There was a craze for digital collectibles featuring short videos from NBA games that started in 2020, Brady writes.

Why it matters: A court has found that the collectibles, known as NBA Top Shots, from Dapper Labs, may meet its test for being a "security" under U.S. law, which would mean they should have gone through a whole epic and expensive rigamarole to ever launch.

• Of note: The court's finding was made on Dapper Labs' motion to dismiss the case, so it only pertains to whether or not the trial can proceed. It can.

Zoom out: Dapper Labs has argued in Friel vs. Dapper Labs that its product is basically like a collectible card.

Yes, but: Top Shots — and the NFTs that people own — can't exist without Dapper Labs' blockchain, Flow.

• The Southern District of New York's Judge Victor Marrero wrote, "Hypothetically, if Upper Deck or Topps... were to go out of business, the value of the cards they sold would be wholly unaffected, and may even increase, much like posthumously discovered art."

By the numbers: Top Shots had generated more than $230 million in revenue by March 2021, hit a million users, and raised $250 million.

• But last November, it laid off 22% of its staff as crypto's downturn deepened.

Flashback: For those who have been casually interested in crypto for a while, Dapper Labs was also behind CryptoKitties, an early NFT craze that clogged the Ethereum blockchain in late 2017.

The intrigue: Some users made a lot of money trading Top Shots cards in Dapper Labs' marketplace, but then found it took months to actually withdraw their funds.

The bottom line: Marrero denied the motion to dismiss on the narrow finding that Top Shots looks like a security.

• "The interplay among FLOW [its token], the Flow Blockchain, and Moments is necessary to the totality of the scheme at issue," he wrote.
• Dapper Labs can respond.

The other side: In a statement sent by Steph Martin, from its communications team, Dapper Labs noted the ruling isn't final and that courts tend to find consumer goods are not securities.

• "We are confident the same holds true for Moments and other collectibles, digital or otherwise," it said.

Quick take: If Dapper Labs had attempted to register Top Shots with the SEC, it is highly unlikely it would have ever launched.

Ethereum, the original smart contract blockchain, has lost more in total value locked than the value of all its competitors combined.

• But it's still bigger than all of them!

Why it matters: One of the big narratives of the 2020/21 boom was "Ethereum killers." Ethereum was slow and buggy, it was said. Better technology would take it out.

Yes, but: No.

Be smart: Total value locked (TVL) refers to the funds entrusted to different kinds of decentralized finance (DeFi) activities, such as lending, trading, staking, or betting.

• TVL counts all the funds just sitting inside these smart contracts.
• The more deposited, the more is actually in use (capital efficiency is not a strength in DeFi quite yet).

This chart shows that all the smart contract blockchains have lost a load of TVL from their various peaks.

• Proportionally, Ethereum has lost the least.

More importantly, Ethereum is still bigger even at its present low than any of its rivals ever were.

Use it or freeze it!

• A crypto community used token ranks to justify cutting off those deemed dead weight, Crystal writes.

What's happening: The Telegram-linked blockchain The Open Network voted to freeze inactive wallets, temporarily shrinking the circulating supply of the native token Toncoin by 20%, or roughly $2.5 billion worth of TON.

• Call it "Tokenomics Optimization."

Why it matters: It matters to TON holders because circulating supply matters on token leaderboards. So artificially reducing the supply of TON could, in theory, attract fresh money and buoy their rank.

• Of course, it could also repel people, because no one wants to be punished for hodling.

Zoom out: Take a field trip over to CoinMarketCap.com's Toncoin page and notice the massive difference in the circulating supply and the outstanding supply.

• Only 25% of the outstanding supply is in circulation, so the site says.
• That reflects poorly on the overall project, thus the hunt for inactive wallets with big holdings.

What they're saying: "It is in the community's best interest to identify and signal the true circulating supply of TON," Tal Kol, a TON ecosystem member and founder of partnered firm Orbs, wrote in a blog post earlier this month supporting the proposal.

Details: Wallet addresses associated with the initial distribution of Toncoin between July 2020 and June 2022 but that never made a transaction were identified and asked to make one to prove that they were still active.

• Those 171 wallet addresses holding as little as 25 to as many as 112 million Toncoins are now set to be frozen for 48 months.
• Freezing wallets isn't unheard of in crypto history. EOS did it almost immediately on launch.

The other side: Vudi Kingyru, another member of TON, said in a separate post that it would be quite the rude awakening for an early miner to recover a misplaced wallet only to discover that their assets had been frozen. He added that the act seemed to cross a line:

• "Huge Bitcoin wallets have been holding their reserves for 10 years now and no one is regulating them."
• There's a long tradition in crypto of snagging assets cheap, early, and just not looking for years.

Flashback: Telegram, the giant messaging app, released the code in 2019 that would become The Open Network, a little before the company gave up on launching the blockchain itself because of pressure from U.S. regulators.

• With the network running, Telegram has embraced it and built for it.

For what it's worth, the market isn't really gushing over it: Toncoin on Wednesday gained roughly 6% to around $2.48.

🚙 Two of the largest NFT projects on Solana detailed their plans for leaving the blockchain. (Decrypt)

🧮 Bankrupt hedge fund Three Arrows Capital will start selling from its NFT collection. (Bloomberg)

🧬 Coinbase announced it's building its own Layer 2 for Ethereum called Base. (The Block)

Emoji jurisprudence is apparently a whole thing, Brady writes.

👨‍⚖️ It was very surprising in reading that the ruling in the NFT case from the top of this newsletter by the Southern District of New York's Judge Victor Marrero, included specific (and accurate) interpretations of emoji that the defendant used in tweets.

Quick take: I bet this stuff gets wild in divorce court.

• I'm now imagining a judge asking clerks to see if there's a difference between 🏨 and 🏩 (there is).