Will FTX buy Robinhood?

GM. Next week is July 4th so we hope you all have something planned. We are headed somewhere top secret. Will clue you in when we return. Just kidding we will be monitoring crypto 24/7 like we always do. We won't publish on July 4th however:)

Today's Topics:

• Rumor Mill: FTX is not buying Robinhood

• Web3 is in the hands of a few

• Mike Novogratz chats with NY Magazine

• Quick Links

Rumor Mill: FTX is not buying Robinhood

Today Bloomberg News reported FTX was in talks to acquire Robinhood, the free equities trading app for an undisclosed sum. News of the potential acquisition boosted the stock price like a kid with a fresh pair of Nike Airs trying to dunk.

FTX bought a 7.6% stake in Robinhood in May which led many industry experts to believe a full acquisition was right around the corner. CEO Sam Bankman-Fried clarified later: “We are excited about Robinhood’s business prospects and potential ways we could partner with them, and I have always been impressed by the business that Vlad and his team have built. That being said there are no active M&A conversations with Robinhood.”

Whoops. Don't believe everything you read.

FTX + Robinhood = False alarm. They will work together like 2 college kids on a paper but they won't get married yet. Any potential M&A would require approval by Robinhood founders who have more than 50% of voting control.

Our take: Robinhood has been dabbling in crypto for awhile and FTX sees a company with a strong brand that could greatly expand its current base of customers. People who are into free stock trading jumping to free crypto trading is not a hard concept to grasp.

Web3 is in the hands of a few

Chainalysis a blockchain data company wrote a banger on the state of Web3. It is a meaty read so we are gonna summarize the main points. You can thank us later.

DAOs or Decentralized autonomous organizations are a cornerstone of web3. How do they work?

• DAO creators launch a "governance token"

• Tokens are given to users, supporters and various stakeholders

• Each token represents a share of voting rights within the DAO. The token also has a price in a secondary market where people can buy and sell them.

People assume this leads to decentralization but looking at token data says otherwise. Chainalysis dived in and researched the distribution of 10 major DAO tokens. Less than 1% of holders have about 90% of voting rights. Shocker!

This sucks for many reasons but the main one is just a tiny portion of the 1% could outvote the rest of the 99% on almost any outcome. So much for fair voting. We call this a dictatorship.

Expansive list of most common DAOs courtesy of Chainalysis:

• DeFi protocols like Uniswap ($UNI) and Sushi ($SUSHI).

• Social clubs like Friends With Benefits ($FWB) and Bored Ape Yacht Club ($APE).

• Grant-makers like Gitcoin ($GTC) and Seed Club ($CLUB).

• Play-to-earn gaming guilds like Good Games Guild ($GGG) and Yield Guild Games($YGG).

• NFT generators like Nouns (1 NFT = 1 vote).

• Venture funds like MetaCartel and Orange DAO.

• Charities like Big Green DAO and DreamDAO (1 SkywalkerZ = 1 vote).

• Virtual worlds like Decentraland ($MANA) and Sandbox ($SAND) .

So how do DAOs hold their cheddar?

DAOs in the future

As DAOs continue to proliferate many businesses have formed to create and service them. Examples include:

• Superdao streamlines DAO creation

• Snapshot simplifies governance

• Coin Center advocates for the industry on Capitol Hill

These are just a few examples but we are excited to see what will launch soon and we hope token distribution and voting becomes more fair.

Mike Novogratz chats with NY Magazine

A year ago:

Mike Novogratz was bullish on Luna and showed off his tattoo above with pride after the token price hit $100.

Today:

Forget about that please. Luna is worthless. What a difference a year makes! New York Magazine sat and interviews Mike on what is new. We break it down for you.

Was crypto a scam?

If you put money into Zoom and Bitcoin at the beginning of the pandemic you would have double your money on Bitcoin but no gains on Zoom. Yes, shit got out of hand for many assets but now we are getting beaten down.

Bitcoin and Web3 are here to stay. He mentions us spending more time in the metaverse. This is where we disagree until people have a clear definition of the "metaverse".

Crypto has tribalism that does not make for a great investing mindset.

Is this collapse different from prior ones?

History repeats itself. We had an asset bubble. It popped. Recession incoming. Buckle up.

Coinbase?

Cash rich but spending a ton. The CEO will fix it or they will merge or be acquired. Bankruptcy unlikely.

The Fed

They are most likely going to pause rate hikes in the fall.

Final Lessons

Don't mess with leverage as in the case of BlockFi and Celsius which are worthless or bankrupt. Where you buy an investment matters. Buy low. Sell High!

Some super cool projects in this batch. Click on the thread to unravel it.

Quick Headlines

Voyager tells Three Arrows to pony up - 3AC is in default of more than $650M in debt. Earlier Voyager borrowed $75M from Alameda Research.

Hedge funds are shorting Tether - After Terra went down the tubes thirsty hedge funds want that alpha. Traders are betting the economy will continue to get worse and that the assets backing Tether are garbage.

Goldman Sachs gives Coinbase the thumbs down - Shares took a hit. GS says they need to lay off more than 18% of staff with prediction of revenue diving 60. Ouch!

Cuts:

Banxa a crypto payments firm is cutting 30% of staff - Based down under in Australia the company is trying to reduce costs

Crypto.com cutting a slew of tokens from its earn program - SHIB, DOGE, XTZ, MKR, EOS, OMG, FLOW, KNC, ICX, COMP, BIFI, ONG, GAS, STRAX, BNT

Hacks:

Harmony hackers who stole $100M begin cashing out - The scammers are trying to launder $36M of ETH at a mixing service. Harmony offered a $1M bounty on Saturday.

Hit Reply to let us know how we are doing! We would love to hear from you.

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Disclosure: We are a newsletter for information only. We are not financial advisors nor do we claim to be. Consult your legal, investment or tax advisor. Crypto is risky. Do you own research.