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Former CPO of Opensea charged with insider trading
Are NFTs the next Stories?
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Former Employee of NFT Marketplace Charged in Insider Trading Scheme
Crazy story. Back in September, Opensea’s CPO Nate Chastain was fired after getting caught front-running NFTs. He knew which NFTs were about to be on the homepage of Opensea, would buy them, and quickly sell them for a profit. He earned around 18 ETH in these trades.
The way he was caught is at the heart of why crypto is a bad place for criminals to conduct business. Everything on blockchains are public. A random person on Twitter went through Nate’s transactions and could see he was front-running the trades. He tweeted about it, the tweet went viral, and a few days later, Nate was fired.
Well, that was not the end of this story. Here’s what happened last week:
CHASTAIN, 31, of New York is charged with one count of wire fraud and one count of money laundering, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
That 18 ETH of profit has changed his life. A few reflections on this:
Doing the right thing: It can be easy to do shady shit to make a quick buck. Especially in web3 today. You see examples of people profiting off of insider information often across industries. It is rarely worth it. I have had conversations with well-intentioned friends who wanted to see how they could create their own pump and dump schemes during the last bull run. Everyone relax! There are ways to do well in this space if you orient yourself on a longer-term horizon; your reputation matters.
Nate is being made an example: I do feel for Nate. He is being charged for insider trading, which is iffy because it is not clear that NFTs are securities. Even the charges for fraud are questionable, given how much this happens in the art world. Nate is being made an example. This will scare the crap out of a lot of people in web3 to iron out their own business practices.
No shady stuff on blockchains: All these transactions are public today. There are a ton of scams going on, and a lot of them can be tracked. The question is not if you can get caught, it is more is an institution is willing to put the resources in to find you.
I’m sad because Nate messed up and is probably going to jail. I am happy because it will scare people who may have wanted to do some shady stuff. Hopefully, this brings more stability and reasoning to web3.
Are NFTs the next Stories?
Snapchat launched Stories in 2013. This enabled users to share a narrative of snaps within a 24-hour time span. The feature did well amongst their young user base. Over time brands used the medium to share content with their followers.
Stories was a success. You can tell because many started to copy it. In 2016 Instagram launched its own version. Twitter, LinkedIn, Pinterest, and others have followed. Many failed, others have succeeded.
Here’s a hot take: I think NFTs will follow a similar trajectory. In the next 3-5 years, you may be able to buy NFTs on most platforms. Some may work, others may not. I think most will experiment.
Let me explain…
NFTs have become a popular way to sell creative work (e.g., art, music, writing, etc)
Platforms like Opensea, Magic Eden, and NBA Top Shot have driven a large % of NFT sales
Web2 platforms are starting to experiment with allowing creators to showcase NFTs on their profile
Creators will see NFTs as a way to build economic opportunity. They will begin to request NFT-like functionality on their platforms. Social platforms may service these users
Incumbents will see that allowing creators to create and sell NFTs can be an alternative revenue driver driven by transactions fees
As I was writing this, the news of Salesforce creating their own “NFT Cloud” came out:
The company’s goal with this product is to make NFT selling more accessible. ‘NFT Cloud is all about helping our customers mint, manage and sell NFTs, and of course it’s all no code. So it’s super easy on our platform, abstracting all the complicated technology in this [new] web3 world,’ Adam Caplan, SVP of Emerging Technology at Salesforce said.
He says he’s seeing interest across a variety of verticals including retail, media, fashion and consumer goods, among others. ‘It’s really about driving engagement and communities, and we’re seeing super passionate communities in the NFT space…’
Is there a future where you will be able to create, share, and sell your work on every platform? I think most forward-thinking product leaders can imagine this. Will this be done through an NFT based standard? That is an open question.