🦄 Recap: DeFi Week of Feb. 7
Hello Defiers! Happy weekend!
This was the week that the real world caught up with crypto… It wasn’t regulation or taxes and, at least until de Friday close, it wasn’t a market crash. It was “cancel culture,” or to be more precise, the reckoning for people who post offensive comments on social media. In a finely tuned piece of writing, Owen Fernau explored how the crypto community is coming to grips with the hard balancing act between free speech and tolerance that’s been so hard to strike elsewhere. His story touches on some of the most hallowed values in DeFi — anti-censorship, the right to anonymity, to name just two — and how they may be challenged in the months to come.
The other big story this week was the Justice Department’s bust of two alleged money launderers who’d socked away more than $3.6B in Bitcoin purloined from the 2016 hack of Bitfinex. Mainstream news was all over the story, natch, but Brady Dale reported how Bitfinex’s LEO token soared in the wake of the arrests. Brady unpacked the dynamics at work in a story that provides Defiers with a fresh angle on what is the biggest token seizure of all time.
In this week’s podcast, Camila Russo sat down with Giveth’s Griff Green to talk about public goods and crypto-powered philanthropy. It’s fascinating conversation that shows an often overlooked dimension of the space — how blockchain can empower non-profits.
In the same vein, we were delighted to publish a guest column by Izzy Howell that argued for renewed campaign to ensure that web3 maximizes financial inclusion as it unfolds in the year to come. Prof. Andrew Hall also contributed a scintillating essay about the thorny governance problems confronting DAOs and how the lessons of two thousands years-plus of democracy might offer invaluable guidance.
And don’t miss the latest crop of videos from Robin Schmidt and his team. This week Robintook a look at whether Defiers are unfairly ignoring Harmony, delivereda tutorial on the riddle that is Squeeth, and dida takeon doxxes, hacks and bailouts.
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Our Inbox Dump newsletter, which is exclusive to paid subscribers, is where we include the updates and announcements that flood our DMs each week and didn’t make it to The Defiant’s content platforms. Sometimes announcements here didn’t meet the bar to become a news story, sometimes they may have slipped through the cracks, or they came late and we haven’t had a chance to cover. We also include a compilation of DeFi and crypto funding rounds in the past week so you have these in one handy place.
Griff Green is one of the co-founders of Giveth, which aims to build the future of charity using the Ethereum blockchain. It wants to become the gateway for non-profit organizations into web3, giving them the tools to grow their own communities via DAOs and crypto.
The primary source of revenue for any non-profit organization is donations, but relying on individuals giving voluntarily can limit their impact, Griff says. He argues a system that better aligns incentives can allow non-profits to have a much larger role in society, potentially even stepping in where local governments are failing. The big vision is for donors and volunteers to become akin to investors in an organization, and be rewarded for their participation too.
Griff also talks about his own fascinating journey into crypto, and how he went from keeping all his savings in physical gold to digital gold. He goes through the history of Giveth and how it was born directly out of the ashes of the famous DAO hack of 2016, and what the roadmap is for the organizations going forward.
In which Owen Fernau delves into the dangerous collision of crypto culture and societal expectations.
For years, crypto has floated along in its own bubble, replete with risque anime characters, profane observations, and lots of provocative opinions about politics and society. There was little concern about offending others and definitely no worry about crypto leaders being jettisoned from projects because of something they said.
That appears to be changing. On Feb. 6, True Names Limited (TNL), the non-profit behind Ethereum Name Service (ENS), terminated Brantly Millegan, the project’s director of operations, after a 2016 tweet surfaced in which he said “homosexual acts are evil” and “contraception is a perversion.”
After discussion with the ENS team, Nick Johnson, the project’s founder and lead developer, made the final decision to remove Millegan from TNS, according to a tweet by Makoto Inoue, also a developer at ENS. There has been a separate action taken which removed Millegan as a ENS community steward, a position which manages one of the project’s four working groups.
DeFi Deep Dive
Owen Fernau explores how SushiSwap, the popular DEX, is looking to creative solutions to its troubles.
SushiSwap has been whipsawed by busted deals and the departures of key leaders. And yet the decentralized exchange remains one of DeFi’s second-largest DEX by trading volume and now, a coalition of of other projects is rallying to get behind it.
A Snapshot proposal, based on a post from Sushi’s forums, is imminent, according to its author, Justin Bram of Ondo Finance, a protocol that bills itself as a decentralized investment bank. Ondo’s co-founder Nathan Allman authored the proposed changes. The proposal calls for another group of projects putting their collective weight behind Sushi to turn the project into a multi-chain DeFi force.
The proposal, called Poke Bowl, would formalize Sushi as an on-chain DAO, which means voting will trigger smart contracts to execute and establish a legal entity for the project. The move would take assets like the protocol’s Twitter and Discord accounts off-chain. Both entities would be governed by SUSHI holders, according to the forum post, which preceded the Snapshot proposal.
Guest writer Izzy Howell argues that web3 will fail to fulfill its promise if it doesn’t leverage DeFi to promote equality.
A recent report by ArtTactic revealed something startling about web3: for an industry that casts itself as an egalitarian panacea we still have a long way to go.
More than three quarters of NFT sales went to male artists, between January 2020 and September 2021, while only 5% went to female artists (the report also makes the point of saying that 16% of sales went to individuals of “unknown genders”). What’s even more galling is that 55% of all of the capital generated by NFT artists went to 16 creators – a result that shows just how exclusive this new world truly is.
CNBC and Acorn’s Invest in You: Next Gen Investor Survey is equally disheartening: Women are falling far behind men when it comes to investing in crypto, with a gender gap that exceeds the ownership of other securities. That includes exchange-traded funds (14% men; 7% women), individual stocks (40% men; 24% women), mutual funds (30% men; 20% women), real estate (36% men; 30% women), and bonds (14% men; 11% women). You get the point.
Prof. Andrew Hall writes that DAOs can solve thorny governance problems by looking to antecedents in the political world.
DAOs can reshape society by bringing democratic control to important economic and social activities previously governed through more hierarchical means. But as many people have pointed out, DAOs have not yet achieved their goal of true decentralization.
Participation in DAO governance is too low, and tokenholders often lack the expertise and time to make informed decisions. Many DAO decisions are taken by a small number of actors, and we lack formal mechanisms to ensure these decisions are aligned with the interests of the tokenholders at large.
As it turns out, these challenges are identical to the governance challenges faced by democratic societies in the physical world. Lessons we have learned from two millennia studying and designing democratic governments provide useful insights into improving DAO governance.
When it comes to the metaverse, one thing is clear: Big tech players are aggressively trying to grab market share. It isn’t just Facebook’s corporate rebrand to Meta. There’s also moves by Epic, Roblox, Microsoft, and other players jockeying for supremacy in this emerging realm.
The big question many are asking is whether the metaverse in the hands of Big Tech will lead to a dystopian, surveillance-based digital future.
There is hope for an alternative — a digital universe that enables genuine connections between people and empowers us to address urgent issues. Sadly, the key ingredient we need is sorely missing from Big Tech’s repertoire: privacy.
Gas Prices Slam Buyers in Cool Pets NFT Drop as Transaction Fees Soar 7,000% Demand for NFT avatars is showing no signs of slowing down. Collectors seeking to mint Cool Pets, the latest drop from the Cool Cats development team Cooltopia, paid extreme fees to secure a token from the project’s public drop yesterday.
Smooth Love Potion Soars 70% in 24 Hours Behind Axie Infinity Update Smooth Love Potion, a token earned by playing Axie Infinity, has been a white knuckle ride in recent months. In its latest turn, the token has soared almost 70%, to $0.034 in mid-morning trading U.K. time. The momentum pushed Smooth Love Potion’s (SLP) market cap to $1.1B.
Gnosis Votes on Whether to Spin Out DeFi Infrastructure Project as Independent DAO In a move that could change the structure of one of the most important pieces of DeFi infrastructure, the community behind Gnosis is voting on whether to spin out Gnosis Safe, its popular multi-signature digital asset management platform.
Bitfinex’s LEO Token Explodes after US Seizes $4B of Bitcoin Lost in 2016 Hack A token most people in crypto haven’t thought about since it launched in 2019 just rocketed up in value and the moves actually make sense once you dig in.
Anchor Asks Terra Foundation Guard for $450M to Shore Up Dwindling Reserves The community for Anchor, a Terra-based stablecoin money market protocol, is discussing the project’s future as revenues continue to fall short of the roughly 20% yields it promises depositors.
Scramble for Spots on Lucrative NFT Whitelists Sparks Grind-to-Earn Trend Getting on the whitelist for a hyped NFT drop can mean tens of thousands of dollars in profits. But with new projects launching daily and whitelist requirements getting more arduous, some NFT collectors and flippers are looking to outsource the task.
Aave Team Launches ‘Decentralized Social Graph’ With Lens Protocol Venture Today’s announcement confirms what we previously reported: Lens Protocol is a new social media effort from the team at Aave, the money market that first launched on Ethereum.
Market Action: Terra Jumps 7% to Lead Rebound in DeFi Names The DeFi markets have surged to post an emphatic recovery from January’s lows despite lingering concerns about heavy-handed regulation.
From Airdrop to $307M in Revenue in 30 Days — LooksRare Surges Past OpenSea in Torrid Month Maybe it’s the decentralized architecture? Or maybe it’s liquidity mining. Whatever the cause, LooksRare, the newly launched NFT marketplace, pulled ahead of the centralized market leader, OpenSea, in terms of protocol revenue almost immediately, according to data site TokenTerminal.
Thanking all the amazing Defiers for the support and love this week (and always)!
The Defiant @DefiantNews🎨Over 75% of #NFT revenues from Jan '20 to Sep '21 went to male artists, according to a report from @ArtTactic📊 55% of revenues were earned by just 16 creators. @izzyhowell__ says the time has come for web3 to make good on its promise of inclusivity👇 https://t.co/khc3g7UUGp
The Defiant @DefiantNewsEthereum OG @thegrifft wants to super-charge public goods by turning non-profits into DAOs and donors into token holders. If you introduce market forces to charity, you're bound to get better results, the @Givethio co-founders says. Video here: https://t.co/C2tqyATyjy
The Defiant @DefiantNews🤔What is DeFi 2.0? The next iteration of decentralized finance aims to address some of the problems faced by current projects: 💱Liquidity 📈Scalability 🔒Security 👨💻Centralization 🔎Oracles Read more in this primer from @masonmarcobello👇 https://t.co/KzYDjUwYjE
Metis @MetisDAO🔊 Tomorrow! Join us for a Spaces with DeFi change makers @ElenaCryptoChic, @Natalia_Ameline, @Mashinsky & @CamiRusso! 7:30pm ET on Twitter Spaces 🗓 Set your reminder using the link below👇🏼👇🏼👇🏼 https://t.co/vtV7KTEqoU https://t.co/a0KlzrHTFi
🧑💻 ✍️ Stories in The Defiant are written by Brady Dale, Owen Fernau, Sanuel Haig and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access, while free signups get only part of the content.Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($15/mo, $150/yr.