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Crypto enters academic curricula
By pure coincidence, the day after we dug out some data on TE subscribers from the academic world, Coinbase published a report containing the results of a student survey, showing the rise of crypto-related studies as new subjects in higher education.
(More coverage of the report can be found on Coindesk and Fortune.)

For us it's been fascinating to see the undeterred interest of students growing steadily throughout the Q4 '17 madness and subsequent bear market. We now count subscribers from over 100 institutions (that we can identify via their email address), including half of the top 50 universities. It's not surprising that also Google searches for relevant keywords don't seem to have followed the same pattern of market prices.

Now seeing universities themselves adapting to this emerging demand is even more fascinating. We can't really think of another subject that has made its way into university curricula so pervasively and in such a short time. If you can, let us know as it would be particularly interesting to draw some parallels. It probably helps that many of these academic institutions already had a bedrock of foundational classes in cryptography and active researchers in the fields of game theory or distributed systems, who are now presumably deeming crypto currencies and blockchain areas that deserve further academic attention.

Our friend Matt Stephenson from Planck, and most recently a PhD at Columbia University, put it succinctly when we asked for his perspective:

“I think there will be a lot of action at the intersection of researchers looking at blockchain and Blockchain vets doing research”
As always Twitter provided us a timely proof of that, with an emblematic exchange between Martin from Gnosis and Glen Weyl, researcher and professor at Princeton:
The particularly revealing takeaway from Coinbase report is the multi-disciplinary appeal of this subject across engineering, finance, law and social sciences departments, clearly showing the belief that it can have a profound impact on society in multiple industries and with the contribution from diverse disciplines.
“That interdepartmental approach may emerge as a hallmark of cryptocurrency and blockchain education, given the number of departments that are currently offering classes on the subject. Coinbase’s analysis found that of the 172 classes listed by the top 50 universities, 15 percent were offered by business, economics, finance, and law departments, and four percent were in social science departments such as anthropology, history, and political science.”
The other side of the coin is that there is such an invaluable goldmine of learning opportunities freely available to anyone online, and that in such a nascent industry there aren't in fact many "professors" yet. There's also a question around whether a rigid academic curricula can appropriately form students in such a fast-paced industry. But universities are no doubt pressured to satisfy students natural curiosity in order to gain and retain their attention. And once an ivy league university starts offering a blockchain course, you bet that others will be following suit at rapid pace.
Ultimately, even education is a ruthless marketplace where universities thrive by placing students into the job market, and therefore need to market what the job supply is after, perhaps at the cost of following the hype. David Gerard's sceptical piece about the Saïd Business School picks up on this theme. But it's undeniable that such skills are currently highly desirable across many industries, with law being singled out (unsurprisingly perhaps!):

“If you’re graduating from law school it’s a tough market these days. [...] However, the law students that are trained in blockchain, they don’t need to apply anywhere. People are just asking them to join their firms.”

One stat from the report that stood out is that international universities are somewhat lagging US ones. We noticed the same theme across our subscriber base, though we suspected it could be down to a cultural difference in the use of academic email addresses. The numbers from the report however seem to suggest there is a more fundamental trend behind it, and we can't quite figure out why:

“Only five of the 18 international universities on the list, or 27 percent [vs 42%], offer at least one class on blockchain or cryptocurrency. And only two — Swiss Federal Institute of Technology Zurich and National University of Singapore — offer more than one.”

Lastly, one number that made many headlines, but it's probably well within expectations given the general tech-savviness of students vs general population: 18% of the respondents own or have owned crypto currencies.

If you are a student and want a platform to give your thoughts more reach in this industry, reach out to us. We'd be delighted to feature some of your work.
We published a little end of summer update this week. It's got Token Economy top 10 most read posts of the last 3 months and some travel plans for September.
🔦 Featured on Token Economy, by Paul Kohlhaas

Following on from the world of academia, this week's featured piece is a deep dive into the intriguing concept of "token curated intellectual property", a crypto economic design resulting from the combination of NFTs and token bonding curves to fund, curate and distribute ownership of IP rights.

The idea is that a bonding curve smart contract becomes the legal custodian of a NFT that represents the underlying IP (eg a patent) via a Trust. Tokens sold by the TBC would effectively represent a share in the IP, give a holder a % of the royalties earned by the trust.
By tokenizing IP on a bonding curve one could create a Netflix-like pay-per-use model for intellectual property rights, potentially more efficient than pirating it and then having to deal with the legal consequences.

A fascinating concept that, if legally implementable, could help inject economic incentives to open-source IP in the scientific realm, fuelling further innovation.
Vitalik on the trade-offs between Layer 1 and Layer 2 innovation.

The crux of this balancing act is crisply expressed in this sentence: "...blockchains would also need to choose between adopting activist governance, with the perils that entails, and falling behind newly appearing alternatives."

His argument is that layer 1 improvements should be focused on generalizable functions like consensus, latency etc with a view of minimizing the governance overhead that would result from unnecessary base layer complexity and ensuring developers have a stable platform to continue drive layer 2 innovation on. As layer 1 matures over time, he sees an increasingly larger share of innovation moving on to layer 2.

TL;DR: "...there is a certain minimal level of complexity that is required for base layers to be powerful enough for applications to build on top of them, and we have not yet reached that level. Additional complexity is needed, though it should be chosen very carefully to make sure that it is maximally general purpose, and not targeted toward specific applications or technologies that will go out of fashion in two years due to loss of interest or better alternatives".
In a natural follow-up to Vitalik's post, Rob from 500 pragmatically thinks it's time to focus on building usable products, as apps ultimately drive platform adoption. The risk of not doing that is platform oblivion:

"Remember Windows smartphones?  Windows smartphones had apps, but not very many, and their competitors (Android and IOS) had a lot. The apps determined the winner in this case and I think something similar will happen for Crypto."
The post touches on the increasingly relevant dynamics of PoS networks and how investors should think about the emergence of this type of yielding 'work' assets.

We have covered this topic in a couple of occasions lately, and with annual staking rewards expected in the $4-5B range by the end of 2019, this is only going to take more mind share going forward.

🎧 BONUS: A relevant podcast on the topic of the new role of investors in decentralized networks: a primer on crypto-native funds with Andrew Cronk (Figment Capital), Jake Brukhman (Coinfund) and Meher Roy (Chorus One).
Contributing to a network comes in different flavours according to the type of underlying asset. For bitcoin the dominant narrative is that hodling it constitutes extremely valuable work for a crypto assets that wants to replace money.

Here Dan Held sings an ode to hodlers, going through the history of bitcoin.

"Money is a winner-take-all technology, driven by network effects. The crypto with the most hodlers, therefore, is the most demanded by consumers and will be the ultimate winner."
A new paper by an anonymous author going by the name of Savant.Specter dropped this week making the case for a more accurate macro framework for evaluating crypto assets as a counter to the models proposed by Pfeffer et al.

It's a supply and demand model in which the most significant factor affecting demand is the number of units actively withheld (just as we finished talking about hodling...).

There's also a healthy debate going on Ethresear.ch.

Still digesting it.
On the topic of valuation, the Hasu/Liegl band are back at it after their excellent collaborative piece on a deductive valuation framework for crypto currencies.

This time they cover 'profit share' tokens associated to decentralized protocols (e.g. Siafunds) and argue that for their holders it's harder to capture value due to the absence of legal enforceability of ownership rights in case of forks. It will be interesting to see in practice what, if anything, will contribute to the defendability of rent-seeking mechanisms built-in in such networks at scale.
A monster 3-part primer on Web3 by team Coinbase. One to bookmark and send around when the parents ask what you are working on. 

It even features a chart by no other than our very own Stefano. Watch him brag about his design skills next...
As a counter to Coinbase web3 post above, here's a rather sobering view on decentralization from Todd of High Scalability (we missed it last week):

"...consumers simply do not care. Users use. Only a small percentage have the technical sophistication to understand why they may want to preferentially use decentralized applications for technical reasons. Saying "It's like X, but decentralized", does not resonate, especially when the services are not as good."

Todd thinks the possible catalysts for decentralization to take-off are the following:

1/ Complete deterioration of trust such that avoiding the centralization of power becomes a necessity.
2/ Radically cheaper cost basis.
3/ It becomes fashionable.
4/ The decentralization community manages to create clearly superior applications as convenient and reliable as centralized providers.
5/ Geographical isolation.

It feels that we are somewhat underway on 1 and 4, but as always we tend to overestimate the impact of tech in the short term...
Some financial documents on Bitmain's IPO leaked and Bitmex research team dissected them to death, highlighting how aggressive their strategy is.

The most juicy bits:
- they have been slowly divesting from their own mining operations
- they have overproduced and now sit on an inventory worth $1.2B
- they are making losses on sales of the L3 and S9 miners
- they hold $1.2B in altcoins at cost, including $900M (or 69% of its 2017 operating cash flow) spent on BCH. On which they are down >$300M.

Bitmex concludes that the rush to IPO could be down to desperate need for cash and/or a tactical move to weaken its competition. We suspect they will probably do just fine.
Speaking of miners. You might be wondering why Bitcoin hashrate has been steadily increasing to all time highs despite the negative price action year to date. This posts explains it.

Tl;dr: it has to do with the "different pace of hardware cycle and information structure in capital markets".
Closing off this week's coverage of the mining space, team Node Blockchain just published an in-depth report illustrating the positive externalities of PoW mining. It's on our (long enough) reading list for next week. 

The debate on PoW energy use continues with strong arguments being outlined on both sides. 
💥Newsy stuff
- Dash. Someone reached out after we commented on the social media rumours of Dash potential looming financial troubles last week. He wrote a detailed and well researched post (his 1st!) challenging that opinion. Gotta love this community.

- Filecoin. Finally an update after a long radio silence (they have been developing in a private codebase). It's very meaty. Mainnet launch now expected by Q2/3 of 2019.

- Square. It won a patent for a layer 2 type payment network that allows merchants to accept payments in any currency, including BTC. The impact that SQ will have on mass adoption of crypto currencies should not be underestimated.

- Institutional FOMO. BoA is the latest financial institution working on a custody solution for crypto assets, as suggested by a recent patent application. On the exchanges front, rumours are that the NASDAQ is preparing to go 'all-in' on crypto, pending regulatory guidance expected in Q1 2019.

- TRON/Bittorrent. The last episode of the saga is that as part of the acquisition it was agreed that TRON would invest $50K into Chia Networks. Details of the acquisition also suggest that Bram Cohen only made just over $10M from it.

- Apple store. Coinbase Wallet was forced to remove a NFT-based game from its iOS app because Apple...

- XRP army. If you are left with a bit of time to waste, scroll through this mind blowing scientific dissection of the XRP army Twitter graph. 
😎 Cool new projects
Swarm have unveiled their own version of a regulatory compliant protocol for transferring and trading security tokens, with OpenFinance being the first exchange integrating with it.

With multiple open-source standards being developed (e.g. Harbor, Zeppelin TPL), it will be interesting to see which will become more widely adopted.
A neatly designed web tool to create and manage crypto pools for investment purposes.

Not sure of the regulatory implications, but the team seems to suggest it's down to the pool creator to comply to their local legislation.
Origin Protocol have released an Ethereum-based decentralized messaging system to power communications between buyers and sellers, but available to anyone in the ecosystem as its been open-sourced. 
Lightning Network has a brand new minimalistic web and native mobile wallet interface, built by an independent developer. 

It takes some technical chops to get it going: it can be run as a server and accessed either remotely via a web browser or Android app, or locally on desktop through an Electron-based app. 
Christmas presents for the kids sorted.
A group of devs are working on building a better implementation of the Submarine Send, a particular type of Ethereum transaction that allows to conceal the sender, receiver, value and data until it is revealed in a later block (useful to prevent front running for example).

If you are a developer building on Ethereum you may be interested in this.
Decentraland are making it easier to manage, develop and transfer multiple parcels of land by grouping them together into NFT-based Estates.
Curated on a Product Hunt collection!
💰 New funds
A new crypto index fund hit the market this week, launched by Pomp's Morgan Creek and managed by Bitwise. 

Amongst other criteria, it claims to exclude crypto assets with large pre-mines where a central party still owns >30% of the supply, citing market manipulation and regulatory risks. But some of the inclusions caused several raised eyebrows. It lists: bitcoin, ether, bitcoin cash, EOS, litecoin, zcash, monero, dash, ethereum classic and omisego. Market-cap weighted and rebalance monthly.
💸 Funding rounds
DFINITY raised another +$100M, barely 6 months after closing $60M. A16Z Crypto and Polychain are the main investors.

They seem to be attracting some of the very top talent in the space and their ambitions are not short of ginormous, but yet we still can't quite get our heads around this cadence of 8-9 figure rounds at such short distance.

A16Z investment thesis is an excellent read though.
The founder of a successful Korean ecommerce business has closed a $32M round from a group consisting of some of the largest Asian crypto exchanges and other notable investors including Polychain, FBG Capital, Hashed, 1kx, Kenetic Capital and Arrington XRP.

The plan is go after no less than Alipay, by launching a stablecoin (effectively backed by investors capital and transaction fees) and getting it adopted across a network of large ecommerce websites who apparently have formed an alliance to participate in it.
Really cool investment by our friends at BlueYard, leading a $7M Series A in AirTM (refreshing to see a round with only one investor listed btw).

AirTM is on the widely quoted mission to 'bank the unbanked' with a p2p infrastructure powered by 'human nodes' and e-wallets allowing the exchange of any type of financial assets outside of traditional banking system. Starting from politically and economically unstable countries.
Congrats to MyCrypto team who have closed their first ever funding, with a $4M round participated by Polychain, Boost, Asum and Shapeshift. 

Be it a reminder that you can build something, get people to use it and then raise capital.
🤡 ICO madness
August update
(Courtesy of Tokendata)
$500M raised, mostly privately as usual. The largest raises (Hashgraph and tZERO) have been in the works for a long time, so they just happen to have closed this month. Otherwise the trend of the last 6-9 months continues.

The top 5:
1/ tZERO: Security Token Exchange ($134M)
2/ Hedera Hashgraph: Next-generation distributed public ledger ($100M)
3/ London Football Exchange: Football (soccer) community & marketplace ($71M)
4/ 4NEW: Energy trading platform ($45M)
5/ Grapevine: Database for healthcare data ($30M)

(we too had to Google London Football exchange)
Speaking of mad football related ICOs, Indigogo have done some cautious back-pedalling on the recently closed $5.2M token sale for the Fan Controlled Football League (FCPL).

The licensed broker-dealer that partnered with Indigogo to conduct compliant token sales (MicroVentures) cited the evolving regulatory environment as a reason for issuing refunds. Interestingly, FCPL founders had not yet banked the funds and were not made aware of the change of plans until the investors received communication directly from MicroVentures.
👮 This week in regulation
"Operation Cryptosweep" is actively ongoing behind the scenes. 

The NASAA announced that there are more than 200 active crypto-related investigations, resulting in 46 enforcement actions so far since May.
Finance ministers from the European Union’s 28 member states are meeting up on September 7th in Vienna to discuss how to regulate crypto across the union.

Wouldn't hold my breath...
An interesting map summarizing how inconsistently each US state applies Money Transmission Laws to the sale, transmission or transfer of digital assets (incl. crypto currencies). 

A clear challenge for any business or network looking to offer nationwide services from launch.
ℹ️ About us
Token Economy is written and curated by Stefano Bernardi & Yannick Roux.

💼 We’ll be looking for new sponsors from September. Get in touch!

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