Past issues

Dec 31 2017

#29: 🎆 End-of-year edition

📌 An opinionated recap of the most interesting news in crypto
Token Economy
📓 also published on Medium
🎉 2017: that's a wrap!
What a ride 2017 has been!
 
Every week we have watched in bewilderment as the industry threw at us a weird mixture of some of the most exciting and ambitious endeavours of our lifetimes as well as the worst scams and speculative pump schemes.
 
Writing Token Economy has been our North Star throughout, forcing us to voraciously read, dissect and be critical as the hype storm made landfall. When we set out to publish the first issue early in the summer, our idea was to open source our thoughts and lenses so we could refine them over time, helping us and others navigate the industry. Perhaps thanks to the explosive interest the space has attracted, and hopefully thanks to the content produced, we now have an increasingly diverse audience of +12k readers growing steadily every week.
 
As we enter 2018, we wonder how we can grow and improve Token Economy for everyone. We've received some great feedback over the months from many of you already, but would love to hear more about what you like and don't like, any new ideas to implement or directions we could take it from here.

You can reach us on Twitter as always, else at hodl at tokeneconomy dot co

Wishing you all a great start to 2018, and thanks for all the reading! 🤙

 - S & Y
📌 Token Economy
Legendary marketplace investor Fabrice Grinda eventually comes out with his own thesis on crypto (spoiler: yes, he's raising a dedicated crypto fund).

Nothing ground breaking, though lots of things we agree with:

- decentralised systems will have a very hard time replacing established centralized liquid marketplaces
- as a corollary, markets that don’t yet exist are more likely to be created on blockchain
- most of the existing tokens have no fundamental reason to exist and their value will ultimately go to zero
- the 'bubble' has shifted from ICOs to private pre-sales
- bubbles tend to last longer than even insiders think.

With his fund FJ Labs they are invested in hedge funds Metastable and Blocktower, and directly in Basecoin, Orchid, TrustToken and Biddable.
An excellent 26-page dense yet accessible paper by an ex-KKR partner focused on crypto valuations from the perspective of a long-term investor. Earlier versions of this document have apparently landed on most institutional investors desks.

John is most bullish on money-like crypto currencies as investments, less so on utility tokens. If you are time-short jump to the conclusion on p22.

Spoiler: he's placing BTC potential at $260-800k based on winning the store of value use case.
Nick wrote a great post for Token Economy this week, where he explores the implications of liquidity and incentives for employees of crypto projects, comparing them with stock options and imagining some nice future scenarios.
A fantastic post by Taylor of MyEtherWallet illustrating the product challenges the industry is facing as it rapidly grows from addressing early adopters to catering for the more unsophisticated masses.
The founder of Basecoin makes a case for his project to become a platform for "programmable equity".

Picking up on the inherent flaws of medium of exchange app tokens, he argues that a better way of structuring that type of token would be to de-couple the MoE component from the 'equity' component. Basecoin would come to the rescue by taking the role of the (programmable) internal stable currency, while the app token would be programmed to accrue platform fees. 

Leaving aside the merits (or lack of thereof) of an algorithmic stable coin, this all sounds very much like a traditional equity-based legal construct. If not for its ability to run autonomously without any human/management/employee intervention, introducing the (perhaps not so new?) idea of "autonomous value-creating networks". 

Again, trying to picture how this construct may end up replacing existing networks is tough, while it being more likely to power up brand new and yet not fully imaginable ones.
A good post on how crypto projects can still adopt a traditional equity-like structure to get off the ground, and then dissolve it at network launch, transferring the economics and governance from early investors to the token holders. 

We have been suggesting a similar avenue to many founders, it's good to see others doing the same.
Ouriel from Isai VC shares his 2018 prediction for crypto.

We still have a very blurry view of the short-term future, and Ouriel does a much better job than us in putting down a short-term vision for the next year (plus some bonus non crypto insights as well!)
For all of you interested in crypto and token economics (and if you're reading down here, I guess you are), this is a very good addition to your "token models" bookmark folder.

The founder of Livepeer explains how participation mechanics can have impact on token price and value.
A good Reuters reportage on the mania that is sweeping South Korea right now.

If you're still scratching your head looking at the top 10, this might help in understanding where some of the irrationality comes from.
Just like the Estcoin, the Petro might indeed become a reality, while still making little sense.

The Venezuela's cryptocurrency first announced by the government earlier in December, will supposedly launch "within days" with the backing of 5.3 billion barrels of oil worth $267 billion.

The attempt is to create a new national currency that is pegged by a real asset, to prevent it from devaluation. It's unclear what the oil 'backing' actually means and how the reserves can be verifiable in a trustless manner. Half baked would be a generous compliment.

Preston Byrne has a good critique of the initiative.
Scary stuff and good materials for a Bitcoin movie...

The update as of yesterday is that he's been released upon the payment of $1m worth of BTC in ransom.
🤡 ICO madness
December 2017 ICO numbers
The draft December numbers from Tokendata are in and it looks like we'll close 2017 on a high note (and it’s not over yet):
  • 70 reported ICOs* (up from 51 in November)
  • $1,077M (up from $822M)
  • $5.5B raised year to date from 445 completed and reported ICOs
*excludes 185 small/questionable token sales have ended but not reported numbers.

Top 5 December 2017 ICOs by amount raised:

1. Sirin Labs: $157M
2. Bankex: $70M
3. Nebulas: $60M
4. Blockstack: $52M
5. Naga Group: $50M
A former employee leaked a 2-minute advertorial about the new blockchain platform that Telegram is supposedly working on, the “Telegram Open Network” (TON) whose native currency will be the Gram. 

180 million users, many of which from oppressed countries, could be about to get their hands on some crypto. At the very least it will be fun to watch, if confirmed.

🍿
👮 This week in regulation
After some FUD earlier in the week, South Korean regulators say they will regulate bitcoin exchanges, but clarified that they are not to put a blanket ban on cryptocurrency trading. 
The Israeli Treasury is actively considering the creation of a national cryptocurrency, in conjunction with more stringent legislation on physical cash, to eradicate the black market.
Another rather short sighted statement on crypto currencies from the Indian regulator. 

We are not going to see much regulatory innovation coming from there anytime soon.
💰 New funds
Nick Tomaino, formerly of Coinbase and Runa Capital, finally made it official that he's launching a seed fund to invest in the crypto space.

Nick has been an early force and sensible voice in the space, running The Control and Token Summit.

LPs include ourselves, Horsley Bridge, Thiel Capital, Marc Andreessen, Chris Dixon, and Mark Cuban among others.

We're delighted to back Nick and can't believe the great company we got in this adventure.

If you're launching a cool new project next year, you should reach out to us and to Nick!
ℹ️ About us
Token Economy is written and curated by Stefano Bernardi and Yannick Roux.

If you're building a new fundamental piece of technology for the future, please reach out 🤙
Feel free to send links to include in the next issue, or any comments you might have on this one!
Token Economy · The Dolomites · 38121 Trento TN · Italy
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