📌 An opinionated recap of the most interesting news in crypto
Token Economy
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💸 Crypto Extravaganza
Boat parties and Aston Martin giveaways.

And the NY Post says: "On display at the conferences was one of the most ostentatious displays of wealth that New York has seen since the peak of the subprime mortgage boom more than 10 years ago."

Anthony Di Iorio, one of the N cofounders of Ethereum, and the founder of Jaxx and Decentral, is surely free to spend $3M of his own monies however he prefers, but this is not a great signal to give to a community.

I've received numerous messages from people at the conference saying that this definitely felt like the height of the internet bubble, and many of them had questions about remaining in the space.

The questions are fair. The amounts of suits at the conferences was also apparently particularly impressive, and in stark contrast to the developer conferences we prefer to attend (and hope they don't get taken over too).

Fortunately some people are actually interested in the broader revolution, and hosted a parallel BUIDLWEEK, with Balance renting out a studio and letting anyone show up to do cool decentralized work there.

Thanks Richard!
Our friend Patrick, from Cherry Ventures, attended the madness that was NYC Blockchain Week and has a nice recap if you weren't there.
Brayton paints two diametrically opposed approaches and philosophies to building decentralized computing: Ethereum and Dfinity (but the latter could be Tezos, EOS or Telegram).

In under 4 years we have gone from a grassroot open-source movement winning hearts and minds of a community of cypherpunks to projects raising 9 figures from VCs and hedge-funds on day 0, leasing fancy offices in SF, hiring expensive talent and advertising in Times Square.

And yet: "There is no clear answer on who is correct. What is clear though is this will be one of the largest social experiments of this generation. "
Somewhat related to the missionaries vs mercenaries debate, here's another interesting post on sources of moats for crypto projects, by Tony Sheng.

The author argues that, compared to traditional companies, crypto projects have much fewer moats to protect against copycats, of which network effects are the single most important ones (though obviously not there at the start).

His contention is that go-to-market strategies are therefore critical as the way the get there quicker. In that light, massive raises a la Telegram and ecosystem funds start to look more rational...
An economist's take on stablecoins from the team at the Economic Space Agency.

In short, they argue why "stability" should not be defined in relation to the fiat system that is being transcended.

"The reason for building a crypto economy is certainly that we understand that finance is moving beyond a discretely-delineated category of money as an ‘independent’ measure of the so-called ‘real’ economy. With financial innovation, many assets acquire the liquidity of ‘money’, and the distinction between money and other assets is breaking down {...}. As a consequence, the sociallness of money, once hidden by the belief that there are objective units of measure, starts to reveal itself. Cryptocurrencies are about exploring and re-engineering that sociallness; building alternatives of how a different economy might be"
David Sacks is all-in on security tokens, as we know here from his deep involvement in Harbor.

At Token Summit he spoke about his beliefs on why Real Estate could be the first real market for security tokens.

His prediction is that we'll be trading security tokens by the end of the year.

Also interesting:
- A Q&A with Harbor's CEO about security tokens
- And Morgan Creek tokenizing the equity of Anexio and going out for a raise
Coinbase gets a Washington Post piece.

The interesting tidbit I wasn't aware of is that Coinbase only has 1% of the crypto is holds in hot wallets, and that it is entirely from company reserves!

So basically there are no consumer funds whatsoever in hot storage.

On top of that, the 1% is fully insured.
Quite impressive.
This was a revival week of talks about Bitcoin's energy consumption, but this time the conversation was more sticky than usual thanks to an actual study by Alex de Vries.

The study says BTC consumes 0.5% of the world's energy.

I think at this point, we have a serious problem on PoW, and it's time we acknowledge it.

Yes, PoW is the most secure algorithm.
Yes, printing money and operating our other value mechanisms and banking sectors require more energy.

But still, it seems clear at this point that the trajectory is scary and we need to find solutions, either on the protocol level or on the planetary level.
Emin Gun Sirer announced a new family of consensus protocols at Token Summit.

The three protocols are based on random network sampling and that makes Vlad Zamfir doubt it's a really great solution.

Coming up with simplified consensus mechanism is a great past-time, so id you want to get started you can read their white-paper here.
A super scary, but not surprising finding from the Wall Street Journal on token offerings.

Salient facts:
- Out of 1,450 digital coin offerings, The Wall Street Journal has found 271 with red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.
- 111 papers repeated entire sections word-for-word from other white papers. The copied language included descriptions of marketing plans, security issues and even distinct technical features such as how other programmers can interact with their database.
- In one example, Denaro, the CEO is completely non-existent and is represented by a stock photo.
- "Investors" have poured more than $1 billion into the 271 coin offerings ‼️
💥Newsy stuff
Coinbase pace of execution is hard to keep up with.

This set of product releases cater exclusively to institutional investors and once again shows the amount of pent up demand they must have for this sort of solutions. 

1/ Coinbase Custody. this was first announced back in November, when presumably they didn't have the product ready or perhaps they still needed to secure the partnership with the SEC broker-dealer. Now that it's all sorted, 8 funds are featured as launch partners, including Polychain, Metastable and Multicoin.

2/ Coinbase Markets. This is a brand new product that will be run by a new development team based in Chicago (home of many traditional exchanges), providing a centralized pool of liquidity underneath all Coinbase products.

3/ Coinbase Prime, a fully-fledge trading platform for institutional investors that will offer margin trading and lending, OTC and algo trading.

4/ Institutional Coverage Group, effectively a white-glove service ran from NYC for the largest institutional customers. 

And rumours are Coinbase is already in talks with the regulator to obtain a banking license, a move that would enable them to offer their own custody services as well as federally insured bank accounts.

Bonus: Ledger have also just announced an institutional custody solution, in partnership with Nomura and Global Advisors. 
While everyone is partying at Blockchain Week, Team 0x keeps shipping.

0x V2 will go live in July featuring support for non-fungible tokens: big news for ERC-721 standard! The upgraded modular architecture will also be able to seamlessly support other token standards in the future (e.g. R-tokens, ENS etc).

Another huge improvement in the new release will be the abstraction of WETH, which has been a big UX friction point for 0x traders.

$4M daily volumes, 10% wow growth. It's hard not to get excited by this growth trajectory and this team.
Not one, but two Chinese mining equipment makers are looking for $1B (each) in upcoming IPOs.

With Bitmain's profitability being examined left and right, it just seems normal that many hardware makers are trying to follow in their footsteps.
In other news:

- JP Morgan: from calling fraud to appointing a head of cryptocurrency strategy in 8 months.

- The CFO of the world's 12th largest bank by market cap has joined Block.one as its new COO and President.

- Big4. Deloitte Blockchain boss departs to build Ethereum supply chain, and raise $300M. As you do.

- Aragon announced Aragon One, its new for-profit operating company.
😎 Cool new projects
This. is. awesome.

Bitcoin is unstoppable, but only to a point: its single point of failure is actually physical, as the network still relies on ISPs for internet connectivity. These are centralized communication networks with a history of censorship (imposed by governments, see the whole net neutrality situation), attacks or fragility (natural or manmade disasters).

So the folks at Samurai Wallet, using the GoTenna SDK, a toolkit provided for free by GoTenna (the makers of an off-grid mobile mesh networking platform) have developed the TxTenna app. The app can broadcast offline bitcoin transactions off-grid via goTenna Mesh devices, effectively enabling an alternative physical communication layer for bitcoin. This is how it works:

"Using the Samourai Wallet app the user creates a standard bitcoin transaction and signs it. This is possible while offline and without wifi or mobile access.The Samourai Wallet app then passes the offline transaction to the TxTenna App and TxTenna broadcasts it to nearby mesh nodes via a paired goTenna mesh device. Other goTenna devices in the area relay the transaction until an internet connected goTenna node also running TxTenna receives it and forwards it to the Bitcoin network."

And sifting through the comments in Fred Wilson's post about it (USV led GoTenna Series B last year), it seems there could a token on the way:

"We’re working on an open-source incentive protocol to, among other things, ensure transactions get posted to the public ledger by a mesh node with internet access as efficiently as possible."
A well designed registry of Dapps, sponsored by Blockstack. A flavour of what a platform-agnostic decentralized app store would look like.

To be mined by many a VC.
Consensys have developed the token design version of the popular startup Business Model Canvas, and here provides an example of it applied to a TCR.
Tokensoft have extended their token-issuance compliance platform offering to funds, citing benefits such as increased liquidity, automated bookkeeping and the lack of need for a 3rd party platform (the latter sounding a little confusing since Tokensoft itself is presumably a 3rd party platform).

More tokenized funds on the way no doubt!
Dexy is yet another decentralized, non-custodial crypto exchange.

The first version still maintains a centralized order book, but it's still  supports trading any ERC20, ERC777 and ERC223 tokens.

It's also an opinionated exchange (which sounds weird if decentralized) which has some beef with Ethereum competitors.

"Tokens such as EOS, TRX, etc, who claim to have much better performance and functionality than ETH are free to use their own blockchain to trade their token, and we will not be featuring them on the main page."
Curated on a Product Hunt collection!
👮 This week in regulation
Regulatory trolling, SEC-style.

Here is a bogus ICO website the Agency put up for educational purposes to show what a typical fraudulent ICO would look like: howeycoins.com

Also, Clayton seems to have dropped a pretty clear hint in one of his statements (highlight ours):

“We embrace new technologies, but we also want investors to see what fraud looks like, so we built this educational site with many of the classic warning signs of fraud. Distributed ledger technology can add efficiency to the capital raising process, but promoters and issuers need to make sure they follow the securities laws. I encourage investors to do their diligence and ask questions.”
Governor Lael Brainard from the FED gave a speech this week at the Decoding Digital Currency Conference, titled: Cryptocurrencies, Digital Currencies, and Distributed Ledger Technologies: What Are We Learning?

Key points:
- Crypto is not yet big enough to pose systemic risk to the financial system, however continuous vigilance is warranted;
- It's not obvious what value add a central bank issued digital currency would provide vs electronic payments, while being a potential target for cyber attacks and restricting bank's ability to make loans;
- there could be a case for a narrower use case for tokens and DLT for facilitating payments, clearing, and settlement.
Regulation gets even more confusing when it comes to crypto mining.

These guys (not lawyers) try to make some sense of it all in the context of the Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD“).

"...it is pretty obvious to us that crypto-mining ventures typically are to be considered as an activity covered by the Alternative Investment Fund Managers Directive (AIFM). Crypto-mining ventures definitely meet all criteria defined by the EU Directive."
💰 New funds
Ripple is formalizing its effort to get people to actually use XRP.

Its new Xpring initiative will invest in, acquire, incubate, or sponsor companies and funds that use XRP as their currency.

We have no idea why people would do that, but it seems to be working as there are a few examples showcased.

They brought on a former Director of the Facebook Developer Network to run the initiative.
💸 Funding rounds
Big moves by Circle.

After the Poloniex acquisition, it's now announcing a $110M Series E round at $3B valuation led by Bitmain, with participation from DG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group, and Pantera, along with new investors Blockchain Capital and Tusk Ventures.

But that's not all.

They are also launching USD Coin, a full reserve USD-backed ERC-20 stablecoin based on the Centre Foundation open source fiat stablecoin framework. Effectively USDC will be a more financially and operationally transparent version of Tether that will operate within US money transmission laws, and may in fact end up replacing USDT on exchanges, starting with Poloniex obviously.

More details in Circle's USDC FAQ.
Compound announced its "seed" round, of $8.2 million led by Andreessen Horowitz, Polychain and Bain Capital Ventures.

We spoke with the team multiple times and were impressed at how simple they were trying to make money markets for Ethereum.
You can borrow and lend crypto assets on the platform (but to borrow you need to put 100% collateral down).

The founder is also opinionated, stating that “My thesis is that almost every crypto asset is bullshit and not worth anything.”

The most interesting thing about Compound is that it is an actual business, and has no tokens, instead relying on old fashioned revenue (they take a 10 percent cut of what lenders earn in interest).

One thing I'd like to note is the insanity of the funding market.
It's just unfathomableto me how investors will make good returns on their portfolios when they are paying $30M+ valuations for seed level risk (if not more).

But maybe it's just me being too conservative and old-school (yet I hold most of my net worth in crypto, so I don't really know what people that have 0-1% in crypto should be called).

Also good to read the "other" Compound (compound.vc) investment thesis in this Compound.
We had not heard of this one before, but it clearly didn't prevent them from raising a 9-figure pre-launch round (from undisclosed sources).

Team of Israeli co-founders who sold companies to Alibaba and Wix and have hired 60 people already to develop a new blockchain and consensus algorithm to power large-scale consumer apps. 

They claim to have Kik as a 'design partner'.
After "ICO madness" and "Funding rounds", we may need to add a new "Pledges" section from now on as apparently it is a real thing.

"The pledge has been estimated to be around $100 million."

If you are still reading, TaTaTu is building a hybrid Video on Demand platform social networking site that incentivize viewers with crypto tokens for consuming and contributing content, as well as allowing advertisers to pay for advertising on the platform with the token itself.

The founder is a famous film producer.
ℹ️ About us
Token Economy is written and curated by Stefano Bernardi & Yannick Roux.

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