2022’s most controversial moments in Web3

Amid the continued disruption and impact of the pandemic on the global economy, the rise of geopolitical tensions caused by the Ukraine war and the US-China rivalry, and natural disasters caused by climate change — the Web3 space was once perceived as a bright light, an area that would continue to see growth despite a bear market and the uncertainty and chaos taking place around the world.

However, recent months have demonstrated that crypto and NFTs are not quite immune to the impact of the recession and other events. The bankruptcy of crypto exchange monolith FTX and the downfall of its founder Sam Bankman-Fried have belied weaknesses in digital currencies — an industry which critics argue needs stronger regulations.Meanwhile, Elon Musk’s courting, purchase, subsequent layoffs, and policy shakeups enacted at Twitter, have led to further confusion in the tech space, as the CEO plans to step down following the results of his latest poll.

And finally, despite the promise of virtual idols, Web3 events and AR connections, critics argue that the lofty dreams and ambitions of the metaverse have so far fallen short of expectations.

But as the saying goes: What goes up, must come down… and then hopefully up again. Here, Artazine takes a look at the most controversial events in Web3 over the past year, as we prepare for a bigger, brighter 2023 ahead.
 

FTX’s collapse + ensuing contagion. 

With an alleged $8 billion dollar hole in the balance sheet, the collapse of FTX — Sam Bankman-crypto Fried's exchange, has resulted in billions of dollars disappearing from the crypto market, as well as plenty of collateral damage. 

The exchange’s blatant misappropriation of customer funds has not only jeopardized the financial stability of its users and investors, but also resulted in the loss of funds from institutions like the Ontario Teachers' Pension Plan (which lost US$95 million). 

The repercussions have rapidly impacted FTX's estimated one million creditors, and critics worry this event may cause users to abandon cryptocurrency entirely. 

Additionally, FTX’s closure has resulted in almost US$3.6 billion in net withdrawals from Binance, the world's largest cryptocurrency exchange. Users worry that if this trend continues, withdrawals will snowball, and the last standing exchange may prove insolvent.

Opensea contemplates creator fees. 

In November, OpenSea stated it would implement "on-chain enforcement of creator fees" for any collections traded, choosing to uphold artist royalties compared to other competitors in the space. . Additionally, NFTs hosted on OpenSea would also be unable to be traded on other NFT markets that provide zero or voluntary royalties.

This proved to be too much for some creators including Bobby Hundreds, who decided not to launch his Badam Bomb Squad NFT collection on the platform. Shortly after, Opensea announced it would reconsider its strategy regarding creator royalties. 

Elon Musk acquires Twitter, rolls out changes and upheaval.

In the span of just a few months, Musk's US$ 44 billion takeover of Twitter has sparked much criticism, as well as upheaval within the social media giant. Upon Musk’s acquisition, the business laid off half of its workers, which included employees from areas such as ethical AI, marketing and communication, search, and public policy. Shortly after, a number of employees chose to quit, citing an unwillingness to see through with Musk’s vision “Twitter 2.0”.

The Neuralink and Tesla CEO indicated that he would reinstate a majority of previously suspended accounts including those of former US president Donald Trump and rapper Kanye West. Musk stated that he would provide "amnesty" for such users. 

More recently, the tech tycoon stated he would step down as CEO of Twitter, stating “I will resign as CEO as soon as I find someone foolish enough to take the job! After that, I will just run the software & servers teams.”
 

Meta’s Horizon Worlds gives us “legs”.

Mark Zuckerberg opened October’s Meta Connect 2022 event by revealing his plans for metaversal platform Horizon World’s, and what he called "the most desired item on [Meta's] roadmap" – legs.

Meta had excluded the lower body entirely for the first generation of Horizon Worlds avatars, resulting in disembodied floating torsos. Zuckerberg has since added their most requested feature. 
 

Damien Hirst sets fire to his paintings, keeps the NFTs instead.

 
In October, at his Newport Street Gallery in London, Damien Hirst burned thousands of his own paintings. 

The act was part of the artist’s latest project "The Currency”. The collection, which launched in July 2021, featured a total of 10,000 hand-drawn, dotted paintings created by Hirst since 2016.  Each painting came with an equivalent NFT, and their value was determined by a machine-learning system which analyzed paint texture, drips and splashes and other traits. 

In total, the project generated around US$ 89 million in sales, with Hirst keeping the last 1,000 NFTs for himself “to show my 100 percent support and confidence in the NFT world.”