Token Economy #9 – Token Economy
Token Economy #9
Without any prior announcement, Vitalik dropped us a pretty nice bomb this week.
Joseph is best know for his work in ideating Lightning Network (which today announced feature freeze towards a quick release of version one ).
For the uninitiated, LN is a device that basically converts BTC into an actually usable payment method, by recording transactions in lightning channels that get reconciled to the main blockchain once in a while, instead of having to write every single tx to the mainnet.
Think of it like micro-payments for Bitcoin.
But Ethereum already has a Lightning Network-like protocol, Raiden, which implements the same mechanics.
So what’s the hype?
Plasma in a sentence:
The point of Plasma is that not only asset transfers are moved off chain to fresh channels, but now also utter wise contract computations can be moved.
The reaction to Plasma has been mixed, as there are many non-believers in child- and side-chains for security reasons.
Interesting things to think about:
– Ethereum vs Parity war?
– ETH holy trinity expanded.
– How will Plasma influence Cosmos and Polkadot?
Cosmos, with the Tendermint protocol, raised $17M in a very successful ICO, and resumes to ship like crazy.
Polkadot, mentioned above, is running a Filecoin-sized presale at the moment, so this will be a joy one to see.
– Could this influence projects like IOTA too?
We could see some specific IoT channels.
Whatever the case, the technical innovation going on in the space today boggles the mind. We are fortunate to be living in a time that will be remembered for all its fresh discoveries about decentralized consensus computing.
OmiseGo naturally shot up in price like crazy after the Plasma announcement. ($Two.75->$7)
Woah, wait, wait, wait, why are we talking about OmiseGo? And why would it go up in price?
You guys have to keep up with the politics, gossip, moves, etc!
Joseph Poon, who co-authored the Plasma and Lightning protocol papers, actually went to work for OmiseGo in June.
Are you as excited as we are??
So, say you weren’t aware of all of the above and missed out on having some cheap OMG (OmiseGo’s ticker). Well, not to worry — as long as you have an ETH wallet with at least .1 ETH, the OmiseGo team will just airdrop you some free coins.
We’ll all be getting it, and it will be 5% of the total token issuance. Very likely not worth it to create hundreds of wallets given the chain snapshot has most likely already been taken.
We’ve spent fairly some space in the last issue covering Filecoin.
We left waiting for a response from Protocol Labs about all the questions that their token sale had raised amongst prospective participants, but ended up empty passed.
Protocol Labs, after a petite Q&A where basically nothing got answered, proceeded to:
– switch the pricing for the very first hour: all contributions in the very first hours were to be averaged to obtain a final price.
– moving the sale from Monday to Thursday.
Stefano was on The Bitcoin Podcast’s latest scene explaining his views, together with Ryan Shea from Blockstack and Richard Burton from Balance.
In any case, the big institutional and wealthy individual investors who had pre-funded their AngelList accounts and/or had ETH ready didn’t seem to be particularly worried with the issues and pricing and embarked sending hundred of millions of dollars.
The sale nevertheless had fairly a few problems, with dual counting of transactions and continued downtime of the platform.
Filecoin had to pause the sale for more than two days, and it will be restarting at 11am PDT on Aug 12th.
The same day the ICO kicked off, Neufund added Filecoin to their ICOmonitor, the contraption they launched next week to evaluate ICOs on the basis of their transparency. Outcome: NON Semitransparent. Interestingly, it managed to get exactly zero green flags.
– there is no clever contract treating funds, fiat and crypto are centrally managed by Coinlist and there is no way for any outer auditor to monitor them. “You are as good as sending a signed transaction in envelope to Coinlist.”
– The SAFT agreement is such that one has to trust Filecoin to refund monies shall deadline for network launch not be met.
(Interesting comment about differences inbetween Sia, Storj and Filecoin, which we haven’t linked to before)
I hope you’ll excuse the somewhat negative stance here, but this still feels like a massively greedy endeavor to raise hundreds of millions of dollars for something entirely unproven that may or may not exist in a few years.
I think that this does not help the blockchain space one single bit.
If we see nascent projects raising these sorts of sums, everyone else will be incentivized (and justified) in going out and doing massive ICOs with just a white paper. We’re observing slew of this (you don’t want to look at our inbox, promise) and it is entirely unjustified and detrimental to the long term success of this technology.
We do want a lot of money going to decentralized computing development, but the $xxxM that went to Filecoin (+Tezos, +Bancor) could have gone to dozens of teams working on other technologies, and more money could have gone to these big projects when the product was live/useful/used/derisked.
When is the last time you felt you interacted with the future?
Well, today you’re in for a treat.
Leeroy is a decentralized, ETH based twitter clone.
Sure, it costs a fortune to use. You have to pay to tweet, retweet, go after, edit your profile, anything truly (and the developers don’t get any of that).
But, the gas cost of posting has been diminished by 84%, down from 173,000 to around 25,000 gas.
Sure, it’s slow as hell.
But, it’s immutable and decentralized.
Sure, it deep throats. But it’s the future.
If you want to spend some gas, you can go after us here: @ste & @yannick
The Reddit thread with comments is here.
The rumours have ultimately been confirmed, Coinbase is officially the 1st venture-backed ‘unicorn’ in crypto land. Investors, led by IVP, with participation from Spark Capital, Greylock Fucking partners, Battery Ventures, Section thirty two and Draper Associates, are clearly betting on crypto achieving mass adoption and on Coinbase being best placed to build a lasting brand in this space.
Investment will primarily go into customer service (never too late), growing GDAX and most interestingly building up Toshi.
The concentrate on GDAX’s NYC office suggests they are (predictably) positioning for traditional Wall street type institutional capital to flood the market.
However the concentrate on Toshi truly gets our hopes up that behemoths like Coinbase (feels indeed weird to say this having visited their office when it was less than a dozen people) don’t get too focused on the speculative aspect of the market (even thought that’s where the money presently is, and will stay for a while).
They want to “to help accelerate digital currency’s shift from speculative investment to global payment network.”
A few interesting data points:
- $1.Five billion pre money valuation (3x the valuation at Series C in early 2015)
- $206 million raised in total
- $25B exchanged to date, $15 billion exchanged in H1 2017, 10x growth in annual run-rate (putting Coinbase revenues in the $100-eds of millions).
Stephen McKeon, professor of Finance at U Oregon, illustrates the potential implications and challenges of the tokenization of all the assets. The last sentence is particularly thought provoking:
“As the world’s assets become increasingly liquid, the concept of ownership will evolve in ways we cannot yet imagine.”
This is also a monster bull case for decentralized exchange protocols (e.g. 0x).
Ryan Selkis (TwoBitIdiot) tells it like it is.
As you can guess, everyone’s has been asking us: “so are you launching a crypto fund?”
It seems like everyone and their dog is launching one, and Ryan has some ideas about it.
We entirely agree with the post, with one caveat: there is an chance if you are exceptional (like most things in life, I guess).
The definition of outstanding in our opinion won’t be limited to picking, and surely won’t be indexing, but will resemble much more a traditional venture capital model. That’s what we’re observing the pros do (DCG, Pantera, Polychain, etc.).
Takes hard work, skill on how to build communities, company building practice, and all the such.
The extra opportunities might be for:
– experienced commodities / stock traders that thrive in such volatile markets.
– scammers that can manipulate the market with all sort of illegal schemes until exchanges get regulated.
You can tell Lerer Hippeau Ventures has been doing some solid token thinking.
Here, Julian Moncada argues that VCs are in a excellent spot to proceed to sell their product even to the fresh, different customer-base of token-enabled projects.
“successful VCs will find a way to differentiate themselves by doing a lot of things they already do: providing investment expertise as a service and managing the operational challenges of community building. On a more granular level, I still have slew of questions. Very first and foremost, what’s the best way to economically structure a fund that does this?”
Muneeb Ali from Blockstack lays down a very ordinary 5-step token analysis workflow.
- Code speaks louder than words
- A team with relevant expertise
- Peer-reviewed technology
- Usefulness of the token in the protocol
- Organic interest from developers & enthusiasts
If you’ve been missing any of these points in analyzing a token, it’s a solid addition. Anything that doesn’t fulfill the above is most likely worthless.
Nick Tomaino writes about the difference in token types (work, usage, hybrid)
The interesting TL’DR:
“I am now of the belief that it’s generally far too early in the space for models and metrics to accurately quantify value. If fundamental value as described above truly underlies usage tokens, work tokens and hybrid tokens, they’ll create many orders of magnitude more in value in the future (orders of magnitude not typically grabbed by traditional analysis, much like early stage startups).”
This is a different post than Yannick’s “On Tokens Value”, which is identically interesting!
But earnestly, if you plan on trading crypto assets in the short-to-medium term, this is a fascinating read.
Attempting to untangle the Current Utility Value and the Discounted Expected Utility Value is a excellent exercise
Chris was recently on the Blockchain Insider podcast, worth a listen!
David Sacks doesn’t bashful off in explaining the revolution in the making.
1/ Crypto Capitalism is the fresh Venture Capitalism.
Two/ With over one thousand five hundred ICOs launched or announced, it’s becoming clear that any startup that can ICO will ICO.
Trio/ As more VC moves to CC, VCs will have to become CCs.
Four/ Traditional VC categories (seed, early, late, etc) get substituted with CC categories: pre-ICO and post-ICO.
Five/ Post-ICO VCs will have to contest with hedge funds. Not a good place to be.
6/ Pre-ICO VCs will need an angel-like value-add. Not a natural place for a lot of them to be.
7/ Ultimately the SEC will determine how large the category of who can ICO is. But it could be fairly large.
8/ Most VCs still haven’t packaged their goes around this disruption. More to come. //
If you still haven’t dug into Kik’s KIN currency and model, this is a very nice summary.
TL;DR: this one could be a game changer given that it adopts many proven dynamics already used in games and other apps, and most importantly could get youthful people interested in and used to the concept of crypto app coins.
Microsoft gets to play with Blockchain consensus and trust mechanics.
Coco is a framework for enterprise blockchain apps.
“The basic idea here is that you have a trusted box on which you can trust to put your blockchain code. That trust is established through instruments like Intel’s Software Guard Extensions or Windows’ Virtual Secure Mode — and because it’s an open framework, it can also support other TEEs as they become available. With these TEEs you can then build a network of trusted enclaves that all agree on the ledger and Coco code they are running.”
Coco is compatible with any chain, adds privacy and governance, and can be run anywhere.
Oh man, I thought we’d be done with taxes in crypto land.
That’s obviously not the case — so if you have the curiosity and tummy, this is for you.
For the neglected philosophical discourse, a fine excerpt from a presentation Elaine Ou gave at last week’s Blockstack Summit, borrowing the title from Tim May.
“We now have the technology to create and enforce our own rules, and this skill cannot be stopped. We can either rail against the unavoidable, or use these contraptions to build the world we want.”
$NEO (fka Antshares) has been on an absolute rip lately (3x in a week, 5x in a month). Known as the Chinese Ethereum, at $1.6 billion in network value this one could be running for a while longer. The article goes through the possible reasons.
SegWit locked in this week , but the NY agreement is still super fragile and we might have another fork in November
A sample post from the growing movement opposing the NYA.
TL;DR: Decentralized consensus and protocol building is hard.
We do like contrarian views here, so here’s one on Bcash.
- Police make arrest over London ‘cryptocurrency boiler room’
- SEC suspends trading in Ciao Group stock after the company announced a rather obscure ICO
- Bitfinex pulls out of the US market
In a latest note, Goldman Sachs points out that ICOs have surpassed angel and seed-stage funding for *all* internet companies since the beginning of the summer.
This is pretty incredible, must likely unsustainable at this tempo, but despite the hype, the scams, the regulatory uncertainty, the irrationality all around, it shows what can happen if one liquidates frictions from fundraising.
15k people registered for the 0x token sale
The process to register for the sale was built with Civic to minimize sybil attacks (once the registration period ended, 0x announced that it will no longer require Civic to purchase tokens on the day of the sale).
It was very effortless to go through it with MetaMask on my side.
Let’s attempt to figure out how much ZRX you’ll be able to buy.
Max cap is $24,000,000.
Say the 15k is about right (it is).
That means that individual allocations should range in the $1,500 range.
My speculation is that
10–15% registered people won’t go through with the sale for a multitude of reasons, and so I expect the allocation to go up to around $Two,500.
I also expect many people to buy less than the max, and so bring up the total buyable to
But we’ll have to wait for the sale on the 15th and the following days to indeed know!
Cool fresh projects
Like Digit, but for cryptos: round up spare switch and invest in BTC/ETH/LTC.
Homesharing protocol, from the creators of Bedkin.com. Coming soon.
Just during the 0x token sale registration period, ConsenSys came out with AIRSWAP, a decentralized exchange platform which implements the Interchange protocol, a decentralized peer-to-peer protocol for exchanging ERC20 tokens on the Ethereum blockchain.
Not much else is known atm. Token available in October.
Just an update here, but significant.
Sia now integrates with Minio, so that it can used as an S3 alternative super lightly by developers.
Glint, a stealthy London fintech startup has raised £3.1 million to tokenize gold ♂️
A suite of contraptions that make it effortless to buttplug a line of credit into any decentralized application (similar to a decentralized Klarna/Affirm). Launching on testnet in partnership with Metamask.
Very first they overlook you, then they laugh at you, then…
Fidelity customers who use Coinbase will be able to see their digital asset balances as part of their portfolio of investment accounts, directly on the Fidelity website.
Overstock were early in accepting bitcoin, and now they are the very first well-known retailer to open the door to other digital currencies via an integration with the ShapeShift.io API. Overstock customers spend about $50,000 a week with bitcoin, and that has not been growing much over time.
It will be interesting to see if suggesting other currencies creates an inflection point in user adoption of crypto for transactional purposes.
It seems that Bitcoin adoption has achieved critical mass in the Philippines, the third largest remittance market in the world (worth almost $30 billion), where Bitcoin was legalised by the central bank earlier this year. More and more merchants are commencing to accept it too.
Tezos keeps writing its own playbook.
This is interesting (and awesome) in many ways:
- Tezos is effectively a $232 million endowment with a tech arm
- The traditional fee-driven model of allocating capital (retail->LP->GP->Cos) gets turned upside down: retail investors give money directly to projects they believe in, who in turn allocate the capital to GPs or other projects that directly benefit them. Companies become the ultimate (and most efficient) asset managers. Crazy?
- It’s uncommon, but not unusual, for tech companies to become investors in their own platforms (see the Slack fund for example), more so if it’s in a nascent ecosystem.
Tokyo-based Coincheck, one of the Japan’s leading crypto exchanges, will embark investing in fresh startups with the launch of the ‘Coincheck Investment Program’, a fresh startup investment fund.
A very first, to our skill, for an exchange to launch a fund.
The ICO is run by Argon Group on TokenHub.com. Suggesting Memorandum to come out in September.
Super interesting threads inbetween Mike Hearn and Satoshi Nakamoto.
If you recall the Mike Hearn name, it’s most likely because of his massively collective post about “the resolution of the Bitcoin experiment” where he basically announced he was leaving the scene because of a centralized control dynamic from Core.
Mike’s ideas on the problems with BTC have certainly stuck around given the latest fork, but now the combined value of BTC + forks is above $4k..
Token Economy is written and curated by Stefano Bernardi and Yannick Roux.
If you’re building a fresh fundamental chunk of technology for the future, please reach out