Token Economy #6
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European Venture Retreat
As some of you know I moved to the northern Italian mountains a year ago. Now I’ve decided to organize an event so that everyone can come enjoy the Dolomites for a weekend.
Take a look at the program of the European Venture Retreat, happening in Seiser Alm on September 14th-17th.
There will be a solid crypto gang coming, including the co-founder of Aragon, as well as VCs from the top EU funds (confirmed Balderton, Hoxton, OpenOcean, and more).
🚨 Growing Pains
If you’ve been living under a rock, Parity’s multi-sig wallet was hacked, and a hacker stole a cool $30M worth of ETH. S/He was also able to liquidate some through Changelly.
This is from the company itself. Ouchy.
Other excellent detailed write-ups of the events:
The most fascinating aspect of it is how quickly and effectively the community came together to disarm the hacker, ultimately saving $180m from various accounts. No one came together organically so promptly to save JP Morgan from their 2014 hack, or Yahoo, Target or Adobe from theirs. Witnessing such a concerted community effort to save the network really builds up the long term confidence in crypto.
Nothing feels insurmountable. 💪
The Tezos Foundation raised over $220M worth of bitcoins and ethers in the recent ICO. A corollary to raising an insanely high amount of capital without needing it is that one has to then figure out what to do with it…so it came as a bit of a shocker that the best use of that capital is to invest it in STOCKS, BONDS & PRECIOUS METALS! Gut reaction: we came all the way to crypto land to then play with precious metals again, disappointing!
Upon further thinking though there is actually a rational sense to it, after all even high tech companies such has Google and Apple invest their balance sheet in highly liquid marketable securities. Treasury management is not a discipline that traditional early stage startups ever had to confront with as fundraising is typically based on milestones and ‘being liquid’ is the end goal rather than the starting point.
Crypto is really flipping the playbook. 🙃
Pretty sure you’ll have heard about this by now.
The main theory in various circles is that this is an inside job done by someone on the team. To be fair, it is the most easily believable explanation.
We still wanted to include it, and put in the growing pains section because I think it highlights something important:
we are still in the phase where most teams are either inexperienced or downright scammy, and the line is very thin.
Things will get extremely interesting as the pros step in. This is already happening in SF and Boston, but also London and Berlin, where everyone in the startup space is playing with crypto projects in their spare time.
📌 Token Economy
Nothing new here, but it’s always interesting to hear Olaf talk about how he sees the space.
The consolation here is that it seems no one really has any particular knowledge about what is going to happen.
It’s all up for grabs, and the important thing is just to be there when they happen.
He shares an anecdote about Andreessen not being able to answer a question about which sites would be created on the internet.
Vitalik illustrates all the parties and potential attacks in a crypto ecosystem and explains what the philosophy will be in Casper (Ethereum’s upcoming Proof of Stake model).
“The essence of Casper’s philosophy is this: for all four categories of attack, we want to put an upper bound on the ratio between the amount of harm suffered by the victims of the attack and the cost to the attacker. In some ways, every design decision in Casper flows out of this principle.”
The founder of Civic on building uncorrelated token assets.
His view is that tokens (vs crypto-currency tokens) will only be valued for their specific utility and won’t be correlated to the price of other crypto assets.
In our view, the correlation in USD terms to ETH and BTC will be strong for the foreseeable future, and that’s physiological as the price is usually expressed in crypto-terms.
What we agree with, is the rise of the token as a value model.
Aragon described the next piece of their distributed governance platform: the Aragon Network Jurisdiction. It’s a decentralised jurisdiction as a service to solve subjective disputes that aren’t accounted for in the smart contract. Fascinating.
This tweet resonated with the problem Aragon is trying to address here: “The biggest hurdle of Legal Smart Contracts: “as deemed reasonable”” by @ltnom.
Similar: we’ll also keep an eye on Kleroterion, a French project that has a similar aim to decentralise the justice system.
Meltem Demirors from Digital Currency Group talks about diversity in the blockchain space.
Women are around 17% of the blockchain workforce today, which is super low also compared to tech.
Bonus: super long list of women executives in the DLT space.
The newest release of the Brave desktop browser contains a beta version of Brave Payments, their BTC-based micropayments system that can automatically and anonymously reward publishers.
Last week Tokendata launched.
These projects are addressing the need for a transparent depository of accurate token info and data; they will do a great service to the industry and ultimately contribute to a much wider adoption.
🏅 Unsung heros
If there was ever any doubt, the folks at MyEtherWallet are absolute heros. If you are thinking of buying a hardware wallet do them a favour and make sure you click from the affiliate links at the bottom of the MEW site, or donate ETH/BTC if you are feeling particularly generous.
🤡 ICO Madness
Fintech-focused research firm Autonomous have released a very comprehensive 78-page report on tokens. It’s very data-rich and well structured. The chart above stood out showing not only the exponential growth in number of ICOs, but also the diversity of the projects being launched this year.
district0x is a decentralized commerce platform with this cool idea of decentralized districts.
They raised their target but there’s still more time to participate.
Filecoin is one of the most anticipated ICOs in a while, and the first to use AngelList’s new CoinList platform (developed together with Protocal Labs, makers of Filecoin).
We know many, many people that will invest, as well as funds.
There are some advisory investments going on right now, but we’re told without any discount.
😎 Cool new projects
Maecenas is creating a decentralized art gallery, democratizing access to fine art investment.
The most interesting thing about this project is that they seemingly found one of the first ways to truly tokenize equity, legally.
The token pre-sale is currently ongoing for this Estonian project that aims to solve the digital asset inheritance problem.
We were having this exact discussion in a whatsapp group this week, what happens to your crypto assets if you fall under a bus? Some left detailed written instructions, some have a duplicate hard wallet. Digipulse is working on a more elegant solution that integrates with existing wallet providers; it will have a slightly obscure dual coin structure: one usage token ($DGT) issued at the ICO and one ($DGP) passively minable token post-ICO.
If you haven’t read Richard Burton’s story, it’s worth it. He’s been building an elegantly designed open source personal finance app for the Mac menubar that connects via API to traditional financial accounts as well as crypto ones (starting from Coinbase).
They charge 10–25 ETH to plan, launch, market and manage a bounty campaign. Kind of the Hackerone for crypto. They also list existing bounty campaigns.
Acinq are releasing an android wallet for the Lightning Network on Bitcoin Testnet.
🙂 First they ignore you, then they laugh at you, then…
The London Stock Exchange Group Plc has teamed up with IBM to build a blockchain-based platform to digitally issue private shares of small and medium enterprises in Italy.
A big Wall Street name, the ex-CEO of Morgan Stanley, props up crypto currencies and discloses his involvement as personal investor (via Venture One fund) in Omega One, a project that aims to bridge the gap between Wall st and crypto.
Looks like Daimler is thinking of extending the adoption of the Ethereum blockchain to issue more private bonds and across other departments.
🎢 From the Trading Desk
$BTC rallied back up to c. $2750 from the lows of last weekend at $1800, marking the 3rd largest 24hr volume day of the past 12 months (c. $2.6B). As activation of Segwit, the most contentious protocol change so far in BTC history, seems more likely now that BIP91 locked-in, the market re-gained confidence ahead of August 1st, also fostered by positive news of South-Korea officially legalising the crypto currency as a remittance method.
The margined long positions, generally a good barometer of bullish sentiment, have been building up significantly since mid-July on the back of all that.
$ETH had its largest ever 24hr volume day last Wednesday with a whopping $3.2B traded. Interestingly a large chunk of it was on fiat pairs, suggesting perhaps that a lot of new and mainstream money entered the market (more than half of it from Asia).
Status ($SNT) had a terrific week, up c. 3.5x on over $200m in volumes traded. The market clearly liked their first update post ICO where they gave a glimpse of what they’ve been up to.
Interesting data point: the Status Slack channel is one of the most active in the crypto space, with a peak of 10k unique users around the ICO (it was temporarily shut down to prevent scammers to scam). Huge interest from China as always.
These folks, ex forex traders, are sharing their forecasts on a bunch of crypto currencies. Their models take into accounts a wide range of cues such as technical indicators, volume changes, book level movements, social signals and whales activity. They claim a 78% accuracy, though it’s not clear on what timeframe.
The popular social trading app for stocks has moved into crypto land. Let’s see if they can attract and aggregate the crypto social graph, which is already quite spread out across a variety of public and private channels.
This is the $BTC.X channel for example (it has got about half the message volumes as the $AAPL channel, not too shabby!).
💰 New Funds
This wasn’t announced, but their AL profile suggests Polychain has closed another $200m in capital. We understand Sequoia and Founders Fund have invested as LPs in the fund rather than in the management company (unlike USV/A16Z, even tho on the podcast linked above Olaf Carlson-Wee says they all are straight LPs).
Digital Developers Fund, a fund focused on high growth of digital assets such as domain names and crypto currencies, is raising up to raise $90 million via an ICO (11 days in and they are at 1% of target…).
Taas will provide their proprietary Crypto Audit technology as well as invest in the ICO to the tune of 300 ETH.
This VC closed-end fund was first announced on Reddit without much info, then site and whitepaper just went up (weird from a PR perspective).
It’s founded by a serial entrepreneur from Bahrain with fintech experience, with with advisors from 500 Startups, Techstars and Reof Capital. Based in Singapore, the are planning to kick off an up to $50m ICO for a Unit Fund Token that gives holders a share of the profit of the fund. 2.5/22 structure, focus seems to be early stage tech broadly. This is another example, like Blockchain Capital, of a liquid VC fund.
High-five to this man or woman who will no doubt be managing the smallest fund in the world (5 ETH in total of his own capital).
🏦 Legacy funding
Singaporean fintech startup Everex has raised $500,000 in seed funding from Chinese industrial conglomerate Holley Group. Its token sale, which kicked off today, is already at >$6m. They are building as Ethereum-based online payments suite, inclusive of cash transfer, micro-lending and crypto ewallet. Bit too much?
Not a VC round, but still the good old way of raising $! Billion is developing corporate e-commerce and content monetization solutions based on distributed ledger technologies. This is the first foray on Horizon 2020 into blockchain.
PS: We’ll be in Berlin on August 7–8, would love to connect with anyone local who’s working on or investing in blockchain technologies. Reach out on Twitter!
Please send links to include in the next issue, or any comments you might have on this one!