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Welcome back to Chain Reaction.
This week big news rolled out in the layer-2 blockchain space as Coinbase, the second largest crypto exchange by trading volume, launched Base, an Ethereum-focused layer-2 blockchain.
In the past, Coinbase has homed in on the trading and exchange side of its business, but this blockchain is switching up the script for the company as it moves into the decentralized ecosystem.
In an effort to expand further into the developer space, Coinbase is building Base to make it “dead easy” for developers to build dApps and for users to access those dApps through Coinbase products, Jesse Pollak, lead for Base and head of protocols at Coinbase, told TechCrunch.
“Our goal is to bring about phase 4 of Coinbase’s master plan: to bring a billion users into the crypto economy,” Pollak added.
And the new blockchain is hitting the ground running as a number of crypto organizations like Chainlink, Magic Eden, Animoca Brands, The Graph, have committed to building on its platform.
This news comes just two days after Coinbase announced its fourth-quarter earnings for 2022, which beat Wall Street’s revenue expectations of $581.2 million. Although the company generated $605 million in total revenue, it was down sharply from $2.49 billion in the year-ago quarter.
This week in web3
According to a new filing from the Southern District of New York attorney’s office, former FTX co-founder and CEO Sam Bankman-Fried (SBF) now faces four additional counts of fraud, bringing his total to 12 charges. With these new charges, the former crypto wunderkind has been accused of defrauding the Federal Elections Committee (FEC), along with additional counts related to wire fraud and money laundering.
Coinbase’s fourth-quarter earning results show alternative revenue sources may be a key factor for exchanges as the exchange saw trading volumes fall but other nontrading areas rise. TechCrunch dove into a number of questions we wanted to answer, including queries relating to the company’s revenue mix, consumer activity and ability to defend its fee take rate during the present-day crypto downturn.
Through Tezos’ corporate baking program, new and existing Google Cloud customers will be able to build web3 applications as well as deploy nodes and indexers on Tezos’ protocol. This means companies and developers alike can leverage Tezos blockchain technology alongside Google Cloud’s infrastructure. In general, Google Cloud plans to continue partnering with “key players in the web3 ecosystem” to keep growing innovation for open source technologies, James Tromans, engineering director for web3 at Google Cloud, said to TechCrunch.
Dapper Labs, the company behind many popular NFT collectible projects, will face a lawsuit accusing it of selling unregistered securities. A class-action lawsuit was first filed against Dapper Labs in 2021. The company filed a motion to dismiss the lawsuit before trial. And yet, as Coindesk spotted, U.S. District Judge Victor Marrero denied the request, which means that the case will go forward.
The U.S. Securities and Exchange Commission has charged the collapsed blockchain firm and stablecoin operator Terraform Labs and its founder Do Kwon with defrauding U.S. investors who purchased the digital assets Terra USD and Luna. The SEC accused Kwon and the Singapore-based crypto firm of offering and selling an inter-connected suite of crypto asset securities, “many in unregistered transactions” from April 2018 to May 2022, among other things.
The latest pod
For this week’s episode, Jacquelyn interviewed Alex Adelman, the co-founder and CEO of Lolli. Founded in 2018, Lolli is a bitcoin rewards app that lets people earn bitcoin or cash back when they shop online or in-person at over 10,000 stores like McDonald's, Starbucks, Dunkin', CVS, Costco and so on.
Adelman previously was on the team that built commerce gateway Cosmic that was acquired by PopSugar in 2015, then Ebates and Rakuten in 2017. And similar to Jacquelyn, Adelman also went to UNC-Chapel Hill -- go Tar Heels!
Lolli has grown significantly over the past few years, from partnering with fewer than 1,000 stores to more than 10,000 stores, to date. Adelman dived into the rewards system in the crypto ecosystem and how it has evolved over the years -- and what the future holds for Lolli.
We also dived deep into the topic of Bitcoin NFTs and Ordinals, which is the latest craze for the community. We discussed whether Bitcoin NFTs are good for the ecosystem, how the technology can grow long term and possibilities for these digital inscriptions to potentially fit into Lolli’s business model.
Follow the money
AI-powered crypto search engine Kaito raised $5.3 million to improve browsing with AI, ChatGPT
Chain Reaction (not associated with TechCrunch’s podcast) raised $70 million to launch chips designed to compute encrypted data
Ethereum-based blockchain game Worldwide Webb raised $10 million in a round led by Pantera Capital
Multi-signature wallet provider Den raised $2.8 million in a seed round
Galaxy Digital and PayPal co-led a $20 million round for on-chain security system Chaos Labs
This list was compiled with information from Messari as well as TechCrunch’s own reporting.