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Off Chain 2/23/23: Blur vs OpenSea
369 Plays1 year ago
In this week's episode of Off Chain, we cover the following stories:
- OpenSea drops fees and reduces creator royalties (temporarily)
- Rep. Tom Emmer Says Fed Must Not Create Digital Currency 'Surveillance State'
- Solana Spaces shuts down NYC and Miami retail stores after just one year
- Yuga Labs accused of IP theft for trademarking BAYC wolf skull logo
Recommended![CBDCs: The [Dark] Future of Money (Part 2 of 2) image](https://media.zencastr.com/cdn-cgi/image/width=112,quality=85/image-files/61fc0461fb20e00040aeb09e/5b9f1396-2a8e-418d-82a0-30fd00969266.jpg)
Transcript
Introduction & Crypto Portfolios
00:00:12
Speaker
Hello and welcome to the Decrypting Crypto Podcast. It's February 23rd, and this is Off Chain, your weekly recap of the biggest stories in Web3. I'm Matthew Housebarbie, and as always, I'm here with Austin Knight. How you doing, Austin?
00:00:26
Speaker
I'm doing pretty well. We've got, we're still up, Matt. I can't believe it. Haven't crashed new lows. Well, at least from our crypto portfolios, personally, you know, definitely. But yeah, I know.
00:00:43
Speaker
It had me a little bit worried yesterday.
Federal Reserve & Market Reactions
00:00:46
Speaker
Everything seems to be, especially like equities, everyone's getting a little bit worried that we've all been a bit too optimistic that the Fed is going to drive down rates at some point this year, which I still don't think there's going to be a rate decrease. I still feel a little bit bearish, but I just want to enjoy this period of time.
00:01:08
Speaker
I don't think we're gonna see this like crazy big drawdown. I think we're just gonna slowly just like kind of draw down a bit as as Investors in general across all markets and especially across like the bond markets start to Resize and reevaluate their bets. It feels like that's gonna be a little sharper on the equities side when that starts happening especially
00:01:34
Speaker
If we start seeing, I mean, we went from, okay, there's probably going to be 50 basis points left of increases from the Fed. Now it seems to be generally consensus. There's going to be 75 basis points. If that were to increase or there'd be a slightly more aggressive rate rise in the short term. Yeah. Things will take a, uh, take a downward term, but I don't know. I think we're all probably waiting to hear a bit more about like.
00:02:00
Speaker
jobs reports and stuff like that that are going to be coming in the coming few weeks. Yeah, no doubt about it. And of course, you know, the eternal question for us, is this just a tech recession? Like what's going on here, guys? Can we crash some other industries too? I'm kidding. You heard it here first people, us tonight, but once the downfall of other industries, that would kind of be nice for it to not just be centered in on our industries, I guess.
Crypto News Overview
00:02:29
Speaker
But we got some really interesting stuff that we're going to be talking about today. We're going to be talking about the creator royalties war that's happening with OpenSea and Blur. Some of you may be sitting on those nice juicy Blur air drops. We got, of course, some more updates around central bank digital currencies. Updates from Solana. Some sad news, I think, on that front. And then
00:02:59
Speaker
some very controversial stuff around UGA Labs and potential plagiarization of some artwork. So we'll dig into all of that and more. So let's jump into our first story of the day.
OpenSea vs Blur: Fee Changes
00:03:20
Speaker
In what has been a pretty left field move that we weren't expecting from OpenSea, they have probably caved to competition for the first time that I've ever seen in their history, and they have temporarily dropped all of their marketplace fees, so fees on purchasing NFTs, which they would take, I believe it was like a 2.5% fee on all purchases, and
00:03:49
Speaker
making creator royalties optional with a 0.5% minimum for all kind of collections without on-chain enforcement.
00:03:59
Speaker
Basically, this is all came from the fact that Blur, the kind of new up and coming or newest competitor to OpenSea, has just been on an absolute tear. And to understand this, you kind of got to understand the meta around some of like the NFT kind of trading situation right now and over the past four to five months in particular.
00:04:27
Speaker
and then also the business model of Blur. So most notably, Blur has been, kind of came onto the scene as a zero fee and completely optional creator royalty NFT marketplace. This was huge news because highly controversial, but a lot of traders were loving this, right? Dramatically reduced some costs that they were paying out.
00:04:56
Speaker
The thing that's been fueling this crazy growth, and just as an FYI, when I talk about this crazy growth, Blur has just passed OpenSea on total trading volume to be the highest volume NFT marketplace right now. Not only that, but they've just released their token, which you may have heard about, the Blur token.
00:05:20
Speaker
which also means that they're the most valuable NFT marketplace token by market cap, which is the time of recording right now, around Thursdays, around about 400 million bucks. What's been fueling this? Well, in the run-up to this, it's been all about the much-anticipated Blur AirDrop. And they did their first ever AirDrop last week, a week before... No, I think it was last week.
00:05:50
Speaker
And, you know, the way that they manage this is since around about
00:05:56
Speaker
October, November maybe, you could earn points that would earn you care packages. The way that you did this was through placing trades on Blur and also putting bids in on the Blur marketplace. So you would get the largest amount of points if you would put in bids for NFT collections close to the floor price. The longer your bids are there, the closer to the floor price.
00:06:26
Speaker
i.e. you are serving as liquidity for those collections, the more points you are getting, the more ETH that you would spend and turn over in volume, the more points you would get, and then they turn into these care packages. Care packages were then redeemed for
00:06:42
Speaker
blur tokens in the airdrop.
Blur's Market Impact: Sustainability?
00:06:45
Speaker
Austin, did you get any nice blur tokens from this? I can't say I did, but a lot of people are getting in on that. It's been interesting to watch and see how much their trading in volume has increased in such a short period of time. And also just sort of the loyalty components around this, which I think would be interesting to
00:07:07
Speaker
dig into here. Um, yeah, lots of people participating massively. Oh, I mean, this is just huge. Yeah. You may remember me saying back in January that, uh, I never profess to be a NFT trader in any way, but I jumped on all of the hype around the
00:07:23
Speaker
the trial of Jimmy the monkey with the whole Bode Yacht Club stuff and did a little bit of flipping. And I did it all through blur and got like a nice 2000 bucks blur airdrop as a result of it, which was pretty nice, which I will say I sold immediately.
00:07:40
Speaker
Yeah, I have got zero time for holding on to any air drops. I've learned that lesson a long time. I couldn't care less if this thing 10 X is from now because most of the time it goes down south. So yeah, that was a nice little, nice little win. I know some people have cashed in
00:07:59
Speaker
very, very nice amounts, much better than my 2K, but hey, free money is free money. But here's what's interesting, right? So if we look at the trading volume in the past seven days, Blur has generated $460 million worth of NFT trades on Ethereum over the past seven days. That is a 361% increase week over week. We compare that $460 million worth to OpenSea,
00:08:29
Speaker
which has done a $107 million worth of, so nearly three, sorry, nearly four X or actually three X, should I say, on OpenSea. So that is only a 12% increase week over week for OpenSea. But here's where I think this is interesting and where the big criticisms of Blur is coming is like, well,
00:08:52
Speaker
How much of this is just people kind of airdrop farming versus actually using the platform? How much of it is wash trade and things like that? So Blur, if you look at the unique number of traders that have been trading on the Blur marketplace over the past seven days, 55,000 unique traders.
00:09:12
Speaker
Now with a fraction of the amount of total volume, OpenSea has had 125,000 unique traders. So like 3x more, even though their volume is nearly 4x worse. So, you know, it kind of gets you painting a picture of like, is this going to last?
00:09:32
Speaker
I'm not sure. Will OpenSea's reduction in fees really kind of matter here? What I do know is they are scared right now. And this is all in the background of like ETH NFT sales growing 155% week over week. The NFT market has probably hasn't been this liquid in a long, long time.
00:09:52
Speaker
And so you can actually see the OpenSea tweet that they shared out that talked about their fee reduction and so OpenSea fee moving to 0% for a limited time. They also and I think most importantly and most notably moving to optional creator earnings so 0.5% minimum which also
00:10:14
Speaker
is exactly in line with what Blur do for all collections without on-chain enforcement, old and new. You'll remember they grandfathered in a load of the old projects into creator royalties previously. Well, that's gone, at least for now. And marketplaces with the same policies will not be blocked by the operator filter. This is notable because, of course, OpenSea blocked Blur from using their API.
00:10:43
Speaker
So this is a big deal. It's probably the first time OpenSea has ever bought competition and you can expect the creator royalties fee debate to rage on. We did a whole kind of episode, I think it was January around creator royalties. I think that's going to keep going.
00:11:02
Speaker
my take remains the same as last time. Creator royalties are not going to be here for very long and it is a matter of time before they disappear completely and I think it's important for creators to prepare for that and figure out better routes for monetization to be completely honest.
00:11:26
Speaker
Yeah, I mean, definitely a strong signal coming out of OpenSea here. Of course, on top of that, I mean, it's amazing. You can tell that they're really attempting to compete and retain their user base here. I mean, don't forget OpenSea, I think last time I checked had a valuation north of $13 billion, right? So this is a behemoth that we're talking about. For them to drop their fee to 0%, albeit for a limited time, but that's their primary source of revenue, right?
00:11:55
Speaker
So this is, this is like, I don't think it's an exaggeration to characterize this as an all out battle for, you know, domination or at least majority control of this space, right?
00:12:12
Speaker
I mean, you look at Blur on the other side of it. There's season two airdrop that's coming up. Season one was last week. Season two coming up. It's going to be somewhere in the neighborhood of three hundred million dollars worth of new tokens that they're going to be introducing to the ecosystem. So this is a lot of token, a lot of token.
00:12:34
Speaker
It is. I mean, again, you know, you want to talk about sustainability, you know, on Blur's part, like, who knows how long you can keep something like that up. And then, of course, I think that your point around Blur having, you know, this huge trading volume, you know, north of $400 million, you know, over the past week versus OpenSea's $100 million over the past week.
00:12:59
Speaker
You sort of juxtaposed that with the fact that that was done on Blur by 55,000 traders versus 125,000 on OpenSea. And you can start to maybe question the long-term staying power of Blur because it does look like
00:13:12
Speaker
There's a huge constituency of whales on Blur that are just moving huge amounts of money around to game the loyalty system. I mean, when $300 million is coming into play in their season two drop, obviously a lot of people are going to be heading over there and moving money around just to pull in those airdrops.
00:13:34
Speaker
With that said, I am fascinated by their long term loyalty play because they're building out this loyalty system. I don't know, you know, Matt, like you're probably interacting with it yourself, but it's it's aiming to eventually, you know, almost entirely base the rewards on loyalty and like the strictest sense of the term to blur or to a platform because it looks like OpenSea is going to be doing the same thing.
00:14:03
Speaker
to the point where the users with the highest loyalty score, they will be, you know, in order to maintain that score, they will be required to use blur exclusively, as in like they have a block list. You can't list on any other, yeah, you can't list on any other marketplace, your NFTs to maintain that 100% loyalty kind of bonus, things like that. It's kind of, it's interesting. You know, I think from,
00:14:30
Speaker
blurs side you say okay what happens when the Ponzi stops printing right it's like there's only so much you can kind of throw right and listen don't knock the Ponzi the Ponzi the Ponzi will provide for the whales don't get me wrong oh we love our Ponzi's here oh yeah but where I think the damage is right and in his you know this is all not financial advice but if there is one piece of broad advice I would say is
Blur Tokens: Buy or Beware?
00:14:58
Speaker
don't buy a ton of blur tokens thinking that you are gonna just like ride away into the sunset with this like thing that's gonna have mass adoption. Let me tell you what happens when $300 million worth of net new supply hits the market and lands in the hands of a small number of whales. And keeping in mind, you said that the market cap was like $400 million as of right now, right? So that's like almost the entire market cap.
00:15:27
Speaker
entering into the market and diluting it. Yeah. And, and you know what? So there's one thing where the whales get the airdrop and it's like, it'd be like 20 people will get like 90% of these tokens, right? How do they, how do they profit from this? One thing to get tokens? Well, you need liquidity. You need people to be buying into your wave of selling.
00:15:50
Speaker
You start buying, you are their exit liquidity. That's how they make money. And let me tell you, you are going to get dumped on like you've never been dumped on before. It is going to be monumental. So my advice is stay well clear of this. You want to go airdrop farming on blush? Sure. Like you probably do some good stuff there.
00:16:11
Speaker
get out while you can because like it's a the ones that are first in make the most money as long as they're also the ones that are first out and I think it's just recognizing that there's also just like a lot of stuff that's kind of coming out now it's like oh I hear just like OpenSea are going to drop a token and now we've got to like start farming on there it wouldn't surprise me if like OpenSea are like starting to spread some of this
00:16:37
Speaker
I just don't see, with the amount they've fundraised and like their current model, why on earth would OpenSea ever drop a token? Like I could be wrong about this, but it just doesn't make any sense to me. And it will also mean that they can fall into the trap of blur and you know, token drops, they dry up and things get worse. And then things, just the whole narrative changes.
00:17:01
Speaker
I personally think Blur is not going to compete with OpenSea long term. I think when the Ponzi dries up, unless they do something completely novel, anything that they've done as OpenSea have temporarily shown, it can be matched. So yeah.
00:17:18
Speaker
I'm not super bullish on this. I think if there's value to be had, it's in the marketplace aggregators, which funnily enough, OpenSea acquired gem, one of the largest aggregators. So it has that as well. So I think this is going to be interesting to watch, but
00:17:35
Speaker
I would say, speculate with caution. Just because something has mass adoption in the closed loop scene of crypto people, it doesn't mean that's going to translate into value accrual into a token. I think that's really important to separate that.
00:17:53
Speaker
Yeah, I totally agree. With that said, I mean, hey, not a bad opportunity to take advantage of 0% fees for some time, you know, grab some loyalty tokens and you can sell them, you know, same way you did, Matt.
Crypto Trading: Narrative vs Fundamentals
00:18:06
Speaker
Again, to be clear, none of this is financial advice. We're not financial advisors. We're just a couple of idiots.
00:18:13
Speaker
Yeah, go into my wallet history and you'll see what kind of financial advice you're getting. But you know, so if you want to ape into blur, I mean, by all means, but I think that Matt, what you're pointing out here is a behavior and a market dynamic that we have seen time and time again. So if history proves true as it has,
00:18:33
Speaker
time and time again, especially over the past year. That's probably what we can expect. So be careful, do your research, and make your own decisions. Come to your own conclusions. But those are our thoughts on what's happening there. Nevertheless, what an interesting show to watch.
00:18:49
Speaker
Yeah, definitely. I think it's all about if someone apes into something like Blur and they make a nice profit, fair play. I'm happy for you. I think the key thing is in any trade that you're doing, especially in crypto, you need to understand whether you are making a narrative trade or a fundamental trade.
00:19:10
Speaker
This isn't a fundamental trade. This isn't a thing where you're like, this is just like a fundamentally great token and like investment play that's here for the long term. This is a narrative like trade. This is a, oh.
00:19:25
Speaker
This is the current meta. People are going to ape into it. There's going to be a lot of hysteria. I'm going to trade on it and, you know, I can get something short term. Nice. If not, all right, I got to, I got to exit out and cut my losses soon. Knowing those two things can make you pretty, just being able to approach every trade in like crypto or through those two lenses really helps you kind of get a good balance and know what you're getting into. So.
00:19:54
Speaker
Anyway, we'll see how it goes. We'll see how wrong I, uh, I am over the next few few months, but, uh, let's jump into our second story of the day.
CBDCs & Privacy Concerns
00:20:08
Speaker
Representative Tom Emmer in the United States is saying that the Fed must not create a digital currency surveillance state. This is super interesting. We were talking about CBDCs as recent as last week. Tom Emmer is the Republican House majority whip from Minnesota and he just introduced legislation on Wednesday seeking to bar the Federal Reserve from issuing a CBDC directly to individuals.
00:20:35
Speaker
Yeah, it's called the CBDC anti-surveillance state act and basically it out catchy that one Yeah, the market is in there didn't I? It's not quite as good as the the Patriot Act. Oh, yeah, that's true. That is true. That is my favorite
00:20:53
Speaker
Yeah, these aptly named bills. They always tell the truth. This one might actually be telling the truth, though, because really what what it is outlying is concerns that CBDCs would erode Americans rights to financial privacy.
00:21:09
Speaker
And Tom Emmer has been quoted as saying, quote, any digital version of the dollar must uphold our American values of privacy, individual sovereignty, and free market competitiveness. Anything less opens the door to the development of a dangerous surveillance tool. So this does kind of touch on some of those concerns that I think we were talking about the last time that CBDCs came up, basically around how governments could
00:21:35
Speaker
manipulate control over a digital currency and gather, you know, some pretty sensitive transaction information that previously would have just held by, you know, been held by private companies, banks, et cetera, or like completely unavailable because of cash. Um, so in silos that are difficult for one entity to stitch together, right? I think that's kind of the piece.
00:21:57
Speaker
Yeah. I mean, like, you know, right now you have to get a bunch of banks and boards and, and even like disparate state agencies to, yeah, to comply in order to, uh, you know, gain information or lock somebody out of the financial system or whatever it may be. You've got to know how to use a fax machine, you know. Yeah. And they're only open from 2 PM to 4 PM on Wednesday.
00:22:25
Speaker
That's when you can do all of the espionage in that small time window with a fax machine. Yes, this is the only positive to how the DMV operates, is that the rest of the government operates that way as well, and it means that they're completely ineffective, and the less that they do, the better off we are. Okay, I'll calm down. I've been kind of anti-government the last couple of years.
00:22:51
Speaker
Austin's gone full libertarian on us right now. I am pandering to our libertarian crowd here. But you know what's interesting about this Matt is that like Emery, his name has come up a lot, right? He's actually one of Congress's most vocal crypto advocates. And he introduced some similar legislation back in early 2022.
00:23:14
Speaker
that sought to require that any digital currency developed by the Fed would be permissionless. Again, with the goal to ensure user privacy. And that bill was not passed. It wasn't super popular.
00:23:26
Speaker
But at the same time, the Fed has acknowledged that it's exploring CBDCs. I mean, this is something that's happened. We talked about this recently. Numerous Fed offices right now have job openings where they are recruiting senior level developers for digital currency projects. The details of these projects aren't really clear yet, but I think you can kind of read between the lines on this one. There's a pilot program in New York right now with the New York Fed and
00:23:53
Speaker
BNY Mellon, Citibank, Wells Fargo, all of the usual suspects. All the good guys. All the good guys.
00:24:00
Speaker
Oh yes, Wells Fargo, as we mentioned last time we talked about this one, but the ones you want to trust your CBDC to. Not all heroes wear capes, right? Yeah, that's true. I remember back when I was living in California and Wells Fargo was having all of its issues, like there were literal protests in front of like my local Wells Fargo branch. I had a Wells Fargo in front of my home.
00:24:25
Speaker
And it was like, man, those poor people, like, what do you think? They don't have anything to do with this. But anyway, so CBDCs are advancing in a lot of ways across the globe as well. Like, you know, we've talked about Japan, the UK, Turkey, the EU, China. This is something that's happening. So it does make sense that this battle has been sparked up within the US government. And, you know, I mean, classically, crypto has been something that's pretty bipartisan in the US, right? Like you see good
00:24:54
Speaker
crypto legislation coming from the left and the right so far, in my opinion. But Emmer's bill is still kind of gaining support and currently only has nine Republican supporters and no Democrat supporters. So I hope that this isn't- No Democrats? Could Sam give over some of that bail money against the Democrats and get them on board a little bit here? You need to add a little sweetener in, I think. I think he's got some of those FTT tokens that he could throw that away.
00:25:24
Speaker
Oh, my gosh. Yeah, I know that one hurts. I hope this isn't the sign of a partisan design divide, you know, starting here, because like from what I've read about this bill, it seems like something that like it would be fairly popular, I think, with, you know, your average citizen that has, you know, at least a baseline understanding of crypto and CBDCs.
00:25:49
Speaker
And then also just maybe even if you don't understand it, but you have a skepticism of the Fed, of which there is plenty right now. I could see this being popular across both sides of the aisle. So I hope to see more smart legislation like this that is at least putting some scrutiny on the Fed and the federal government and their role in currency and how much visibility they should have into that, how much control they should have.
00:26:17
Speaker
I think this needs to be seen. Yeah, my worry, right, is it really could become bipartisan if this becomes a kind of quote unquote crypto issue. This is a digital surveillance and digital privacy issue that we're discussing here. Yes, this is a digital currency. Yes, this is a cryptocurrency.
00:26:38
Speaker
That is beside the point. What we are debating here is the usage of and the way in which we approach digital privacy and ultimately state-level surveillance. And I think that is what's important here. I think if that can be the narrative, it should hopefully, yeah, like you say, be able to cross the aisle a little bit and gain some momentum.
00:27:00
Speaker
Yeah, it's difficult. And the FDX situation makes just all of these waters a little bit more bloody to kind of navigate through. No, yeah, no kidding, man. Right, let's jump into our third story of the day.
Solana Spaces Closure
00:27:18
Speaker
Solana spaces, yeah, you remember those? Remember those lovely looking retail stores? They kind of look like Apple stores. There was one in New York City, Miami. They had all this beautiful swag, phantom wallet were in there. People coming in in their thousands. It was gonna be the Solana phone home. They're gone. So one year, one year has passed and they're closing.
00:27:43
Speaker
Uh, so it's, uh, yeah, I, I mean, I'm, I'm grand opening.
00:27:55
Speaker
It's such a bummer. It actually is. It is a bummer. I don't even know why I find this funny. I don't find it funny. It is a real bummer that this has been the case because, you know, like the Solana ecosystem, I've never been like a huge Solana fan. I've never really hated Solana. I think it's been a super interesting project. It's been an ecosystem full of a lot of like really great creators and builders.
00:28:24
Speaker
But it is, you know, that it's been through real tough times. It was a Sam coin. And because of that, the FTX kind of implosion really impacted Solana. And I think this is a big part of it. So Solana spaces was an offshoot of the primary like Solana project. And I'll quote from
00:28:47
Speaker
a tweet that they pushed out. We've made the difficult decision to sunset our stores in NYC and Miami by the end of February and to pivot our Solana onboarding efforts into digital products like Drip, our free NFT product with more than 100K signups. I think I saw somewhere that they had a total of 75,000 people come through their stores and I don't know what they expected. You're not going to onboard
00:29:16
Speaker
millions of people with two stores and with Crazy Ren. I think it was an interesting and a cool brand play. I kind of liked it as a play actually. And I thought also with the Solana phone due to kind of launch, it would have been good to have retail stores, no doubt about it. You got to wonder why this leaves the Solana phone. And
00:29:39
Speaker
You know, it's just not great optics for the Solana ecosystem as a whole. What I will say is they, I saw them tweet out about the stores kind of closing either this week or next. So you probably got a few more days. If you go in there, they're going to give you a bunch of swag. They were like, Oh, we're going to be super generous. I think they're just giving away a load of like the stock and swag to people that are going in. So if you just want like a moment of history, at least go in, grab some swag. And at least you've locked in like a great, like
00:30:09
Speaker
moment of crypto history, at least, which is kind of funny. But sure, it's a real bummer for that team. I can only imagine all of the work that went into getting that stuff up and running. And it's yeah, it'd be a real bummer for those teams for sure.
00:30:25
Speaker
Yeah, no kidding. I mean, I guess, you know, across the board OpEx is being cut, right? So this is probably just one aspect of that, but I love the swag aspect of it. I'm going to be in New York in a few days. I'll probably stop in there, you know, say goodbye. I want to see, I want to see you head to toe in Solana gear.
00:30:42
Speaker
tweeted out. It's like, I feel like that will become just such a, like, I am a little bit jealous. I'm still going to buy a Solana phone. I'm assuming they get released just for the, I love like having just like these little kind of moments of history. But yeah, you got to wonder where it leaves that.
00:31:06
Speaker
We'll keep tabs on that. I do feel for the Solano ecosystem. I love it here. They've not had a great few months for sure. But at the end of the day, just a couple of stores. It will go on. And it seems like their drip project is a much bigger focus to onboard lots more people. But with that, let's jump into our last story of the day.
UGA Labs Logo Controversy
00:31:29
Speaker
Ugo Labs have been accused of IP theft for trademarking the board ape yacht club wolf skull logo. You may be familiar with that logo. It's from Ugo Labs NFT collection and it was allegedly illegally trademarked without proper licenses. It looks like this logo was originally released by
00:31:49
Speaker
company called Easy Drawing Guides, which basically specializes. Yeah, I mean, it's absolutely, you know, it is a bit of a meme that sort of encapsulates the entire space at this point. So, yeah, Easy Drawing Guides, they were a company, or they are a company,
00:32:08
Speaker
that specializes in drawing tutorials for children and beginners. I mean, completely unrelated to the crypto space. It's so good. It's actually a brand for kids. I don't know what that does. It's literally showing kids how to draw and they've used it for the Borneo Kennel Club logo. You can't write this. It's hilarious. I mean, there's so many layers to this onion of just like inferences that you can make about the space.
00:32:37
Speaker
the fact that the logo for the Port Ape Kennel Club was taken from a children's drawing tutorial uh the fact that it literally says how to draw a wolf
00:32:53
Speaker
Also, isn't it somewhat ironic that NFTs were introduced with the express purpose of solving illegal use of intellectual properties and protecting artists? And that's basically exactly what Ugalabs is violating here. It really is. And do you know, when I actually saw the headlines, I was like, this is just going to be another
00:33:17
Speaker
Silly claim that's just, cause it's easy to dunk on something like Yugo and stuff like that and be like, oh, they do this. I remember the whole like crazy YouTube videos about how it was like someone was making a claim that Borneo Bjork Club was all like a Nazi cult and I was just like, wow, this is like 10-4 hat time. But it is unquestionable, unquestionable.
00:33:41
Speaker
that this is a straight up copy of this. Like, it's not even like, oh, that's similar. It's like, no, it's just, it's literally that. If you'd have just reverse Google image searched it before like Fortinet Kennel Club had it got big and took over the search results, it would have just been this exact image. It is, that's it. It's shameless.
00:34:02
Speaker
Yeah, it is. You know what's so weird? For those on the podcast that aren't aware, my normal job is that I work in design, product design, UX design. And this is really interesting to me from a design perspective to think about how these types of things happen.
00:34:21
Speaker
And you know, Matt, a lot of stuff like this has been happening recently. I don't know if you saw what happened with Bolt's logo, but basically like there was this logo that this startup rebranded itself. And then it turned out that the logo was actually taken from another startup. And then like two weeks later, another startup stole the same logo again. Like it was this weird chain of like,
00:34:53
Speaker
Yeah, really bad. And you know what happened here is Ugo Labs had hired a freelancer to create the logo design for the Board Ape Kennel Club. And so I think that a lot of this comes down to freelancers, agencies that are being hired by these corporate entities that they've got a lot going on. They're probably
00:35:10
Speaker
One startup stole another startup's logo and then another startup stole that from the startup that stole it from the first startup.
00:35:16
Speaker
not super, you know, cued in to what's happening in the design space, or they're not doing, you know, a lot of due diligence on the assets that are being provided to them. And honestly, I mean, should they really need to? Like, what's the purpose of hiring a designer or an agency? You should be able to trust them. And it looks like this designer just straight may have straight up taken
00:35:39
Speaker
uh, this asset and, uh, you go labs actually, you know, back in June, 2021, when they released the logo, they applied to, to trademark it a couple of months later in November. Um, so they were attempting to trademark this logo, but easy drawing guides, they had posted, uh, the, the, and this image, which, you know, wasn't a logo, it was just a drawing guide. Um, that, that was, you know, the same exact thing. Uh, they posted it to their official Twitter in April.
00:36:08
Speaker
of 2021. So, you know, a few months before it was ever used. Oh, no kidding, man. I mean, to be able to have that, you know, time stamped record of it is really valuable here to easy drawing guides. And there were some people that were saying, well, you know, like, do they actually even have any, you know, claim over this? Like maybe it's something that that isn't protected under law. And, uh, you go labs isn't actually in the wrong here.
00:36:38
Speaker
Well, it turns out if you read into easy drawing guides, terms and conditions, they grant a non-transferable, non-exclusive, revocable limited license to use and access the website solely for personal, non-commercial use. Okay. So that does not protect any use by a, you know, a commercial entity like you the labs, what they're doing here. Um, if it is, you know, in fact taken.
00:37:05
Speaker
from easy drawing guides. It's a clear violation of copyright law. So yeah, it turns out the logo is being removed and replaced on the BAYC and Bored Ape Kennel Club website. And they're asking that Marketplaces... Really? Oh wow, I completely missed that part of the story. So they're actually going to redo the whole logo?
00:37:29
Speaker
Yeah, they are. That is great. And I hope that they do something for easy drawing guides. I actually am with you with the whole like, you know, you've ran giant design teams. You've worked with tons of freelance designers. Like, you know how this could play out, right? Yeah.
00:37:50
Speaker
not for one minute think that Ugalabs will have purposefully as a courtee done this. Especially with the simplicity of the logo. So when you think about this, not that a simple design in itself is a simple kind of thing, it's more so that
00:38:12
Speaker
It is a derivative of their existing kind of design pattern that they had with the board ape skull. And you know, this is kind of like, you know, it was always going to be, you can imagine the design brief for this is basically like draw a like dog skull that matches in theme with this, like they've done for their other derivatives.
00:38:33
Speaker
So like with that, it's not even like, uh, if they'd have even been even on the fence, they're just like, just change it and make it slightly different. Right. Like, you know, like it's not worth all this. So I hope that they do something for the easy drawing guides team. They don't need to write like, and, uh, that they could still get sued. They probably won't, but like, they should do something here as some good will, um, considering they've made a few hundred million, uh, off of all of this stuff anyway.
00:39:00
Speaker
Yeah. Yeah. I mean, you go labs, obviously an entity that large has a huge legal and compliance team. They wouldn't willfully, you know, subject themselves to this type of liability, which really, you know, again, not to point fingers here, but
00:39:15
Speaker
if they did in fact hire a freelancer or an agency to do this as they say they did in my opinion uh the person that's culpable here and really you know in a fair and just world would be liable although oh they're gonna probably get sued i think if they have any kind of just basic agreement right it would be in there like you think about most of this is
00:39:37
Speaker
Like you'll have signed even just like really basic contracts for being like doing freelance work, especially on design. Nearly every one of the basic terms is like, like for a content creator, for example, you cannot use any copyrighted trademark materials. And if you do, you'll be personally subject and liable to like any legal ramifications.
00:40:03
Speaker
Yeah. Welcome. Welcoming that freelancer to contract law. Uh, I, I hope you, you haven't signed something like that because you are going to be in a very bad way right now. Yeah. So interesting situation. Um, I, yeah, I'm glad to see that they're removing and replacing it. I think that's the right, the right way forward. And, uh, that's a difficult thing to do. It's a difficult thing to do. Yeah. It's a real pain, man. I mean, yeah, you've been through it like rebrands and yep.
00:40:30
Speaker
Yeah. And when you're an NFT project? Right. Yeah. Yeah. We have. We've been through that together at HubSpot and things like that. Right. So, you know, but when you're an NFT brand, your literal product is the brand identity. That is just like the one thing you never want to have to change. Um, you know, you don't want an Uber logo rebrand situation without your NFT project. It's,
00:40:56
Speaker
Yeah, that's tricky. But I'm sure we'll hear a little bit more about that with a lot more coming. We want to dig in. We really wanted to cover just before we started recording, we were hearing the news that Coinbase is planning to launch a layer to roll up blockchain of its own, which is huge news. We just haven't dug in deep enough yet. We're going to dig into that next week. We might try and get someone from the Coinbase team or someone else that's relevant.
00:41:22
Speaker
to chat through some of that stuff. But it's big news, really big news. And I think we're going to dig into that next week. But we've covered quite a lot today. There's a lot going on. Hopefully, we're still going to be in the green when we chat next week, Austin. Fingers crossed. All right, I'll speak to you next week. Yeah, talk to you then, Matt.
00:42:03
Speaker
The contents of the Decrypting Crypto podcast should not be used and are not intended as investment advice. Please do your own due diligence before making any investment, cryptocurrency or otherwise.