Analysis of 0x protocol:
https://twitter.com/AntonioMJuliano/status/1070772101026480128

- FYI they recently released 0x Instant
- The architecture does not focus on bringing liquidity, which is the biggest problem among DEX’es
- ZRX token economy cannot capture value (trannoscript: yes, it is essentially a shitcoin from the use case perspective)

Is there a way for charities to create viral donation mechanisms with inherent network effects, that maximise both the amount donated and the number of people donating?
https://tokeneconomy.co/on-bonding-curves-and-charitable-giving-9bf74b9343d2

Token Economy strikes again.

Explaning what can be changed in charitable giving with the introduction of bonding curves (also explains that). Essentially, part of the money - about 10% - you contribute (let’s assume it is ETH) will become a liquidity pool. And as more people contribute to the smart contract, the more it will be and the more the price of an item will be. So early adopters are rewarded.

What I fail to personally understand is how this model is supposed to not encourage ponzi-style behavior. Let’s discuss @cryptocodereviews

Generalized mining - the next step towards UBI (universal basic income)?

Summary: generating token rewards for doing micro-tasks or services for the network. Like providing storage, or completing some tasks in order to get tokens (Livepeer) - to kickstart network growth (does not mean adoption though). Probably not suitable for funds as an investment model (LPs just want to see moon).

Article: https://tokeneconomy.co/generalized-mining-the-lps-perspective-f5dcbd0ed4e0
Good twitter thread: https://twitter.com/nlw/status/1070522881292070913
Great list of sources: https://messari.io/resource/generalized-mining

​​​​Token incentives

I finally got myself to do what I have been trying to start for months: research token economies in a more structural manner. Every day I keep getting more convinced that this space is not as much about the pure technology, but more about token economy designs, meaning economic incentives. That’s what makes the thing function!

Have you seen projects do great tech and being somewhat adopted, but their token does not reflect the progress at all? That’s it. Of course, we are still in the birth stage of that, but it is imperative to make sure that we design the systems in such a way where a token is imperative. That is subjective, but we are trying ^^

And it’s so clear that nobody really gets this at all, which what Coinbase proved yesterday as well: adding tokens not based on what they are about, but based on the companies behind them, which is absolutely ridiculous considering what people buy is actually actually a token! This is not equity guys, that’s not how this works

We will look at different projects, try to re-design their token systems, and figure out how to make people do what we want without external control and trust, like it is done nowadays. Researching articles and documents, figuring out game theory, looking at all interesting game designs and so on. Token design is the most fun thing, join us! t.me/tokenCODE

The role of a VC in crypto. What have we been jerking off to in 2017–2018?

There is already another good article on this, have a look at it. I will restate some of the misconceptions and hopium doses people usually take when they see big VCs.

First of all, let’s understand what a VC is. A high-risk investment arm investing in risky startups to find the next gem and profit from that. Out of 10 investments 7 will die, 2 will stay ok-stable, and 1 will outperform everything. Their model is to give money to teams and make them burn-burn-burn to exhaust themselves completely. For VCs that is normal: they have LPs, they need to make money. Don’t confuse yourselves. Again: they need to MAKE MONEY. Don’t go against nature and call an apple - a pear. It’s what they do.

Crypto VCs are different. First of all, they are not being managed by really experienced people. It’s because being experienced in blockchain is hardly possible, it started not long time ago. These people just mooned on some coins and decided they know evetything. Ask any project how VC calls go: those guys never did anything around IT probably, complete misunderstading. ‘What is your TPS’ - is a normal question there. Any developer would fok you in the eye if he heard such a thing. But the most important thing is the time to liquidity. You don’t have to wait 5 years to IPO, you wait just 1 month. You don’t need to work with the project and bring adoption there. You unlock and sell. Because again… VCs are here to MAKE MONEY.

So the usual VC approach of ‘extract all potential asap’ in a normal world, which is already very toxic - gets multiplied by the low time to liquidity. So here is what you end up with.

(fak this is already getting too long sorry)

VCs make pools and kill investment interest
VCs manage big money, if they make even 20% it’s already good. They just resell allocations to hedge their risks. A reputable top-3 Asian fund literally said ”We get in at seed for 2 million, how do you think we can liquidiate that on the open market?! We give allocations with a fee to our friends at private sale rates”. This kills investment interest on the secondary market because everyone who wanted to get in - already holds a bag. Polychain is no exception. I guess only A16z does not OTC, but maybe even that is wrong. If you see a pool, it’s not the project’s fault, but it’s the OG crypto VC.

So what can a VC potentially help with?
No1: resell your bags to lower food chain VCs -> so there are more big names => pump it
No2: make crypto events (those are 99% of the time useless, because nothing happens at events - except No1) -> so there are more hamsters => pump it
No3: introduce to exchanges (this is pointless - an intro cna be made by anybody, good exchanges cannot list 10 projects those vcs invest in monthly) => pump it
No4: introduce to influencers (by giving them a part of their bags) -> so there are more hamsters => pump it

There are some legit VCs though, but very few. Most are US based. CoinFund does cool research: like what a VC can do that is helpful to projects: that is generalized mining, for instance, but that might not be possible actually. Anyway, the interests of someone who believes in the project or who does not want to flip, probably do not align with the interests of a typical crypto VC. It also depends on WHY they back up a project: if they would not want to get in with no bonus or a longer lock-up, then they are backing it up just to flip and not because they actually believe in a project’s growth.

Web2 vs Web3

If someone has to pay for gas costs on a decentralized network, and that someone isn’t the people using the service, then who will pay?

🤔 bit.ly/2PCgCf9

​​Koreans have saved us yet again… Chicken airdrops 🐔

So you know how airdrops are usually done, right? You get bounty tokens and whatnot for social activity. But Koreans revived this market - they are aidropping chicken to the most active community members. You heard it right: for social activity they give you food. This is just next level. Talk about UBI (universal basic income) - this is it!

ETHalik comes. ETHalik sees. ETHalik gives ETH to those in need. Incredible community support!

twitter.com/vitalikbuterin/status/1075181710730506240?s=21

”Clickbait has become so prominent” and here I am using it - to show what web2 started with and what it has become. About subnoscription economy, clickcbait ads and so on. That Stellar shill at the end is uncaled for though. But it’s interesting to see the narrative of the past and see what we are doing today when we say “oh, EOS is usable, it’s fine”…

Also have a look at the previous post about web2 vs web3.

Think about it: every video, every article you read - has some brand mention or focuses on either directly or indirectly sellign you some stuff. Spin back the last few articles you read and the last few videos you watched. Makes sense now, right? Now think of what scaling such a system would turn into.

Discouragement Attacks

Here is a possible alternative ending: once everyone but the attacker leaves, the attacker slowly exits their validators until only one validator remains… 💠

A step-by-step guide on becoming a crypto maximalist.

Best Christmas wishes u ll hear 🎄

https://twitter.com/nlw/status/1076846190883454976?s=21

Talking about trends: today’s guest is NFT

NFT is a non-fungible token. A unique asset - only one of a kind exists on the blockchain, it’s authentic. Think CryptoKitty.

So people started jerking off to NFTs a few months ago. Which always seemed confusing to me. If I just make something scarce, but it has no utility - it will still not appreciate in value. If I make IvanCoin, and burn 90% of the supply - it won’t go x10, because there is still no utility for it. Not even an imaginary perceived value (emotional value people attribute to coins quite often called HODL). For an NFT to really shine, it first needs to represent or acquire that ‘collectible’ value. Again, the blockchain does not solve cancer. There is no default value in NFT.

Think of MTG. One can think that only the physical cards have collectible value since you can touch and feel them. But no, MTGO (online cards) have that too. So do PokemonGo avatars. But that was about transposing the existing user base into the digital world - and making the value travel there. There were already people collecting those things, and then they started attributing value to it. That happens quite rarely, it’s not easy to replicate such a phenomenon. It was not just a no-use-case NFT created from nothing.

So here you go, two nice tech/conceptual rants about NFTs.

ONE & TWO

www.opera.com/dapps-store

Shiiit this looks quite neat! Still need to try it out, but looks pretty cool. Not actually using Opera, but maybe will switch to it. (where is my brand contract huh?!)

Governance tokens: Melonport, 0x, Maker, Aragon

An awesome article about governance and most popular governance tokens. It’s just so on point! 🔖 The maximum price a network participant (maybe a relayer) will pay for 51% of governance tokens is bound by the cost associated with a network fork. Cost is equal to the difference between the net present value of the pre-fork and post-fork business.

The most obvious problems with governance tokens:
1. Plutocracy. Governance tokens which have only coin voting mechanism in place are like pre-selling a new cartel system (the first ones to grab the supply win). So since we moved away from nodes implementing all the changes, and give the power to users - does this model actually solve what we wanted?
2. Hard to calculate the token valuation, or even impossible. The network value here might be completely different from the token value (see Aragon and 0x). The question here is do you really lose the network effect here? You are supposed to, that is the assumption, but perhaps it’s not even the case.
3. Generalized mining, instead of ICOs or private sales, is probably better suited for governance token models. More users, less speculators. But essentially you still end up with speculators there, since coin voting = economic incentives. Maybe it’s escaping the intended scenario yet again.

a) Aragon: probably a bad governance model where latest coin voting had no turnover. (read the edit below)
b) 0x aka ZRX is just a bad model too, and there is not even governance in place yet (hello, hydro fork).
c) MakerDAO is the best concept in place since there is a link between network value and token value (because it is more of an equity token where you can have diluted ‘shares’ in case of bad governance, so essentially it’s a security token much more than the others, not even a doubt).
d) Melonport has a hybrid implementation trying to balance of different councils responsible for different features, where there is still central authority checking off on ‘identities’ - probably too complicated for what it needs to be doing, but creative.

Overall, governance tokens do not seem to be doing much if it’s just coin voting. Implement a link between the token value and the network value, and you end up being labelled as an outright security… so be it? Let’s discuss in @tokencode (and also feel free to join @cryptocodereviews and @de_fi for quality discussions).

EDIT (27.12.2018, 00:00 CET): Aragon has more use cases to its token than ZRX, and ANT is used for staking as collateral where they attempt to minimise the risks of volatility by a reserve fund, and also for governance to control the inflation rate. The token does have multiple use cases within the system, and those look decent. You can find the whitepaper here.

It’s not about the tech, it’s about incentives and economics

… not that I would know, because I was skipping economics classes in uni, but as they say “a dozen of econ medium articles a day, keeps a boring textbook away” (no one says it, don’t trust me). The idea of a distributed database is fine, but then who will maintain it? How do you make it trustless? How do you automate it all? Buuuah, incentives!

This allows you to model behaviour of different actors based on different scenarios. Making the system dynamic can be perceived as bad (forks) or impossibly bad (if implemented with governance, which works like shit for now). In any case, this is true for evertything that we do. Properly mapped out incentives can make you, your dog or your girlfriend (lol, you don’t have one) - do however you model it (don’t try this on people). It can be done via some economic incentives, a loyalty programme, an elite community pass and etc.

Which is why me and a few other homeless investors find token economics to be one of the most interesting and exciting concepts in crypto: because you can game it in various ways and get cool results. I have 1 test drive coming up related to this, but honestly curious to see if there are move ways to do fun things with behavioural psychology.

This is just an intro article on rewards + motivation, but probably lacking an instagram picture with a booty and a motivational quote 👧

Exactly one year ago Nic Carter predicted the demise of 15 coins, based on either their price or development hault. Let’s see the results. Quite a fun read, don’t get too emotional 😉

Binance, OKEx, Kucoin, Bittrex, Huobi... everyone is doing launchpads now. Waiting for Bilaxy launchpad next!

Bilaxy: we will launchpad your token without you even knowing about it!