Newsletter: The Internet Operating System

Ethereum transitions, Volatility as a Service, OnlyFriends, and more...

Happy Monday!!

Welcome to edition 155th edition of the Forefront Newsletter. If you're new here, we give you a weekly roundup of the best news and insights at the intersection of crypto, culture, and community.

This week we’re covering:

• Vitalik's vision for Ethereum is coming to life...
• ...Volatility as a Service...
• ...Spotlight Leaderboard...
• ...Coinbase takes stake in Circle (USDC)...

Let's get into it...

Week’s Highlight

In June, Vitalik offered a simple yet powerful observation: as Ethereum transitions from a young experimental technology into a mature tech stack that is capable of actually bringing an open, global and permissionless experience to average users, there are three major technical transitions that the stack needs to undergo, roughly simultaneously:

1. L2 scaling: everyone moving to rollups
2. Wallet security: everyone moving to smart contract wallets
3. Privacy: privacy-preserving funds transfer and options for private onchain interactions

Possibly the most important statement in the essay was Vitalik's note that it's not just features of the protocol that need to improve; in some cases, ***the way that we interact with Ethereum needs to change pretty fundamentally, ***requiring deep changes from applications and wallets.

Just a few months later, Vitalik's vision is beginning to manifest more concretely, and at rapid speeds:

• ETH is flowing off exchanges fast down from 29M to 22M ETH on exchanges in 5 months.

• L2 activity is at arecord high, with combined L2 throughput outpacing Ethereum mainnet by 400%. On August 21st, Base saw more transactions than OP Mainnet and Arbitrum combined, and the three L2s are closely battling for the top spot. Base's "Onchain Summer" + friend.tech are leading the way for significant consumer onboarding.

• More consumer applications are experimenting and gaining traction onchain. Zora Rewards make it possible for creators, collectors, and curators to get paid off of very low cost mints. Friend.tech is a fun (although controversial) crypto consumer app, taking advantage of L2 gas fees and new wallet tech. Farcaster is officially launching on OP Mainnet. New community-led marketplaces -- like Spotlight -- are gaining popularity as more content comes onchain. And this is just the beginning.

• Wallet tech and zk tech are fast gaining adoption, with more launches slated in Q4 2023 and Q1 2024...

It's an exciting time to be onchain, but not everything is rainbows and sunshine. Despite primary mints and open editions picking up steam on L2s, NFT volume is way down across the board. The DeFi ecosystem is also seeing its lowest TVL in over 2.5 years.

Take Note. Ethereum -- and the ecosystem at large -- has a long way to go, but progress is certainly being made. What happens onchain in the next 12-18 months will likely define the future of Ethereum, and the internet, as we know it.

What's Poppin'

Introducing: Spotlight Leaderboard

Spotlight is home to ideas worth collecting, and the Spotlight Leaderboard highlights collectors who are actively supporting important ideas and creative work onchain. By collecting and commenting on Spotlight, you can move up the leaderboard and earn Forefront's share of Zora Protocol Rewards! We hope this is a fun way to encourage folks to support creators while building your reputation as an onchain collector -- and get paid!

Volatility as a Service

This is a must-read from Joel John: "Crypto will have to transition from a "transactional" product to an "attention economy" product to reach the user base the internet has today. The tech stack needs to be able to facilitate use cases that capture our attention instead of our money. Web3 gaming and social networks serve that function quite well. We have no mechanisms to onboard creators with the right incentives just yet."

OnlyFriends: OnlyFans creators taking over friend.tech

Content creators from OnlyFans creators are flocking to the buzzy new crypto app friend.tech. The migration of new users picked up speed after the app enabled sending photos on the app yesterday. Around four OnlyFans content creators have entered the list of top 50 most-valuable accounts on Friend.tech alongside crypto influencers. This was an obvious outcome from adding images to the platform, so it will be interesting to see whether the team leans into this activity.

Tornado Cash devs charged with laundering over $1 billion

Tornado Cash developers Roman Semenov and Roman Storm have been charged with three conspiracy counts in an indictment unsealed today. Storm has been arrested and Semenov remains at large, according to a statement from the Southern District of New York. The mixer "knowingly violated" US sanctions and "laundered more than $1 billion in criminal proceeds," according to a statement from US Attorney Damian Williams. "While publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes."

Pepe confirms former team members stole $15 million from multisig

Approximately 16 trillion Pepe tokens ($15 million) were illicitly transferred to crypto exchanges OKX, Binance, Kucoin and Bybit before being sold, according to an announcement. The theft was allegedly orchestrated by three ex-team members who accessed the Pepe multisig wallet, later deleting their social accounts and distancing themselves from the memecoin project. The announcement can be read in full here.

Mainstream headlines this week…

Coinbase x Circle.Coinbase takes an ownership stake in Circle, with plans to launch USDC across six new blockchains.

Shopify x Solana Pay.Shopify adds Solana Pay to platform, allowing USDC payments across shops.

Binance drops.Mastercard and Checkout have both ended their partnerships with Binance following money laundering concerns and general negative sentiment.

Inbox Signal TL;DR

The fifth edition of Inbox Signal just went out to Forefront Members this weekend. Here's a taste of the stories:

• SC06: THE EVENT.An exotic demonstration of consumer crypto products, not another copy pasta demo day.

• READ.The Vertex Thesis by 0xLGHT.

• SEARCH.The Zora Search Extension.

• ETHOS.ETHOS Phone Preorders have arrived.

• LENS. Where should Lens be deployed next?

Forefront Members get full access to Signal -- our daily curated feed on consumer and creator crypto -- every day. You can become a Forefront Member by minting a 2023 Annual Pass here.

For the Culture

The information in this newsletter is not intended to constitute legal, financial or investment advice and should not be construed or relied upon as such. Any opinions reflected are the opinion of the author(s) of the newsletter only and not necessarily of Forefront. Please DYOR.