Pollution Diamonds & All-cash Home Startups 💍

Some Stats: 

• The lab-grown diamond jewellery industry accounted for an estimated 8% of diamond sales globally in 2021, totalling approximately $5.9 billion. 
• Aether recently raised $18 million in funding through Helena, a VC firm with a non-profit arm that supports environmental and social issues. 
• Aether claims that for every 1-carat diamond a consumer buys, it removes 20 metric tonnes of CO2 from the atmosphere, more than the annual carbon footprint for an average American.
• By 2030, the global market volume of lab-grown diamonds is forecast to be nearly 19.2 million carats. 
• The price of a lab-grown diamond is almost 50% lower than that of natural, mined diamonds. 

Aether has two plans for the future - one, to develop a wholesale biz selling its unset diamonds directly to independent jewellery stores and two, to open its first pop-up shops this year, most likely in New York, where it is based.

Designing NFTs is the newest “chic” gig work in town. 

The amount of money freelancers are earning creating NFTs on Fiverr and Upwork appears astronomical….., until they’re put into full context. The NFT market was worth $44 billion in 2021, according to Chainalysis. At the close of the year, the average value per NFT transaction was around $1,000 —which is way more than what three-quarters of those selling their NFT collections on Fiverr are offering freelancers for designing.

Most companies selling expensive NFTs online have somebody who’s doing the labor at the bottom, often creating almost 15,000 pieces of art, for very cheap rates (comparatively). 

That’s the problem of the NFT world’s inequity in distribution of wealth. 

Take the Bored Ape Yacht Club for example. Their 10,000 apes, some of which are now worth $2.5 billion, are beloved by major celebrities. You can’t buy a Bored Ape for less than $250,000 now. But Seneca, the pseudonymous Asian-American artist who was approached to design the apes in 2021, has since accepted the amount she was paid for her work was “comparatively quite low.” Like Seneca, many others in the industry also feel taken advantage of. 

The Colonialism Trend

Many high-ticket projects rely on low-paid artists and designers to make their NFTs. Artists are now starting to liken this to colonialism where the people at the top of the chain have the capital to demand that those beneath them carry out their work for low prices. 

The whole system was supposed to be decentralized to bring freedom in the economy, but instead what it’s doing is creating neo institutions that gate-keep and capitalize on people’s labor.

A couple from Northern Virginia were frantically trying to move to Charlotte, NC, in time to enrol their kids in school. But with houses selling so quickly in the current competitive market, there seemed only one way to stay in the running against dozens of bidders - doing an all-cash deal.

But how could average families find so much liquidity, especially now when home price in the U.S. have soared? Luckily, there are startups now that help with this. 

For example, Ribbon, a Charlotte and NYC-based startup that provided an all-cash bridge loan to the couple at a 1% transaction fee to acquire their 3,400-square-foot, 5-bedroom home in suburban Charlotte.

Like Ribbon, there are many other startups - Orchard, Flyhomes, and Better.com - that have proven vital during a time when there is a shortage of homes for sale. But these aren’t mortgage companies. They are ”power buyers”.

Why are they needed? 

The rise in all-cash home buying comes during a continuing seller's market that exploded during the pandemic. Currently, all-cash purchases comprise 33% of home sales, compared to about 19% two years ago, according to the National Association of Realtors. 

How do they help? 

• They provide quick cash to home buyers, irrespective of their economic background. 
• They allow buyers to skip the traditional, restrictive lending standards in the U.S. 
• They help foreign buyers who don't have a credit history in the U.S. to buy homes outright.

There are obvious problems associated with this system. 

If "the fad" for all-cash offers continues, it could be a major problem for the housing market. For one, the all-cash deals tactic without checking for credit score was also popular in the years leading up to the housing bust in 2008, making the return of this system a little scary. 

Only difference, back then you had to go to shady cash sharks to borrow money. Today you have formal startups. But this business model of paying an intermediary to acquire a house may not be a durable one.