26 August 2022 |

Cash App To Add Commerce Section—FTX Made *Bank* In 2021


Before we dive into this week’s news, it’s almost the end of summer, and I deeply apologize that I haven’t made that many playlists. I honestly haven’t listened to much new music this summer. But I made an “End of Summer 2022” playlist for y’all which I think is quite good (my wife Stevie does not approve and says there’s too much “untz untz” music on it…hope y’all enjoy!) 

Summer Playlist

Commerce Is Coming To Cash App

  • We took a look at Block’s Q2 2022 Shareholder Letter, and spotted an interesting development on their app ecosystem strategy: introduction of their Commerce feature. 
  • Within Block’s ecosystem, the Cash App business is one of the key players, with an estimated 47 million active accounts through June 2022. According to the report, within the Cash App ecosystem there are several pillars: Community, Financial Services, Crypto, Operating System, Trust, Commerce, and Global.
  • In that sense, there was a particular update on Cash App’s strategy that we found interesting: the introduction of their new Commerce product. This comes in the context of important advances on the implementation of their new operating system, which displays the discovery feature within the main navigation. According to the shareholder letter, this change in the Discover Tab will drive engagement towards their Commerce features – which include Cash App Pay, Boost (discounts using Cash App Card), and Afterpay (BNPL), and push their existing peer-to-peer payments customers towards more profitable transactions. 
  • Another interesting feature introduced during Q2 was Round-Ups, which allows users to automatically direct their spare change into stocks or bitcoin when using Card Cash App. As Cash App expands their product suite, it will be interesting to see what else they come up with to drive their payments ecosystem. 

A Few Blue-Chip Brands Are Making Bank Off NFTs

  • An interesting post in Dune showcases a case study on the performance of NFT initiatives of big commercial brands including Nike, Adidas, Tiffany, Time Magazine, and others. 
  • The biggest winner in the brand NFT market at the moment is Nike. NFTs owned by the sports giant have amounted to an astonishing $1B in secondary market volume, and an equally impressive $185M in total revenue. However, it must be noted that these numbers include transactions from the CloneX collection before it was acquired by Nike, in order to reflect overall performance, which was the main driver of the company’s performance in the space. 
  • Apart from the volume and revenue numbers, the dataset displays interesting information by brand, including minting demographics (minter’s level of crypto experience), details on each collection, royalty fees, graphs on price action, and other statistics around transaction history. 
  • This type of data analytics shows that NFT collections could bring real profits into traditional brands. We’ll see if more companies get into the NFT space as crypto adoption in general increases. For instance, there have been reports on Starbucks planning to expand their loyalty program via NFT based memberships. 

FTX Had Some *Monster* Growth In 2021

  • FTX has been all over the place this week due to the leaked financial reports that show a shocking 1000% growth on revenue during 2021. CEO Sam Bankman-Fried confirmed via twitter on August 20 that the numbers are “correct ballpark”.
  • Here’s the round up: Revenue grew from ~$90M in 2020 to ~$1.2B in 2021; net income grew from ~$17M to ~$338M; profit margin was around 27%; and its M&A practice expanded to acquire ~15 companies to drive global presence of the firm. 
  • Of course, these outstanding numbers can be attributed to the crypto bull run that started in late 2020 and continued through 2021, finally ending with the crypto crash earlier this year. However, it would be interesting to see how the firm fared in Q2 of 2022, with unfavorable macroeconomic conditions and decline in trading volumes. Coinbase, for instance, reported a crushing $1B loss during this period.
  • Another interesting take from FTX’s numbers is that nearly two thirds of its revenue comes from derivatives fees. It maintains itself as an exchange for more sophisticated investors that perform futures, options, and other types of leveraged transactions. However, rumor has it they are planning on extending their spot market business, with speculation over Sam Bankman-Fried’s acquisition of ~7% of Robinhood.