Parsec Weekly #86
Durov's arrest, Gary the protector and the benefits of Privy and account abstraction
-kezfourtwez
gm crypto market participants, I don’t have much to say about the current market conditions or price action, other than it must be pretty excruciating for those still actively trading - The death of volatility in real time. But we do have a few new interesting developments and stories this week, so lets get to it.
TON
Telegram’s founder Pavel Durov was arrested in France this week and later charged with complicity in organised crime, criminal distribution of child pornography, drug trafficking, fraud and money laundering and refusal to cooperate with authorities. Though it basically all boils down to that last one.
The big story here is that many feel it’s a violation of freedom and privacy. Essentially world governments have colluded to charge Durov for atrocities committed on his app because he wouldn’t give up user data, or more simply put, give the governments a ‘backdoor’ into Telegram, circumventing the apps encryption and violating the privacy of users.
This isn’t the first time that tech founders have been pressured into giving up user data. Global powers want control, and combatting that is a big part of the crypto ethos.
Upon Durov’s arrest Telegram’s coin TON experienced a sharp sell off with little bounce. Price dropped 20% from $6.81 to $5.45 in just a few hours. There’s been some volatility since, a little lower, a little higher but price now sits at $5.4 at the time of writing.
To add fuel to the fire, coincidentally a few days after his arrest the TON blockchain went down for hours without any real comms from the team. The chain processed 20m transactions in the hours before, allegedly due to the launch of a hyped coin. Read more on that here.
So we have two angles here: The right to privacy and the freedom to transact, and then the fact that in TON’s case the decentralisation wasn’t sufficient and the inability to keep up by a set of validators resulted in an outage. Ironic innit, choose your fighter.
Opensea
The institutions are coming for your jpegs, and not in a good way. The SEC has issued a Wells notice to Opensea, implying they think that the platform is illegally aiding in the distribution of securities. While I don’t disagree that some NFT’s probably have securities-esque promises (NFT’s is a very broad term), it feels a little bit like Gary is taking one last stab in the dark after a series of sunk tax payer funds and lost cases for the SEC over the last 12 months.
The notice came with little information regarding which NFT’s they consider securities, so for now this is mostly the market digesting the news. That being said, I can see how a certain $250m raise in the form of digital land sales with the promise of a Metaverse at the end of the rainbow could be considered a security. A digital picture of a colourful squiggle or 6529’s latest ‘Seize the memes’, probably not.
Opensea has pledged to contribute $5m to assist NFT creators should these lawsuits start targeting more specific categories or projects.
Opensea had the digital world in the palm of their hand in 2021, they got complacent or simply didn’t care enough to innovate and were quickly outpaced as companies like Blur and Magic Eden filled the void. So I’m not particularly worried if Opensea ends up as a casualty from this ordeal, though I am a believer in the right for artists to create and sell their art, and for broader communities to rally around a common belief in the form of a digital picture. So let’s hope this is another lost cause for Gary the protector.
Also very ironic that the notice comes the day after Trump released yet another round of Trump NFT’s.
Privy and account abstraction
A little side note on Privy to finish off this week, who are in my opinion doing the lords work to usher forward crypto adoption.
Even if you are unaware of this companies existence, you may be already using their tech without knowing it. Fantasy.top, Hyperliquid, Opensea, Zora, friend.tech, fren.pet, Blackbird and many more all use Privy for onboarding and authentication.
They abstract away the complexities of the blockchain, allowing consumer apps to be built with simple onboarding processes and a simple UX for conducting transactions, resulting in a larger pool of potential users and ultimately facilitating further penetration of these novel ideas that showcase why crypto is the right alternative to traditional rails.
Hyperliquid’s AA model works to streamline the UX and make it feel more like a centralised exchange experience. Ultimately I think this has been a big contributor to their success, you can have 100k TPS and a dedicated blockchain to trade perps, but if the user still needs to sign a tx every time they submit an action, the user is going to have a bad time.
I think the complexities of most apps will be abstracted away as time goes on. It’s the same reason why telegram trading bots took off in such a big way back in 2023, or why friend.tech had an unprecedented amount of users for a crypto consumer app.