📌 An opinionated recap of the most interesting news in crypto
Token Economy
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🙏Thank you EOS
This week I tweeted that EOS is the best thing that could happen to Bitcoin, as seeing something particularly terrible should reinforce everyone's views of why Bitcoin is so important, hard and valuable.

Little did I know that Dean Eigemann from Harbour had already laid it all out in this great post.

"It is important, however to recognize that EOS is also a great thing — because EOS has shown us what not to do."

This is the post to read to understand why the crazy governance structure and censorship-ability that ended up being instituted make it something the crypto community should distance itself from.

You can read more about the freezing of 7 accounts to form a better opinion.

You should also absolutely read a piece from a block producer team who has invested quite a lot of resources into their EOS setup being pissed after they were instructed to freeze 27 accounts with “the logic and reasoning for this order will be posted at a later date" as an explanation signed by a gardener-turned blockchain enthusiast with no online presence.

The risk here is high. We know there is a solid appeal to perceived safety and security.
Being able to amend mistakes and catch thieves is a desired feature (hell, even Ethereum ended up putting it above many others with their hardfork), but as we've seen countless times it's one that costs way too much.
And the risk here is that a project which implements this feature actually becomes successful, by shifting the users' focus away from the need of censorship-resistance in development platforms and (most importantly) in monetary ecosystems.

Censorship-resistance is hard and valuable. And that makes it important extremely important to always keep it top of mind.

Given how it's being handled at the moment we don't foresee this happening, but the temptation to take the easy route and build a massively performant system sacrificing the valuable aspects of it in the name of speed will be fallen into by many a project.
This is the counter to the above view. By none other than Larimer itself.

And reading it, it seems like a no-brainer. All the problem he lists about crypto today, and the Bitcoin and Ethereum governance are very real.

(It's a post you should read btw)

But where it falls apart, in my opinion, is on this sentence: "Only the most universally competent dispute resolution systems and blockchains will survive."

This is an EXTREMELY dangerous point of view. It's equivalent to saying, it's ok to have someone being able to censor transactions, data, money, etc. as long as they've earned a great reputation.

That's clearly madness that ends up being exactly like the current system we're all trying to change!


Having elected parties being able to censor data will end up in situations were minorities will be exploited unfairly, where the single user won't have any voice compared to the giants.

I see this as a fundamentally wrong vision of the world and not what I signed up for.

"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety." Benjamin Franklin, 1775
This is an example of what we outlined in Issue #2: building in public.

The team at Wyre Capital shared their thinking around the 0x token as well as general thoughts around incentives in protocols.

In the end, they say that governance and "utility" is usually not enough.

As said in issue #2, we're big fans of this public praising/criticizing MO, as it's something we're not particularly used to - and as it adapts very well to complex ecosystems with multiple stakeholders (core devs, users, businesses (relayers here), investors, etc.).

The post opened up a public debate, with Spencer Noon also agreeing that ZRX would benefit from changes.

Will's response didn't lag, saying he would much rather develop something being worth governing rather than "gaming" the velocity and price curve with simple burning and staking mechanics. 👏
A comprehensive and well researched piece on moats in the blockchain space, by Michael of Turing.

His contention is that the strongest moats will be built with a combination of reinforcing network effects, a 'plug & play' ecosystem, solid governance to coordinate it, a trusted brand and investment in compliance.

A good sequel to Julien's post on Platform Moats from last week.
Ari Paul shares an internal memo in which he claims early stage valuations are in a slow-motion fall, to reflect the steep correction in the liquid crypto markets.

"In the last 6 months, the exchange buyer has consistently been losing badly, so they’ve mostly stopped buying.  This means that the late stage pre-ICO investor also started often losing.  Until now, the early stage pre-ICO investor was still winning, but it’s like dominos, and we’re nearing that last domino falling as well."

We've been pointing out the madness of 9-figure valuations for pre-product, pre-launch, pre-everything projects for quite a while in here, and actually we are continuing to see those numbers being regularly paid by both old-school VCs as well as new crypto funds, in a sign that FOMO may not have quite evaporated yet.
So Ari's post may turn out to be prophetic, as the music has to stop at some point, but right now we are not quite seeing it yet.

Valuations have been a hot topic more broadly this week, with many other folks weighting in (and largely rhyming). Nathaniel crafted a handy tweetstorm summarising the various takes and his over-arching view.
While we are on the topic, Qiao highlighted some of the common pitfalls he encountered in the most popular cryptoasset valuation frameworks emerged thus far.

Key point: "Quantitative models work only if patterns persist, but because crypto moves at 10000 mph, regime shifts occur far too often for patterns to persist."

Speaking of quantitative models, here's a comprehensive list of blockchain data resources out there: Digging deeper into cryptoassets: data and visualization resources
A rather sobering take on the state of DEXs, and the various trade-offs and flavours they come with.

The author argues that with an uncertain regulatory framework, the threat of centralized exchanges solving their security problems and institutional capital not being bothered to handle private keys, DEXs could end up with a very limited scope of action. We touched on some of these themes in our Q&A with Paradex CEO after the acquisition by Coinbase.
A solid recap of all the major currencies and a few upcoming projects.

Good to read if you haven't been keeping up with Token Economy as much as you should have!
The title is a bit misleading, for once it's not about security tokens or tokenizing the world...

The main point of the post is that with blockchains we are moving from an extractive economy that is measured in terms of the value consumers contribute to institutions, to an inclusive economy where value flows to the consumers.

"For the first time, inclusive networks, more commonly known as blockchains, will have the ability to enter these large services. This will enable individuals and corporations alike to derive economic value from the services that they provide."

The author then argues that this will lead to an unprecedented economic expansion. Not particularly conclusive, but thought-provoking no doubt.
Warning: very, very long read.

Tezos gets a massive, cover feature piece narrating their story in a great deal of details. "A crypto-tragedy in three acts."

I admire the journalist for having the discipline to spend so much time on this, but I will admit that I did not have the same (or the guts maybe) to read the full thing.

From a glimpse, it does look like the perfect sci-fi financial thriller kind of thing you'd like to read on a long train ride, or if you are a Hollywood screenwriter.

What you should be reading though
is "Death of a Crypto Commonwealth: Tezos’ Failure" which just focuses on how it failed before even starting, making use of a language that borders the religious.

Quote: "The identification all genesis token holders destroys Tezos cryptography a priori distribution. This allows for Tezos’s cryptography to be fundamentally broken by design through identification which profanes it crypto, rendering it worse than useless. At its best Tezos can only offer an impoverished digital commonwealth of subjugation to the same states we are seeking to escape with none of the majesty or empowerment found within cryptography."

My main thinking, as often is the case, is just at how we will manage to not punch ourselves in the face in 10 years, when we'll go:
"hey remember Tezos? How completely out of our goddam minds were we all at the time?"
Good post by the head of research at Scalar Capital on what censorship-resistant store of value actually means and how it's achieved in the context of 'sound money'. Sometimes it's good to go back to the basics.

Quote: "the ethos of crypto isn’t about “taking down the government,” but rather empowering the individual, and helping them protect their wealth from any malicious actor who attempts to interfere."

What you'll send your mom when she asks why you keep all your savings in BTC.
Great read for those deep into crypto economics and governance.

Doug from Livepeer discusses the merits and challenges of inflation-based funding mechanisms for contributors in blockchain protocols.
Regan from Coinlist on a needed article to lighten the need to focus on regulatory competition.

In the end, he states, it doesn't really matter.

No country will really become a hub just because of its regulatory activity, and the talent and money will remain in the big technology hubs which create fertile grounds to create companies and come up with new crazy ideas. 
We love good explanations of consensus mechanisms, and this one is about Istanbul Byzantine Fault Tolerance (IBFT) from the team at Consensys.

Particularly interesting for application- or domain-specific blockchains that we think might proliferate in the future, with a known set of actors.
💥Newsy stuff
The report can be found here.

Those who were expecting a full Tether audit will be disappointed though: it's a small step in the right direction, but far from satisfactory.

What we know is that a reputable US law firm has obtained "sworn and notarized statements provided by duly authorized personnel" at its two unnamed banks indicating that, as of June 1st, there were c. $2.55B in "unencumbered" assets "in accounts owned or controlled by Tether". So, a lawyer, who by the way happens to be member of the advisory board of one of
Tether’s banks, says someone from such unnamed bank sworn the money was there on June 1st, so it's all good? For an industry built on, or at least preaching, trustless-ness and transparency this was not just going to go down smoothly.

In true legalese form, this statement from the law firm is filled with a long list of standard caveats, disclosures and deliberately vague words, as another lawyer pointed out in an interesting tweetstorm.

Timing-wise this comes a week after a widely shared research report providing evidence of Tether-driven Bitcoin price manipulation. It's unclear whether Tether rushed to get this report out in response to that, or whether this has been in the workings for a while.

Sadly though, we are unlikely to see a full audit any time soon. Tether GC confirmed to Coindesk that "The barriers to getting audited are simply too big to overcome right now, and not just for us.".

PS: to add more murkiness, Bitfinex chief strategy officer just announced his departure.
It's been an active M&A week in crypto land.

This one had circulated a while ago and it's now apparently closed for $140M. It still doesn't make a whole lot of sense though. It's unclear whether Tron's founder Sun acquired it personally or through some vehicle somehow linked to Tron, nor it is clear what he's planning do with it as no announcement has been made. It's probably a trophy asset bought for vanity reasons, which with its existing 170M users somehow is supposed to add some actual substance and legitimacy to Tron’s network.

In doubt, TRX was up some 20% on the news. 🤦
As widely anticipated by a leaked Twitter DM between Ari Paul and an anonymous crypto trader, the media has eventually picked up on the rumour that SF-based Chain is being acquired by Stellar for supposedly $500M worth Stellar's native crypto currency XML Lumens. This has not been officially announced yet.

Chain had raised a $30M Series C round almost 3 years ago from a syndicate of corporates including Visa, Nasdaq, Citi Ventures, Capital One, Fiserv and Orange, as well as ranking some high profile VCs (RRE, Thrive, Homebrew, Khosla, SV Angels) and crypto funds (DCG, Pantera and Blockchain Capital) from previous rounds.

There are lots of rumours floating around about the actual quantum and form of consideration paid by Stellar, potentially ranging quite widely. Regardless, this is an interesting and perhaps inevitable development in a market where issuers are sitting on piles of tokens that the markets seems to continue ascribing a premium to, while the marketplace for blockchain developers is as hot and competitive as it's ever been.

As to potential synergies, this acquisition seems to place Stellar head to head competing with Ripple (of which it was originally a fork).
In other news:
- On the move #1. Huge congrats to Charles Noyes for joining Fred Ehrsam and Matt Huang as a partner in their new fund, what a team! 🎉 We are as proud to have featured his post on TON, which happened to be TE's second most read post, as we are depressed to learn that he is only 19 years old...

- On the move #2. As hinted at in issue #50, Aaron Batalion has officially left Lightspeed as general partner to devote himself full time to crypto. Unclear whether he will start a fund or a project. Congrats in any case! 🎉

- Hacks. Another week, another South-Korean crypto exchange getting hacked. This time it's Bithumb's turn to the tune of $31M, mostly in XRP apparently. Bithumb is the 6th largest crypto exchange globally and promised it will refund compromised accounts out of reserves.

- Fooled by randomness. Crypto-twitter went completely haywire when bitcoin block #00000000000000000021e800c1e8df51b22c1588e5a624bea17e9faa34b2dc4a was mined. It turns out it wasn't Satoshi nor God sending a message, but just simple stats.

- New old banks. Robinhood is the latest fintech startup that is rumoured to be going after banking licenses to offer a broader set of regulated financial products to its 4M users.

- Exchanges.
Circle published its Asset Framework as guidelines to how it vets crypto assets to be added to its trading products.

- Executive Laundering: Remember Clinkle? That startup that raised a $25M seed round for ultrasound based payments (which actually now sounds like a fairly modest pre-product raise)? The founder is back. He's launched a new venture fund and one of the projects he's more involved in is a crypto one: URToken, a marketplace for corporate rewards.

- NFTs growing in interest: The first NFT meetup drew crowds from all over Europe (it has a nice recap), and now there's a conference in Hong Kong specifically on this niche.

- What bear market? This was Greyscale's best week for fundraising with more than $20M raised in their family of funds.
😎 Cool new projects
Celo is unveiling its company and seed round today.

It makes sending payments as easy as sending a text, to anyone anywhere. Celo maps phone numbers to wallet addresses using a novel decentralized address-based encryption algorithm.

It uses a "proprietary" stablecoin "backed by a diversified, overcollateralized, and publicly auditable crypto-asset reserve".

They raised a mega seed of $6.5M from Andreessen Horowitz, General Catalyst, Polychain Capital, Coinbase, Reid Hoffman, Jack Dorsey, Naval Ravikant, Linda Xie, Arianna Simpson, Social Capital, and Lakestar, among others.
The Colorado Sun is one of the first real news outlets to launch on Civil (Consensys' journalism platform).
A group of journalists from the Denver Post got fed up and left to create the new publication (who is also raising money on Kickstarter).

Cool to see people adopting the technology because in real need of alternatives to the current models.
This is a truly fascinating open-source project kickstarted by Simon De La Rouviere.

It's an autonomous artists bot that creates generative artwork (using a Node.js and HTML5 Canvas based generator) and sells it as a ERC-721 token via a daily auction.

This would be pretty cool already, but what's even cooler is that the proceeds from the auctions are deposited in a communal pool which itself is governed via a curved token bonding system such that essentially token holders have a claim on the future revenues of a bot artist. 🤯
The first Lightning network app to get some traction.

It's an ever-editable, collaborative million dollar homepage kind of digital canvass powered by Bitcoin Lightning Network. 1 pixel = 1 satoshi. The node is running on a single board computer.

Here's a short guide on how to play with it.
Very cool news on the Bancor side, of which I publicly haven't been a fan.

They are launching a system for local currencies (what made me discover Bitcoin) starting with a project in Kenya.

This is an area I'm massively excited about, so it's always great to see others realizing it and doing something in the space.

Kudos Bancor 💪
Simon Taylor is spearheading an initiative called Global Digital Finance, which just published a "code of conduct" for ICOs with the contribution of more than 140 organizations and professionals.
Curated on a Product Hunt collection!
💸 Funding rounds
After announcing its Seed round in January, TrustToken has now closed a $20M "strategic token sale" with participation from A16Z, BlockTower Capital and Danhua

TrustToken is an asset tokenization platform, with one product currently live and traded, a USD pegged stable coin called TrueUSD. Since the infamous listing on Binance that sent its price up 30%, TUSD trades between $10-20M a day according to CMC.
🤡 ICO madness
For the fun...

"The contents below detail a strategy for creating a mass-market, decentralized supercomputer running a hybrid proof of stake standard utility token on top of a multi-blockchain ICO. This will replace your government."
and this 👇 🤦
👮 This week in regulation
The US Congress is being warned by Secret Services about possible illicit use cases of anonymity-enhanced cryptocurrencies like Monero and Zcash.

“We should ... consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies”.

One could have seen this coming, however it remains very unclear how enforcement will be put in place.
💰 New funds
A new blockchain accelerator called Chain Accelerator (🙄) has launched in Paris Station F, aiming to be the largest in Europe.

Supported by an administration that now seems fully converted to crypto, Paris could become yet another vibrant European center of gravity in the global blockchain ecosystem.

Matt Walsh and Nic Carter have left Fidelity to start a new crypto focused venture fund called Castle Island Ventures, armed with an initial $30M from former Fidelity colleagues and executives at Highland Capital Partners.

Congrats to both! We do think this one will be a quality one.
Jeff Morris Jr, who runs product at Tinder as well as an active Angel List syndicate, has announced the launch of a blockchain dedicated product fund called Page Zero.

With that he aims to work closely with blockchain focused teams that need help on the product side.
Multicoin have managed to attract investment from no less than Union Square Ventures, who now count in their portfolio a total of six other crypto focused fund (the other new one is Arianna Simpson's Autonomous Partners).

Lots of juicy numbers in the post:
- Multicoin had an initial target to close $250M by the end of June, while current AUM is $75M (down from $100M a month ago)
- YTD Multicoin still outperformed both Bitwise Hold 10 and Bitcoin, they took a short position on the market in March
- 85% of the fund is invested in actively traded coins, while the remaining 15% is in illiquid pre-launch projects (eg Kadena, Tari).

Here is Fred Wilson's post announcing their investment and outlining the rationale, as well as the challenges for traditional venture funds to play in this space:

"Their opinions are often controversial and contrarian. You can make a lot of money by being right about something most people think is incorrect. So at USV, we appreciate and value original thinking."
ConsenSys announced their own SF-based accelerator programme called Tachyon, targeting 15 projects with $75-100K investment. 

Areas of interest will be social impact, general ethereum startups and open-source projects addressing scalability, security and data transmission.
Yet another ecosystem fund gets off the ground.

This one is structured as an incubator focused on projects building on the IOST protocol, a decentralized blockchain based platform for dapps with backing from the likes of Sequoia China, ZhenFund, and Huobi. Somehow it already ranks over 50 full time staff with plans to reach 100 by the end of the year.

Here's a list of some of the projects it has already backed.
ℹ️ About us
Token Economy is written and curated by Stefano Bernardi Yannick Roux.

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