Empire Newsletter: Worldcoin is still more UBI than AI

Universal based income

Worldcoin cops a lot of flak for its absurdly high fully-diluted value: nearly $49 billion compared to a market cap of $1 billion.

That makes for just 2% of the total WLD supply currently circulating, with the rest to be released over the coming years. In December, only 1% of the WLD supply was liquid.

What’s often lost is that for all of its gadgetry and tangential ties to the AI movement, Worldcoin is a universal basic income scheme. 

The iris-scanning Orb is something of a red herring. A means to an end. 

Every two weeks, anyone (in a whitelisted jurisdiction) who has sold biometrics to verified their identities with Tools for Humanity (not in the US) can receive a small grant from Worldcoin sent directly to their wallets.

Grants, on average, are each currently 5 WLD ($24.20) but in the early days last June, recipients received on average 20 WLD ($45.60 then, $96.80 now), mostly due to the larger “genesis grant” payments just after launch.

Feeding your eyeball to the Orb was only a method of signing up for UBI d’Sam Altman. World App is your way of receiving and spending the UBI payments. 

And any unspent UBI could eventually be used to help govern the World Chain, a layer-2 that will presumably do all the other wacky things layer-2s do, like DEXs, lending and launchpads.

It’s tempting to already treat WLD like any other low-float governance token airdropped in the past year. But at this point, it’s still purely a currency within the UBI context. 

Here’s how it’s going:

Worldcoin has so far distributed about $752 million through its UBI system, valued at the rough time of each grant. If everyone had held their WLD until today, it would be worth $790 million.

About three quarters of the circulating WLD supply was sent via user grants since last July, equal to 163 million WLD, per an official Dune dashboard. Another 3.8 million WLD was paid to Orb operators, but that crypto shouldn’t be considered UBI, as it was worked for.

According to Worldcoin’s data, 3.93 million unique wallets have claimed at least one grant — which confirms their minimum participation in the UBI scheme. 

Those wallets have altogether received 35 million individual grants. So, enrollees have so far received (almost) nine grants each, on average. Quick math suggests a $200 average lifetime UBI payment for each recipient.

Not bad, considering the number of humans in Worldcoin’s scheme is 10 times the population of Iceland, home to Auroracoin, arguably the original UBI cryptocurrency that launched and failed in 2014. 

— David Canellis

Data Center

• Bitcoin is inching back toward $70K, trading just under that floor ahead of the US market open. 
• Coinbase is set to open 2.5% above yesterday’s stock close, according to Yahoo data. 
• A new Federal Reserve survey included some crypto data. The top-line number: 7% of adults held or used crypto last year.
• That’s compared to 10% and 12% in 2022 and 2021, respectively.
• Yeah, but: just 1% of respondents said they used crypto to send money last year. 

Unwrapping the tin foil

How did we get here? 

The question for the ages. As we covered earlier this week, the ETH ETFs are no longer a fever dream. As potential issuers update their filings, there are a slew of questions to ask. 

Here’s one: Should we have known? Well, there’s no doubt that everyone’s been a little surprised by how everything’s unfolded.

Earlier this year, analysts Eric Balchunas and James Seyffart lowered their odds of a May approval after radio silence from the SEC. Heck, the issuers even added staking language to their drafts and still nothing from Gary Gensler’s agency. 

There’s the possibility that SEC officials suddenly changed their minds and realized that they need to prep ETH ETFs for the market ASAP. There’s also the chance that, as Seyffart told us earlier this week, a political play is unfolding.

But there’s also the chance that the SEC planned this all along.

I know this sounds like a conspiracy theory unto itself, but hear me out. Or, rather, hear out Nate Geraci, president of The ETF Store. 

Earlier this week, Geraci told me he thought that the SEC could have been ready for this. That, of course, sparked my curiosity, and so I asked him to expand. 

“My sense is the SEC wanted to avoid the circus atmosphere around spot ether ETFs like we witnessed with the spot bitcoin ETF approval process. SEC Commissioner Hester Peirce used this exact phrase — ‘circus atmosphere’ — in her public statement following spot bitcoin ETF approval,” he said. 

According to Geraci, the SEC may have “decided to approach spot ether ETF approval in a manner that didn’t draw so much attention.”

Last week, Coinbase’s David Han also said he believed there was room for surprises during decision week. 

But Balchunas later pushed back on Geraci’s claims and said the two would “agree to disagree” because his sources were very surprised about the SEC’s sudden uptick in communication — and assessment that tracked with multiple media reports.

I guess anyone could have anticipated that the week of a potential crypto ETF decision would be…spicy, to say the least. 

— Katherine Ross

The Works

• Sam Bankman-Fried, currently incarcerated in New York as he seeks appeal, is being transferred to a new prison, according to the Wall Street Journal. 
• Speaking of FTX: Government lawyers are seeking a 5-7 year prison sentence for former FTX exec Ryan Salame. 
• Seven percent of American adults “held or used crypto” last year, according to a newly released Fed survey. 
• Sign of the times? CoinDesk reports that MetaMask will add native support for bitcoin. 
• Last but not least: Our friends over at the Lightspeed newsletter went live this week. Subscribe now to get their latest edition this afternoon. 

The Morning Riff

Some might be wary of privacy-protecting tools in light of the US government’s war on crypto mixers and CoinJoin wallets.

Not Vitalik. He’s using Railgun, an Ethereum zero-knowledge protocol for keeping transactions private, apparently once a month.

Railgun presents itself as a tool for “using DeFi without leaking your data or alpha.” And OK, it’s not a mixer, so it’s not the same thing as Tornado Cash. 

And it’s possible to prove funds that have interacted with Railgun are legitimate in the eyes of OFAC sanction lists, without divulging any sensitive information (that’s the point).

The effect is still similar — it hides the origin of funds, which is some of what Tornado Cash did wrong, according to the Department of Justice. Vitalik has also spoken publicly about using Tornado Cash to protect identities when donating to causes in Ukraine.

Crypto faces a political war with multiple fronts, and privacy is a key one. Cult of personality tends to be a centralizing force, but blockchain needs figures like Buterin fighting for it — onchain.

— David Canellis

---

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.