đź“Ś An opinionated recap of the most interesting news in crypto
Token Economy
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We'd like to take a brief moment to thank all of you who've been reading since the early days, and to welcome the new readers to this new, crazy, interesting world.
Your constant encouragement and words of appreciation, as well as the feedback and criticism, is what has kept us going for this long - together with the crazy amount of amazing new software being created all around the world with a singular mission: to decentralize all the things, and give the power back to the people.
And, in a remarkable alignment of stars and planets, it could not have happened at a more momentous time in the history of this industry: Token Economy turned 2 last week (we could say we skipped 4 weeks on purpose to have this happen..) and Uplung #4 is coming up this week!
Just kidding. Obviously we are referring to Facebook's unveiling its plans for the Libra blockchain, its native crypto asset Libra, its custodial wallet and subsidiary Calibra, a programming language (Move), and its governing body the Libra Association.
Barely 18 months ago, in his usual annual challenge post, Zuck announced that he was going to spend the year studying decentralized technologies and crypto currencies. Well, it turned out he was not messing around.
There have been so. many. hot. takes this week that it's frankly challenging to say something that has not been said already.
But we'll try to highlight a few things that we believe are important.
- let that sink in: one of the largest corporations in the world is going all in on "decentralized" technology and "crypto" currencies (deliberately using " " as both terms are highly debatable by the purists in the room and ourselves, but that’s not the focus of this post). Regardless of whether their plan will eventually materialize, this will go down as the moment in time the world, and the legacy institutions and corporations in particular, realize the genie is officially out of the bottle. The impact on general awareness will be unprecedented.
- Also, the scale of their ambition is truly mind-boggling: in one go, Facebook has outlined a plan for a global, digital central bank (the Libra blockchain with its native currency), a global digital bank (Calibra) and a smart contract language for developers to build financial applications on it. If that does not send shivers down the spine, keep reading...Â
- Make no mistake though, the killer feature is access to a captive audience of 2.4B people from day one. That's by far the world's largest “digital nation”. Going from 2.4B to 7B, or however many we are these days, was not going to change the game for Facebook, particularly with their current state of affairs, but wiring that nation up with its native financial infrastructure and currency surely can. And 15 years in, post Cambridge Analytica and other privacy debacles, Facebook had no choice but to completely change the game to stay relevant for the next 15+ years.
- As nation-states continue to lose grips with the internet economy, the dystopian idea of a sovereign, corporate-led, digital nation is taking shape, and it's freaking scary. Not just as a citizen, but presumably for governments, regulators, central banks and the likes. And it's certainly not going to go down easily with those guys, judging by the immediatereactions it generated. As of today, it seems pretty unrealistic that the SEC or the EU finance authorities would enable Calibra or other “resellers” to provide fiat-to-libra onboarding services, as that would mean tolerating the issuance of a competing currency to their magic paper monies potentially culminating in a Libra-denominated petrol future version of this world.
The SEC probably can’t prevent the Libra Association from building the infrastructure and creating the chain - but they sure as hell can make sure that no-one in the west is able to buy any for fiat. That would essentially cripple (how has noone yet used this term to talk about Ripple yet) the effort from day 1.
BUT there's now a strong, powerful and cohesive lobbying group in place, the 27 Founding Members: in David Hoffman’s words“The appending of these logos is Libra’s statement to all governmental bodies: “You have to fight all of us”, “We’re too big to stop”, and, the most strategic, “Forget anti-trust, because no single company operates Libra”.Â
It’s interesting that the Bank of England for example seems to have taken an unexpectedly supportive stance towards it, a sign that others might cave in too? It will be fascinating to watch this battle unfold and see who’ll come out strongest. Perhaps none of them?
We imagine Facebook has surely spent months lobbying regulators and finding potential legal avenues to make sure that happens - we’re just extremely curious to see exactly how this will work.
- Another interesting aspect to watch unfold is the composition of the Swiss Association. It's undoubtedly very US centric at the moment, and one can relatively easily see the behind-the-scenes power lines connecting each party. All that obviously stands at odds with the globally inclusive vision and messaging of "banking the unbanked" that permeates the Libra branding and materials. Whether their plans to decentralize (and democratize) the governance are credible or realistic is yet very much unclear.
- One of the most interesting presences in the Association is clearly the Visa / MasterCard duo. At a first glance it could look like a “keep your enemies closer” situation, as one might imagine that if something like this started to take very wide adoption, then there should be a substantial impact on online (and why not also physical) card payments.
But the other scenario could be Visa / MC getting a seat at the table so that they can in the future leverage the massive rails (technology, distribution, branding, contracts, and so on) they have already built and start creating financial products on top of the Libra platform and currency.
There’s probably enough for a movie in here.
- From a more technical perspective, Jill's take shows how they decided not to reinvent the wheel, pragmatically cherry picking from various approaches and designs at various degrees of the decentralization spectrum. And presumably believing that semi-decentralization will be just fine for more people and use cases. A case of last mover advantage? Only time will tell.
- The economics are also fascinating, and the reserve paper is one we particularly recommend reading. Two takeaways from it: (i) Libra won't be pegged to the USD, nor to any other currency for that matter. It will be a truly global currency that inherits monetary policies from and smooths out the volatility of any single state currency or economy. A signal of an inevitable de-dollarization? (ii) Libra will be fully backed, so not fractional at the settlement layer. Tyler Cowen raises some very interesting questions, particularly on whether fractional banking might emerge at higher layers. Christian Catalini (one of the 53 authors of the white paper) responded, effectively non excluding the possibility of it.
- Zooming out a bit more, Libra completely blurs the lines between finance and tech once and for all. Pretty soon we'll refer to "Fintech" as just "Finance", in the same was as "ecommerce" is becoming just "commerce". Banks and financial institutions more generally won't just want to be on- and off- ramps to Libra. They will want to build stuff on it, or they'll be forced to in order to stay relevant.
- Lastly, a closing thought on who all this will be good or bad for: undoubtedly great for truly decentralized, censorship resistant store of value and smart contract platforms. Great for privacy preserving tech. Potentially not so great for other semi-decentralized platforms. Phenomenal for general awareness, particularly amongst the developer community.
Enough with Libra already, off to a bunch of cool new products that actually got released this past week.
Cloudflare has developed a gateway to Ethereum that gives users the ability to access the network directly from their hostname without installing any additional software. Through Cloudflare’s API, developers can add elements powered by the Ethereum blockchain onto their websites.Â
Cloudflare has already developed an IPFS gateway, which allows for content to be hosted on IPFS and served from a custom domain over HTTPs. Using these two gateways in conjunction gives users the ability to host their websites and services in a decentralized manner through Cloudflare’s existing edge network.
So far, a substantial segment of the industry has relied on Infura’s API to access the Ethereum network without having to host a full node and download hundreds of gigabytes of data. This has been an extremely fragile point of centralization for the Ethereum ecosystem. Cloudflare’s gateway, while centralized technologically, is actually a decentralizing force by providing users with an additional option.Â
This release is part of Cloudflare’s 2019 crypto week. Check out the link below for some other cool developments Cloudflare is pushing out.Â
A proposal for a standard interface for creating and managing fungible assets using smart-contracts on Tezos.
Development in the Tezos community continues in absence of much hype. The newly proposed asset interface standard is similar to ERC-20, with the upcoming reference implementation allowing developers to specify a third party manager of the asset contract (eg a STO, a DAO or multisig) as well as soon having formally verified properties.
What an awesome idea, as we first mentioned back in March when it first emerged! PoolTogether is flipping the concept of a lottery, to one where you lose money 99.9% of the time to one where you never lose money, and instead acts as a savings incentive!
It works by pooling all of the lottery ticket sales into one big pool and investing all of that pool into interest-earning assets (atm lending DAI on Compound), and after a set period, everyone gets their money back - but one person also gets all of the interest! PoolTogether makes money by directing 10% of the interest accrued to a team DAO.
I doubt this could generate the amounts we see from traditional lotteries, but it's definitely an extremely interesting idea
Modularizing the Burner Wallet architecture so that anyone configure and deploy a new Burner Wallet to a new site without writing a single line of code.
David Mihal has drafted a paper where he proposes turning the Burning Wallet into a platform. "...the wallet should be built of a number of small, configurable modules that can be inserted and modified as needed. The creation of alternative wallets should not require forking the entire repository, but rather importing the key building blocks of the application and adding custom configuration."
On the back of that, he's launched burnerfactory.com where anyone can spin a Burner Wallet hosted on a subdomain as easily as launching Wordpress blog. Fantastic to see the community continuing to add dimensions to Austin Griffith's work.
A lightning mobile application to send and receive Bitcoin.
Lightning Labs announced the release of its app on mainnet across both iOS (as alpha on Testflight) and Android (on Google Play). It is now available on iOS, Android, Windows, macOS and Linux, making it the first mainnet application available across all major mobile and desktop operating systems.Â
The application integrates a Lightning Network Node using the Lightning Network Daemon (LND), an implementation of the Lightning Network developed by the Labs team. The mobile app is clean and fairly easy to navigate, without compromising on security decisions, which often times makes the UX more complex.Â
The app’s source-code is open sourced on Github and a further release of LND mobile tools and SDKs is planned to help developers build their own wallets. Â
App’s like this demonstrate the progress the industry has made in designing more user-friendly tools to use the technology. It nonetheless still remains a tough balancing act between remaining uncompromising on security and creating easy to use applications.Â
First release of Colony, an open source Ethereum based protocol providing a general purpose framework to create, operate, and monetize Digital Companies.
This has been long time coming and we're delighted it's finally live on mainnet (as of two weeks ago!) to help push forward digital organizations to the world. Not all parts of the current implementations are yet fully trustless, like the overarching meta-colony for example, however this is a major milestone for the project.
Aninteractive environment for agent-based simulation development and analysis that allows you to quantify protocol and smart contract behavior.
We have been keeping an eye on Guantlet for a while, as we believe that effective tools for simulating and optimizing incentives in decentralized systems are going to be absolutely critical for their broad adoption and success. Most of the approaches to this problem that we have seen have more similarities with consultancy businesses, so what's particularly exciting about Gauntlet is that they seem to have productized it and it's great to see them starting to unveil what they've been working on.
A scalable, off-chain, hardware-secured protocol for transacting with digital assets.
Woah, woah, woah. Grid+ released a completely new beast with the Phonon Network.
It's no secret that I've been a fan of the Grid+ execution to date, and this is another stunning example of it.
To explain: The Phonon network can be thought of as an alternative Layer2 to Plasma and Lightning, with its main feature being the absence of nodes (and the fact that it is multichain).
That doesn't mean I don't have to trust anyone, because to achieve the ability to send directly from A to B without a node, they have used "secure" hardware in the form of cards. I use the quotes because it's hard for me to assess just how secure the hardware can be (even if they explanation seems plausible), so I'll let do that to more technically minded people.
But this is a novel and, importantly, implementable idea that can generate a host of new use cases. Transaction fees are still a bit high for BTC (~$0.5), but reasonable for ETH. And there is a concept of microPhonons.
An interface to swap tokens that automatically finds and executes at the best available price from AirSwap, Uniswap, and Kyber Network.
We have yet to test this one out, but it looks like a really slick interface for non-custodial token swaps that fetches the best prices across three different liquidity pools. Mainnet beta just launched.
A webapp that calculates ROI for liquidity provisioning on Uniswap.
This is a really neat tool for those providing liquidity on Uniswap and want to get a better understanding of their financial return. On the website you can input your Ethereum public address you used to provision Uniswap liquidity, and your ROI for the different pools is calculated. It also gives you a comparison of how that return compares to if you had just hodl’d ;) There’s a tab that ranks the highest yielding pools against each other. The tool is still in beta, so just be aware when using it.
On a higher level, the creation of this is a demonstration of why open finance is incredible. The creator, Frederico Nitidi, isn’t part of the team behind the Uniswap, but thought the protocol is interesting and built something for it. The ability to permission-lessly build on open technologies is rocket-fuel for innovation in this space.
Mythic is live with their first asset: a super rare Magic: The Gathering card.
I have never played, so I can't reasonably get all that excited but it looks like a solid start.
Mythic is selling 20000 shares in the card for ~$62.5 each, for a value of $125,000.
I'm really curious about these projects, as they take a few interesting things from the blockchain space, but are completely trust-based. "Once a card has been graded, it’s carefully placed in a clear inner sleeve to prevent damage from movement, and then gets “slabbed” in a tamper-proof, protective cardholder with a unique label and serial number.
It’s stored in a temperature and humidity controlled vault with 24-hour security."
There is no way to prevent Mythic or whoever holds the card for them to not double-spend it, which to me reduces substantially the interestingness.
Maybe we'll see some clever ideas deployed to that tune, but for now let's see how this one goes!
A Cosmos Hub blockchain data aggregator and exporter that provides the ability for developers and clients to query for indexed chain data.
Born as a weekend project of Aleksandr Bezobchuk of Tendermint, Juno is meant to be for Cosmos what The Graph is for Ethereum: "It improves the Hub's data accessibility by providing an indexed PostgreSQL database exposing aggregated resources and models such as blocks, validators, pre-commits, transactions, and various aspects of the governance module." We are seeing an increasing amount of activity in the Cosmos ecosystem.
An autonomous utility that can be used to find a home address and to deploy (and re-deploy) contracts with arbitrary bytecode to the account at that address.
A bit more technical than the rest, but still interesting.
What HomeWork is trying to do is to create a wallet contract with a permanent address, but no permanent code. In this way, the code can always be supplied via a transaction (by referencing other contracts).
"HomeWork is an autonomous utility that can be used to find a home addressand to deploy (and re-deploy) contracts with arbitrary bytecode to the account at that address. Each home address has a corresponding key, with a specific controller, that it uses to derive the deployment address. Furthermore, HomeWork will allow the controller of a key to mint an ERC721 token for its corresponding home address. Then, the owner of that NFT can redeem it in order to gain control over deployment to that address."
Obviously this isn't ideal for contracts that need and want to be fully immutable. Sometimes thought a flexible fast contract can still be useful and reduce a lot of other UX headaches (like requiring two TXs to spend some ERC20 tokens).
A technical deep dive into the inner workings of Centrifuge OS.
Big milestone for the Centrifuge team, who have just unveiled the technical details about their protocol design for a more open, decentralized financial supply chain.
Paper (disclaimer: Semantic Ventures is an investor in Centrifuge Inc.)