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9 Jan

For Digital Fashion, Does FTX’s Demise Actually Matter?

The spectacular rise of digital currency exchange FTX and its arguably much more spectacular fall are poised to enter the annals of tech lore. As a case study in hubris, if not outright criminality, the story has generated attention all over the place from area of interest blockchain blogs to mainstream media publications, with critics pondering whether FTX founder Sam Bankman-Fried’s fate will hammer the ultimate nail into crypto’s coffin once and for all.

Not so fast, say a still-booming breed of related artists and business executives who depend on digital currency. There’s a foundation of entrepreneurs, creatives and established brands that remain invested within the emerging tech and the applications and experiences it unlocks. For them, the FTX debacle appears to have little implication on things like fashion NFTs, Web 3.0 projects and metaverse shopping initiatives, a minimum of up to now.

“We’re keeping track of where the winds are blowing, but no, we don’t have plans to shift priorities at this point,” one apparel company insider told WWD on condition of anonymity, because the person was not authorized to debate the matter. “Digital fashion’s going to occur, is going on already. There’s still a ton to work out — for everybody within the industry, not only us. However the genie’s out of the bottle and you may’t stuff it back in there. Who’d need to?”

Others expressed similar sentiments to WWD for quite a lot of reasons. Some brands, after highly publicizing their entry into Web 3.0, don’t relish having egg on their faces. There’s also a general sense that a variety of executives genuinely don’t know what to make of the situation yet, and so they don’t need to act rashly. Digital fashion, metaverse shopping and non-fungible tokens, or so-called “phygital” retail, are poised to turn into big business in the long run and nobody desires to miss out, thus resulting in a broad “wait and see” approach.

In fact, a reality check could also be coming for a minimum of some crypto evangelists, regardless.

Earlier NFT projects equivalent to celebrity-fueled Bored Ape Yacht Club paved the way in which for start-ups like virtual product and experience innovator RTFKT, now a part of Nike, in addition to luxury houses like Dolce & Gabbana to drag within the equivalent of tens of millions of dollars with virtual/physical collections, whetting the appetites of high-risk investors, decentralized autonomous organizations or DAOs, and others. While a gradual flow of comparable gonzo transactions was all the time unsustainable — because common sense — the collapse of FTX makes it even harder to picture now.

Perhaps it’s due to how far the corporate has fallen.

Celebrity endorsements from Tom Brady, Steph Curry, Shaquille O’Neal, Larry David, Kevin O’Leary and lots of more, plus a string of high-profile acquisitions, gave the young crypto exchange a magical, fairytale quality befitting a unicorn. At this point last yr, FTX, then just two years old, raised an eye-watering $400 million in funding, taking its total raised to $2 billion and its valuation to $32 billion. Its successes appeared to prove crypto’s legitimacy and viability, and the 30-year-old Bankman-Fried was portrayed as a visionary deserving of the $26.5 billion net price he amassed at his peak.

A yr later, the unicorn looks more like a donkey. A series of revelations late last yr depicted sketchy maneuvers between FTX and Alameda Research, Bankman-Fried’s barely older crypto hedge fund. Alameda Research held a large stake in FTT, the digital currency created by FTX. But FTX also used it as collateral on its balance sheet, adding to a confusing situation that even well-honed finance experts found opaque and hard to follow. That’s never a superb thing, but for a blockchain-based operation, it seemed particularly egregious. (With blockchain, computers share a decentralized ledger that’s able to tracking digital assets. In other words, transparency is presupposed to be an important point.)

Although Bankman-Fried filed for bankruptcy protections, he couldn’t safeguard himself from investigations by the Securities and Exchange Commission and the Department of Justice. The authorities aimed to untangle how funds moved between the 2 businesses, amongst other things, and the long-simmering financial scandal hit peak boil in December with the arrest of the young tech founder.

It’s a multitude of rare magnitude, that much is obvious. But what’s less certain is whether or not it’s enough to shake the religion in crypto, blockchain, NFTs and the like, particularly now, as their mainstream potential is starting to mature. Because up to now, many of the hand-wringing appears to come back from the pundits, not the style, tech or other pioneers blazing the virtual trail.

Call it a collective shrug, but these innovators seem undeterred, and the important thing to understanding that impervious optimism is definitely quite easy: They were already accustomed to crypto’s intense swings. They know that the volatility preceded Bankman-Fried and that the roller-coaster ride will likely proceed, no matter what happens to him.

Pros like Femi Oluwafemi, the FaZe Clan veteran who now runs Web 3.0 creative content firm Fourth Frame Studios, are keeping their eyes on the vast potential of blockchain. “There’s huge value within the NFT space and applications,” he told WWD. “There are some brands which are beginning to do some cool things throughout the digital [and gaming] world, equivalent to Balenciaga. I feel that there’s an appetite, and an audience for it.”

In other words, there’s no shortage of desire on the a part of brands to pursue the metaverse and Web 3.0. What they lack is the know-how, but they’re figuring it out. “I feel we’re still in the invention phase,” he told WWD. “But I do think it’s going to survive. There are utility applications which are yet to be discovered and a few really cool brands are entering the space.”

For Oluwafemi, who’s worked with a notable roster of brands, including Ralph Lauren, L’Oréal, Walmart, Roblox and Beats by Dre, amongst many others — including his previous employer, FaZe Clan — the metaverse remains to be a really young concept. That’s exciting since it implies that there’s quite a lot of room for brand new ideas, and people discoveries could change the sport.

“It’s just like the very early stages of the web,” he explained. “People jumped in really quick, [even though] they didn’t really quite know what it was. There was a down climb. There was a bubble. After which hastily, it began to select back up again.

“So where we’re at, within the lifespan of this complete space, I’m unsure. But I see that it does have longevity and there’s a future in it.”

Big tech seems to agree, at the same time as it faces economic headwinds and regulatory battles.

Meta’s race to the metaverse has turned Instagram into an NFT-minting machine. Meanwhile, Apple’s mixed reality headset looks heading in the right direction for a late 2023 release. Retail platforms like Shopify are still determining their place within the virtual world, but they’re making progress. Last summer, the corporate announced that it could offer NFT support, and on Thursday, a recent Shopify app from Venly appears to pay that off by allowing merchants to design, mint and sell their very own Avalanche NFTs in only a couple of clicks.

A series of notable offerings also signal a rising tide of intriguing recent projects and businesses — from the Council of Fashion Designers’ inaugural NFTs and metaverse exhibition to a recent fashion brand by crypto legend Gmoney and the launch of Mntge, Sean Wotherspoon and Nick Adler’s NFT platform for premium vintage apparel. Decentraland also announced it’s going to host a second edition of Metaverse Fashion Week March 28 to 31, following last yr’s inaugural event which attracted Tommy Hilfiger, Etro and Guo Pei, amongst other brands.

It’s tempting to consider that they’re ignoring the state of crypto, averting their eyes from the writing on the digital wall. That’s not necessarily accurate, though. They do see what’s happening. They only don’t view it as bad news.

“There are builders within the space at once and profiteers, and that’s what’s making it really healthy, actually,” explained Mntge’s Adler. “I feel it’s made it very nice and organic for our growth. That’s the positive outlook we’ve on it: It’s a time for real builders to be in here and for all types of profiteers [to get] the ‘rug pull’ stuff and just sort of wash away, because that chance isn’t here for them anymore.

“So I feel it’s actually cleansing up the market beautifully.”

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