This Week in Web3 | 2.13.23

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Here's what we'll cover today:

• Smells fishy: What happened at UMAMI Finance

• Bitcoin Punks and NFTs

• Product updates from our CEO & Co-Founder, Dariya

• An exclusive preview of our biggest change to come

Sarah at Layer3

WEB3 DIGEST

UMAMI Finance: On the perils of leadership risk

UMAMI finance, a DeFi protocol for lending and borrowing on Arbitrum, caused quite the stir from DeFi Twitter after its entire team resigned, in a move to push Umami towards a DAO structure.

The move wouldn't be so terrible if the CEO hadn't also proceeded to (allegedly) dump his tokens at the same time, swapping his UMAMI holdings for hundreds and thousands of dollars according to Etherscan block data. Team members have contested this claim by claiming that the assets were moved to a safe Multi-sig which would have controlled the future UMAMI DAO treasury.

Smells a bit fishy, doesn't it? It's a tale as old as time, and UMAMI had dropped more than 50% from its previous value of $22 to just around $8 at the time of publication today. Its previous ATH? $162, in December of 2021. Their Twitter has also been largely inactive as of 9 days ago.

For a protocol that advertised itself as "institutional DeFi," it sure also didn't follow institutional rules. In early Feburary, UMAMI stopped all payouts to token holders, citing regulatory risk, despite promising holders and investors otherwise. 

It's an unfortunate end to a relatively low-risk protocol with decent DeFi offerings, but, like all projects in crypto — it fell prey to leadership risk.

INFORMATION DIET

Sarah's Recommended Reads

Welcome to Sarah's Recommended Reads! Here, I'll be summarizing well-written articles or threads by web3 thinkers and builders that you should know about. 

This week, we're diving into Bitcoin NFTs. That's right — NFTs on Bitcoin? All coordinated through a Google Spreadsheet? Let's break down how it works here.

In this article on NFT NOW, Eric James Beyer breaks down Bitcoin NFTs and why they caused a stir.

To begin, you should know that Bitcoin can't natively mint NFTs like Ethereum mints ERC-721 or ERC-1155 tokens. Instead, the Bitcoin NFT craze that started growing in intensity around last week was the result of Casey Rodarmor's The Ordinals protocol launched on January 21, which allows people who operate Bitcoin nodes to inscribe each sat with data, creating something called an Ordinal. This can include smart contracts, which in turn enables NFTs on Bitcoin!

However, an Ordinal itself is actually quite difficult to create, and Bitcoin's infrastructure requires users to operate a full Bitcoin node to make an inscription themselves. So when someone created Ordinal Punks (a version of CryptoPunks, but make it Bitcoin), they coordinated bids and asks for these Punks through a Google Sheet.

No Bitcoin NFT marketplaces or anything. And now, the lowest bid for one of these Punks is sitting around 3.7 BTC (nearly $84k) each.

For more on Bitcoin Punks and Bitcoin NFTs, check out this article here.

Quick Hits

• No "Crypto Bowl" this year: Fox Sports bans all crypto ads during Super Bowl LVII – link

• Dubai Prohibits Privacy Coins Like Monero Under New Crypto Rules – link

• MakerDAO integrates Chainlink oracle to help maintain DAI stability – link

• SEC Hits Kraken With $30 Million Fine, Orders Crypto Exchange to Halt Staking in US – link

Product Updates from Dariya

Hey everyone!

Next week our revamped quest experience & explore page will go live. Our team has been working tirelessly to bring you a truly engaging experience each time you log in to Layer3. This new experience is designed to help users of all levels of crypto-literacy explore the world of web3 and explore new platforms, protocols, and products. It will be more engaging and user-friendly, making it easier for users to find relevant quests and earn rewards for their achievements.

We're confident that this new design will provide a more exciting discovery experience for everyone. Whether you're a seasoned crypto enthusiast or new to the world of web3, you'll find something to enjoy. Stay tuned for next week's launch and as always, reach out to us with any feedback or questions.

You can send me a DM on Twitter @dariyaxyz. We love hearing from our users and are always here to help!

— Dariya, Co-Founder and CEO

COMMUNITY FEATURE

Get Ready for our Biggest Change Yet

Tomorrow, we're sharing an exclusive preview of our elevated "Quest Experience" on Layer3.

This is by far one of the biggest changes that we're making to our platform — and there'll be whole collections of new Quests for you to try once it's all live. Get ready for a completely revamped Quest and Homepage experience, and to do what you already do best on Layer3: Learn, explore, and succeed in web3.

We've spent the past couple of weeks gearing up for this launch and we couldn't be more excited to share it with you all! Remember to turn those 📣s on to be the first to hear about it on Twitter.

As always, thank you for reading!

Join our Telegram, Discord, and Twitter to stay up-to-date on the latest Quests, communities, and more. Until next week, frens.

Cheers,

Sarah from Layer3