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The FTX Effect on Generative Art
Let's talk about the elephant in the room and the impact on the gen art market so far...
I was in the process of writing my weekly crypto art recap when I noticed that last week's events deserve more than a few lines.
Crazy revelations unfolded during the last few days. Here is a very brief summary, for those who weren’t paying attention.
One of the biggest crypto exchanges, FTX, filed for bankruptcy after multiple days of drama and uncertainty. The founder of Binance (known as CZ), one of the leading competitors, openly called out FTX and its founder, Samuel Bankman-Fried, for not being in a solid financial position and transparent with their customers.
Sam, a 30 years old ex-billionaire, said the rumors weren’t true in a Twitter thread. After just 24 hours, he tweeted again to acknowledge CZ wasn’t that inaccurate and they were in the process of being acquired by Binance.
This was a huge shock, and almost all crypto coins started to crash. After another day, Binance pulled out of the deal, and it was revealed FTX had been using customer funds for multiple purposes, among them transferring funds to another company owned by Sam called Alameda Research. The newest information is they are not only down by 10 billion dollars but also, Sam himself has created backdoors to their balance sheet software to modify the actual numbers and keep auditors out of the loop.
It isn’t clear yet how they lost $10 billion, but besides acquiring other companies they were notoriously aggressive in their advertisement deals to put their logo in Formula 1 cars and Major League Baseball umpire’s uniforms and rename the Miami Heat stadium name.
If this isn’t wild enough, FTX was hacked, and the hacker allegedly transferred one billion dollars from customer funds to anon wallets. The site and mobile app were reported malicious, and you should avoid the site and delete the app immediately.
There are rumors that the top executives are on the run.
Again, the whole story unfolded in less than four days…
I really hope you weren’t affected by this. I ran a poll on Twitter to get a feeling about how many people were using FTX, resulting in 6% of the voters, making me think many of you were affected.
I’m sorry if you are hurting right now. Feel free to reach out if you want to talk about it or if I can help.
Let’s talk about crypto art. What has been the effect so far?
I pulled some data together to measure the impact. Here is what I found:
ETH is down 27% (from $1611 to $1222).
Tezos is down 32% (from $1.42 to $1.02).
Solana is down 62%! (from $34 to $13.62).
Why is Solana down so much? because the companies affected were big investors and held around 10% of SOL. This is an excellent example of why token distribution and decentralization are key in blockchains.
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It is tough to estimate the effect (short term and long term), so I prepared a simple floor analysis of the top 10 Art Blocks and FxHash generative art collections to understand where we stand.
These collections aren’t looking great (expected, -24%). At least they are doing better than ETH by 3% (on average). Keep in mind the reported change is adjusted to dollars and some collections like Archetype by Kjetil Golid and Gazers by Matt Kane are actually up if we measure the floor on ETH.
Interestingly, FxHash collections look much better than Art Blocks. In fact, horizon(te)s by Iskra Velitchkova and Zach Lieberman, SMOLSKULLs by Mark Knol, and contrapuntos by Marcelo Soria-Rodríguez are all in green (+3.5%, +27%, +11%, respectively).
If you ever wanted a Garden, Monolith by zancan, the floor is $10k cheaper today than seven days ago (-31.59%).
If you had money on the side (some people were waiting for something like this to happen), you might find great deals right now. Be aware that the whole situation is still developing, and we don’t know the full ramifications and how much lower crypto coins could go. Be careful. This isn’t financial advice.
I wanted to compare generative art to other forms of NFTs, so I pulled together data from the top pfp collections on ETH.
They are doing much worse (almost three times worse than FxHash collections and nearly twice as bad as Art Blocks curated collections).
This is an excellent example of generative art and crypto art being resilient over time as collectors genuily like art, not necessarily for financial reasons (which is less likely to happen with pfps).
To close today’s issue, I want to emphasize some things:
Try only to use exchanges to buy and sell crypto coins. Educate yourself about self-custodian wallets (ideally cold wallets). Feel free to reach out if you are confused about this.
Exchanges aren’t banks; we shouldn’t use them like that, as there isn’t transparency on what they are doing with your money.
There are rumors other exchanges might be affected (especially crypto.com). Please be careful; if I were you, I would move my funds as soon as possible.
None of the issues were related to the protocols or the blockchains, just greedy young multimillionaires playing with people’s money.
See you tomorrow for the weekly crypto art recap; the generative art world keeps moving forward, and the upcoming weeks are particularly thrilling.
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