TBW #30: Sorare at the heart of a political battle

TBW #30: Sorare at the heart of a political battle

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🖊️ Editorial

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⚡ ️ The strategy d'EDF

🤖 The hype of Web3 funds


The battle of image

We've known for years that the development of cryptos doesn't just depend on their performance. The image they project is also very important, and Ethereum's comeback is the best example of this. Since its switch to Proof-of-Stake, the 2nd largest blockchain has become like much more frequented. There are countless companies and political leaders - French Minister for the Digital Economy leading the way - praising its qualities.

This event is obviously an undeniable step forward for Ethereum, but it is also an important signal for Bitcoin. For all the support for Proof-of-Stake is just as much condemnation of Proof-of-Work, which effectively consumes much more energy...

The coming months look set to be crucial for Bitcoin, whose image could suffer a little more. The question is how its defenders will react. Will they have the patience to take up their pilgrim's staff again to explain how it works and demonstrate that it can be useful for the energy transition, or will they isolate themselves even further? Bitcoin has lost an image battle, but not necessarily the war.



👉Sorare at the heart of a political battle

Between the National Gaming Authority (NGA) and Sorare, the government seems to have made up its mind. As he explained to us yesterday in an exclusive interview (available here), the Minister Delegate for Digital Affairs, Jean-Noël Barrot, is calling for "agility" on the subject of the NFT champion 🇫🇷. In other words, the ANJ should not penalise Sorare by treating it as a sports betting game. A mission has been entrusted to the Inspectorate General of Finance to clarify the status of this type of company, but it will take time. "It generally takes a year for the report to be delivered and two years for it to be translated into law," points out a person familiar with the procedure. And yet the ANJ is supposed to issue its decision in the next few weeks. What will it do? It's impossible to know. The only certainty is that if the ANJ decides to consider the company, like Winamax and other sports betting operators, France would become the first country, along with Switzerland, where NFTs would be treated as gambling. Which would obviously be a blot on a country that wants to become a leader in Web3!



Fatih Balyeli: "A group like EDF has a role to play in Web3"


Created in 2020, Exaion, the Web3 subsidiary of the French energy giant, is now an established player in the world of cryptos. We spoke at length about its ambitions with its head, Fatih Balyeli.

The Big Whale: How can we introduce Exaion and its business?

Fatih Balyeli: We are a Web3 service and infrastructure provider. When I talk about Web3, I'm referring to blockchain, metavers and edge computing (an optimisation method used in the cloud, editor's note). We don't do applications, we do infrastructure. We are the technological layer that we make available to those who develop protocols or applications. I like to present us as the Amazon Web Services (AWS) of Web3.

Speaking of a giant like Amazon, Exaion is not an autonomous entity. You are a 100% subsidiary of EDF. What mission do you have within the group?

We have several missions that fall into two main areas. Firstly, we want to help reduce the carbon footprint of the crypto industry: our data centres are located in the north of France and their energy mix comes from nuclear and wind power.

With regard to the computing power we use, this is supplied by 100% renewable hydraulic energy in Canada. We use decarbonised energy. It's important to bear this point in mind because it's what differentiates us from our competitors (Infura, Blockdaemon, editor's note) who operate in the United States or China.

The other main thrust of our action is to support EDF's digitisation and help it position itself in new technologies. It's worth pointing out that EDF was the first European giant to create its Web3 subsidiary. We want to be a pioneer in new technologies and Exaion was designed to do just that.

Is Exaion just a simple adventure or is it a strategic element for EDF and France as a whole?

I think it falls into the second category.

What was your career path before you found yourself in this position?

I trained as an engineer and I also went to business school. Before joining EDF, I first worked in finance as a trader at BNP Paribas in Hong Kong and London, then I had a few entrepreneurial experiences. My arrival at EDF coincided with the creation of the EDF Pulse Ventures venture capital fund in 2017. I then launched Exaion in January 2020.

What is your experience in Web3?

I immersed myself in cryptos and Web3 through finance. I have to admit that I was quite disturbed when I discovered and saw the emergence of Bitcoin because I found it hard to conceptualise the issue of a currency that wasn't managed by a central bank. It went so far against what I'd been taught and what I'd seen on the markets!

After Bitcoin, I discovered many other applications and projects like Ethereum. For me, there are several generations of crypto protocols that differ in many ways: technology, operation, energy consumption...

What motivated the creation of Exaion?

When I was in venture capital, I spent a long time looking for a start-up capable of developing crypto projects in conjunction with major groups and institutions. When I couldn't find one, I decided to create it!

How many people work at your company?

There are currently around thirty of us (31 to be precise). The majority are based in the EDF Tower in La Défense near Paris, while the others are spread around our data centres and in the regions (Normandy, Brittany, Occitania, Rhône-Alpes, Grand Est, Lyon).

With the addition of service providers, we're not far from fifty employees. The profiles at Exaion are very varied: infrastructure experts, blockchain developers, front-end and back-end developers, security and cybersecurity experts, energy experts, sales people, communications, etc.

How is Exiaon financed?

We have just completed a series A fundraising round with EDF. I can't reveal the exact amount.

What projects have you been working on?

In recent months, we've been working with teams at BNP Paribas and EDF Renouvelables on the first tokenisation of a bond to finance a renewable energy project.

We also worked with Société Générale, Goldman Sachs and Santander on the issue of the first blockchain-based bond. This was a €100 million transaction on behalf of the European Investment Bank. Finally, we worked with Progiss on the dematerialisation of elements related to animation and special effects, as well as with the Klapcoin project, which aims to support the diversity of French cinema.

How do you see France in the Web3 universe?

We have everything we need to become world champions in the sector. Because of our geographical location, France is in an ideal position to run a data centre business without having to resort to a lot of cooling thanks to free cooling (a method that uses outside air to lower the temperature, editor's note). In this respect, Normandy is particularly well placed because the climate is neither too cold nor too hot.

Also, we have the most decarbonised energy mix in Europe and one of the best in the world. Why is that? Because we have nuclear power. We are capable of building an eco-responsible digital environment.

In an interview published in April in The Big Whale, Emmanuel Macron called for the construction of European technological giants specialising in a few specific Web3 bricks. Do you see yourself in this speech?

What the President said in this interview reflects all of Exaion's ambitions! A group like EDF has a role to play in Web3.

Exaion recently entered the Canadian market. Are you thinking of moving into the US?

This market is very difficult because there's a lot of competition and everything costs a lot of money. A French developer costs 70,000 euros, whereas an American developer costs 350,000 dollars - five times as much! And it's the same for offices.

If we wanted to do the same business in the US as we do in France, we'd need a lot more capital. Nonetheless, it's a market that we're obviously keeping a close eye on. But for the time being, we're focused on Canada, where we've already invested more than two million euros and where we plan to open around twenty data centres.

What experience have you gained from working with the Tezos ecosystem for which you are validators?

We always like to put French technologies to the fore! At the moment, we manage most of the nodes that are hosted in France. We have a very good relationship with the French people at Nomadic Labs, which is a sort of research and development consultancy for the Tezos ecosystem (read our survey).

Tezos isn't the only protocol you use. The Big Whale recently revealedthat you manage more than 150 Ethereum nodes...

We are protocol agnostic. We work a lot with Ethereum, on which we participate in transaction validation, but also with Hedera, Energy Web, Polkadot, Cosmos and Avalanche.

Historically, our strongest links are with Ethereum and Tezos. In the case of Ethereum, most of the nodes we operate are on behalf of customers, notably the French Just Mining. But we also manage 10 validation nodes of our own.

Was it Ethereum's move to proof-of-stake, which consumes much less energy, that made you decide?

Many of our customers were using Ethereum long before Merge. But when we started experimenting with Ethereum 2.0, we immediately switched over to it. As we had the technical roadmap, we knew that Ethereum would one day be less energy-intensive. We were never interested in protocols that didn't plan to move to proof of stake.

What do you like about Ethereum?

The proof of stake obviously. But above all it's a very beautiful technology that has made a lot of progress. It takes its ecosystem into consideration, and the teams take user feedback into account. It's part of a process of continuous improvement, unlike... Bitcoin.

Have you ever considered mining bitcoins at EDF?

At my level and at Exaion's, it's always been out of the question. I can't speak on behalf of the group, but on Exaion's side we don't want to go there for energy reasons. However, that doesn't stop us from taking an interest in the ecosystem: we will soon be offering a bitcoin transaction explorer, which itself is not energy-intensive.

However, and you're in a good position to know this, bitcoin has shown that it can be interesting when it consumes the unsold surpluses of renewable energy producers...

Many miners say that they consume so-called "fatal" energy, but in practice this is less true. Most of the time, renewable energy installations are not connected to the grid.... The installations are 100% financed by private companies for the sole purpose of mining bitcoins!

And when they are connected to the electricity grid, isn't that an effective way of supporting the energy transition?

When the Texas power grid failed in the winter of 2021, people were unable to keep warm while facilities were mining bitcoin a few miles away. For me, this poses a problem because this electricity could have been used to power homes. There are only two possible hypotheses: either the miners were not connected to the network, or they thought that mining was more profitable than selling electricity. For us, this doesn't make sense.

We can nevertheless set up load shedding, as in Quebec, where miners contractually agree to turn off their facilities when demand for electricity is very high...

On this specific case, I don't know, since we've never been in the bitcoin mining business.

Couldn'tEDF come up with an agreement with the miners in which provision is made for a load shedding system?

You'd have to do a full analysis of the cycle and the market... But as I'm telling you, I don't know too much about the Bitcoin ecosystem, because it's never really interested me. We have the very ambitious goal of helping the blockchain community by building eco-responsible and low-carbon infrastructures. I didn't want to look at the specific cases where we could create value with the Bitcoin protocol. We are positioning ourselves on much broader and structural issues.

Could you play a role in the future digital euro?

Yes, totally. The digital euro will run on sovereign and European infrastructures. At the moment, the only European player in a position to do this is Exaion, and no one else. Once the Member States and the European Central Bank have agreed on the outlines of the project, we will be able to make our infrastructure and know-how available.

If the launch has been so discreet, it's because Trail is not the first player to jump into the Web3 deep end. In recent months, several other French funds have emerged. "Ledger has teamed up with Cathay to create a €100 million fund. XAnge has also created its structure with a pocket of €80 million. Smaller entities such as Atka are also very active. And other funds are in the pipeline. "It's the best time to invest in Web3," explains Marguerite de Tavernost, who manages the Cathay-Ledger fund on Ledger's side.The market downturn has in fact acted like a needle in the valuation bubble. "Prices had reached insane levels and the bear market has had its effect," confirms Ivan de Lastours, head of crypto and blockchain at Bpifrance, which is very active on these subjects.Only a few months ago, some companies that had never delivered a single product could be valued at several tens of millions of dollars! How much have these valuations fallen since then? 10%, 20%, 30%, even 50%? It's always difficult to know. It all depends on the project and its potential. What is certain is that there are now many more opportunities, and funds are keen to take advantage of them.They are not the only ones. In addition to falling valuations, the success of Web3 funds can also be explained by the growing appetite of traditional players. These "players" are banks, insurers and companies."It's a classic. Officially they're not doing anything, but in reality quite a few institutional players are interested in cryptos and Web3," points out Julien Bouteloup, the founder of Stake Capital, which has therefore invested in Trial's Web3 fund. "Institutional players want to do Web3, but not directly", agrees Luc Jodet, head of XAnge's Web3 fund. And they should be doing more and more of it in the coming months 👀.This edition was prepared with ❤️ by Raphaël Bloch and Grégory Raymond. The Big Whale is a free and independent media. By supporting us, you are contributing to its development.
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