Crypto Winter is getting Freezing Cold 🥶; PayPal is deepening its in-store push, or why the future of commerce is unified 🔁; How much is a Metaverse user worth? 🤔
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back to a 🔓 weekly free edition 🔓 of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.
If you’re not a subscriber, here’s what you missed this week:
Twitter can become the Super App PayPal, Klarna, and Revolut always dreamed of 🤯 [this could be a game-changer!]
N26 widening losses show what happens when you don't prioritize compliance🚨[lots of lessons for other FinTechs]
More than just a partnership: Visa and FTX want to bring cryptocurrency into Main Street 💳
Banks are crypto companies now 🤯 [we haven’t seen such a move before]
FinTech Winter is coming… its time to bundle up ❄️ [+2 bonus reads how to survive this]
Railsr’s Series C and why the future of finance is embedded 💸
Brazilian companies are buying crypto like their future depends on it 😳
and more!
As for today, here are the 3 FinTech stories that were making a massive difference this week. It certainly was the most fascinating week in the FinTech space this year so far, so definitely check out all the above stories.
Crypto Winter is getting Freezing Cold 🥶
New data 📊 We all knew that crypto winters are cold but few could have thought that it would be this cold… According to The Block Research, for the first time since 2018, crypto venture funding has fallen for two consecutive quarters. Wow 😬
More on this 👉 These are the most fascinating figures:
Last quarter saw a roughly 35% drop to $6.2B, which followed a 22% decline in the previous period.
The number of VC deals closed in the third quarter also decreased by 22% decrease from the previous one.
Later-Stage deals were down roughly 92%, from 13 to just one. Mid-Stage deals fared only slightly better, falling approximately 63% from 30 in the second quarter to just 11 last quarter.
✈️ THE TAKEAWAY
It’s not that bad when you think about it… 💭 First, it’s clear that the Crypto Winter, which was expected to be a winter of hibernation in the cryptocurrency market, is turning into a complete freeze. Funding is dropping and fewer and fewer deals are getting done. But it’s not as bad as it might seem at the first glance. First, this will help the industry to build stronger foundations and focus on long-term sustainable development efforts. Second, if you’re looking for silver linings, here’s one - $16 billion has been invested in the space in the past two quarters, which is more than the total from 2017 to 2020. Let that sink in and go build! And to make it easier, use this:
Web3 & Crypto VCs: a list of most prominent venture capitalists to fund your next startup 🚀
Triple your chances of getting funded with this cheat sheet 💸
PayPal is deepening its in-store push, or why the future of commerce is unified 🔁
The launch 🚀 Payments giant PayPal rolled out the PayPal Zettle Terminal in the US after an EU launch last year. For context, PayPal already offers Zettle’s card reader solution in the US.
More on this 👉 Terminal is an all-in-one point-of-sale (POS) solution for small and medium-sized businesses (SMBs):
It lets SMBs track stock levels and manage sales, reporting, and payments all in one place.
The device’s mobility––from its handheld design to its ability to accept payments via a cellular connection––sets it up to attract small and micro-businesses, especially those like vendors at a farmers market without permanent storefronts.
✈️ THE TAKEAWAY
Why is this important? 🤔 With this move, PayPal has entered a highly competitive POS market. In other words, it’s going head to head against the likes of Block’s Square, Fiserv’s Clover as well as Adyen & Stripe. That will make it increasingly harder for PayPal to capture market share but the terminal’s place in the broader PayPal ecosystem sets it apart from competitors. PayPal is working toward a unified commerce experience for both merchants and consumers. And this is the future of commerce. PayPal gets it, and so should you.
Bonus: PayPal's biggest threat is coming from around the Block & it's called Cash Pay 💳
How much is a metaverse user worth? 🤔
New data 📊 It seems that it’s not only lonely in the metaverse but users may not be returning every day. According to data aggregator DappRadar, the Ethereum-based virtual world Decentraland has around 38 “active users” in 24 hours, while competitor The Sandbox has 522 “active users” at that same time.
Both platforms have market caps of around $1.3 billion each.
More on this 👉 It’s important to note that an active user, according to DappRadar, is defined as a unique wallet address interaction with the platform’s smart contract. For example, logging onto The Sandbox or Decentraland to make a purchase with SAND or MANA, each platform’s respective native utility token is counted as an “active use.”
This means that DappRadar’s compilation of daily "active users" doesn’t count people who simply log in and interact with other users on a metaverse platform or drop in briefly for an event, such as a virtual fashion week. It also may mean that fewer transactions, like buying or selling a non-fungible token (NFT), take place on these platforms than the number of people that visit.
✈️ THE TAKEAWAY
Show me the money 🤑 If we take DapRadar’s data as a proxy, then Decentraland is worth/priced at $34 million per user, while competitor The Sandbox is at $2.5 million/user. For the perspective, TikTok, which is the hottest social media platform right now, is priced at around $300/user. Let that sink in. Ok, you might say that this isn’t accurate. In fact, Decentraland (as well as The Sandbox) has disputed the way DappRadar tracks daily "active users” on the platform claiming that the platform had 8,000 users on average per day. Even if we take that as a proxy, it gives us that every user is worth at least $162,500, and that’s just nuts. That said, it’s clear that Metaverse is overhyped, and we are far away from what it can really do.
🔎 What else I’m watching
The oldest bank goes crypto 😳 BNY Mellon BK -2.36%↓, the world's largest custodian and America's oldest bank, has rolled out a digital custody platform for safeguarding client holdings in ether and bitcoin alongside traditional financial assets. BNY Mellon formed an enterprise Digital Assets Unit in 2021 to develop solutions for digital asset technology, with plans to launch the industry's first multi-asset platform that bridges digital and traditional asset custody. The bank has been working closely with Fireblocks and Chainalysis to integrate their technology in order to meet the present and future security and compliance needs of clients across the digital asset space. Yet another illustration that Banks are becoming crypto companies while crypto companies are becoming banks ₿🏦.
Another one… 🤦🏽♂️ Solana-Based DeFi giant Mango was hit by a $100M exploit. A crypto trader utilized millions of dollars to manipulate the price of Mango’s MNGO tokens on the namesake decentralized exchange (DEX) to drain over $116M in liquidity from the platform. The MNGO token dropped over 40% in value after the exploit. Mango developers said they reviewed the exploit and blamed faulty oracles, a third-party tool that fetches off-chain data, for the lapse. It’s yet another reminder that Decentralized Finance has a massive security problem🚨
💸 Following the Money
LHV UK is to buy the SME lending business of Manchester-based Bank North, which is winding down its operations after failing to fully capitalize the bank. Bonus: Lessons from another failed neobank 🧠
Fractional investing app Hedgehog completed its above-expected £1.56M crowdfunding raise.
Blockchain indexer Nxyz, a spin-out of private search engine Neeva, secured $40M in a Series A round.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up: