ICYMI: Last Week in Crypto - Africa Go for Lightning & Pudgy Penguins Raise $9m in Seed Funding
Web3 For Crypto OGs and Degens🤑💰
Last week, Bitcoin transaction fees spiked drastically causing users in the African continent to look towards the Lightning Network. Pudgy Penguins NFT collection raised $9m in a seed round, and Binance listed Bitcoin Ordinals on the NFT marketplace.
Africa Adopts Lightning Network/Stablecoins amid Bitcoin Transaction Fees Spike
As transaction fees have increased to their highest level in roughly two years, African Bitcoin (BTC) users are increasingly switching to the Lightning Network and stablecoins.
In order to process transactions more quickly, a layer called the Lightning network was added to the Bitcoin network.
However, instability has also been noted even in wallets that use the Lightning network, according to some. Since many people across the continent have already been using these tools, they weren't necessarily troubled by the spike in fees.
As a result of the higher fees there has been a shift of demand from customers who now “prefer moving their transactions through stablecoins like USDT, while folk with low volume transactions now prefer lightning network transactions over the base layer transactions,” said Heritage Falodun, the founder of Africa-focused over-the-counter liquidity provider Digioats.
The introduction of ordinals on Bitcoin, a protocol that permits the creation of non-fungible tokens and BRC-20 tokens, connected with some memecoins, on the Bitcoin network, is at least partially to blame for the sharp rise in transaction fees.
Daily users of Bitcoin for activities like remittances and cross-border payments have been significantly impacted, according to Lorraine Marcel, the Kenya-based founder of Bitcoin DADA, a project to educate women in Africa about cryptocurrency.The majority of the African population is not familiar with the Lightning network and “most educators prefer onboarding newbies onto the unchain network as it offers self custody,” she said
Even though the total amount of transaction fees may seem negligible to those in the West, those in African nations with fragile economies find it to be a heavy burden. said Mary Imasuen, host of the Bitcoin Gamer Chat Podcast, who is based in Lagos, Nigeria.
“Most exchanges that operate in Africa don’t yet have lightning ... a lot of traders are still waiting for transactions from three days ago to confirm ... [while] some trades are too expensive to settle,” said Kgothatso of Machankura wallet in an interview.
Those running Lightning nodes are also facing difficulties. “Opening a channel to the node now costs more than before because of the bitcoin fees,” said Imasuen. “From the perspective of those in Africa, where our currency is constantly devaluing, that cost is not small,” she said.
Ultimately this could lead to less decentralization of the network. Fewer “everyday people” will be able to “run effective nodes without using a well funded LSP [lighting service provider],” which could increase centralization on Layer 2, said Nikolai Tjongarero, Bitcoin Educator, founder of EasySats and BTC Mining Namibia.
Hiccups on Lightning Network
Due to transaction congestion or a lack of liquidity among service providers, even those who are already using the Lightning network have experienced problems.
According to Kgothatso, users of the Muun wallet, which processes transactions using both the Bitcoin and lightning layers, have been charged exorbitant fees, especially when using it to pay at the South African retailer Pick N Pay. Users must foot the bill for expensive swaps in the Muun wallet due to mempool congestion, Kgothatso added.
“Every Monday for the past year and a half I've paid salaries for 11 people working for Bitcoin Ekasi using lightning, and today was the first time in over a year that the process hasn't gone smooth,” said Hermann Vivier, chairman of South African Bitcoin Ekasi, a startup aiming to create a circular bitcoin economy.
“I had to use 4 different lightning wallets as channel liquidity between different wallet providers had dried up.”
In essence, mempools serve as waiting areas for bitcoin transactions. Over the past few days, these have become congested, with 400,000 transactions occasionally waiting to be processed. Muun bases its fee estimates on the state of the mempool, so as congestion has increased, fees have as well.
Despite all of these problems, many in Africa view this fee increase as potentially having a positive impact on adoption because it accelerates the transition to solutions that integrate the Lightning network.
While adding that it is "an eye opener," Marcel expressed his "hope" that the fee increase "is just temporary."
Despite the short-term inconvenience, Vivier said, "In a way, it's a good thing, as it's forcing people onto lightning."
NFT Project Pudgy Penguins Raises $9M
Last Tuesday, Pudgy Penguins announced the completion that its $9 million seed funding round, which was led by 1kx. The business intends to expand its team and intellectual property by using the new funding.
The funding round takes place more than a year after the founders of the Pudgy Penguins project were voted out for allegedly stealing treasury funds and failing to achieve community objectives. Entrepreneur Luca Schnetzler (Netz) paid $2.5 million for the rights to the Pudgy Penguins in April 2022, promising to expand the brand. This expansion soon involved licensing agreements and social media campaigns, driving the NFTs to an all-time high floor price in December. Live events, new ways for owners to monetize and use their tokens, and tangible goods bearing the IP including toys and books are now a part of Pudgy Penguins.
“We are thrilled to be able to continue the strong momentum we’ve built over the last year, even in a bear market,” said Pudgy Penguins head of investor relations Vi Powils in the press release. “Today’s milestone is a testament to the vision of our strategic partners, who recognized that Pudgy Penguins is not only a Web3 brand for crypto-natives, but also an accessible IP for everyday consumers around the world, as well as our incredibly talented team.”
The founders of LayerZero Labs, Kronos Research, Big Brain Holdings, Old Fashion Research, and CRIT Ventures were among the other investors in the round.
Bitcoin Ordinals Hit Binance NFT Marketplace
The popularity of Bitcoin Ordinals, also referred to as Bitcoin NFTs, has increased as more marketplaces adopt and provide access to digital assets.
On May 9, the cryptocurrency exchange Binance declared that by the end of the month of May, its NFT marketplace would support Bitcoin ordinals. The addition of the Bitcoin network will broaden Binance's multichain NFT ecosystem.
Previously, the Binance NFT market connected to decentralized networks like Ethereum, Polygon, and BNB Chain.
The head of product at Binance, Mayur Kamat, offered the following comments on the expansion of market offerings and the legacy of Bitcoin in the crypto space:
“Bitcoin is the OG of crypto.”
Users of Binance can now buy and sell Bitcoin ordinals from their active Binance accounts thanks to an update. The update will reportedly also include royalty support and "additional revenue-generating opportunities" for those who develop Bitcoin ordinals, according to the announcement.
The cryptocurrency exchange OKX announced in late April that it was integrating Bitcoin ordinals into its marketplace and wallet ecosystem before Binance did. According to Haider Rafique, the chief marketing officer at OKX, users could initially view and store ordinals using their accounts, with the option to mint ordinals being hinted at in the future.
Markets like Magic Eden, which integrated the feature back in March, offer Bitcoin NFTs as well.
Recent data shows a rise in Bitcoin ordinal inscriptions over the past few months. On April 2, there were 58,179 Bitcoin ordinals, an increase of 83.5% from the previous month. But starting on May 1, there were more than 3 million Bitcoin ordinal inscriptions overall.
However, they continue to generate debate within the cryptocurrency community, with Bitcoin maximalists criticizing them for departing from the peer-to-peer philosophy of the original Bitcoin.
Artifact Labs Raise $3.25M From Blue Pool Capital, Animoca, Others
A $3.25 million funding round has been completed by Web3 company Artifact Labs, which seeks to store blockchain-based records of historical events.
Blue Pool Capital, along with Animoca Ventures, took the lead in the funding round. The wealth of Alibaba founders Jack Ma and Joe Tsai is primarily invested by the fund known as Blue Pool Capital.
According to the press release, Artifact Labs intends to use the money to grow business operations, with a focus on hiring more developers.
“It’s not about creating new IPs for speculation – for example NFT hype projects – it’s about driving new engagement with historically significant collections by using Web3,” Phillip Pon, CEO of Artifact Labs, said in a release. “We want to carve new space in the younger public’s consciousness for historical brands and artifacts…while supporting these important organizations with new revenue streams to fund their preservation work, we are also solidifying immutable on-chain data preservation through NFTs.”
South China Morning Post (SCMP), a newspaper in Hong Kong, served as Artifact Labs' initial incubator. The SCMP introduced the ARTIFACT non-fungible token (NFT) standard for archiving historical data in 2021.
The sale of NFTs of the newspaper's historic front pages, which included the handover of Hong Kong to China in 1997, the avian flu outbreak, the Asian Financial Crisis, and the passing of the United Kingdom's Princess Diana, was brisk throughout 2021 and 2022.
In a press release, Artifact Labs stated that in addition to creating and releasing technology to assist institutions in preserving their archives on-chain, it will also release NFT collections as a source of income for preservation organizations.
Gambling Games for 'OG and Crypto Degens' Coming to Solana
The player-versus-player (PvP) gambling game studio Bitblox Games has been established to create on-chain games that use Hxro's Solana-based platform for decentralized finance (DeFi), according to an announcement from the company that runs that platform.
In a blog post on Thursday, Hxro referred to Bitblox Games as the place where "OG degens meet crypto degens," using the crypto slang term for risk-taking traders or "degenerates." Additionally, Brandt Page, VP of Business Development at Hxro, has been named CEO of Bitblox Games.
“Bitblox dramatically expands the scope of what igaming can be,” said Page in the announcement. “Blockchain-based gaming provides additional transparency to igaming operators while giving players the ability to bet in new and engaging ways.”
Online gambling is referred to as "igaming" by the casino and gambling industry. The vast majority of gambling games, however, differ from most video games in that they tend to focus more on financial betting mechanics than other types of gameplay, lack well-developed characters, and have an immersive world.
The "igaming" industry, on the other hand, provides its users with glitzy browser-based gambling opportunities where thousands of dollars can be won or lost with the click of a button.
Dan Gunsberg, a co-founder of Hxro, described the on-chain gaming sector of the online gambling market as a "surprisingly underserved subset" where some game components involve cryptographic transactions or data stored on a crypto network.
“Bitblox will bring the online gambling industry into the Web3 era, supporting Hxro Network’s goal to be the world’s largest on-chain source of derivatives and igaming liquidity,” Gunsberg said in a statement.
While the gambling sector may consider its goods to be a form of gaming, prominent video game streamers and livestreaming services like Twitch have recently taken stern positions against online gambling. Twitch labeled unregulated gambling sites "unsafe" in a blog post, and in October 2022 it forbade creators from livestreaming on websites like Stake, which lets users wager cryptocurrency, and other gambling sites.
According to the American Gaming Association, the online gambling sector generated $5 billion in revenue in 2017. However, since gambling is now more widely available, players are also more likely to experience its potential drawbacks.
The National Council on Problem Gambling estimates that about two million Americans suffer from a serious gambling problem, and the National Association of Addiction Professionals found that "problem gambling" is associated with a higher suicide rate than alcohol or drug abuse.
Smart-Contract Registry Cookbook Raises $2M to Create Web3 Developer Support Tools
According to the American Gaming Association, the online gambling sector generated $5 billion in revenue in 2017. However, since gambling is now more widely available, players are also more likely to experience its potential drawbacks.
The National Council on Problem Gambling estimates that about two million Americans suffer from a serious gambling problem, and the National Association of Addiction Professionals found that "problem gambling" is associated with a higher suicide rate than alcohol or drug abuse.
"With this investment, we're excited to continue building the most comprehensive platform for web3 developers, aggregating everything they need to launch their production apps," Cookbook CEO Tyler Sehr said in a press release.
Additionally, the funds will support the platform's initiatives to collaborate with developer communities to produce free educational materials for Web3 builders.
The educational program will complement Cookbook's current services, such as its platform, which equips developers with the means of sorting through countless open-source smart contract templates and gaining access to operating manuals for those contracts. According to a press release from Tagus Capital General Partner Leon Mirochnik, those tools enable developers to secure, "battle-tested" codes that support the projects they're building.
More than 1,500 developers have used Cookbook, and they have used the platform to access more than 3,000 smart contracts. According to the company, as more smart contracts of varying quality flood the web, its services are becoming more and more beneficial for developers.
“The increased interest in digital assets in the last 3 years has led to a chaotic upsurge in the number of smart contracts created by thousands of developer communities around the world, but the industry still lacks a robust infrastructure for finding battle-tested open-source smart contracts templates, " Mirochnik said.