📌 An opinionated recap of the most interesting news in crypto
Token Economy
If you enjoy Token Economy you can:
👏 on Medium | 📨 forward it to a friend | 🙏 stake ETH on StakeTree
👔 Crypto investor jobs at top VC firms: interested?
Two (very) high profile VC funds, one European and one US-based, have asked us if we know of any good candidates for an associate/principal positions focused on crypto.

Get in touch if that might be you, or someone you know 👉 hodl at tokeneconomy.co
🏰 Governance done right
As you know, we're fans of Aragon.

Originally, it was because Stefano always wanted to build "BitCorps" but never got to it. So after finding out about Aragon, it was just awesome to see someone bring to reality such a needed thing in the world, and one dear to our heart.

But then, after getting to know the Aragon team, we became complete believers.

I honestly think it is one of the best teams in the industry.

(Disclosure: we are both ANT holders with a small non-meaningful portfolio allocation)

And I think that this week announcement shows exactly why.

- Today, the Aragon is directly employed by the Aragon Foundation
- They are creating a new (for-profit) company, and are moving all employees to the new structure
- The Foundation will fund the new company to develop the protocol
- The Foundation will also start to fund *competing" teams that want to further develop aragonOS, Aragon Core, and other pieces of the protocol.


This, people, is what this space is going to look like. It's just going to be different from what we're used to today.

Governance is one of the areas where we're seeing the most experimentation, both regulation-driven as well as phylosophically-driven.

Things like this should make us stop and rethink all of our standard conceptions about how to build software and how companies work.

Sure, we'll continue to see normal for-profits that both develop paying products or develop free open-source software and then monetize with consulting. But we think we'll also see many more hybrid approaches, both on the company level and the personal level.

What we envision is a future where work is much more fluid and opportunistic, where people work on what is needed, what they're good at and what gets them paid without the constraints of competition and margin-based profits.

Given the Aragon team is always one step ahead of me, I really wouldn't be surprised if in a few years we'd see the new Aragon company working to improve other protocols and being funded by other foundations.

Thanks for rewiring our brains!

📌 Token Economy
Chris Dixon offers a profound reminder of why we are all deploying our mental cycles on crypto.

"Cryptonetworks combine the best features of the first two internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services."

It's that 'eventually exceed' part that gets us super excited, finding entrepreneur that dare to dream up things that were not possible nor imaginable under centralized platforms.

Chris argues that those new systems are likely to start-off "half-baked", with unclear user cases and underestimated potential. But by first winning the hearts and minds of the best developers and entrepreneurs, they end up reaching platform/ecosystem-users fit and ultimately win.
We've taken a sneak peek at this post in draft form and many smart people have contributed to it.

Kyle from Multicoin has published his thoughts on two token economic models that address the 'velocity problem' for utility tokens:

- work models, where the tokens confers a right to perform work on behalf of the network (eg. Filecoin, Augur, Keep)
- burn-and-mint equilibrium model, where the demand side burns tokens as proof of work done by suppliers, while suppliers get rewarded with newly minted tokens pro rata until an equilibrium is reached (e.g Factom).

Work models are thought for networks that provision a commodity service (eg storage), while BME models are best when suppliers can compete on multiple other levels (eg UX, content). In both models though, growth in network usage should drive growth in the value of the token (in absence of speculation).

So much food for thoughts here.
Primoz makes a case for airdrops as a token distribution mechanism that can drives actual usage while deterring speculative activity.

Random token airdrops are most likely useless, we've all got some random ones in our ETH addresses and don't even know what they are and why they are there. But carefully 'targeted' ones could indeed be powerful incentives, though so far we can only point to Numerai as a successful case study (where a highly engaged community was already present).

Would love to hear more thoughts on and examples of successful airdrop approaches.
Some interesting thoughts on an token model that isn't talked about much. 

In discount token models, the token gives its holder access to preferential prices when transacting with other currencies. 

This model is intriguing as:
- it does not suffer from the velocity problem (utility is derived from holding)
- tokens are more valuable to users than speculators (who forgo the 'discount value')
- it can be a mechanism to drive active usage of a network (airdropping discount tokens?)
- the value of discount tokens is directly linked to the size of the network it gives preferential access to.

It would be interesting to see more experimentation with this model: are they any applications of this model a part from Binance and Sweetbridge?
This is the article you should read this week.

Josh Stark from L4 explains three different Layer-2 models (along with a great intro).

He goes over
- State channels
- Plasma
- Truebit

with some great explanations on all of them.
Skip the read, the important data piece is in the title. According to the Dappradar developer, over $10 million a week worth of ETH is circulating in the Ethereum gaming economy, pretty impressive!

Over half of it is transacted in Etheroll, an Ethereum casino!
This is a good article, and you should read it all.

The big drama this week in the ETH world was the quitting of Yoichi Hirai as an EIP reviewer.

The takeaway is that (Semi-) Decentralized governance is hard, and designing a good EIP process is complicated.

Clearly the current one kinda sucks, and we'll see a lot of drama, discussions and hopefully improvements to it.

Now let's see if Parity gets their way on this one or not.
Non-blockchain based consensus mechanisms are starting to get prime time and attention from the likes of Bloomberg.

Here the story is about hashgraph, a consensus algorithm based on DAGs (currently only deployed privately), that is apparently is being courted by a group of US credit unions looking to package large loans through smart contracts.
YC kick-started a series on decentralized technologies, starting off with a framework for discovering new startup ideas by looking at the brand new use case enabled by a breakthrough innovation like Bitcoin.
Salon is experimenting with an interesting concept: open and transparent request to rent CPU time and energy to mine Monero, instead of looking at their ads.

Clicking on yes is less work than unblocking the site from the adblockers, so it might actually even get people to do it.
Read it
Interesting insight here, that can be summarized as: protocols might start soon to compete based on their political beliefs rather than just on pure tech, as anyone can copy anyone else.

I'd argue that this has been happening all-along.
Some drama ensued at Coinbase this week after many users reported being wrongly over-charged for debit and credit card transactions. Several affected users got their cards cancelled or suspended by their banks as a result.

After some mutual finger pointing, first Coinbase blaming Visa, then Visa denying any responsibility, a joint statement from Visa and Worldpay on Coinbase blog brought some clarity and let Coinbase off the hook. The issue that caused the flood of duplicate transactions related to some obscure "recent MCC code change by the card networks and card issuers" that resulted in bank/card issuers incorrectly charging user accounts. The issue has apparently been corrected now, with refunds being processed. 

I bet most affected users still have absolutely no idea about what actually happened and who to trust or blame, not doubt ultimately leaving a bad taste in their mouth about Coinbase.
Cisco exposed a Ukrainian hacker group that robbed popular Bitcoin wallets by using Google ads and phishing landing pages. 

Simples. Never click on a Google ad when doing crypto related searches, or any crypto ad for that matter.

Decentralized identity has been touted as a major use case for Bitcoin and other public blockchains for a few years, and now Microsoft is the first tech giant to get behind the concept.

One week late on this one, but worth including now.

It's an explanation of how the Loom Network enables DApps to scale through specific chains just for them.

Summarizing, Loom’s DAppChains enable the following:
1) A user-friendly way for developers to spin up their own blockchain-based apps without having to know anything about implementing the actual blockchain logic, allowing them to focus on the core app logic.
2) Building full-scale apps such as MMORPGs and social media which are not limited by the high costs of gas on Ethereum and slow speeds.
3) Running the entire DApp on a decentralized blockchain, contrary to popular DApps which partly run on Ethereum, and the rest on a centralized web server
4) DAppChains make DApps updatable, forkable, and have publicly shared data, allowing further experimenting and innovation.
We'd still need all of the Layer 2 innovations, but this is very interesting nonetheless.
😎 Cool new projects
Algorand launched this week to much funfare, given USV's investment in the company.

Algorand is a new blockchain platform that wants to compete with Ethereum mostly on the scalability side.

We've been seeing quite a lot of these recently. It's a though space to play in, given Ethereum's developer mind-share utter domination and its very active development, including sharding solutions and more offchain stuff like Plasma.

This being said, there could be a chance a newcomer platform is just so much better and takes it all.. as well as the chance that many different ones will get their own specific niches.

It will be nice to see all the alternatives when they launch and see who wins between Ethereum, Dfinity, Algorand, Radix, EOS, Rchain, AION, ICON, Aeternity, RSK, Enigma, etc.
Bitfinex never stops, nor do they give a fuck about the massive request for audits from the community.

The newest announcement is a partnership with Block.one to launch EOSfinex, the first high performance decentralised exchange to be built on EOS.IO technology.

They've already done something similar with ETHfinex, so now on to the next.
It's always great to see solid entrepreneurs launch projects in the space.

This time it's Amitt Mahajan, one of the co-creators of FarmVille, who's launching RareBits - a zero fee Ebay-like marketplace for crypto assets.

You've probably all seen how fast the digital collectibles space has exploded, and this week specifically with the launch of CryptoAllStars, and a marketplace for it just makes a lot of sense.

Incredibly, they already have 547,832 items (mostly Crypto Kitties).

Go on your shopping spree, we'll wait here.
As proof of how fast the space is moving, one company in the current YC batch just pivoted to exactly the same model as above!
Dharma has launched it's official Javascript library!

What we particularly like about it is that it doesn't use its own token, it's just a bunch of cool open source software.

Ideas of what you can build with Dharma from the team:

Collateralized Collectibles
Putting crypto-collectibles up for collateral in a Dharma debt instrument.

Decentralized Relayer for Debt Instruments
Build the world’s first decentralized marketplace for finding and investing in loans. Show investors principal, interest rates, and repayment periods and help them evaluate the best investments for their portfolios.

Trustless Securitized Product
Create a trustless Collateralized Debt Obligation (CDO) or a Credit Default Swap (CDS) using smart contracts and Dharma debt agreements.

Decentralized Margin Trading Application
Marry Dharma debt agreements with 0x orders in order to create an end-to-end trustless short selling instrument. Help all of us short those shitcoins!!!!

Dharma Debt Explorer
Build transparency. Show the world what types of debt agreements are most popular, what average interest rates are, the day’s biggest loans, and more.
If you're readers of Token Economy, you'd know everything about this already from last week's issue!
So this one is pretty interesting, and inception-y.

0xbitcoin is an implementation of Bitcoin core, on top of Ethereum as an ERC-20 token.

It is fully mineable with Proof-of-Work, and this one you can try at home given it's a CPU one and not GPU.
Laura Shin has launched a new weekly podcast! The cadence is weekly and the format shorter than Unchained (22'), with guests from crypto land commenting on top headlines (similar to Simon Taylor's Blockchain Insider).

The first episode is with Olaf from Polychain. 
Gitcoin launched a cool small experiment at ETHDenver with Colorado Coin, a physical plastic thingy with a QR Code, which gives access to 5 meals during the hackathon.

They're already white-labeling this for others.
We finally have a solid peer-reviewed journal for original crypto research.

Thanks to the folks at the University of Pittsburgh.
Edge is finally out, and it looks awesome.

It's a multi-currency mobile wallet with support for ETH and ERC20 tokens, on top of Bitcoin, Litecoin, Bitcoin Cash, Dash, Augur REP, and Wings tokens.

They have big plans and we'll be following.
A cute and handy analysis tool for dapps activity and usage.

Basically the AppAnnie of crypto, but without the shenanigans.
Juris is another project looking into the problem of contract disputes and mediation.

We've seen all sorts of approaches, and Juris goes at it with humans. Users can in fact escalate to a Juris PANEL which provides a decentralized, United Nations-compliant arbitration tribunal judicially enforceable in 157 countries.

We're getting closer to the day where 1) smart contracts will be more powerful than dumb paper contracts 2) the state infrastructure starts to be replaced.
This one fell through the cracks a couple of weeks ago, but it's a big one: the first implementation of sharding for the Geth client!
🤡 ICO madness
Nothing extremely interesting here, just a reminder that shit like this happens, and that the websites logos and roadmaps are all nicely designed.

Still hard to feel sorry for the "investors", but many could be unsophisticated and fully scammed with ads and the such.

Ha, our constant love-hate with regulation..
Skip the read.
- Telegram filed saying it already sold $850M worth of tokens
- Tokens are being flipped on secondaries through brokers before the public sale
- Everyone is nuts
Joining Kodak is another legendary but desperate company.

Atari Token will apparently be targeted at online casino-like games.

Obviously, the shares jumped up 60%.
👮 This week in regulation
The Swiss Financial Market Supervisory Authority FINMA has just issued guidelines for how it intends to apply financial market legislation to ICOs.

- all types of pre-functional tokens (or the instruments representing claims on future tokens) are securities (same conclusion as the SAFT Whitepaper)
- functional 'payment tokens' are not securities
- functional utility tokens that only represent a claim to a service or application are not securities (but if they have investment purpose, they are securities).

A very fine line for sure, but a clear statement that some utility tokens are definitely not securities, standing in stark contrast to SEC Chair Clayton's words last week: “I believe every ICO I’ve seen is a security”. Jurisdictional competition at its best.

Marco Santori did his usual tweetstorm summary here, alternatively the table below is a good snapshot of the key takeouts.
A reminder that pump and dump schemes can now be reported to the CFTC Division of Enforcement via a toll-free whistleblower hotline (866-366-2382) or by filing a tip or complaint online. 

Bounties available.
New Jersey Bureau of Securities orders a ban on Bitstrade, a crypto business that has all the features of a ponzi scheme: 'become a promoter', 'Earn Up to 45% Monthly‎' google ads, no team page, non existent address in California, etc.
A good overview of the Reg A+ framework by law-firm Pepper Hamilton, and how companies issuing security tokens in the US could leverage it.

As posted a couple of weeks ago, Gab has gone down this route and we'll no doubt see more examples soon.
💰 New funds
MakerDAO announced the launch of a fund dedicated to the DAI ecosystem in partnership with L4 Ventures.

They offer grants or financial investments ranging from $25k to $200k, depending on stage, to projects using Dai or the Maker infrastructure as a core component.

They even have a 'request for startups' page where they list ideas they want to back.

There are currently a dozen ecosystem funds that have been announced, and many more in the making. For many over-capitalized projects the question is no longer 'should we launch an ecosystem fund', but 'why shouldn't we launch one'. It's becoming table stakes. 
An on that note, here is another ecosystem fund.

The Ethereum Community Fund is a $100 million grant fund pooled together by the likes of  Omise Go, Cosmos, Golem, Maker, and Raiden (plus an odd Japanese fund) with the aim to:

"provide both funding and connectivity, while shaping the strategic direction of the space towards mainstream adoption through the development of infrastructure and compelling end-user applications."

We particularly love these multi-project collaborations (even though they introduce some complicated mechanics in the deployment of the funds).

The amount of funding for decentralized projects keeps on growing exponentially.
Joel and Chris unveil their investment thesis for Placeholder (which they closed in December), and in true crypto fashion it's a document hosted on IPFS.

None of it is news for those who have been avidly following Chris' tweets, posts or been lucky to speak to him in person, but seeing it all in one place just shows the magnitude of brain power that they have been putting into it. Most impressive of all is their ability to convey it simple, accessible terms.

A must read for everyone in the space.
Massive congrats to our friends and readers Adam and Brayton for closing their $38 million Fund III! As part of the new fund they are also expanding their remit from crypto, where they have been true pioneers, to VR, space and...jetpacks!

We look forward to investing more together, and if there is any jetpack startup that needs user testing let us know!
All time high for the number of crypto hedge funds: we are now at 226, up from 37 a year ago, and double the number counted only 4 months.

AUM estimated at $3.5-5.0 billion.

The warmest welcome to those who launched in January...
💸 Funding rounds
Unsplash, the fast growing online community of photographers / database of royalty free high-res digital photos, has announced a $7.25 million funding round.

The interesting bit is that the round is led by Jason Goldberg's OST, the company behind Simple Token, that is committing $4 million in cash and $1m worth of OST tokens (another example of 'ecosystem funding'). Unsplash is looking for a monetization strategy and inevitably stumbled upon the magic of issuing a proprietary token and the simplicity of doing that with the Simple Token blockchain toolkit. No details are yet given about the token model, other than:

It won’t be a model where photos are going to be paid for with cryptocurrency. It will be a model that leverages the unprecedented distribution Unsplash photos gain to bring as many opportunities to contributors as possible while maintaining the open, free-to-use principles of the community.
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 🤙

If you're feeling generous, you can stake some ETH on our StakeTree page 🙏
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
Unsubscribe | View in browser