An absolute gem of a post.

From the title, I would have expected a post suggesting teams focus on just building great products *before* optimizing for decentralization.

And we got that, BUT we also got a really amazing introduction about all that's wrong with how projects are currently building and what they are focusing on.

I think it should be required reading for all VCs about to make an investment in token projects.

✍️"As investors clear their conscience (and finish marking their books) in this drawdown, the next wave of institutional capital will have higher expectations around project offerings."

This is a glimpse into how decentralized applications will actually work in the future.

Anyone that used Leeroy realized that that was just not gonna work.

The simple solution here is to queue a number of transactions and then submit them in a blob to the public blockchain.

This is achievable by just signing the transactions and queuing them in some offchain location before submitting.

The other interesting concept is going to be figuring out the economic incentives. This post assumes that the contract owner will be paying for the transaction's gas, and that seems the most frequent case, but I wouldn't be surprised to see non-obvious ideas come up here in the future.

In our opinion, everything you need to read about EIP-999.
Alex Van de Sande's take on the Parity fund recovery issue is actually much more than that.

It's a post exploring the hidden costs of forking big platforms, and how forks perform in the future.

He explores how games, smart contracts, stablecoins, oracles, real-world-tracking tokens could all be affected by a split.

The ETHDenver organizer with an instantly likable you-know-you've-been-abad-guy post.

I once was a Bitcoin maximalist, and still am for many aspects, but I've also found myself being an Ethereum maximalist very often, and often shut my mind to even considering that other attempts are serious.

I would say that one cause for the tribalism is the very high noise-to-signal ratio in the space.

Most projects are outright scams, and so identifying the non scammy ones tends to take a lot of work, especially because they might present themselves similarly to the scammy ones in order to compete for funding and mindshare.

0x continues its push of extremely interesting ideas into the wild.

Today it's the concept of a Permissioned Liquidity Pool, which would make 0x trades one step closer to being compliant with securities trading.

This will be baked into 0x v2.

Good quote: ✍️"The next 12 months will be defined by the emergence of securities tokens and institutional participation in the token economy. While irrational exuberance surrounding ICOs may be waning, a growing hunger for compliant tokenized securities has taken its place. The same chaotic cycle will repeat itself with frenzied outbursts of innovation that take us in new unforeseen directions. However, this time there will be some semblance of rules and an opportunity for institutions to come along for the ride. A major emerging theme will be encoding complex compliance rules into smart contracts."

Richard Burton has been pretty vocal recently on his disappointment with how hard it is to get actual data out of the Ethereum blockchain, especially token balances for single wallets.

This has led to the thinking around Open Protocol Interfaces, a spin on APIs. 
It feels fairly intuitive that this is how in the future we will approach data-reading off of blockchains, so I think it's a topic worth thinking about as well as building.

An excellent companion to last week's contrarian post on TCRs.

It's a comprehensive 1.01 on TCRs that covers design, participants, features, examples and some outstanding questions (including attack vectors).

We wonder if the relative simplicity to understand TCRs will make this crypto economic primitive a prime candidate for rapid mass adoption.

A fantastic piece of writing by Jill Carlson, that puts some context around how the Venezuelan Petro came about, how it ultimately failed and how the fate of open platforms is that of getting used in unexpected ways.

✍️ "Maybe you built a platform to make the world more open and connected, but instead transformed how people’s data gets used. And maybe that, in turn, has resulted in a new and powerful paradigm for government and corporate propoganda. Maybe you built a platform to enable censorship resistant money, but instead created a fundraising mechanism for corrupt governments and fraudulent parties."

The team at Unchained have produced some of the most fascinating charts in recent crypto memory.

By looking at age distribution of Bitcoin’s UTXO set historically back to the genesis block, they have managed to represent in a visually engaging way the macro shifts in Bitcoin’s ownership throughout its history, captured in their newly coined "Hodl waves".

✍️ "And after every great rally, there’s been a great HODL. As the data shows us, there is already the development of another generation of holders settling in for the long haul."

A honorable attempt to put a fair value on governance tokens as the NPV of the cost associated with a network fork, using 0x as a working example.

Another interesting approach was the one suggested by Brendan from Tetras Capital, where the network value of a governance token should equate the discounted expected cash flows from voter bribes.

We find it hard not to feature all of Tony's posts lately.

This one is about the opportunity that NFTs open up for "sound digital goods", which Tony quantifies in the same order of magnitude as sound money / Bitcoin.

✍️"Users will be quick to rid themselves of non-crypto collectibles and will hoard crypto collectibles–storing trillions of dollars. The opportunity for sound collectibles is at least as big as the opportunity for “digital gold”"

This downturn should be a great way to evaluate how crypto funds perform.

In a bull market everyone is a genius and you can just randomly write 3 letters on Binance and make a good call.

But, as an LP, if I had invested in a crypto fund that lost 50%+ in this downtrend, then I'd be pissed, and I'd pull my money out as I can lose money perfectly just by myself - no help needed.

Not that we're traders, but these funds' performances are really impressive compared to the hits taken by the big names.

Exremely solid journalism by Fortune on the current state of affairs for Mark Karpeles, as well as some of his history.

I don't really know why, but I continue to be fascinated by this story. This is one of the best written ones.

🔦 Featured on Token Economy

Clinical trials seem to be a natural fit for blockchain tech, so we're happy to feature a piece by a Wharton student who had actually the time to think about it.

As with all other areas of potential applications, the biggest question is always "can't this be solved without any blockchain in a better way?"

🚨Vitalik book recommendation alert: Radical Markets by Eric Posner and Glen Weyl.

The book explores "different ways that markets and property rights can be constructed, some of which are unexplored and potentially far better than what we have today". It does so from the perspective of a centralized society, while Vitalik takes some of the ideas proposed (and many more) to crypto land, arguing that blockchains/smart contracts "may well be used as a technical backbone for some of the solutions described in the book".

One more addition to the "One day" shelf of Goodreads.

PS: after reading the post you may feel like polishing up the "Interests" section of your CV ("I do also have broader interests, of which the use of economics and mechanism design to make more open, free, egalitarian and efficient systems for human cooperation, including improving or replacing present-day corporations and governments, is a major one.")

All that is wrong in this space, in just one Bloomberg article.

Let me try to see if I can extract it all:

1) People just focusing on the trading.
How is buying from random strangers and selling to random strangers something you know nothing about 1) additive to the world and 2) even remotely interesting?

As a venture investor, this might be the hardest thing to digest really.

"Crypto" now officially means crypto-trading more than cryptocurrency (much to the chagrin of the "crypto is cryptography" cloud).

2) The media covering the most useless stories
Nothing to add here

3) Attracting random people that have no clue about what is going on having first heard of cryptocurrencies in 2017

But really, try to read this one in a safe space away from windows and pointy objects to make sure you can't injure yourself, as the temptation will be there.

A fully decentralized & encrypted P2P communication platform for Blockstack.

This one seems well done, it's available as a dapp plugin, so you can for example chat while collaborating on a Graphite doc or a standalone.

Given it's on Blockstack, you can just login with your Blockstack id and you're ready to go.

It's always awesome to see the emergence of concepts that were just not feasible nor imaginable before we had digital scarcity.

SuperRare have launched on the Ethereum mainnet a platform for creating, selling, collecting and bidding on digitally rare artwork.

And people are buying it:

✍️ "four nude portraits generated by artificial intelligence were just sold on the blockchain. The future is weirder and more amazing than we imagined."

Bitfinex continues its race to the top, notwithstanding all the controversy.

Now they've shipped a completely new order matching software, which reduced by 10x the time it takes to accept and register orders. O_o

But the most interesting part is that they are accelerating their way towards becoming a decentralized exchange.

"Hive puts the groundwork in place for the decentralisation of Ethfinex. Through adding support for expiry times for orders into the engine — a necessary component for the matching of 0x format, non-custodial orders — as well as adding several other flags, the road is paved for the launch of the Ethfinex non-custodial API and decentralised trading portal."

Classic Million-dollar-homepage stunt.

Turns out, they oftentimes work and you get to make a lot of monies.

We're finally seeing serious, interesting approaches to smart contract security - this time from a team of Imperial College developers.

Flint is approaching this at the programming language level, developing a language to write "inherently more secure" contracts.

This is achieved by having some specific features like "Caller capabilities", which for example require programmers to think about who should be able to call the contract’s sensitive functions.

Solid sets of updates on myCrypto, (most interestingly scheduled transactions, which is still on testnet).

I was hoping for a redesign, but I think I'm gonna have to wait quite a while for that..

First idle game on the blockchain, and it tops Dappradar for most popular Dapp with +4k DAUs.

EtherGoo has been built and run by a team of *1* developer who remains anonymous.

Lots of traditional game experiences are starting to move onto the blockchain, the most interesting are the ones where cryptographic ownership augments the game play (h/t Matt Condon for all the good thinking).  

Only last week we talked about the idea of tokenizing software licenses and some of the technical unknowns about implementing subscription billing in a decentralized fashion.

This week Consensys published some of the ground work kickstarted by Kevin from Gitcoin on a protocol proposal to enable subscription services on the Ethereum blockchain.

This space is moving at the speed of light.

Another fascinating new token standard: ERC-998.

This one enables composable NFTs, ie it allows an ERC-998 token to own other ERC-998, ERC-721 and ERC-20 tokens be exchanged in a single transfer. 

Ideas for composable tokens span from baskets of tokens (a la {Set}) to crypto kitty families, from a digital avatar equipped with weapons, armours or magic potions each represented by a NFT to more real-world baskets of tokenized assets trading as one.

This is a pretty big deal that didn't get much attention.

Taking advantage of recent Delaware blockchain-friendly Senate Bill (n. 69), the ERC-884 is a draft Ethereum token spec allowing any Delaware corp to use a smart contract to create and maintain an official share register on the Ethereum blockchain. Essentially a legally compliant standard for tokenized equity.

We are going to tokenize the world and no one...alright we got a bit Pomp'ed away there, sorry ;)

Confirming that in crypto we find both the best and the worst people around, Cambridge Analytica was supposedly working on an ICO for a user-to-marketing companies data marketplace.

The piece is full of disturbing tidbits, including details of their involvement with Dragon Coin (whatever that is).

I wonder how all the other teams that are working on this idea feel like now.

AKA: "we'll still have meat for this section and it's not going away"

The regulatory headline this week is that a working group consisting of some high profile VCs and law firms involved in the crypto space (e.g A16Z, USV, Cooley, McDermott Will & Emery) has been to DC last month to meet with the SEC and lobby for a Safe Harbor approach to regulatory this industry (and, failing that, for no-action letters).

For a reminder on Crypto Safe Harbors we suggest going back to Albert Wenger's February post on the topic, which pre-dated the 49-page memo sent to the SEC by about a month (and in hindsight was probably drafted in parallel to it).

Objective of the DC mission was to propose "a non-exclusive safe harbor to help provide guidance to the industry on what constitutes an ‘investment contract’ and how the investment contract law and guidance should apply to utility tokens”. The proposal would ensure a digital currency falls outside securities law "once the token achieves full functionality".

Apparently the SEC welcomed the proposal with skepticism at the time, though Clayton's remarks at Princeton (which on a timeline would come after the meeting with the VC working group) seemed remarkably more open to the possibility of evolving definitions of securities and utility tokens. So perhaps it had some effect.

Stefano's comments: "we're still talking about security vs utility? 😪"

Thirteen major exchanges are being investigated by New York Attorney General Eric Schneiderman, including Coinbase, Gemini, Bitfinex, Kraken, Poloniex and Binance.

Investigations from GAs have state-level consumer protection at heart, so the questionnaires provided to the exchanges are aimed at surfacing, among more administrative informations, details of:

"their approach to combating suspicious trading and market manipulation; their policies on the operation of bots; their limitations on the use of and access to non-public trading information; and the safeguards they have in place to protect customer funds from theft, fraud, and other risks."

Results will be published, though it is unclear what failure to comply entails, particularly for those exchanges that decided not to operate in NY after the BitLicense requirement (see Kraken CEO: Crypto Exchange Won't Answer New York AG's Inquiry and his fuming Twitter rant).

Christine Lagarde, MD of the International Monetary Fund, continues to advocate for international cooperation around an "even-handed regulatory agenda" for crypto assets, highlighting the benefits they could bring to the financial system (fast and cheap transactions, more efficient settlements, secure, immutable storage of private and public data).

✍️ "Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto-assets that survive could have a significant impact on how we save, invest and pay our bills."

Ether Capital is a new "fund", but actually it's structured as a public entity on the Toronto-based NEO exchange.

They've already raised C$45M and they'll mostly just going to buy and hold Ether, and only in the future do a minor amount of other investments.

Another ecosystem fund, Status Incubate plans to provide:

- Funding: Get Seed and Series A funding.

- Open Source development: Status Network Tokens (SNT) to use on the Status Open Bounty platform.

- Legal and regulatory support: Consult with world-class crypto-experts.

- Technical mentorship: Work with our team of blockchain engineers.

- Marketing and PR: Get your story to the right people the right way.

- Organization guidance: Learn from our efforts to create a truly decentralized organization.

- Space: Stay tuned for an announcement about the first Status Incubate location.

In a sign that traditional financial institutions are feeling some FOMO too, Barclays has launched a corporate venturing arm that will focus on areas such as artificial intelligence, distributed ledgers and smart contracts. 

Harbor shoots straight for the B just a couple of months after a $10M A round. Lead was Founders Fund and joined by the usual crypto suspects (A16Z, Pantera, etc.)

Total is now $40M+ to build a protocol for real-life asset exchanges. That David Sacks brand is strong, and the opportunity is clearly there.

We've already featured Rare Bits in the newsletter a while back, and they're now announcing their first round of funding, a $6M A from Spark (their post here).

Amitt is a force and he's known for creating Farmville, so it's no surprise that investors want to bet on him and the rest of the team.

The other interesting thing to note is how talent is shifting to the space fast. Amitt had recently started Presence Capital and was 100% focused on AR and VR investing - but crypto collectibles was what actually made him be a founder again.

That FOMO is real.

A few months after their round at a (for us) already high valuation, Basecoin has announced the round that's being going around for a while, at a *super steep* valuation.

But apparently a long list of top investors think Basecoin will be the one stablecoin to rule them all. Bain Capital Ventures led the round and was joined by GV, Stan Druckenmiller, Lightspeed Venture Partners, Foundation Capital, Andreessen Horowitz, WingVC, NFX Ventures, Digital Currency Group and others.

One way Basecoin could actually become *the* one, is by now leveraging the massive amount of people with a vested interest in it, as they have also raised from major crypto exchanges, blockchain wallets, application developers, and economists.

You can read the CEO's announcement here.

Our view on stablecoins is still fairly blurry. It is clear that they are much needed, but the best approach is still vastly unclear (jurisdictionally backed, crypto collateralized, algorithmic, etc.) and so paying up 9-10 digits valuations seems just incomprehensible to us. But clearly we just can't see the future yet.

The other thing that's unclear is *how* they can create so much value for rent seekers.

We're seeing examples with DAI/MRK but we've already seen many Basecoin "clones" that remove the Baseshares concept and thus remove the rent-seeking from the equation.

Still, a very interesting space to watch, until a FEDcoin is released and made mandatory on exchanges.

Preston Byrne continues to not be impressed. But I mean, this is a team that assumes a $5B valuation at network launch as a "very conservative" estimate.

Not to be outdone, another "in-everyones-portfolio" company is gearing up for a 9 figures raise. 💸

If there is one thing that I always take away from stuff like this it's;

there is way too much fiat in the world.

The small % of the world that owns most of it, have no idea where to put it and what to do with it.

Long BTC.