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Welcome to another edition of the DeFi Frontier, a newsletter about DeFi innovation for the real world! Binance was the main source of spiciness this week, with the U.S. government declaring war on the world’s largest exchange. Dramatic as that was, we remain focused as always on the ways that crypto is empowering ordinary people all over the world.
News Wire
Drama and intrigue
- March 27 — U.S. regulators target Binance in sweeping legal complaint. The US Commodity Futures Trading Commission (CFTC) alleged that Binance actively solicited U.S. customers via its main trading platform, rather than the exchange’s supposedly independent U.S. entity Binance.US. In a response to the complaint, Binance CEO CZ described the complaint as “containing an incomplete recitation of facts.” (link)
Innovation
- March 30 — Argentinian airline issues every ticket as an NFT. Flybondi announced that it will issue tickets as NFTs on the Algorand blockchain. This integration will permits passengers to change their name, transfer, or sell their “NFTickets” independently. (link)
- March 28 — Homebase sells out 1st tokenized home on Solana. HomebaseDAO’s pilot initiative permitted users to purchase NFTs representing a fractional share in a house in Texas. (link)
- March 30 — Web3 protocol Polytrade raises $3.8mn for blockchain-powered trade finance. Polytrade is an Ethereum-based trade finance platform, providing factoring and invoice financing services for SMEs. (link)
Crypto cards
- March 30 — BTC rewards app Fold and Visa expand partnership. Fold’s debit card program permits users to earn BTC rewards. Under the expanded partnership, Visa will now serve as the exclusive card network for Fold in North America, Europe, and Latin America and the Caribbean. (link)
- March 30 — Australian stablecoin wallet Stables to launch Mastercard program. Stables permits users to hold ERC-20 USDC, USDT, and BUSD. Under the Mastercard partnership, these stablecoin balances will be spendable via an attached prepaid card. (link)
- March 30 — Payroll streaming platform Zebec launches Mastercard program. Zebec provides streaming payment services on Solana. The Zebec card will be available in the UK and Europe. (link)
Analysis
Around the world, across cultures and creeds, few companies are as universally reviled as Ticketmaster. In November, Ticketmaster was forced to cancel a sale of Taylor Swift tickets after their systems were overwhelmed by presale demand, prompting a U.S. congressional hearing on the subject. Then, in December, thousands of Bad Bunny fans were turned away from a concert in Mexico City after their tickets, many purchased directly from Ticketmaster, were rejected as fraudulent.
Many in the crypto community responded (albeit quietly to avoid the anger of enraged fans, especially the Swifties) by pointing out that blockchain could solve many of the problems that have plagued Ticketmaster.
To understand why blockchain might bring value to ticketing, it is first worth examining the current landscape of ticketing. When you purchase a concert ticket, the ticket issuer creates an entry on their internal ledger indicating that seat X is reserved for the bearer of that ticket. But what happens if you get sick, and you need to sell your ticket? Some ticketing websites may facilitate ticket resales between fans, but this option is not always enabled, and the ticketing website may impose fees. Fans can elect to purchase tickets from a third-party vendor, or via social media, but they may have no guarantee that the tickets are genuine and unique.
Ideally, electronic tickets should be non-fungible, easily verifiable, and exchangeable between parties. Conveniently, blockchains have pioneered a solution that satisfies all of those characteristics: Non-Fungible Tokens (NFTs).
An NFT-powered ticketing system might work as follows: Users purchase a ticket via the ticket marketplace (using on-chain payment or traditional payment methods like credit cards). Fans connect a wallet to receive their NFT ticket; this could be a standard crypto wallet or a ticket-specific wallet application. Ticket resales would then constitute on-chain transfers of the NFT ticket between wallets. Finally, ticket checking devices at the event would scan a QR code generated by the user wallet application (on a cell phone), which would confirm that the fan’s wallet is the current and true owner of the NFT ticket.
Some NFT ticketing initiatives are underway (see the Argentine airline news item above). But so far at least, NFT tickets have not become the norm. Beyond corporate inertia, there are some challenges standing in the way of NFT ticketing that might need to be addressed:
- Blockchain selection. NFT tickets should ideally be based on a blockchain that is fast, low-cost, but highly resilient. Ethereum transaction fees would probably be too expensive for a scalable ticketing regime, so less expensive L2s (e.g., Polygon, Arbitrum, or Base) or other L1s (Solana, Celo, etc) might be a better option. However, this blockchain network also must be able to support an enormous amount of traffic. During the Taylor Swift fiasco, Ticketmaster reportedly received 3.5 billion system requests in a single day.
- Connectivity issues. Network connectivity in crowded stadiums is often quite poor. Verifying blockchain data (e.g., NFT ownership) usually requires internet access, so a wifi outage could be problematic for ticket checkers.
- Wallet security. If tickets can be easily transferred between wallets, this opens the door to theft and scams (e.g., spam emails asking customers for their private keys). Ticket wallet applications should have built-in antifraud and user education features.
As far as crypto adoption goes, NFT tickets seem like low-hanging fruit: a clear solution to a glaring problem. However, as always, new technologies require a wide range of conditions, especially user buy-in, to achieve widespread uptake. We will see if Swiftie rage is enough to force an NFT revolution in ticketing!
DISCLAIMER: The views and opinions expressed herein are those of the speakers and do not necessarily reflect the views or positions of any entities they represent. The information provided does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and you should not treat any of this content as such. Do conduct your due diligence and consult your financial advisor before making any investment decisions.
