The Week in Web3

Author

Sarah from Layer3
June 13, 2022

Do you know even one person who has a problem withdrawing from Celsius?

— Alex Mashinsky, CEO of Celsius, a day before Celsius paused all withdrawals, swaps, and transfers between accounts

It’s feeling a bit chilly in the markets, isn’t it?

Aside from some big bad looming macro concerns, it’s been yet another spectacular week in web3 web5 with some major news and announcements that you don’t want to miss. Let’s get to it.

This week, we cover:

  • What’s going on with Celsius

  • Jack Dorsey and his new decentralized “web5” platform

  • The Merge goes live on Ropsten testnet

  • Layer3 adds new on-chain support for bounties

Your Web3 Briefing 📝

A roundup of the biggest Web3 headlines over the last week

Celsius suspends all user withdrawals, trades, and swaps

Another day in crypto, another protocol gone. Crypto lending platform Celsius Network announced earlier today that they would be halting all withdrawals, transfers, and swaps between accounts due to “extreme market conditions.”

What exactly happened here? Celsius was one of the largest “centralized” DeFi lenders in crypto, and was valued at $3.25 billion when it raised a $750m Series B back in November. Users could deposit Bitcoin, Ethereum, and Tether in the protocol to earn as much as 18% interest a year—wew, lad!

If that high yield sound too good to be true, it probably is.

Celsius has faced major liquidity issues for a while now. A liquidity crisis occurs for a variety of reasons. As covered in this thread, Celsius demonstrated all three major signs of one—large losses, a mismatch in liquid liabilities and illiquid assets, all with an increased demand but decreased supply of liquidity.

Large losses: Celsius faced multiple hacks with large losses (over $120m) in the past couple of months. They also invested at least $138m into $UST, which crashed just last month.

Mismatch in liquid liabilities and illiquid assets: Only 27% of Celsius’ ETH was liquid, while the rest was in either stETH or staked long-term in ETH2.

Increased demand, decreased supply of liquidity: Celsius’ assets under management (AUM) dropped more than $5 billion in less than two weeks.

All this means that Celsius is essentially going bankrupt. With no money left to cover user withdrawals or transactions, it’s likely that many users won’t see their deposited crypto anytime soon 🥲

In short:

Jack Dorsey announces new decentralized web platform…through a Google Doc

We read through Jack Dorsey’s web5 deck so you didn’t have to. If web2 + web3 = web5, then does web5 really live up to the hype?

Jack’s web5 essentially proposes a new web model where users can own their own data and identity via a class of decentralized apps and protocols. web5 is also classified as a “Decentralized Web Platform” where developers can write “Decentralized Web Apps (DWAs)” using “Decentralized Identifiers (DIDs)” and “Decentralized Web Nodes (DWNs).”

If this sounds familiar to you, then it’s probably because it sounds an awful lot like what Ethereum proposed in its original whitepaper and has been trying to build for the past couple years.

If DWAs, DIDs, and DWNs are new, then what was the whole point of DApps, on-chain identity, and nodes?

The only difference is that Jack is a Bitcoin maxi, so you may see web5 running on $BTC instead.

What else you should know

What we've been BUIDLing 🏗️

It’s official: Our community loves bounties.

We’ve gotten tons of requests from users to add new chains that they can explore all that web3 has to offer. Aside from Polygon and Optimism support, our bounties are now compatible with Arbitrum, Avalanche, Aurora, and Celo!

🛣️ Stay up to speed on what we're building: Take a look at our roadmap to see what we've been cooking at Layer3, and a preview of what’s to come.

🚢 And if you want to help decide what we ship next: You can submit a feature request here and vote on your favorites! Some top community requests have already made it onto our roadmap.

Community Spotlight 🔍

A weekly spotlight on some of our favorite DAOs, communities, and L3 community contributors

Featured Community: OnJuno

🤓 What: Create a meme that centers around OnJuno and web5 (where web5 is in context with Jack Dorsey's new project, TBD)

📝 Instructions: Calling all memelords! Make an OnJuno meme in the context of web5, and win $20 USDC. Best memes are evaluated according to engagement and based on internal community discretion.

Community Events: Layer3 x OnJuno Twitter Spaces

OnJuno and Layer3 hosted a Twitter Spaces today @ 12PM EST on earning and spending crypto! We chatted about fiat onramps/offramps, the challenges and future of crypto-friendly banking, and how to get started in web3 with $0.

Listen to the recording here:

Web3 101: DApp💡

Each week we’ll cover an essential web3 concept in simple terms. This week we’re looking at DApps ✨

What is a DApp and how is it different from a regular app?

A decentralized application, also known as a DApp, is a type of application that operates on a peer-to-peer network like a blockchain.

How does a DApp work?

Because DApps do not run on a single server and instead exist on peer-to-peer networks, these networks are often more secure and require less downtime maintenance. Data also becomes more transparent as it will exist openly on the blockchain, and users may have the ability to own their data. Furthermore, users can save money on fees when interacting with DApps, because DApps require less intermediary fees.

How do I pay gas on Ethereum?

Layer3 has partnered with over 40+ communities, including those powered by DApps. You can take a look at some of the DApps that have posted live Bounties, Contests, or Projects on our platform or check out this list here.

Want to get your hands on a Layer3 NFT, mug or even a much coveted hoodie?

PS👇

Join our Discord or follow our Twitter to stay up-to-date on the latest DAOs and contests.

That's all for today! Thoughts on today's email?