parliament, writes:
#Tokenization will be as groundbreaking for the financial system as the introduction of the public limited company in the 17th century. Good that we are creating licensing and supervisory structures with #MiCA. US and UK will now look very closely at #MiCA.
And in a press release Berger formulates:
"Today, we put order in the Wild West of crypto assets and set clear rules for a harmonised market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors (…) With MiCA, we are making important steps towards environmental protection while encouraging innovation. We want to create a European crypto innovation hub.” - Stefan Berger, Berichterstatter für MiCa im Europäischen Parlament (Source)
I have read quite critical assessments from various stakeholders, but I will have to take a closer look to form my own opinion. Ledger, for example, in the run-up to MiCA/TFR:
MiCA and the TFR would irreparably cede leadership of Web3 economies to the US, UK and Asia, and make Europe permanently uncompetitive. In terms of global economic competitiveness, Europe is in a precarious position. The United States and China account for 76 of the world’s 100 most valuable firms. In 2000, Europe had 41 of the top 100 companies, down to just 15 today. None of the 20 largest tech companies are European. As global competitors invest in innovation, the EU rushes to regulate. This has happened before in other industries, and the result in Web3 will be no different. The U.S. and Asia will continue to dominate. For example, over 99.7% of stablecoins currently in circulation are denominated in U.S. dollars, and less than 0.3% in euros. MiCA will virtually ensure the U.S. retains its lead. (Source)
Keynote „Crypto, NFTs and the Metaverse – Phenomena of an exciting new era“
Next week Thursday (7.7) I will be speaking in Innsbruck (Austria) at Factor. If you are in the area and have time & would like to exchange thoughts in person, registration for the event is free.
For the philosophically interested among you.
Just read and signed this essay written by KERNEL0x with thoughts on what it means to own and how to use technology to cultivate more reciprocal relationships. The essay is really worth reading. 251 people have currently signed it.
Then I minted two thoughts, which I think are key passages in the essay, as NFTs (one of them see below).
And last but not least, I minted a Kernel seal. The content on it appealed to me because I see many people who, especially with regard to Web3, think only in 0 or 1 and limit themselves in their thinking. Minting these NFT helps Kernel cultivating open educational webs.
Disclaimer: The thoughts published in this publication are my personal opinions and should not be viewed as investment advice. I am not a financial expert. My specialty is entrepreneurship, innovation & marketing. Readers should always do their own research. I own various cryptocurrencies and NFTs, however in many cases it is for the sake of researching the field and gaining a deeper understanding of Web3, NFTs and the Metaverse and not for investment purposes.