Hey everyone, and welcome back to Chain Reaction.
In our Chain Reaction podcast this week, Anita and I chatted with Mercedes Bent of Lightspeed Venture Partners on backing blockchain startups and the future of consumer fintech. More details below.
Last week, we talked about how the crypto industry needs to take a moment to reflect on buying the love of its followers. This week, we’re looking at the unhappy misfortunes of America’s favorite public crypto company
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the hottest take
Though crypto markets have been relatively stable since last week’s bombastic dump-o-rama, gloom was on the menu this week for institutional investors and retail buyers prophesying crypto winters falling upon all ye households for the next several years.
The message from VCs to crypto startups and mega corps alike was “cut the fat” — a statement which doesn’t jibe too well with the lavish launch parties and plans to quintuple hiring that plenty of founders seemed to be working toward last month. It’s been a period of unprecedented boom for crypto startups, but life has been looking a bit less pleasant for Coinbase since Bitcoin and the public markets hit their frothy peak in November of last year.
Coinbase is currently trading below $65 per share after a more than 80% decline from its November all-time high. A lot of other public market tech stocks are also feeling the hurt, but relative to just how much revenue Coinbase pulled in last year, it’s clear investors have nuked their expectations for the company’s future performance. Coinbase did $7.4 billion in net revenue in 2021 and is currently rocking a market cap below $14 billion. That’s nuts.
Public market investors may not have the rosiest view of Coinbase, but the question is how this really impacts the company. Well, the firm is adjusting its growth expectations for one thing. COO Emilie Choi announced this week that the company was hitting the brakes, “Heading into this year, we planned to triple the size of the company. Given current market conditions, we feel it’s prudent to slow hiring and reassess…”
This is expected, but isn’t great for a company that has several cash-swolen competitors all chasing their market share. The company has been diversifying its offerings looking to leverage its network and provide more of a browser for the nascent web3 world, but it’s unclear what kind of consumer pickup the crypto world is looking at over the next year compared to the past couple, something which has left the company in a fairly grim position for the near-term…
the latest podcast
Hey, it’s Anita, here to give you an update on our latest episode of Chain Reaction, where we unpack the latest web3 news, block-by-block for the crypto-curious.
In this episode, we talked about 30-year-old blockchain billionaire Sam Bankman-Fried (SBF) buying a 7.6% stake in Robinhood and what he could possibly be planning to do to help turn around the struggling exchange amid a rough first half of the year. We also explained the difference between custodial and non-custodial wallets, since Robinhood just announced it’s launching the latter — the latest in a spate of new products intended to attract more users to its platform.
Since we talked about Robinhood, we had to go over what’s up with its competitor, Coinbase, which said this week that it would be slowing its hiring plans because of the crypto market crash. We also gave listeners an update on the latest with the disgraced UST — the stablecoin that (kind of) started it all.
Our guest this week was Mercedes Bent, an investor at Lightspeed Venture Partners who helped us unpack the loaded term that is the “metaverse” and talked about some of the long-term potential she’s seeing in sectors like web3 video games.
follow the money
Where startup1 money is moving in the crypto world:
- Cross-chain wallet BitKeep banks $15 million from Dragonfly.
- Treasury management startup Coinshift gets $15 million from Tiger Global.
- Crypto startup TipTop raises $24 million from a16z.
- Web3 social startup CyberConnect scores $15 million from Animoca and Sky9.
- Smart contract security startup Certora scores $36 million from Jump.
- Crypto education co Encode Club raises $5 million from Galaxy Digital and Lemnis Capital.
- Crypto games co Metatheory banks $24 million from a16z.
- Investment DAO Seed Club scores $15 million from Union Square Ventures, others.
- Crypto investment firm Elwood Technologies gets $70 million from Goldman Sachs.
- Web3 studio Gusto Collective nabs $11 million from Animoca.
Animoca Brands has grown into one of the biggest firms in the metaverse, play-to-earn gaming and NFT worlds, but its co-founder Yat Siu told TechCrunch there’s a new sector the company wants to enter: education. No, not education about crypto topics, but more general educational tooling that could apply to more than one discipline. Siu said he hopes to drive the teacher economy with a “learn-to-earn” or “teach-to-earn” model, so both teachers’ and students’ time can be rewarded in the form of a token or cash. This push could be a new wave for the crypto ecosystem to implement additional ways to earn rewards.
Thanks for following along, and get Chain Reaction in your inbox every Thursday by subscribing on the TechCrunch newsletter page.
— Lucas Matney