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GameStop looks to diversify its meme money



Welcome back to Chain Reaction.

Last week, we looked at web3 without web2’s winners. This week, we’re looking at a crossover episode for meme investing.

You can get this in your inbox every Thursday afternoon by subscribing on TechCrunch’s newsletter page.

power to the pumpers

A weekly dispatch from the desk of TechCrunch crypto editor Lucas Matney:

What happens when a meme stock and a meme asset class collide? Well, investors in each hope that the result is a tidal wave of very real money.

This week, GameStop launched an NFT marketplace. The reception wasn’t particularly overwhelming, the marketplace reportedly raked in about $2 million in sales volume which equates to less than $50k in transaction fee revenue on the first day. Daily volumes have trended downward in subsequent days but it’s far from an embarrassing launch, especially when one considers the failures endured by competing upstart marketplaces like Coinbase NFT.

GameStop is hoping to find a revenue-generating vertical that decreases its reliance on brick-and-mortar sales. The timing could be better for the company as NFT dollar volumes have plummeted as crypto prices have taken a hit, but this is clearly still a vision that has registered with the company’s very unique breed of investor profile. GameStop is down more than 40% from its November highs but things have gotten much less bleak in the past couple months as the company stock has rallied some 50%.

Taking down OpenSea — the current market leader — will be no small task, but it doesn’t particularly seem like GameStop is aiming at a straight feature-for-feature copycat and is instead aiming to contribute something different to the ecosystem.

Most secondary NFT sales happen on the Ethereum or Solana blockchains, GameStop is launching their marketplace on what’s called a layer-2 of Ethereum, its a secondary network that handles most of the computation but still relies on the mainnet Ethereum when it comes to storing data on a blockchain.

This is vision of modular blockchains that Ethereum creator Vitalkik Buterin very much stands behind, but it makes things complicated because it forces crypto investors to rally behind a new network as there are many layer-2 options. GameStop is currently using a rollup network called Loopring to bundle transactions, the complication is that you can only transact on GameStop with NFTs that were minted on Loopring, meaning that you can’t buy popular collection like CryptoPunks or Bored Apes on GameStop’s storefront.

This remains a risky choice for GameStop which will probably add support for other chains down the road, but for now is left on a different set of rails that the majority of NFT dollars spent today. This does seem to signal the option as being a bit more future-minded than one might expect, if this was a pure cash grab they could have grabbed at the existing cash more effectively by playing it straight.

Having pure-ish intentions only takes you so far in the crypto world and GameStop realizing success here remains a vertical uphill climb, but meme stock buyers have realized more challenging odds over the years so their appetite for risk remains hard to satiate.

the latest pod

Lucas and Anita are back in action this week and they wasted no time getting into the headlines. This week’s news lineup had them chatting about everyone’s favorite meme stock, GameStop, and its bold foray into the NFT marketplace even after posting a $381 million loss last fiscal year. They also talked about yet another disappearing act from the founders of a crypto firm that lost billions of dollars of other people’s money (yikes) and ran through some of the numerous crypto venture fund launches they’ve seen in the past week. 

Joining them on the show was Naveen Jain, founder and CEO of Yat, the company behind those emoji identifiers you’ve seen celebrities like Ke$ha use in their Twitter bios. Jain spoke with them about the concept of identity in both web2 and web3, and Anita used the opportunity to get him on board with the cause of lobbying Unicode for a long-overdue biriyani emoji. Y’all are welcome.

Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to keep up with us every week.

follow the money

Where startup money is moving in the crypto world:

  1. Crypto-focused donation API startup Change raised a $5 million seed round co-led by Freestyle and NEA.
  2. Farcaster raised $30 million led by a16z for Merkle Manufactory, its decentralized social network protocol.
  3. Animoca Brands brought in over $75 million from investors including Liberty City Ventures and Kingsway Capital to build the open metaverse in an extension to a funding round it raised in January.
  4. Digital asset management platform Safe raised a $100 million strategic round led by 1kx with participation from investors including Tiger Global and Digital Currency Group.
  5. DeFi lending platform Morpho Labs nabbed $18 million in a seed round co-led by a16z and Variant Fund.
  6. DEX aggregation protocol LI.FI raised a $5.5 million strategic round from investors including 1kx and Dragonfly Capital.
  7. Crypto derivatives trading platform Thalex closed a Series A of €7.5 million from Bitfinex, Bitstamp and others.
  8. Tenderize, a liquid staking platform, raised $3 million for its seed round led by Eden Block Ventures.
  9. Bravo Royale raked in $3 million in seed funding from the likes of Solana Ventures, 6th Man Ventures and others for its NFT-based battle royale video game.
  10. MetaOasis DAO, a metaverse real estate developer, scored $1.5 million in seed funding led by KuCoin Ventures.

the week in web3

A weekly window into the thoughts of web3 reporter Anita Ramaswamy:

Most crypto investors aren’t actually using their digital currency for transactions very often. They tend to prefer holding onto their crypto in the hope that it will appreciate over time. But there’s one notable exception that has motivated numerous U.S. crypto holders to part ways with their tokens – charitable giving. 

Research shows that crypto donors are actually more generous in their giving than those who donate cash. The optimist in me says that this might be influenced by web3’s strong sense of community. The cynic in me knows that it’s also a smart financial move for these donors because of the significant tax benefits of donating crypto, given that it’s treated like an asset rather than cash under the U.S. tax code. Regardless of the motivation behind it, crypto donations could be a useful tool for charities looking for new ways to fundraise. 

2021’s bull market was a boon for startups that help charities facilitate these crypto donations, including The Giving Block and Endaoment, which both saw donation volumes surge on their platforms during the year. But startup Change is taking a different approach, developing APIs to help companies and charities process donations. I caught up with the founders, Sonia Nigam and Amar Shah, this week to chat about the $5 million seed round they just closed to double down on the crypto space (you can read more about that here). They’ve historically focused on online fiat donations but see strong potential for crypto donations because they believe the blockchain can provide the transparency donors desire but isn’t always guaranteed to them. 

We already know things are getting ugly during this crypto winter so it’s especially interesting to see a startup that’s using this time to invest more deeply into its web3 capabilities rather than pumping the brakes or running for the hills. Charitable giving on the blockchain has lots of potential but can be a difficult undertaking, so only time will tell if startups like Change are able to bring transparency to the opaque world of nonprofits or if they’ll end up running into intractable challenges despite their good intentions, like many of web3-native regenerative finance (ReFi) projects that rely on inefficient, easily misused carbon offsets to meet their environmental goals. The latter is a topic for another day, but I think it’s always worth giving some thought to how crypto could evolve as a force for good, even if the reality of implementation is much tougher.  

TC+ analysis

Here’s some of this week’s crypto analysis available on our subscription service TC+ from senior reporter Jacquelyn Melinek

The US government is digging into NFTs’ impact on intellectual property
After NFTs exploded over the past year, the U.S. Patent and Trademark Office and U.S. Copyright Office are launching a joint study to investigate the digital assets’ impact on intellectual property rights. The study comes about a month after Vermont Senator Patrick Leahy, a Democrat, and North Carolina Senator Thom Tillis, a Republican, wrote to the offices asking them to look into NFTs given their exponential growth in a short period of time.

Despite falling NFT sales volume, there’s more underlying strength to the market than you’d think
Bearish sentiment in the crypto markets has trickled down to the NFT subsector. Over the past 30 days, NFT sales volume across the top 10 blockchains has fallen, according to data from NFT aggregator CryptoSlam. “The NFT market has not been great, but there is still great momentum,” Nick O’Neill, CEO and co-founder of The Nifty, said to TechCrunch. Even with that said, it’s hard to ignore bearish macro headwinds, O’Neill noted.

Have a great weekend and remember you can subscribe on TechCrunch’s newsletter page to get this in your inbox every week,

Lucas & Anita


Uber to sunset free loyalty program in favor of subscription membership



Ride-hailing giant Uber is shutting down its free loyalty program, Uber Rewards, so it can focus on its subscription-based Uber One membership.

Uber first launched the rewards program in 2018 as a sort of frequent flyer scheme that allowed riders to earn points for every dollar spent on rides or Uber Eats deliveries. Those points could then be used to get discounts on future rides or deliveries. In November 2021, Uber began introducing Uber One, which, for $9.99 per month or $99.99 annually, allows members perks like 5% off certain rides or delivery orders and unlimited $0 delivery fees on food orders of over $15 and grocery orders of over $30.

In an email sent to customers that was picked up by The Verge, Uber said users can still earn points via the legacy rewards program until the end of August, and that they can redeem those points until October 31. Uber Rewards will officially shut down on November 1, 2022, according to an update posted by the company.

The Uber Rewards program allowed users to earn 1x point for every Uber Pool dollar spent, 2x for every UberX dollar spent and 3x for every $1 spent on Premium. The number of points accumulated would put members into different castes of loyalty, from Blue to Gold to Platinum to Diamond, the latter of which comes with benefits like access to highly rated drivers, free delivery on three Uber Eats orders, access to better customer service and free upgrades.

While phone support will continue for Diamond users, now the only way to get additional perks with Uber will be to shell out for a subscription. Existing Rewards members will get a free one-month subscription to Uber One, but then will be charged for access. If you’re someone who orders Uber Eats more than twice a month, you can easily break even with the Uber One subscription, but plenty of users might not see the money saving benefits in the switch.

Uber did not respond immediately for clarity as to why it is shutting down the Rewards program in favor of the Uber One membership. Perhaps the company did not see the returns and user loyalty that it would have expected from the program and thinks a subscription offering will provide better returns.

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Twilio gets hacked, teens ditch Facebook, and SpaceX takes South Korea to the moon



Hi again! Welcome back to Week in Review, the newsletter where we quickly recap the top stories from TechCrunch dot-com this week. Want it in your inbox every Saturday? Sign up here.

Is Facebook for old people? If you’ve got a teenager around the house, you’ve probably heard them say as much. The most read story this week is on a Pew study that suggests this generation of teens has largely abandoned the platform in favor of Instagram/YouTube/TikTok/etc.; whereas in 2014 around 71% of teens used Facebook, the study says in 2022 that number has dropped down to 32%.

other stuff

Mark Cuban sued over crypto platform promotion: “A group of Voyager Digital customers filed a class-action suit in Florida federal court against Cuban, as well as the basketball team he owns, the Dallas Mavericks,” writes Anita, “alleging their promotion of the crypto platform resulted in more than 3.5 million investors losing $5 billion collectively.”

A troubling layoff trend: While tech layoffs might, maybe, hopefully be showing signs of slowing, Natasha M points out a troubling trend: some companies are announcing layoffs only to announce another round of layoffs just weeks or months later.

SpaceX launches South Korea’s first moon mission: South Korea has launched its first-ever lunar mission — a lunar orbiter “launched atop a SpaceX Falcon 9 rocket” ahead of plans to land on the surface some time in 2030.

Twilio gets hacked: While it’s unclear exactly what data was taken, Twilio says the data of at least 125 customers was accessed after some of its employees were tricked “into handing over their corporate login credentials” by an intense SMS phishing attack.

Amazon’s bizarre new show: Think “America’s Funniest Home Videos,” but made up of user-submitted footage from Ring security cameras. By now most people probably realize their every step is recorded on a security camera or three — but doesn’t embracing it as Entertainment™ like this feel kind of…icky?

Haus hits hard times: Haus, a company that ships specialized low-alcohol drinks direct to consumers, is looking for a buyer after a major investor backed out of its Series A. The challenge? Investor diligence for an alcohol company can take months, and Haus just doesn’t “have the cash to support continued operations at this time.”

woman pouring wine

Image Credits: Haus

audio stuff

How clean is the air you breathe every day? Aclima co-founder Davida Herzl wants everyone to be able to answer that question, and sat down with Jordan and Darrell on this week’s Found podcast to explain her mission. Meanwhile on Chain Reaction, Jacquelyn and Anita explain the U.S. gov’s crackdown of the cryptocurrency mixer Tornado Cash, and the Equity crew spent Wednesday’s show discussing whether the turbulent market conditions of late will mean we see fewer early-stage endeavors in the months ahead.

additional stuff

What lies behind the paywall? A lot of really good stuff! Here’s what TechCrunch+ subscribers were reading most this week…

Building an MVP when you can’t code: Got a great idea but can’t code? You can still get the ball rolling. Magnus Grimeland, founder of the early-stage VC firm Antler, lays out some of the key principles to keep in mind.

Are SaaS valuations staging a recovery?: “…the good news for software startup founders,” writes Alex, “is that the period when the deck was being increasingly stacked against them may now be behind us.”

VCs and AI-powered investment tools: Do VCs want AI-powered tools to help them figure out where to put their money? Kyle Wiggers takes a look at the concept, and why not all VCs are on board with it.

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After the FBI raid at Mar-a-Lago, online threats quickly turn into real-world violence



Threats of violence reached a fever pitch — reminiscent of the days leading up to the Capitol attack — following the news that the FBI raided Trump’s Florida beach club to retrieve classified documents the former president may have unlawfully taken there.

After Trump himself confirmed Monday’s raid at Mar-a-Lago, pro-Trump pundits and politicians rallied around declarations of “war,” and Trump’s ever-fervent supporters called for everything from dismantling the federal law enforcement agency to committing acts of violence against its agents. The situation escalated from there in record time, with online rhetoric boiling over quickly into real-world violence.

By Thursday, an armed man identified as Ricky Shiffer attempted to force his way into an FBI office in Cincinnati, Ohio, brandishing a rifle before fleeing. Law enforcement pursued Shiffer and he was fatally shot during the ensuing standoff with police.

Analysts with the Institute for Strategic Dialogue (ISD), a nonprofit that researches extremism and disinformation, found evidence that Shiffer was driven to commit violence by “conspiratorial beliefs related to former President Trump and the 2020 election…interest in killing federal law enforcement, and the recent search warrant executed at Mar-a-Lago earlier this week.” He was also reportedly present at the January 6 attack — another echo between this week’s escalating online threats and the tensions that culminated in political violence at the Capitol that day.

Shiffer appears to have been active on both Twitter and Truth Social, the platform from Trump’s media company that hosts the former president and his supporters. As Thursday’s attack unfolded, Shiffer appeared to post to Truth Social about how his plan to infiltrate the FBI office by breaking through a ballistic glass barrier with a nail gun had gone awry. “Well, I thought I had a way through bullet proof glass, and I didn’t,” the account posted Thursday morning. “If you don’t hear from me, it is true I tried attacking the F.B.I., and it’ll mean either I was taken off the internet, the F.B.I. got me, or they sent the regular cops…”

In posts on Truth Social, the account implored others to “be ready to kill the enemy” and “kill the FBI on sight” in light of Monday’s raid at Mar-a-Lago. It also urged followers to heed a “call to arms” to arm themselves and prepare for combat. “If you know of any protests or attacks, please post here,” the account declared earlier this week.

By Friday, that account was removed from the platform and a search of Shiffer’s name mostly surfaced content denouncing his actions. “Why did you censor #rickyshiffer‘s profile? So much for #truth and #transparency,” one Truth Social user posted on Friday. Still, online conspiracies around the week’s events remain in wide circulation on Truth Social and elsewhere, blaming antifa for the attack on the Ohio FBI office, accusing the agency of planting documents at Mar-a-Lago and sowing unfounded fears that well-armed IRS agents will descend on Americans in light of Friday’s House passage of the Inflation Reduction Act.

“‘Violence against law enforcement is not the answer no matter what anybody is upset about or who they’re upset with,’ FBI director Christopher Wray said in light of emerging threats of violence this week. Trump appointed Wray to the role in 2017 after infamously ousting former FBI director James Comey.”

Friday is also the five-year anniversary of the Unite the Right rally, which saw white nationalists clad in Nazi imagery marching openly through the streets of Charlottesville, Virginia. The ensuing events left 32-year-old protester Heather Heyer dead and sent political shockwaves through a nation that had largely grown complacent about the simmering threat of white supremacist violence.

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