TheChek News Flow

Head of leading marketplace responds to digital assets slump following FTX scandal

The chief executive of OpenSea, the world’s leading non-fungible token marketplace, has sought to distance NFTs from cryptocurrencies as the sector is hit by the knock-on impact of a series of scandals.

Devin Finzer, 32, told the Financial Times that the crypto industry had seen “some setbacks recently”, referencing the fall of FTX, the cryptocurrency exchange that collapsed into bankruptcy in November helping to trigger a fall in the value of digital assets.

OpenSea soared in value as online collectibles and digital art called NFTs built upon the same blockchain technology as cryptocurrencies became a hype-fuelled market over the past two years.

But the head of New York-based company insisted that NFTs retain a bright future, believing that consumers will continue to spend real-world money to acquire digital images and display them in their homes and in online virtual spaces.

“It is not necessarily the case that NFTs will always be bought and sold denominated in cryptocurrency as they are today,” he said. “There are a variety of reasons why that makes sense in the current ecosystem, but as we get broader and more accessible, there is no reason that NFTs could not at least be denominated in US dollars.”

OpenSea has seen monthly trading volumes in cryptocurrency ether fall 95 per cent from a $4.9bn peak in January last year to $253mn in November, according to data from a user named “rchen” on Dune Analytics. The daily number of NFTs sold in ether on the platform has dropped 68 per cent from a peak of 2.3mn in January to 740,000 last month.

“NFTs do not exist in a vacuum, there is the overall macro climate which has changed dramatically, and that affects consumer spending and the broader crypto climate, which is experiencing a winter right now,” Finzer said.

The company cut 20 per cent of staff in July, with Finzer anticipating a “prolonged downturn” and leaving OpenSea with about 300 employees.

Finzer maintains that the company has a “healthy runway”, having raised $423mn over several funding rounds since 2021, which saw investments from venture capitalists Coatue and Andreessen Horowitz. Angels, including Reddit founder Alex Ohanian, actor Ashton Kutcher and singer Shawn Mendes, also participated in previous rounds.

OpenSea raised the majority of its capital, $300mn, during its most recent funding round announced in January this year, valuing the company at $13.3bn.

NFTs use blockchain technology to certify ownership of a digital asset, which is recorded on an immutable ledger of transactions. They use the same technology that underpins cryptocurrencies and are usually bought and sold in cryptocurrencies such as ether.

This year, the crypto market has suffered a series of scandals, including the collapse of stablecoin terraUSD and a marketwide crash that saw the price of popular tokens such as bitcoin plummet. A raft of legislation is being introduced to regulate the volatile industry, including the UK’s Financial Services and Markets bill and the EU’s Markets in Crypto-Assets Regulation.

Governments and law enforcement bodies worldwide are also deciding whether NFTs should be registered and disclosed as financial securities.

“It is really important that regulators and government officials understand that this is not the same as the broader crypto industry where there is a lot of focus around financial use cases,” Finzer said.

He said the value of NFTs should be decided by how people engage with it, whether through using tokens to attend exclusive events, play games, or display digital artwork in their homes.

“It is already the case that people are using Instagram [to share NFTs] with their friends,” Finzer said. “[In future] more and more of your property may be digital as opposed to physical art . . . right now, it is maybe early adopters that are displaying NFTs inside of their homes, but that could be something that continues to happen more and more.”

Start-ups are raising funds to speed up process that uses microbes

The world is awash in plastic. Some 400mn tonnes are produced each year. Most is not recycled and ends up in landfills or the ocean. As it degrades, plastic also accumulates in the food chain. Microplastics are widespread in fish.

Yet plastic production is accelerating It is expected to grow 50 per cent by 2050 to almost 600mn tonnes a year, says the International Energy Agency. Recycling is expensive. Researchers think plastic-munching microbes offer an alternative solution.

Microbes are nature’s recyclers. They can create enzymes — or proteins — that break down organic matter into soil. In 2016, researchers in Japan discovered a bacteria that produced enzymes able to break down polyethylene terephthalate (PET), a substance used to make plastic bottles and polyester clothing.

Enzymes are an appealing choice. Although industrial chemicals can break down plastics, enzymes require less energy, making them a potentially greener option. Their use also allows easier recycling of plastic from mixed garbage.

The problem is that even the best enzymes tend to work relatively slowly, making them economically inefficient and hard to scale up to handle commercial volumes. Any naturally occurring plastic-gobbling bacteria would require serious bioengineering if they are to degrade plastic hundreds, or thousands, of times faster.

The main hurdle is an economic one. New plastic is cheaper than recycled versions. Without subsidies, plastic-eating bacteria and their enzymes will continue to compete with cheaper virgin plastics sourced from petroleum.

Start-ups are raising funds to speed up biorecycling. In the UK, Epoch Biodesign, which is targeting plastics that cannot currently be recycled, raised $11mn this summer. Across the channel, French company Carbios announced in 2019 that it had successfully produced new plastic bottles from PET with a process that makes them infinitely recyclable.

The goal is for bacteria to break down old plastic and create components used for new plastic. Eventually, plastic could become an enzyme-enabled circular economy.

Beijing has granted licences to 128 new games including from foreign developers

Tencent shares extended a three-month rally after Chinese regulators granted new licences for games made by the technology group marking the latest sign that Beijing was easing its crackdown on the sector.

Shares of the world’s largest video game developer, which has a market value of more than $400bn, rose above 2 per cent on Thursday, extending a three-month rally of more than 50 per cent.

Beijing launched a campaign in 2021 to rein in the technology industry’s growing power. It cracked down on ride-sharing group Didi Chuxing and others, launching cyber security investigations.

The regulatory assault has wiped off billions worth of market value from the country’s leading tech companies, while growing geopolitical pressure from Washington has further added pressure on the sector.

But the new approvals suggest that Beijing may be relaxing its restrictions on the gaming industry, which included capping playing time for minors and other curbs to address gaming “addiction”.

South Korea titles were also granted licences for the first time in years. Shares of Netmarble, a Seoul-based developer, rose 17 per cent on Thursday.

The National Press and Publication Administration on Wednesday said 84 domestic games were approved in December. Chinese players are set to welcome 44 foreign video games, the first batch since regulators froze new game import approvals 18 months ago.

Tencent won approvals to publish five imported games, including Pokémon Unite by Nintendo and Valorant by Riot Games. The tech group also won a licence for its own game Synced: Off-Planet.

Tencent had flagged in November that it had expected to win more licences. In September, a subsidiary of Tencent received a licence for a free educational game. Last month, the company won its first commercial game licence, for a sports game called Streetball Allstar, in 14 months.

At a year-end meeting held this month, Tencent’s founder and chief executive Pony Ma warned against heightened regulatory scrutiny of the country’s gaming industry and stressed that the company should take advantage of every licence it has obtained and focus on the quality of games.

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