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Uniswap and no-free riding
We’ve been reflecting a bit about Uniswap lately, admiring what they have achieved so far and the elegance of its design. No token, no VCs, no hype. This by Cyrus is a great primer on it, if you missed the note. 

So here’s a summary of those mostly unstructured ramblings…
(Note: I had to update this screenshot taken on Friday ago as over the weekend ETH locked up in Uniswap shot up from 7k to >10k!)

One aspect of Uniswap that fascinates us as investors is that, in its current form, it’s effectively “un-investable”, as in there’s nothing for an investor to invest in. To be precise though, there is one way to gain financial exposure to its growth, and that’s what makes it so unique: anyone with capital can provide liquidity to Uniswap pools and earn fees from that activity. Capital is the product itself (liquidity in this case).

Which led us to wonder whether there are any other projects, assets, entities, organizations, companies etc. out there where the *only* way to gain financial exposure to is to directly participate in the product, or at least that got off the ground in that fashion. We could not think of any, certainly not from the ‘real world’. 

Take listed equities for example, you can just buy Apple shares and sit on them, you are not required to do anything. Same thing for unlisted equity. 
For something like Lending Club, you could be lending to the marketplace yes, earning interest from it, but you can also just own its shares and do nothing. 
Moving on to crypto, the same goes with virtually any crypto asset actually: you can just hodl your way to the moon without having to do much at all (other than having good opsec). BTC might be the only exception here (and that might be the key), where in the very early days you could only get one by mining, in absence of secondary markets. 
#Defi dapps like Compound, dydx/Expo, Lever etc. all have investors who can just sit on their equity or SAFE and be passively exposed to their growth in value. 
There’s a lot of talk about “generalized mining” or “active network participation” in crypto these days, where investors get actively involved on the demand or supply side of the networks. But again, that’s not the *only* way to gain exposure to the underlying network, and more passive investors can still just free ride on the more active ones (a simplistic take for the purposes of this post, but in part true). [1]

Point being, most traditional investing has free riding built-in by nature. Sure, it’s not technically free riding as capital is still being put at risk and good venture investors actually do work for their companies, but you get the point: capital is not the product, at best it indirectly helps build the product (e.g. in primary markets like venture).

You can’t free ride Uniswap. It’s an open source public good that lives on its own thanks to its internal incentive mechanisms, deliberately built with no rent seeking features to optimize for user adoption. The trade-off, and perhaps the subject of another post, is that it’s not immediately obvious how to fund it. Having investors on your cap table demanding a return, having sold a token or simply being incorporated as a company in some jurisdiction are all decisions that, directly or indirectly, eventually result in frictions for the end users. 

So what Uniswap shows is that those sorts of structural decisions prone to free riding, that normally constitute the genesis of a project, can be deferred to post product-market fit, and beyond. And more generally that with crypto one can bootstrap a network without relaying on legacy incentive structures, even without a token! So far Uniswap has been supported by generous grants from Balance and the EF, but given the current trajectory it could definitely do with a more sustainable funding stream.

[1] Bonding curves and DAOs are potentially free riding-free structures akin to Uniswap, however we’ve not seen one like it in the wild yet, certainly not with the sort of traction Uniswap has.
🔥Must read this week
Featured on Token Economy - Fantastic piece by Dan Elitzer where he describes what could happen if the idle collateral locked up in open finance became itself a source of additional liquidity.
Ethereum Community Conference is back on March 5-7th in Paris for its 2nd edition, and we'll be there!

The week will be filled with side events for Paris Blockchain Week and close with ETHParis hackathon over the weekend.

PS: big props to Asseth for putting this together again. If you want to volunteer to help out with the logistics and organization of the conference, here's the application form.   
Great episode of the a16z podcast, featuring Chris and Joel from Placeholder and Jesse and Denis from a16z Crypto. It dives into goes deep into cryptonetworks design and learnings from real-world economies and monetary policies.
More from Placeholder, who share their thesis for investing (predominantly) in middleware protocols: they believe it's a best way to be exposed to the asset of a layer-1 smart contract blockchain (eg ETH), while providing a hedge via interoperability if other smart contract platforms gain traction.
Jack from Polkadot explains their value proposition in a clear and succinct post.

Essentially, believing in Polkadot means believing in a polychain future where instead of just deploying an ETH smart contract, a project would spin up its own blockchain, with its own rules, all secured by the Polkadot network and in communication with other chains thanks to the relay chain and other parachains.
Richard Chen from 1confirmation uses macro-economic theory to outline why strong monetary maximalism is likely to fall short and why the best outcome for crypto currencies is to keep centralized financial infrastructure in check.
😎 Cool new projects
This is cool.

It's a one-way plasma implementation to scale one-to-many payments.

Monoplasma itself was developed to split incoming revenue amongst potentially hundreds of thousands of data producers.

It was used at ETHDenver to send out payments to 100,000 addresses in a few seconds.

One-to-many payments in the future DeFi world will be ubiquitous, especially with intelligent routing based on smart contract rules (think in DAOs, DeFi lending platforms, tokenized real estate, etc.). Some use cases for monoplasma include:

- Revenue sharing
- Dividends
- Frequent airdrops
- Loyalty reward schemes
- Pension + benefit payments
- Payroll

Smarter people than us have noted that this is very similar to what Livepeer did with the distribution following their merkle mine, saying that this is mostly marketing with not that much new usable tech by dapps.

Would be cool to have some more info on this out soon
First 0x community governance vote for 0x Protocol with the ZEIP-23 which would bump 0x to v2.1 and allow for baskets of tokens to be traded on 0x, as per suggestion from the OpenSea team.

The post is SUPER detailed on the technical architecture, but the easy TL'DR is that "MultiAssetProxy (MAP) is a smart contract that adds the ability to trade arbitrary bundles of ERC20 and ERC721 tokens via 0x protocol."

Pretty cool.
Cool piece of development infrastructure from Zeppelin.

Zepkit is a tool to test smart contracts locally and includes Truffle, an Infura config and a React UI.
Coinfund have crystallized their generalized mining interest and activities with a dedicated initiative brand and, presumably, legal structure called Grassfed Network and a partnership with Placeholder to run a Decred staking pool.

CoinFund is active on Livepeer, Steemit, Compound at the moment with NuCypher and GEO Protocol coming up soon. 
At this moment this seems to the the only explorer for Uniswap liquidity pools (this other tool showing liquidity by token pairs, providers and ROI is pretty cool too). 

Looking forward to seeing more tools focused on liquidity providers.
New ZCash android app with a WalletConnect-like feature with their desktop app.
Cool new take on the hardware wallet by Status, which has designed the Keycard - a credit card like NFC hardware wallet that can be used with their android app and has an API for developers to integrate.
Dharma has finally unveiled their Lever product, which allows to trustlessly borrow and lend crypto assets. It is now open to early access and looks absolutely gorgeous from the screenshots, setting the bar high for open finance UX and UI. 

We look forward to giving it a spin.
Cool idea. This browser extension places a tippin.me button next to each tweet (only on twitter.com) so you can send Lightning Network tips to Twitter users.

It also supports Joule, another extension that manages your own Lightning Network node, so if you have that installed you don't even need to scan a QR code.
Some extremely needed ETH infrastructure coming.

Vipnodes are full nodes that open light node spots and are compensated for that.
Now any full node can join a vipnode pool and start earning proportional revenue from serving VIP subscribers.

Very cool stuff to help us all get off the Infura addiction.
This got first place at the recent 0x + CoinList Hackathon. 

It's an app that allows nearby users to exchange digital assets trustlessly with each other after after agreeing terms in real life (it leverages Apple Connectivity to search for the devices nearby).
This was sorely needed.

Dexpay is a Point Of Sale for physical stores and online shops that accepts Ether and many other coins and converts them instantly to DAI so merchants will never have to worry about volatility again.

Order Domino's Pizza over the Lightning Network from anywhere in the US. Get 5% off, ~30 min delivery and <1¢ fees on all orders. Made with love by Fold.

Python to the rescue!

As a frustrated observer of Javascript's rise in past years, I can't be happier when I see similar projects.

Benjamin rage quit and started developing a Python framework to develop Ethereum smart contracts.
Curated on a Product Hunt collection!
💰 New funds
The virus has finally spread. 

Pomp's relentless contamination efforts bore the sweetest fruits, with two public pensions (Fairfax County, Virginia’s Police Officer’s Retirement System and Employees’ Retirement System) anchoring Morgan Creek's latest $40M crypto venture capital fund. Other LPs in the fund include a university endowment, a hospital system, an insurance company and a private foundation.

Remarkable achievement getting this sort of capital to dip toes into the industry. 🚀🚀
💸 Funding rounds
The blockchain analysis company has closed a $30M Series B round led by Accel. The company has known no bear market, with its revenues 4x-ing in 2018 and over 100 customers.

The funding will go into opening up a R&D centre in the UK, as well boosting product development and possibly some M&A.
dLab, the NYC-based startup accelerator SOSV is running with Emurgo (Cardano's ecosystem fund), has announced its first cohort of 4 startups:

- Catallact: a blockchain analytics engine for the finance industry focused on market intelligence and regulatory compliance.
- Helixworks: MoSS technology that integrates DNA-based ID tags to physical goods.
- Sempo: a platform for efficiently getting cash-aid to people affected by humanitarian crises. 
- Tesseract: developer tools to standardize and streamline the way applications interact with blockchains.
In a very weird press release we learn of a new 25 million USD blockchain fund from japanese Recruit Holdings.

One of the investments made is in BEAM, in an unclear round.
ℹ️ About us
Token Economy is written and curated by Stefano Bernardi & Yannick Roux.

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