As the Web3 space expands, nonfungible token (NFT) use cases continue to develop past the hyped days of stagnant digital art collections. However, even within the art realm, NFT utility is being reinvented, as is the case with a Ukrainian art museum.
The Kharkiv Art Museum announced on Oct. 13 its “Art without Borders” NFT collection is now available on the Binance NFT marketplace.
It includes 15 pieces of art from the museum’s collection, with proceeds going back to finance the museum and “save the cultural heritage of Ukraine,” as stated by the official announcement.
The museum is one of the oldest in Ukraine, with nearly 25,000 works of fine art by artists from Ukraine and around the world. Artwork by Albrecht Dürer, Georg Jacob Johann van Os, Ivan Aivazovsky, Simon de Vlieger and others is featured in the NFT collection.
Binance NFT head Lisa He told Cointelegraph that in a time of conflict, when donors are looking for a secure and sure way to give funds, NFTs offer reassurance
“[NFTs] offer peace of mind and security for donors because all transactions are registered on blockchain technology. All donations to causes via NFTs are tracked and can’t be altered or deleted.”
The Binance exec continued to say that the transparency of the blockchain also allows donors to know when and if funds reached their desired destination.
Meanwhile, the city of Kharkiv has been subject to intense fighting in the ongoing conflict between Ukraine and Russia. Therefore, this collection’s utility can preserve culture currently at risk of being destroyed, which was the case in the infamous looting of the National Museum of Iraq in Baghdad in 2003.
Lisa He says the combination of “nascent NFT technology and the long-standing Ukraine culture heritage in the NFT will support rebuilding culture and history in real life.”
Already NFTs have been used as an act of aid and resistance in Ukraine during these turbulent times. Proceeds from an NFT auction were used to help restore physical monuments which have taken damage from the conflict.
The Ministry of Digital Transformation in Ukraine even launched its own digital NFT museum in order to document and preserve a timeline of major events in the conflict.
Lisa He said Binance will continue to support NFT projects that create practical and scalable solutions for various social problems, “including the preservation of Ukraine’s cultural heritage.”
Nonfungible token (NFT) marketplaces should commit to combat fraudulent NFTs, but brands are far more responsible for protecting NFT investors, according to one industry executive.
Brands that issue NFTs should be taking the first step to protecting themselves and potential investors from fraud, BrandShield CEO Yoav Keren said in an interview with Cointelegraph on Oct. 12.
According to Keren, it’s more straightforward for a brand to recognize NFTs that were not released by the company itself rather than marketplaces like OpenSea or Rarible. NFT marketplaces usually have fewer insights into which brands are creating NFTs when they are launching and other details, the CEO noted.
Although marketplaces should not be negligent of the reality of NFT fraud, it’s still a must for brands to keep their audience publicly and transparently updated about any NFT offerings, Keren hinted, stating:
“Brands should understand the legal implications of misuse of their image, and should take action to protect their customers across all platforms, websites and marketplaces.”
The CEO went on to say that counterfeits and copyright infringements have emerged as the two most common forms of NFT fraud so far.
Counterfeit NFT fraud implies unauthorized replicas that are sold despite the existence and sale of an original NFT drop by its creator or authorized party. Copyright and trademark infringements refer to fraudsters hijacking a brand’s likeness or image to create and sell NFTs without prior authorization.
Both types of NFT fraud occur across some of the largest NFT marketplaces, including OpenSea, Rarible and Nifty Gateway, Keren noted.
“We conducted a scan on OpenSea and found 41,500 suspicious NFT listings using unauthorized likenesses or images associated with prominent celebrities who’ve promoted NFTs or cryptocurrency,” Keren said. In these cases, fraudsters utilized copyright or trademark infringements to defraud consumers, he added.
One of the ways to eliminate NFT fraud is for platforms to encourage more reporting of fake listings when a suspicious listing is discovered by a user of the platform. “Ideally, brands and marketplaces should work together on solutions,” Keren stated, adding that attacking a problem from multiple angles is the fastest way to an effective solution.
Despite encouraging brands and marketplaces to do their best to protect NFT investors, BrandShield CEO emphasized that it’s still important for consumers to do their own research while investing in NFTs. It is important to not only double-check the website of the NFT marketplace’s domain but also go for only verified NFT sellers and avoid suspicious shortened links.
“Work to verify an NFT before purchasing because by the time marketplaces catch on to these abuses, it’s oftentimes too late,” Keren added.
The rise of NFTs and metaverse has created yet another way for fraudsters to mislead investors into falling for scams and counterfeits. According to data from crypto risk management firm Elliptic, NFT investors became victims of more than $100 million worth of NFT scams and thefts related to NFTs in a period from July 2021 to July 2022.
MakerDAO, the governing body of the Maker Protocol has seen its revenue plummet in the third quarter of 2022, caused by a fall in loan demand and few liquidations, while expenses have remained high.
According to an Oct. 13 tweet by Johnny_TVL, a Messari analyst and co-author of “The State of Maker Q3 2022,” the decentralized autonomous organization saw its revenue plunge to just over $4 million in Q3, down 86% from the previous quarter.
One of the results of this has been MakerDAO’s first quarter of net income loss since 2020.
MakerDAO value statement as of September 30, 2022. Source: Messari
The Messari senior research analyst has pointed to few liquidations and weak loan demand as the reasons for the drop in revenue.
Its two biggest earners, Ether (ETH) and Wrapped Bitcoin (wBTC), have performed poorly in the last quarter, with revenue from ETH-based assets falling 74% and revenue from BTC-based assets falling 66%.
Borrowers use these cryptocurrencies as collateral for loans of the Dai (DAI) stablecoin, providing some security from the volatility often seen within cryptocurrency markets at the cost of interest paid on the loans.
Maker quarterly revenues by collateral token. Source: Messari
The analyst has also pointed to a fall in the collateral ratio of MakerDAO, suggesting the ratio has fallen to 1.1 from 1.9 at the same time last year.
However, “expenses are not so elastic” said the analyst, with the report showing that expenses have remained high in the quarter at $13.5 million, falling only 16% from the previous quarter.
Meanwhile, MakerDAO has recently taken steps to increase the return on assets it holds as collateral, having commenced a proposal to invest $500 million in treasuries and bonds. MakerDAO believes this will provide the protocol with low-risk additional yield.
One other positive for MakerDAO was the growth in Real World Asset (RWA) backed loans, which now accounts for 12% of its total revenue after it successfully rolled out its largest RWA backed loan to Huntingdon Valley Bank (HVB) in the third quarter of 2022.
The loan, which involved the creation of a vault with 100 million Dai, constitutes a new collateral type in the Maker Protocol which can help it generate additional revenue through vault stability fees associated with maintaining the vault and minting DAI.
HVB is still able to benefit from this integration as it allows the bank to effectively increase its legal lending limit, and MakerDAO hopes that if all goes smoothly other banks will follow behind HVB.
Patrick McHenry, ranking member of the United States House of Representatives Financial Services Committee, thinks the “conversation has become unmoored” about financial technology and needs to return to solving real world problems. He is in talks on legislation that may at least bring more clarity to stablecoins.
Currently, there is no U.S. federal definition of digital assets or stablecoin, McHenry said, calling the situation “retrograde.” McHenry, House Financial Services Committee chair Maxine Waters and the Treasury Department have been in negotiations for months on legislation to regulate stablecoins “in an election year, in a divided Washington.” He spoke positively about the bipartisan nature of the legislation taking shape and tradeoff that have been made between himself and Waters, and said:
“We agree on the asset, that is, a narrowly defined set of assets, 1:1 backing, no leverage. [..] Then we get into more complex conversations.”
Speaking at DC Fintech Week, McHenry named “the means by which we hold” stablecoin, regulating wallets and determining the federal regulator for it as outstanding questions. Those decisions are “less science, more art,” he said. The resulting draft is “a pretty ugly baby,” according to McHenry, who added that it may grow into something more attractive.
McHenry has said that, if he becomes chair of the Financial Services Committee after the midterm elections, he would make crypto regulation a priority. McHenry could become chair of the committee if the Republican party gains a majority in the House. He has been a longtime advocate of bipartisanship in crypto legislation.
Waters, who addressed the conference briefly a day earlier, also mentioned stablecoin and the question of digital wallets. She stressed the need to make the technology user friendly, especially for “People are often excluded from the traditional financial system.”
John Hickenlooper, a United States Senator representing Colorado, has penned a letter to Gary Gensler urging the Securities and Exchange Commission chair to establish “clear rules” for the crypto market.
In an Oct. 13 letter, Hickenlooper called on the SEC to take action on regulatory issues including identifying the cryptocurrencies that will be considered sasecurities, establishing registration guidelines for trading platforms, and “determining what disclosures are necessary for investors to be properly informed.” According to the senator, the lack of a coordinated regulatory framework from the government has led to uneven enforcement, while the SEC is the agency “well positioned to offer regulatory guidance.”
“Given the complexity of these issues, and recognizing that some digital assets are securities, others may be commodities, and others may [sic] subject to a completely different regulatory regime, a formal regulatory process is needed now,” said the Colorado senator. “This will significantly improve policy development and allow the SEC to collect views and understand concerns.”
Hickenlooper requested the SEC engage with the public by opening a “notice-and-comment period” to develop rules and regulations applicable to crypto. He offered to work with the regulatory body to build such a framework, though his committee assignments for the current meeting of Congress were limited to commerce, small business, energy and natural resources, and health, education, labor and pensions.
During his time as governor of Colorado from 2011 to 2019, Hickenlooper established the Council for the Advancement of Blockchain Technology, tasked with creating a “comprehensive legal framework” to support the technology. In 2019 following Hickenlooper’s departure, Governor Jared Polis didn’t renew the order to continue operating the council.
Members of the United Kingdom’s House of Lords have introduced legislation aimed at eliminating the need for paper trade documents, increasing the likelihood of using blockchain technology to trace records.
In an Oct. 12 announcement, MP Michelle Donelan and the U.K. Department for Digital, Culture, Media and Sport said the Electronic Trade Documents Bill had been introduced in Parliament. The legislation proposed removing “needless paperwork and bureaucracy” by making digital documentation legally recognized for trade.
“Electronic trade documents also increase security and compliance by making it easier to trace records — for instance, through the use of blockchain and distributed ledger technology,” said the government, citing the World Economic Forum. “International trade still relies to a large extent on a special category of trade document which is dependent on being physically possessed by a person, and transferred over to another person.”
Thank you for your support on the Bill @michelledonelan It is a stellar piece of work by DCMS and a game changing piece of legislation. There is a huge international following from all corners of the globe watching very closely! @DamianCollins@iccwboUK@iccwbohttps://t.co/ig1UR2XT63
According to Donelan and the digital department, the bill would reduce carbon emissions related to documentation by at least 10% and cut down on processing time — the U.K. has roughly 28.5 billion paper trade documents on a daily basis. If approved, the legislation would allow businesses to provide electronic versions of documents including promissory notes, warehouse receipts, cargo insurance certificates and delivery orders from ships.
The Lord Privy Seal of the U.K.’s House of Lords introduced the bill, which, ironically, was “ordered to be printed” following the first reading.
Under Prime Minister Liz Truss, the U.K. government’s plans for the economy seem uncertain following a now-scrapped tax cut plan that sent the value of the British pound crashing. The prime minister, who took office in September prior to Queen Elizabeth II’s death, previously said the U.K. “should welcome cryptocurrencies in a way that doesn’t constrain their potential.”
The hype around nonfungible tokens (NFTs) may be fading, yet a number of organizations continue to implement Web3 initiatives. Nonprofit organizations and activists, in particular, have begun implementing nonfungible token projects to help fundraise and generate awareness for certain causes.
While these methods are still new, NFT projects for philanthropy have been met with relative success. A recent report from crypto donation platform The Giving Block found that nonprofits using The Giving Block received more than $12.3 million dollars in cryptocurrency donations from NFT-related charitable giving initiatives in 2021. The report further noted that charitable organizations using NFTs are presented with the opportunity to connect with younger donor demographics while diversifying donation methods.
NFT projects for Breast Cancer Awareness Month
Benefits such as these can be especially helpful for raising awareness around life-threatening diseases. number of breast cancer-focused organizations have started implementing NFTs this October to highlight Breast Cancer Awareness Month.
For example, Shaney jo Darden, founder of the Keep A Breast Foundation (KAB) — a California-based nonprofit that aims to reduce breast cancer risk — told Cointelegraph that KAB focuses on engaging with younger generations to bring attention to breast cancer. She said:
“Even though women over the age of 40 are typically diagnosed with breast cancer, early detection can result in a 98% survival rate. Given this, KAB aims to generate awareness about breast cancer through encouraging and fun ways, like using NFTs to educate young women.”
Darden said that last year, KAB hosted an exhibition in the CryptoVoxels metaverse to raise money for breast cancer research. “We wanted to do an event in the Metaverse as opposed to conducting a membership drive or gala, since this opens access globally,” she noted. Based on the success of this, Darden explained that she wanted to continue to implement Web3 initiatives — especially those involving artwork created by women — to generate awareness around breast cancer. Most recently, Darden partnered with the NFT project NFTitties to raise funds for KAB’s breast cancer prevention and educational initiatives.
Carlota Dochao Naveira, founder of NFTitties, told Cointelegraph that the women-led project celebrates women, art and breasts to raise funds to fight breast cancer. “Emerging artists and activists were invited to submit an artwork representing breasts, following a set of visual guidelines. The artworks were then vetted and, if selected, included in the first release of NFTitties,” she said.
NFTitties #1.14 by Medici_Labs. Source: OpenSea
According to Dochao Naveira, almost 30 NFTs were sold during the first week the project launched on Oct.1. She further pointed out that NFTitties has helped onboard more women into the Web3 ecosystem since the initiative encourages women artists, activists and others to submit their artwork to be presented as nonfungible tokens.
Other organizations are implementing different forms of NFTs to educate individuals on this type of cancer that affects one in eight women. For example, the women’s handbag designer Vera Bradley announced on Oct. 3 that it will be donating almost 100% of the proceeds generated from its fashion NFT drops to The Vera Bradley Foundation for Breast Cancer.
Jennifer Bova, vice president of marketing at Vera Bradley, told Cointelegraph that to date, the foundation has raised and donated more than $38 million to support critical advancements in breast cancer research. Yet, Bova noted that Vera Bradley has started focusing on marketing in the Metaverse to attract new users by attaching philanthropic utility to its digital and physical fashion NFTs. “Through its NFT PFP backgrounds, Vera Bradley hopes to drive awareness for fundraising, as well as female-led conversations and initiatives in Web3,” she said.
It’s also notable that Susan G. Komen, a leading breast cancer research foundation, recently began accepting crypto donations to enable cryptocurrency holders to give back. Michelle Strong, vice president of marketing strategy at Susan G. Komen, told Cointelegraph that about a year and a half ago, the organization began receiving requests from individuals interested in donating cryptocurrency:
“We implemented this feature nearly a year ago with the help of The Giving Block. This has driven interest from both current and new donors, as crypto donations have opened doors to those who haven’t been able to give before but were interested in being charitable.”
Based on the successful implementation of crypto donations over the past year, Strong mentioned that Susan G. Komen will be incorporating crypto donations, along with other digital donations received during the week of Oct. 9–15, to fund the organization’s metastatic breast cancer excellence in research award.
“Oct. 13 this year is ‘metastatic breast cancer’ day, which is the most advanced stage of the disease. Susan G. Komen is giving out the excellence in research award to bolster investment around this specific area of research and cryptocurrency is another great way to support this,” she remarked.
Web3 initiatives are helpful, but not necessarily better
While the use of NFTs and crypto donations to support breast cancer is innovative, these initiatives are still only helpful ways to bring attention to certain causes. For instance, Bova pointed out that driving awareness and funds for breast cancer research in the Metaverse is not necessarily better but rather an additive resource to tap into new donors and volunteers. Echoing this, Darden mentioned that incorporating NFT projects with KAB enables the organization to diversify its funding, yet it hasn’t proven to be a better solution in comparison to traditional fundraising mechanisms:
“Many NFT projects die out over time, so KAB is taking a risk by being a part of certain projects. However, NFTitties has a clear goal and beautiful art that resonates with the KAB community.”
Indeed, even though there are a number of risks associated with NFT projects, nonfungible tokens remain appealing when it comes to increasing user engagement and interest.
“Susan G. Komen is happy to benefit from NFT projects that others are able to pull together. We are currently in conversation with an NFT project that aims to benefit our organization,” Strong noted.
Yet, it’s also important to point out that, in addition to risks, there are challenges associated with implementing such projects.
According to Dochao Naveira, targeting traditional NFT investors can be difficult when it comes to women-led initiatives “There tends to be a bro-culture in the Web3 space that doesn’t care as much about certain projects. There can also be difficulties with helping mainstream users set up a MetaMask wallet,” she said.
But, as time progresses, Web3 projects aim to incorporate new features to help ease onboarding and educate new users. For example, Carmen Toal, CEO and co-founder of Sprkl NFT Studios — a platform working with nonprofits and individuals to implement NFT technologies — told Cointelegraph that mainstream users typically need more guidance when it comes to participating in NFT projects.
As such, she mentioned that Sparkl NFT Studios incorporates familiarities with charitable NFT initiatives. “We sometimes include a ‘donate now’ button that is not directly attached to an NFT,” she said.
Most recently, Sprkl NFT Studios partnered with the National Breast Cancer Foundation, Inc. (NBCF) on an NFT artwork fundraising campaign for Breast Cancer Awareness Month. Candice Hensley, senior manager of strategic partnerships at NBCF, further told Cointelegraph that working with Sprkl NFT Studios is part of the organization’s strategic plan to diversify its funds.
Sprkl NFT Studios commissioned artist Pola a Yim to create and draw an original flower bouquet for a digital NFT to support Breast Cancer Awareness. Source: Sprkl NFT Studios
Meta’s metaverse aspirations haven’t fared well for the tech giant, as the firm wiped out nearly five years’ worth of market cap in just 10 months of 2022.
DappRadar only tracks users directly interacting with blockchain, a new blog post explains. For example, Axie Infinity’s daily user count is over 100,000, but DappRadar measures it only at 20,000.
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