Rug Radio Recap - March 12, 2023
The collapse of Silvergate and Silicon Valley Bank will have both short and long term impacts on crypto. In Rug Radio news, we highlight a few community initiatives.
gm! This past week was probably one of the most stressful weeks in the web3 space since the collapse of FTX, so don't forget to log off, touch some grass, and enjoy your Sunday.
Personally, I'm looking forward to a nice lunch this afternoon with Sara Baumann, the founder of Women & Weapons, and some web3 friends as well as curating an art gallery to take a break from all the chaos.
Here's what we've got in this week's recap...
Rug Radio Updates: Rewards Program and Prop House initiatives
The fall of Silvergate and Silicon Valley Bank
Coinbase says "It's time to Update the System"
Exciting Rewards Program Updates
Yesterday, we sent out an email outlining some exciting updates to our rewards program which included the announcement of the launch our rewards store. Starting tomorrow and throughout next week, you'll be able to use your $RUG tokens to bid on a variety of rewards with the first auction being a 30 minute chat with Farokh. The auctions will start at 9am EST each day and run for 24 hours. We'll be sending out notifications when each auction goes live, but you can also add a reminder to your calendar!
Community Infographics Printer
The Rug Radio Community Infographics Printer, a Prop House initiative by Yaffe.eth and DnznJuan.eth, is currently under development and Yaffe shared an update with a video of it's progress.
The goal is to create a simple, token gated tool for Rug Radio holders to easily create infographics for a variety of use cases and platforms.
After playing with the latest version it’s obvious @daileytj has been hard at work! So much progress has been made already! 👏
This sneak peak shows off one of the templates along with customizations that will be available for you to choose from 🔥🔥🔥
— yaffe.eth (@Jay4nft)
Mar 10, 2023
Guatemala’s first Ethereum community hosted Ethereum Guatemala on March 11th featuring Rug Radio as one of the sponsors. This was another Prop House initiative ran by DnznJuan.eth, and was the first event by community members based in the country.
Within Ethereum Guatemala there are projects such as research with the Ethereum Foundation to bring access to credit in a decentralized way as well as the use of blockchain in biology.
Announcing @RugRadio as our sponsors for tomorrows event. Thank you for believing in thriving communities around the globe and enabling passionate builders to continue their quest for passion, education and technology.
— Ethereum Guatemala (@ethereumgt)
Mar 10, 2023
Community Spotlight, FreedSeed
One of our newest community members, FreedSeed, wrote an amazing thread outlining the fundamentals of the Rug Radio ecosystem. Give it a read and welcome them to the fam!
A lot of projects fail because they don't have their fingers on the pulse of web3. That's where @RugRadio stands out.
Founded by @farokh , as a simple indicator of #web3 vibe is now a juggernaut
Heres why i brought in to the project with this beauty from @coryvanlew
— FreedSeed (@FreedSeed_Nut)
Mar 7, 2023
Silvergate and Silicon Valley Bank Collapse
What's going on?
Silvergate: On Wednesday, Silvergate announced that they would wind down operations and proceed to voluntarily liquidate it's assets while assuring customers that all deposits would be repaid. This is significant as Silvergate is 1 of 2 major crypto friendly traditional banks that allow crypto firms to transact 24/7 via it's SEN network.
Silicon Valley Bank (SVB): On Friday, SVB was forced to shut down due to liquidity and solvency concerns by the California financial regulator who appointed the FDIC to take over the bank. This bank served a large percentage of tech startups which included crypto businesses like BlockFi, Circle, and even Proof Collective.
How did this happen?
Silvergate: The initial concerns of a potential collapse came after the bank delayed it's annual 10-K report to address "a number of circumstances" and whether they could remain solvent. The announcement caused it's stock price to plummet and major crypto companies like Coinbase and Circle to suspend transfers and seek alternative banking partners.
SVB: The situation here is more of a bank run sparked by a letter sent to shareholders that the bank had incurred a $1.8 billion loss on the sale of US treasuries and mortgage backed securities along with a plan to raise $2.25 billion to offset the losses. As a result, investors and depositors attempted to withdraw $42 billion in the largest bank run since 2008.
How does this affect crypto?
Silvergate: Silvergate is one of the primary crypto friendly banks and without their infrastructure, the friction for getting liquidity into/off exchanges is significantly higher. The other crypto friendly bank, Signature, is still around to take Silvergate's place...but they've mentioned in December of 2022 that they intend to offload billions in digital assets.
SVB: The primary concern for crypto began after Circle, the issuer of the USDC stablecoin, announced that $3.3 billion (~8%) of their reserves were stuck in the bank. This caused holders to panic and sell/swap for other crypto currencies and USDC to depeg to 82 cents on the dollar. These fears were calmed on Saturday after the CEO of Circle, Jeremy Allaire, tweeted a thread with a link to a blog post essentially saying that the company would use corporate resources to cover any shortfall.
Sharing an Update on USDC and Silicon Valley Bank.
— Jeremy Allaire (@jerallaire)
Mar 11, 2023
What happens next?
Silvergate: Since Silvergate is voluntarily liquidating and is able to return all deposits, the situation is a little less dire for crypto in the short term. In the longer term, it's up to crypto exchanges to maintain positive relationships with banking partners or even go as far as what Kraken is trying to do and launch their own bank.
SVB: We know that deposits up to $250,000 will be covered by FDIC insurance, although this represents a very small percentage of all deposits. Outside of that, we won't know more until tomorrow although solutions can include a bailout or liquidating assets.
For transparency, Rug Radio did not have any exposure to either Silvergate or Silicon Valley Bank. All of our assets are held on chain in multi-sig wallets controlled by the core team and Cayman Director. We have experienced nominal declines due to the depeg of USDC and, while Circle has an action plan to maintain it's 1:1 ratio with the US dollar, we'll continue to monitor the situation and take the necessary steps to protect our assets.
Othersidemeta released details for 2nd trip of it's metaverse platform on March 25th, opening the experience to non-holders.
Jen Stark’s piece “My Body, My Business”, will be available in an auction curated by Pussy Riot at Sotheby’s on March 14.
Starbucks Odyssey launched the Siren Collection, it's first paid collectible as part of it's blockchain based rewards program.
Amazon revealed more information about their NFTs, saying they will be tied to real world assets and that they plan to notify every Prime customer worldwide.
Coinbase released a video titled "Update the System" outlining practical use cases for crypto and blockchain technology, in addition to how it can revolutionize the financial system.
2/3 of America thinks the financial system is overdue for an overhaul.
It’s time to update the system 🔁
— Coinbase (@coinbase)
Mar 7, 2023
A variety of factors contributed to declines in across all markets including: Silvergate closure, SVB bank run and USDC reserve concerns, a proposed 30% tax on electricity used in mining, and the New York Attorney General alleging that Ethereum is a security in a lawsuit again Kucoin.
In the week ahead, we'll be watching to see how the Silicon Valley Bank collapse shakes out as well as the results of key economic data such as the Consumer Price Index and Producer Price Index.
What did you think of this week's newsletter?