Bored Apes "acquires" CryptoPunks to create the first NFT monopoly 😮; Coinbase is severely undervalued. Here’s why 📊; Microsoft joins $450M ConsenSys funding round to build for Web3 💸

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Good day Everyone,

And happy Saturday! This week was super hot!🔥 In fact, it’s probably the hottest week in FinTech this year 🤯 Therefore, without further ado, let’s dive into the three stories that were making a difference this week. You can uncover other stories, keep the FinTech pulse daily and get at least x5 more by becoming a subscriber. Join the community here:

And here’s a mix of 3 super hot FinTech stories from this week:

Bored Apes acquires CryptoPunks to create the first NFT monopoly 😮

The deal 🤝 Yuga Labs, the creator & the company behind one of the biggest and most valuable NFT collections in the industry, the Bored Ape Yacht Club, has acquired the rights to the intellectual property of the CryptoPunks and Meebits collections from Larva Labs.

Funny thing is that CryptoPunks were the world’s most valuable NFTs for most of 2021, until Bored Apes dethroned them 🦧

The rights 👉 Following the acquisition, Yuga Labs now owns the brands, copyright in the art, and other IP rights for both collections, along with 423 CryptoPunks and 1711 Meebits, and the first thing they are doing is giving full commercial rights to the NFT holders.

In other words, this means that CryptoPunks and Meebits holders will be granted the same rights as holders of Yuga Labs' existing collections. Prior to the deal, Larva Labs had been reluctant to grant this same kind of commercial license to its NFT holders, which had become a source of controversy among CryptoPunks investors. Several high-profile holders even abandoned the project.

The refresh ♻️ NFTs are unique tokens that sit on blockchain networks, such as Ethereum, and are used to demonstrate ownership over digital items, like profile pictures, music files, or other kinds of assets. The market for NFTs exploded over the last year, with more than $23B changing hands in 2021, as per data from DappRadar.

The boom was led in large part by collections like Bored Apes and CryptoPunks, which are the two highest-value collections by market capitalization and floor price.

NFTs, which are at the heart of Web3 and its guiding ethos, are getting more and more centralized. Should we talk about the monopoly here? Here’s the takeaway:

✈️ THE TAKEAWAY

More centralization. First, let’s briefly talk about what this means for CryptoPunks. At the core, this move will allow creators & developers to use their NFTs freely and easily in their Web3 projects. That will effectively drive further attention to these projects and open up new ways to monetize your popular digital objects. That has already been proved working by BAYC as all Bored Ape NFT owners were granted full license to use the images they own for whatever commercial ends they choose. Entrepreneurs, brands, and celebrities then quickly capitalized on the BAYC phenomenon and launched various Bored Ape-branded enterprises, including an Arizona Iced Tea ad campaign and a Gorillaz-inspired "metaverse band" from Universal Music Group, among other things. Zooming out, Yuga Labs + Larva Labs means that the two most valuable NFT collections are now owned by a single and relatively little known company (i.e. Larva Labs has always been just two guys, John Watkinson and Matt Hall while Yuga Labs’ two core founders had previously been pseudonymous). That’s on the content side. Looking at the sales side, NFT trades are happening almost entirely on OpenSea, which holds the vast majority of all NFT trading volumes. And OpenSea is backed by venture capital heavyweight Andreessen Horowitz aka a16z. The surprising part? Yuga Labs is also reportedly an Andreessen Horowitz investment. Hence, a16z now virtually controls all the NFT space, having stakes in the biggest NFT platform and some of the market’s most valuable intellectual property. Maybe decentralization is a myth after all?

Coinbase is severely undervalued. Here’s why 📊

The slide 📉 Coinbase, one of the biggest crypto exchanges in the world, did a really successful IPO last April. $COIN closed at $328.28 per share in Nasdaq debut, valuing the crypto exchange at $85.8B.

Despite the successful public debut, Coinbase has lost more than 50% of its value and now trades at circa $155 per share with a market cap of slightly above $34 billion. Which seems to be severely undervalued. Here’s why:

The unrealized potential 👀 And it’s hidden! Coinbase has “hidden value” in its Coinbase Ventures unit which investors haven’t appreciated fully. According to equity research analyst Owen Lau of Oppenheimer, the Coinbase Ventures investments aren’t contributing financially right now, but are “strategically important” because they support the broader crypto ecosystem and add insight for new technologies.

In Oppenheimer’s estimation, the fair value of Coinbase’s Venture portfolio is $6.6 billion. Coinbase had invested in more than 250 companies through the fourth quarter of 2021. Here’s a visualization of what this looks like (not updated though):

Lau wrote that Oppenheimer’s sensitivity analysis showed “that the market value could go as high as $17.0B, assuming a 13% ownership stake.” That’s big.

Having that in mind, Lau has an outperform recommendation and $377 price target on Coinbase’s stock. This is more than x2 what $COIN currently trades at.

✈️ THE TAKEAWAY

It’s more than just gains. I’ve shared earlier that Coinbase has one of the most active (if not #1) corporate venture arms in the world, hence, I’m pretty much in line with Oppenheimer’s analysis. Especially when you think about the fact that current investments can end up being acquisitions that could further ignite growth and expansion of Coinbase’s core business. Moreover, it must be noted that Coinbase has been doing really well, revenues were going up but that didn’t reflect on the stock price primarily because the crypto exchange doesn’t have a growth story to sell as of now. But when you think about their opportunity to diversify revenue in staking, NFTs, and derivatives products, not to mention a potentially massive surge in new customers after their blockbuster Super Bowl ad, it’s hard not to be bullish. So yes, Coinbase stock seems to be severely undervalued now.

Microsoft joins $450M ConsenSys funding round to build for Web3 💸

The money. Solid money💰 Microsoft has joined a $450M funding round for ConsenSys that values the blockchain software engineering firm at $7B.

ParaFi Capital led the raise, which was joined by new investors Temasek, SoftBank Vision Fund 2, Microsoft, Anthos Capital, Sound Ventures, and C Ventures.

The USP 🥊 Founded in 2014, ConsenSys has been through a series of changes and reorganization initiatives throughout its history. It settled on its current structure in 2020 through a transaction that sold certain assets from ConsenSys Mesh, the company’s venture arm, to ConsenSys Software Incorporated (CSI), a newly formed company that, post-transaction, now functions as the parent entity to some of the company’s key products, including MetaMask and developer platform Infura.

Self-custodial wallet MetaMask now supports more than 30M monthly active users, having grown by 42% in the last 4 months. That’s more than solid!

✈️ THE TAKEAWAY

Is Web3 the future? 🤔 If it is, ConsenSys will probably play an important part there. ConsenSys’ mission is to “unlock the collaborative power of communities,” making decentralized autonomous organizations (DAOs), non-fungible tokens (NFTs), and decentralized finance (DeFi) “universally easy to use, access, and build on. It’s progressing towards its mission pretty well, in fact, we could say that ConsenSys has been at the center of the Web3 revolution since Day 1. How? The MetaMask 🦊 The self-custodial wallet enables tens of millions of users to hold and manage their digital tokens, and connect with more than 3000 Web3 applications - including NFT marketplaces, play-to-earn games, decentralized autonomous organizations, DeFi applications, and metaverse worlds. And all can be done easily and globally. Therefore, if Ethereum is going to be the decentralized computer software, then MetaMask will be an iPhone.

🔎 What else I’m watching

• Not passed (but good)!🇪🇺 A proposed rule by the EU that could have effectively limited or banned the use of proof-of-work crypto mining has been squashed. The European parliament’s economic and monetary affairs committee voted on Monday to keep the provision draft out of the proposed Markets in Crypto Assets (MiCA) framework. EU leaders have pushed against proof-of-work cryptocurrencies over energy concerns, arguing that renewable energy may be channeled into sustaining cryptocurrencies like bitcoin rather than serving national use. 

• BNPL troubles 😬 Companies like Klarna and Zilch are beginning to let customers buy food — and pay for it later. This could get very dangerous for the financially vulnerable as living costs swell, according to Citizens Advice. Its latest research reveals one in 12 people in the UK have turned to BNPL to cover basic costs like food and toiletries in the last six months. It’s yet another rallying call for local regulators to speed up scrutiny of the sector.

• CVC is the new VC🔥 Luno, a subsidiary of Digital Currency Group, is launching an early-stage investment arm to back FinTech and crypto/web3 startups. Building on DCG’s seven-year track record in early-stage crypto investing, Luno aims to support between 200 and 300 startups a year, widening the focus beyond crypto into the broader fintech space, globally. Operating in stealth mode over the past few months, Luno Expeditions has already invested in over 20 crypto and fintech companies, including a crypto compliance solution in Israel, an NFT marketplace in the United States, a bank dedicated to women in Pakistan, and a remittance outfit in Tanzania.

💸 Following the Money

• Blockchain infrastructure startup Aligned raised $34M in funding to expand its Web 3 infrastructure and attempt to become the Amazon Web Services for blockchain.

• HSBC and Standard Chartered were among the investors that pitched into the $40M Series B funding round for Silent Eight, a Singapore-based AI platform that monitors potential criminal financial behavior online.

• San Francisco-based FinTech EarnUp, which focuses on payment and data solutions for the mortgage industry, has closed an oversubscribed $31M Series C financing round.

👋 That’s it for today! Thank you for reading and have a productive weekend! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:

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