gm friends —

If you’re a crypto investor, I hope you’re alive. For those unaware, we tanked HARD (nothing we’re not used to).

The tldr is that governments are dumping on us, Mt. Gox creditors are going to dump on us, and sentiment sucks because everyone thinks the crypto bull market is over.

The first two are true, but I have doubts about the third. In today’s markets section, we’ll explore the state of crypto and where we see things going.

Today’s topics:

• ❌ Crypto is Dead: Mt. Gox + Germans Dumping Crypto

• 🐧 The Next Gen Multimedia Empire: Pudgy Penguins, Igloo Inc., and Abstract Chain

• 🤑 Maker: How to Mint Decentralized Dollars

No YouTube show today. The co-hosts were traveling for the holiday. Don’t worry though, expect some new videos (and new formats 👀) this week.

Want to be a better crypto investor? Subscribe, follow us on X and check out our YouTube Channel to never miss an update - thanks for reading!

Crypto is Dead: Mt. Gox + Germans Dumping Crypto

Crypto is dead. The whole thing was always a scam. This is the last crypto newsletter you’ll ever read from us. We’re treasury bond guys now.

Jk. But this week was indeed ROUGH. BTC broke down below the key $60,000 level, leading to a violent sell-off for the whole market.

Analysts are attributing the sell-off to the German and United States governments selling BTC, and impeding Mt. Gox BTC distributions which are expected to be sold. The total selling pressure from the situation amounts to tens of billions of dollars.

Notice something about these events though: they’re all short-term. In traditional finance, non-recurring expenses are separately categorized as “one-time expenses” on a company’s income statement.

This is because non-recurring expenses are not part of ongoing business activities and shouldn’t be used to value the company’s future prospects.

The same thing can be said about crypto’s current headwinds. They’re all one-off events with finite duration and shouldn’t be used to evaluate crypto’s long-term prospects.

In the short term? Oh yeah, we could definitely keep getting clobbered. But this is why understanding your time horizon and risk tolerance is so important.

If you’re going to invest in crypto, know these well. How much are you willing to lose before selling? Do you believe in the technology long-term or are you just aiming to capitalize on a bubble? What is your thesis and under what conditions is it invalidated?

Like many things in life, changing your perspective changes the reality of the situation. What looks like a nasty downturn to one man looks like a golden opportunity to the other. With your time horizon and risk tolerance clear, you can decide what this dip looks like to you.

The Next Gen Multimedia Empire: Pudgy Penguins, Igloo Inc., and Abstract Chain

Igloo Inc, the parent company of Pudgy Penguins NFTs, has acquired the NFT-focused Ethereum L2 Frame (now Abstract Chain).

I know what you’re thinking… but no, NFTs are not entirely dead. This is something that we should be paying attention to. Let me explain.

Indeed, NFTs got slaughtered in the wake of the 2021-2022 crypto crash. Most NFTs went to zero, and even the biggest projects experienced 95%+ drawdowns (Justin Bieber lost ~$1.3 million on his Bored Ape)

But know this - NFTs aren’t completely dead because they aren’t simply JPEGs that you can trade. NFTs are key building blocks for next generation media companies and online communities.

To understand what I mean, let’s explore Pudgy Penguins and Igloo Inc’s acquisition of Frame.

Pudgy Penguins Background

First, some background. Pudgy Penguins was launched as your typical collectible NFT project in the midst of NFT mania (August 2021).

Once the bear market hit, prices tanked with the market, and its owners decided to sell the project. Serial entrepreneur Luca Netz acquired Pudgy Penguins in April 2022 for $2.5 million, with visions of building an empire.

Luca has since developed a method (Overpass IP) for Pudgy Penguins holders to license their NFTs for commercial use, created physical Pudgy Penguins toys ($10 million+ in sales), and forged partnerships with Walmart and Target.

Just a few weeks ago, Luca and Pudgy Penguins unveiled the next phase of their plan - Igloo Inc.

Igloo Inc.

Igloo Inc is the parent company to Pudgy Penguins and Overpass IP. Its goal is to create an end-to-end ecosystem for new people to come into crypto.

According to the official Igloo Inc announcement, the plan is as follows:

1. Pudgy Penguins - brand that will be the top of the funnel to our ecosystem. Penguins unique positioning allows us to create an  emotional attachment to a brand that people are familiar with and trust

2. Redacted - not revealed at the time of announcement, but this is probably a Pudgy Penguins chain (hence the Frame acquisition)

3. Overpass IP - aligns collectors with the brand through licensing

4. Future Igloo Inc Products & Brands - avenues for monetization and brand building (e.g., Pudgy Penguins toys, lil Pudgies NFTs, etc.)

Without delving into the details, let’s zoom out and think about what Luca is doing. He’s building a vertically integrated multi-media company with community ownership.

The key words here are community ownership. Pudgy Penguins NFT holders own the project’s media assets and can profit from the ecosystem’s growth.

In theory this should incentivize more active community engagement and novel forms of community-driven brand & product development. Just think about how crazy people are about Star Wars when they don’t own any of it…

Community ownership is difficult if not impossible to achieve in the traditional media space. Creating a global community-owned multimedia brand would require complying with complex IP laws in thousands of jurisdictions.

There’s not enough upside for entrepreneurs to solve this problem for a community owned media company.

This is where NFTs fit in. Blockchains and NFTs eliminate the legal and operational overhead of this problem. By deploying media assets on a blockchain, ownership of media assets is instantly verifiable, transferable, and interoperable on a global scale.

The consequence? Ongoing legal and operational expenses are significantly reduced for entrepreneurs, fans have a closer connection with the brand via financial alignment, and media assets are inherently global and internet-based.

Imo this is HUGE. We’ll explore the implications of this in another article, but for now you just think about the possibilities… let’s wrap up by taking a look at how Igloo Inc’s acquisition of Frame fits into this picture.

Igloo Inc’s Frame (now Abstract Chain) Acquisition

So what does Frame (now Abstract Chain) bring to the Igloo Inc. vision? A “blockchain home” for the entire Igloo Inc. ecosystem. While details have yet to be released, we can infer the acquisition’s motives

Igloo Inc’s “end-to-end ecosystem for new people to come into crypto” needs to have a central hub where fans can gather to interact with each other and the brand’s digital products. This will be Abstract Chain.

Abstract Chain will be built using ZKsync’s ZK Stack and be a part of it’s Elastic Chain network. This provides the Igloo Inc ecosystem with access to Zksync’s and the Elastic chain’s native financial tools, marketplaces, and social applications.

Overall, I’m super bullish on Pudgy (Abstract) Chain. Luca is a world-class operator and Pudgy Penguins have one of the best brands in crypto. If the vision of a blockchain-based community-owned multimedia company does pan out, Pudgy Penguins and Luca will be the ones to do it.

Maker: How to Mint Decentralized Dollars

!!! Update !!!

From here on out, the Internet Capital Newsletter will have the following structure:

1. Markets - a breakdown of the week’s cryptocurrency market movements, investor sentiment, and its underlying drivers

2. Story of the Week - deep dive into one of crypto’s current hot topics

3. Trade of the Week - analysis of popular trade ideas for the current market

4. App of the Week - overview of a crypto app you can use to expand your onchain skillset

5. Other News - a list of the week’s top news with short descriptions

This structure is designed to keep you up to date with the industry’s latest developments AND help you build foundational crypto knowledge and skills.

Other News

• SEC Acknowledges Hashdex’s ETH + BTC ETF Filing - the newly proposed ETF would give investors exposure to a market-cap-weighted index of BTC and ETH. The SEC has up to 45 days to initially respond

• US Marshals Service x Coinbase - the US Marshals Service announced a partnership with Coinbase to safeguard its large-cap crypto portfolio

• USDC and EURC in the EU - the USDC and EURC stablecoins from US-based issuer Circle are now available in the EU under new laws. This is huge news after many believed that Europe’s stringent crypto would prevent one of the industry’s top products from the region.

• ZKsync Elastic Chain - the Ethereum L2 network announces new technology to help developers build and deploy zero-knowledge powered L2s that can seamlessly connect with each other. The network of L2s using the tech (similar to Optimism’s Superchain) will be called “Elastic Chain”

• Aave Expansion - top lending and borrowing protocol Aave is expanding its GHO stablecoin to the Arbitrum L2. Also this week, the Aptos Foundation submitted a proposal to Aave’s governance system about deploying Aave V3 to the Aptos L1

Thanks for reading!

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Nothing in this newsletter is meant to be taken as legal, tax, investing, or other advice. Internet Capital is for educational and entertainment purposes only. All views are our own, and not representative of any organizations with which we are affiliated. For any business partnerships please reach out via the email [email protected]