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🤿 DAO Dive: Wyoming Haven News, Ecosystem Map, and Governance Token Explainer
Hello Defiers, here’s what we’re covering today,
We’re going deep into DAOs (decentralized autonomous organizations) —the automated, on-chain, way to organize humans. In short, corporations of the future:
Plus, ETH’s wild week,
BSC shenanigans and other news,
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The DeFi Pulse Index, a capitalization-weighted index that tracks the performance of selected DeFi assets across the market.
Be Sure to Check Out This Week’s Video Content👇
DAO SPECIAL: LATEST NEWS
TLDR Governor Mark Gordon signed bill SF38 into law on Wednesday, making Wyoming the first state in the country to address the legal treatment of decentralized autonomous organizations, or DAOs. SF38 addresses liability concerns around DAOs by applying a limited liability company (LLC) status to them, effective July 1st.
PARTNERSHIP Typically, DAOs would be considered a partnership – a different type of legal structure that does not have the limited liability of a corporation. Moreover, members in a limited partnership have a fiduciary responsibility to one another, meaning – in a nutshell – they have to put the interests of other people before their own.
“The law presumes that if you’re pooling together capital and coming together to make a profit, you’ll be considered as an implied partnership,” said Aaron Wright, a professor at Cardozo Law School and Co-Founder of OpenLaw.
LIMITED LIABILITY This new legislation limits that individual liability and specifies whether the code or the paperwork filed with the state would take precedence, creating procedural clarity for projects.
DAO SPECIAL: BASICS
Kevin Nielsen of Boardroom writes an in-depth introductory piece on what DAOs are, why they are important, and what the ecosystem looks like today, including the different projects and their categories, and the infrastructure stack. It should be the starting point for anyone wanting to learn about this radical new way of human coordination.
DAO SPECIAL: BASICS
Jake Ryan of Tradecraft Capital writes an introductory oiece of governance tokens, the tools that allow individuals to participate in DAOs via governance, gain exposure to a protocol’s success, and sometimes even directly benefit from their revenue. The piece dives into the different characteristics that make governance tokens valuable.
TLDR It’s been a wild week for the DeFi traders, with ETH experiencing a mini bear-bull cycle over the course of just a few days.
WILD RIDE After reaching a then all-time high above $2,500 last week after Coinbase was listed, ETH took a dive over the weekend hitting lows just above $2,050. But this week, ETH has rallied back to a new all-time high of $2640. Ethereum’s cryptocurrency has retraced some of those gains and is now trading at $2,287.
ETH/BTC While both ETH and BTC have hit new all-time highs in 2021, Ethereum has been growing at a faster rate, with ETH climbing 213% year-to-date, compared with BTC’s 68% increase. The difference has driven the ETH/BTC ratio to climb to 0.048, the highest since 2018.
FUNDAMENTALS Regardless of daily price swings, less flashy metrics paint a promising picture of ETH’s growth. Wallet addresses, number of daily transactions, and ETH trading volume have all been steadily increasing.
TLDR Safemoon, a Binance Smart Chain token, soared by 16 times in the past week driven by TikTok videos, only to immediately whiplash holders as it went on a dizzying ride that has halved its value.
TIKTOK SHILLS The all-time high was fueled by Zoomers shilling the token on Tik Tok. The posters claimed to be millionaires and billionaires thanks to their Safemoon holdings. Owning 10M of the token at its peak meant owning $93 of SAFEMOON.
NO USE CASE The Safemoon website’s whitepaper section lists three main features of the protocol, which show the platform’s only use case is to provide mechanisms to manipulate the token price.
TLDR PancakeSwap, the leading Binance Smart Chain application in terms of market capitalization, blamed recent performance woes on an overloaded blockchain.
“No, #PancakeSwap isn’t slow, BSC is just overloaded right now,” the tweet said. “We also have an ATH number of people using the site.”
BLOCK SPACE DEMAND The increased demand for BSC block space appears to be the culprit with daily transactions hitting an all-time high of 8.1M on Tuesday, and Wednesday at 9.1M.
EARLY GETH FORK BSC is a fork of Geth, itself an implementation of Ethereum, written in the Go programming language. BSC is suffering from arbitrage bots spamming the network with transactions, Andrei Anisimov, previously a Senior Software Engineer at Coinbase, said in an interview.
“Ethereum experienced similar problems during the DeFi Summer, which prompted the core devs to introduce time-based transaction ordering,” he said.
DIDN’T UPGRADE Core developers merged the feature into Ethereum’s protocol in July, before BSC was released, but BSC forked Geth prior to the pull request according to Anisimov. Because of the fork’s timing, BSC is not ordering same-price transactions chronologically, but randomly, in the mempool where transactions are picked to be integrated in the blockchain.
TLDR Ampleforth, the rebasing token which aims to create a currency with stable purchasing power by programmatically managing supply, has launched its FORTH governance token. Anyone who has interacted with AMPL, the stable token, can claim FORTH tokens.
“Due to stETH’s vast network effect and the fact that decentralized pools can be both non-custodial and possibly earn more revenue from MEV, we see it as likely that a single such decentralized pool can win the whole market. As a result, we should be focused on making sure a non-custodial and robust version of stETH wins the market instead of a centralized one, to ensure a good systemic outcome.”
“Today, DexGuru is excited to announce a $1M financing round led by ParaFi Capital to develop a Web3 trading platform that helps traders analyze data across major EVM-compatible blockchains.”
“Layer2.finance is a novel solution that allows people to access all existing DeFi protocols at a fraction of the cost by acting like a ‘DeFi Public Transportation System.’ With Celer’s advanced layer-2 rollup technology, multiple people split the cost of individual layer1DeFi transactions in a completely trust-free and non-custodial way. Enabled by a unified strategy abstraction, Layer2.finance’s community-built and community-hosted “turn-key” UI provides a simple one-stop-shop experience for users to navigate the increasingly complex DeFi landscape.”
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🧑💻 ✍️ Stories in this newsletter were written by Dan Kahan, Owen Fernau, Kevin Nielsen, and edited by 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).