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🏛 MakerDAO Ponders the Unthinkable as Members Debate Incorporation and Paying Taxes
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NEWS Curve, the decentralized exchange known for specializing in tokens that should have roughly the same price, has launched on the sharding blockchain Harmony. There are rewards available for those who help it find a footing.
FAST ALTERNATIVE Harmony is a chain that touts itself as a fast alternative to other blockchains. It was founded by Stephen Tse, a Google alum who also previously sold a startup to Apple.
PEGGED ASSETS “A unique feature of Harmony is our bridges to Ethereum and Binance Smart Chain which are bringing in stablecoins and pegged assets from both ecosystems, i.e. ethBUSD-bscBUSD,” said the proposal from Harmony to the Curve DAO. “This creates a unique opportunity for Curve to support stablecoin swapping of assets from multiple chains.”
KICKSTART Binance, the world’s largest cryptocurrency exchange, has allocated $1 billion in funding to a new growth fund that aims to kickstart the next phase of expansion for Binance Smart Chain (BSC).
ACTIVE PROTOCOLS According to the announcement, $100M will be earmarked for talent development to enable a “new generation of crypto-native professionals to push crypto adoption forward.” Another $100M will be used for liquidity incentives for the most active protocols on BSC. DERI Protocol and MCDEX will be pilot participants in the program.
SPOT TRADING “My understanding is BSC would like to position itself as THE ‘trading chain,’” 0xAlpha, founder of DERI Protocol, a decentralized derivatives platform, told The Defiant. “In other words, DeFi (especially the trading part) will be at the core of their strategy. And this does not just mean spot trading like PancakeSwap but more so derivatives, as they have referred to Advanced DeFi in today’s announcement.”
In which Brady Dale explores the simmering discussion in one of the influential DeFi groups on the thorniest of topics…
CONVERSATION Should DAOs pay taxes? And, if so: Where? There’s a conversation underway in MakerDAO about how it should relate to the governments of the world, which has implications for the whole DeFi industry. In short, people are talking about whether or not MakerDAO should find a way to pay its taxes.
PAY THE IRS “I don’t think anyone here has the money to pay the IRS if they decide that Maker is a U.S. entity and decide to treat as income the $400+ million batch of tokens provided by the Foundation,” pseudonymous MakerDAO forum user PaperImperium wrote.
SINGLE JURISDICTION “My understanding is the only way around this is simply that Maker itself meet any claimed obligations,” the user continued. ”The first level of compliance is paying taxes — preferably in a single jurisdiction we choose now and not half a dozen that decide they can pick on a stateless DAO.”
ENGINE Dating back to around 2014, MakerDAO is thought to be the oldest project in decentralized finance (DeFi), with roots in the BitShares blockchain. Most people know it now as the engine that creates the decentralized stablecoin DAI. It functioned as a decentralized autonomous organization (DAO) — an organization that mediates all its decisions over the internet and a blockchain — before that was even really a concept.
In this essay, Philipp Pieper, the co-founder of regulated crypto exchange Swarm Markets, argues that divvying up NFTs may be a great way to make the assets accessible but the practice invites regulatory scrutiny.
LENDING PRODUCTS Fractionalisation of NFTs is a key development in a maturing market. These assets amount to more than just a craze for artists to sell digital art at sky-high valuations. Non-fungible tokens are also being used in sophisticated ways such as collateral for lending products.
VULNERABILITY Divvying up ownership of NFTs enables more people to hold a piece of the asset. Like with a lot in DeFi, it is unclear how top-tier regulators intend to regulate NFTs. However, ventures offering fractional NFTs to any investor may not have realised the regulatory vulnerability of these assets — in short, they are morphing from collectibles into securities.
MULTIPLE JURISDICTIONS You would be hard-pressed to argue how giving fractional ownership of an asset could not be classed as equity. This will no doubt trigger securities laws and enforcement in multiple jurisdictions, especially considering that Gary Gensler, the hard-charging chair of the Securities and Exchange Commission, has taken a broad view on what types of cryptocurrency offerings are defined as securities. U.S. companies offering fractionalized NFTs should school themselves on the law before regulators knock on their door.
🧑💻 🦄 🌈 NYC DeFi Hub: The Defiant has just launched Colony, a co-working space in Dumbo for teams building DeFi and Web3 to join and find a community. There are 20 desks in an open floor plan at a reformed factory building. Fill out this form if you’re interested in working there or sponsoring the space.
tl;dr: Today we’re unveiling Arbitrum Nitro, the next iteration of Arbitrum, which we’ve been working on for months.
Payments company Stripe has begun assembling a crypto engineering team to chart its future in digital assets.
Caroline Crenshaw, a commissioner at the U.S. Securities and Exchange Commission (SEC) has said the “safe harbor” proposal would have exacerbated the problems seen during the initial coin offering (ICO) boom of 2017 and 2018.
Bored Ape Yacht Club has been a big winner of this year’s NFT market explosion, with hundreds of millions of dollars’ worth of trading volume in a matter of months.
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Axie Infinity is Up 223x This Year: Here’s the Skinny on What’s Propelling AXS Since our last in-depth analysis of Axie Infinity almost two months ago the price of their AXS token has increased over 100% within a few weeks.
CyberKongz’ 13,000x Leap Spurs ‘Own to Earn’ NFTs But Regulatory Scrutiny Looms The lines are getting blurred between NFTs and DeFi. Bored Ape Yacht Club (BAYC), the Ethereum-based NFT collection that exploded over the summer, has announced that it will issue a “legally compliant” token in the first quarter of 2022.
XRP Holders to Get Huge Airdrop of New Blockchain Songbird Not only is DOGE a very good boy, its coin is about to be very smart, too — as in, smart contract-ready.
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🧑💻 ✍️ Stories in The Defiant are written by Brady Dale, Owen Fernau, Bailey Reutzel, DeFiDad and yyctrader, and edited by Edward Robinson, Bailey Reutzel, and Camila Russo. Videos are produced by Robin Schmidt, Alp Gasimov and Daniel Flynn. Podcast is 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