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TLDR

• Meta (formally Facebook) is pouring billions of dollars into the metaverse, will this be a positive for web3?

• Atomic N°8 is a “branding slash venture studio specializing in strategy and identity with an emphasis on web3 and emerging technology”. We chat with the founder Alexa Lombardo.

• The Chainforest community is strong and growing. Chainforest is hosting three IRL meetups for members this week in San Francisco, New York, and Austin.

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Crypto In The News

• Lonely Ape, the BAYC dating service was cancelled due to lack of women signing up for the service.

• Terra LUNA 2.0 had their airdrop, with the token price dropping over 60% just hours after the airdrop.

• Actor Seth Green had his BAYC NFT had his NFT stolen, putting doubts whether his TV show featuring the NFT will be able to proceed without control of the NFT.

Can Meta Contribute to a Web3 Friendly Metaverse?

In late 2021 the famous social media company Facebook changed its name to Meta. This name change came with the announcement that the newly named Meta would devote significant resources to making the ‘metaverse’ a reality. However, this name change sparked backlash, with many calling the rebranding effort a distraction from the harm that the company causes its users as outlined by whistleblower Frances Haugen. Despite this backlash, Meta remained true to their promise of building their version of the metaverse. Yahoo News reported that Meta spent $10 billion dollars and had 10,000 employees working on the metaverse, with the hope that they will hire 10,000 more employees in the future. Mark Zuckerberg announced that the project will likely continue to lose “significant” sums of money over the next 3-5 years. Meta has the resources, connections, and most importantly capital to make their project a reality, but will this look like the metaverse that people are expecting?

Taking a look at other current metaverse projects, such as Decentraland or the Sandbox, and anyone can see we are a long way away from the ‘Ready Player One’ metaverse that people so often expect. This makes sense, the metaverse is a relatively new concept being implemented and technology usually improves over time. However, this time needed for the metaverse to improve will mean projects will need to spend more and more money researching and improving their world. None these projects will be able to continually raise money from VCs, at some point investors will expect a profit or the company will fail. Meta on the other hand is the world’s 10th largest company by market cap with a value of over $545 billion.

Meta has used this economic standing to build out the most comprehensive version of the metaverse we have seen to date. Meta purchased the VR headset company Oculus in 2014 for $2 billion dollars, is developing AR/VR glasses and haptic gloves (gloves that recreate a realistic sense of touch for users), and has recently launched beta testing of Horizon Worlds (its VR workroom). Startups simply won’t have this kind of capital or runway to develop this kind of technology on its own and will have to rely on companies such as Meta or another one of the major competitors that have entered the space. In addition to Meta, Microsoft bought the gaming company Activision Blizzard, with plans to build out their own metaverse. Apple and Google have also begun to develop their own mixed-reality headgear.

Many will argue that a large, centralized company such as Meta cannot build a metaverse that isn’t based around gathering people’s information and pushing their products. This is likely true, as Meta isn’t building the product for fun, their investors demand a profit. However, if one truly expects a metaverse where one throws on a headset and experiences a realistic and entertaining virtual world that can rival the ‘real world’, large companies such as Meta, Google, and Apple are going to play a major role in that development. These large companies will likely inspire many smaller companies to build better metaverses, with more traditional web3 decentralized values.

It is difficult to say when the metaverse will see its true potential, as it is still in its infancy. It is fun to think that electricity is less than 150 years old, the first computer is less than 50 years old, and crypto currency is less than 15 years old. All of this is a blink in terms of human existence. With this amount of rapid technological advancement, it is very plausible that technology makes the concept of spending all day in a virtual world something we see come to fruition within our lifetimes.

Atomic N°8: Building Brands in Web3

Article Written By: David C R Feld (@DCHRISTRF)

Who is Alexa Lombardo?

I’m a brand builder turned venture builder collaborating with founders to concept, launch, test, learn & grow futureproofed brands, all with an emphasis on community, transparency & sustainability.

After a decade in beauty & CPG, I started Atomic N°8, a mission-driven venture studio based in Brooklyn. Our early clients were sustainably-minded founders in wellness (beauty, food, health) & lifestyle (travel, hospitality), now we’re navigating / building in web3, blockchain, DeFi, NFTs, DAOs, AI, AR / VR & the metaverse.

On Brands in Web3

In web3, a brand is only as strong as its community - and the community is the biggest determinant of how valuable a brand actually is. In this way, community trumps currency - or, community is currency. This marks a major shift in how brands engage their consumer base.

Simultaneously this shift is forcing brands to engage them in totally new ways that aren’t solely transactional. It’s not about a product for purchase, or a store where the product can be purchased. Brands need to build an entire ecosystem.

Another major shift is the growing sense of collaborative advantage over competitive advantage. Companies have to adapt from being protective and guarded to embracing collaboration and cross pollination — either between community members or between communities.

And finally, the crux of decentralization is decentralized ownership. The community actually has tangible ownership in the brand, and a say over what the brand does. This stake is not just based on respect or consideration, but based on your community actually holding a piece of your brand — an NFT or token — that gives them power through voting rights. This asset allows them to monetize their support for your brand, and thus create a cyclical loop of value. They can turn around and sell it, earning against their support in the short term, or stay and reap other potential benefits as it appreciates in the long term. That is a level of consumer involvement that has never existed before.

On the Role of NFTs in Building Brands

We continue to transition more and more into this “experience” economy. For a long time brands have attempted to create a sense of belonging that could cultivate loyalty. Blockchains make the process of creating loyalty “programs” exponentially easier, trendier, and seemingly ethical — (the ethos of decentralization being about individual ownership and value capture.)

Let’s take restaurant groups for example. Normally, each named restaurant, or each location, might need to have its own loyalty program. Blockchains allow these loyalty programs to be cross branded and cross geography. Wallets and DLT allow for so many new opportunities to actually reach consumers, create communities with them, alongside new incentive models.

Rather than a static Rewards Card or a points system, an NFT’s utility can continue to evolve, and the community can play a role in that evolution. Also, the way NFT communities are currently evolving - and the role they’re playing in shaping their own brands - makes me think that the next major brands will come out of NFT projects, not the other way around. These communities are breeding grounds for creativity and co-creation. And in this way, in the same way as “brand” delivers value to the community, the community delivers value to the brand. We weren’t really able to measure this value before - the value of loyalty has always been based on LTV of a user, but now that concept is being totally rewritten.

One more thing. This web3 ethos - the openness around value creation that’s rooted in what the community wants - is what’s really special. You don't actually need to have it be on the blockchain or need to have an NFT. But you can embrace the values and you can create a community around it. I think it's just more about actually delivering value to that community that is then empowered to create value in return, and financial assets like NFTs are simply one way of doing it.

The Place of DAOs

First, there is a role of brand in all DAOs. Brand can be informed or it can inform the overall vibe. It can inform content and partnerships. There are a lot of DAOs out there that have a brand even without knowing it or thinking to hard about it. I think that’ll change as more enter the space - we’ll have to be more intentional. (DAOs: call me if you need help with brand - visuals, messaging, etc). Also there’s something interesting happening with DAOa having loose enough guidelines that their community can know the guardrails but also interpret the brand themselves, and that’s where some cool creative brand visuals and content are emerging.

Aside from DAOs as brands, I’m starting to see more DAOs being created as a compliment to a company where the community lives. It makes sense since the structure of DAOs lend themselves towards initiatives like incubation, impact, or venture so well, rather than building products. This could be used to create incentive-rich environments which unlock the network, and all that network has to offer, of their consumer base while not slowing down scale or more immediate, product-oriented practices.

Let’s take Estee Lauder, for example. Using a DAO for incubating ideas could unlock the value of their network overall while being totally separate from their main business model and their current existing brands. While companies are definitely better structured to ship actual products, DAOs allow for this idea generation which is why we're seeing so many venture DAOs emerge.

I do think DAOs can be the place for incubation for those future brands, as well as playing the role of a company’s impact arm. DAOs are an alternative to the pitfalls of traditional nonprofit structures and nonprofits that make funding and investment ineffective. DAOs being vehicles to globally mobilize enormous amounts of capital quickly makes them better poised to solve a lot of these major challenges like global access to reproductive health care, contraception, or funding abortion rights. Obviously, the last one is very top of mind for me right now. I’m really curious to see how corporations and DAOs come to coexist and, hopefully, complement each other.

Those interested in learning more about Atomic N°8 should visit their website here.

Around the Fire: Community Updates

• Chainforest member Nick van der Vink (@USA_pharoah) released a new episode of his podcast, Moonshot Research Podcast. Listen to episode two here: Episode #2 Crypto Sundays: Publius and Beanstalk Farms.

• Chainforest members are hosting IRL meetups for members in New York, San Francisco (Graph Day), and Texas (Consensus) this week.

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Chainforest is always searching for passionate, inquisitive individuals to welcome into the fold. Don’t hesitate to apply here.

TLDR

• Outside.io is a NFT project that aims to get its users off the computer and into the outdoors.

• Can cryptocurrency survive a recession? As the economy starts to take a turn for the worst, cryptocurrency is bracing to take on its first U.S. recession.

• The first ever fireside chat within the Chainforest community took place, discussing venture investing.

Crypto In The News

• The Federal Reserve released a study in which they surveyed 11,000 people. That survey revealed that 12% of U.S. adults held cryptocurrency in 2021.

• GameStop releases their own non-custodial wallet in Beta. The wallet will be based in the Ethereum ecosystem and will allow users to connect directly to the GameStop NFT Marketplace.

• High end fashion brand Balenciaga announced they are accepting payment in cryptocurrency. Balenciaga accepts Bitcoin and Ethereum now, with additional cryptocurrencies planned to be accepted in the future.

• Terra Luna’s snapshot is expected this coming week, to begin the airdrop of “Terra 2.0”. With a planned supply of over 116 million, holders of Luna pre-crash will receive their tokens periodically over 2 years to prevent an immediate sell off.

Outside.io: The NFT Project Getting People Outdoors

A majority of the Web3 community is focusing on the future of the Metaverse, which will potentially lead to even more screen time. Outside.io takes a different approach and aims to get its NFTs users outdoors. The average American spends 7 hours a day looking at a screen (computers, phone, etc.). As technology increases and our everyday lives become more reliant on computers, that number is likely to continue tp increase. A NFT project “designed to get you outside” sounds counterintuitive, so how is Outside.io accomplishing this task?

A play on the Metaverse, Outside.io has dubbed their community the ‘Outerverse’. The Outerverse consists of three main components; a curated NFT marketplace, a creator platform, and a token with utility and reward characteristics. This may not sound all that different than many other NFT projects, however taking a look at the current projects Outside.io has already running or planned for the future you will begin to get a picture of the value add a project like Outside.io brings into the Web3 community.

Coming this summer, Outside.io will launch its first NFT offered on its platform, the Outerverse Passport, which they advertise as “a living, breathing fun generator”. The NFT will not only be beautifully designed, but also offer its owners special access to future NFT drops, special access to their events and meetups (more on this later), and other community benefits. The Outerverse Passport will be limited in quantity and those interested should follow the community’s Twitter for updates on the launch date and details (note that the planned launch price is $300).

The real world events and meetups is where this project intends to get its users outside and separate itself from other NFT projects. Some NFTs will allow access to once in a lifetime experiences such as cycling with George Hincapie (professional cycler from 1994-2012) or climbing with Sasha DiGiulian (World Rock climbing Champion in the overall category). Other events unlocked by the NFTs are in person meet ups at some of the most popular outdoor events and festivals in the world, such as the GoPro Games or the Warren Miller Film Festival.

The project also plans on launching NFTs with one of a kind art (outdoor themed of course). Incredible one of a kind nature photography and rare and exclusive images from brands like Peloton and Backpacker are just a few of the plans the project has. In addition, the project has partnered with outdoor themed brands such as Yeti and North Face to release free gear, unique access, and discounts on the gear.

The project has charitable ambitions too. 20% of profits from the sale of the passport and future NFT drops will go to a non-profit that aims to “help build the diverse outdoors and wellness communities [they] want in the future”. The project also chose the Solana blockchain because it is more eco-friendly than Ethereum or other layer one blockchains. In addition to running on the low-carbon emitting Solana blockchain, Outside.io plans on neutralizing 100% of their carbon emissions from NFT transactions.

Outside.io is truly a unique project and an incredible use case for blockchain technology. The idea of cryptocurrency combining with the outdoors may seem counterintuitive, but that is what makes the space so incredible.

Cryptocurrency Will Survive A Recession

Most economists will agree that the definition of a recession is two consecutive quarters of declining GDP. Using this definition, The United States has not seen a recession since the “Great Recession” from December 2007 to June of 2009, caused by the collapse of the housing market. However, due to the current situations of inflation, the war in Ukraine, and supply chain issues caused in part by the Coronavirus, there is a major stress on the economy. That stress is likely the last straw on the camel’s back. Larry Harris, the former Chief Economist at the SEC, says that a United States recession is “very likely”, in an interview with CNBC.

Satoshi Nakamoto created Bitcoin in 2008, in response to the “Great Recession”. This means that cryptocurrency has yet to see a recession. Simply put, Satoshi created Bitcoin to lessen our reliance on banks (including central banks), who were largely responsible for the collapse of the housing market due to their reckless lending habits. For those looking for a comprehensive summary of the causes of the housing market collapse the National Council for the Social Studies wrote a great piece. A few reasons for the collapse that one could draw similarities to the current situation is that investors were ignoring fundamentals to chase short-term gains, the Federal Reserve was adjusting their interest rate policies, and there was excessive leverage in the market. All this begs the question, can cryptocurrency survive a recession?

The Bear Case

Cryptocurrency has grown into an over $1 trillion dollar market and many would see that and say it’s here to stay. However, the “too big to fail” argument has been disproved before many times. Lehman Brothers, Bear Stearns, and Citigroup were all considered too big to fail but eventually went bankrupt or were bailed out by the federal government. What’s worse, is that cryptocurrency is unlikely to receive any federal aid in the event of a major collapse, given the fact that it is largely unregulated, and many government officials have publicly voiced their disapproval of the technology. The complete collapse of Terra Luna in less than a week shows the extreme vulnerability of the cryptocurrency market.

Another particularly concerning factor that could lead to the collapse of cryptocurrency is the amount of leverage used in the space. Leverage is the use of debt to buy more of an investment in order to increase potential returns (or losses). Cointelegraph reported that Bitcoin leverage reached an all time high in January of this year. Many exchanges see 10x leverage, 20x leverage, even 100x leverage. This is particularly concerning if we see a major dip in prices, investors will be liquidated out their investments, causing a massive sell off. This will in turn cause more sell offs, leading to a potential ‘death spiral’. Many have drawn similarities to the overuse of leverage in the crypto markets to the poor lending practices that caused the collapse of the housing market.

There are also outside factors the crypto market cannot control that will affect the economy as a whole. The Federal Reserve has recently decided to increase interest rates and says it will continue to do so as necessary to assist the economy and manage inflation. The Federal Reserve is teetering trying to combat high inflation while still trying to maintain a growing economy. Lower interest rates mean more flow of cash in the economy, but is a root cause of the high inflation we are seeing in today’s economy. Higher interest rates means increased borrow costs for businesses and individuals alike, leading to less spendable cash in the economy. In some cases rapid interest rate increases can lead to a recession. A recession is bad for the economy as a whole and as people begin to conserve money for essentials like food and housing, many will not have the extra cash for investing in crypto and may need to sell off their investments to cover these expenses.

The Bull Case

Despite the concerns highlighted in the bear case, there are several reasons why crypto should survive a recession. This article has largely touched on the state of the US economy, and while it is the world’s largest economy, cryptocurrency has become a global asset. Chainalysis released a report titled The 2021 Geography of Cryptocurrency Report, that highlights the true global adoption of cryptocurrency by country, region, platform, etc. Bitcoin has even become the national currency of El Salvador. This kind of global adoption ensures that if one country’s economy collapses, cryptocurrency will have a use case in one of the many other parts of the world that use the technology.

Growth in the blockchain space has not slowed down with the economy. Simply put the cycle of the economy moves faster than the typical start up investment process. A venture capital fund will invest in very early projects, those projects will take time to develop and launch, then the true value of the project will be determined. The first quarter of 2022 saw a record high $10 billion dollars of venture capital investments into the crypto markets, according to The Economic Times. This investment amount means that despite the downturn in the economy, projects are still being built. We will continue to see these new projects being deployed as long as the money is flowing in. Venture Capital funds continue to see value in investing in cryptocurrency despite the increase in regulation and unstable economy.

The biggest factor for cryptocurrency surviving a recession is simply its potential. This sounds like a gross generalization but consider this. Crypto isn’t just a way to pay peers without a bank anymore. There are several active use cases for cryptocurrency, including DeFi, NFTs as art, gaming, and as mentioned in last week’s article Polygon Nightfall is helping fix supply chain issues. There are still many more use cases that have been floated but not fully implemented or reached mainstream usage yet. Using NFTs as housing deeds, digital identity, decentralized storage are just a few examples of massive potential for cryptocurrency. The cryptocurrency market has dipped its toes in many industries, decreasing the chance that the whole market will just collapse.

In conclusion, a recession will cause most markets and industries to suffer. Cryptocurrency will likely suffer more than other industries given its regulatory uncertainty and the fact that the technology is less than 15 years old. But looking at the fundamentals, one can see that the underlying technology and its use cases serve a purpose that will improve the life of businesses and individuals alike. It is difficult to see this all going down the drain due to a downturn in the economy.

Around the Fire: Community Updates

• Chainforest member Abraham (@Abraham_L_L) shares his thoughts on DAOs scaling effectively in a twitter thread:

• The Chainforest community held a discord member only fireside chat with the community discussing Venture Investing. This is the first of many events on the Chainforest Stage discord channel.

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TL:DR;

• Is Polygon positioning itself as the dominant layer 2 scaling solution for Ethereum with its suite of projects?

• Axie Infinity launches its mobile app on Android.

• Chainforest member Nick van der Vink hosts the Moonshot Research Podcast

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Crypto In The News

• Germany announced that it is making all crypto gains tax-free after one year. This includes coins that have been staked. Germany adds itself to an increasing list of countries with crypto-friendly tax rules.

• Robinhood announced this week that it’s releasing a non-custodial cryptocurrency wallet that will have no network fees. The wallet will be a “hot wallet” and allow users to have control of their crypto. This app, which is set to launch in late 2022 will be a separate app from the current Robinhood App.

• Terraform Labs founder Do Kwon proposed a hard fork of $LUNA, calling it a “rebirth” of the Terra Blockchain. The forked blockchain would focus its efforts in the DeFi sector and all “Classic” chain holders would receive an airdrop of the new chain’s token.

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Polygon’s Impressive Suite of Ethereum Scaling Solutions

Could Polygon be leading the charge as the best layer 2 project being built on Ethereum? Many would argue that they are already up there, but competitors such as Optimism and Arbitrum (amongst others) are giving Polygon a run for their money. However, Polygon is developing a whole suite of Ethereum scaling solutions, with some already launched and others currently being developed, that aims to take the Ethereum layer 2 scaling by storm.

Polygon Zero: Built to be the World’s Fastest ZK Rollup

Polygon Zero brands itself as the “World’s most performant ZK L2”. It does this through its use of Plonky2, which is 100x faster than current alternatives. Plonky2 achieves this performance through its use of recursive proofs, which is a much more efficient method of verifying transactions by allowing the chain to scale horizontally. A recursive proof can be accomplished on Plonky2 in just 170 milliseconds. Using recursive proofs, the protocol isn’t limited by its weakest node, but rather by its total compute power. The proof size is also only 45 kb in size-optimized mode and is fully compatible with the Ethereum Virtual Machine. All of this combined could make Polygon Zero the fastest and cheapest to verify protocol on Ethereum.

Polygon Miden: The General Purpose zk-rollup

Polygon Miden uses zk-STARKS to combine thousands of transactions into a single Ethereum transaction, increasing production and reducing fees. This rollup combines the security of the Ethereum ecosystem with a throughput of 1,000+ transactions per second before sharding and 10,000+ transactions per second after sharding. The code on Polygon Miden will be open sourced and boasts “community-driven development”.

Polygon Nightfall: Privacy Enabled Optimistic Rollup for Enterprises

Polygon Nightfall is a hybrid optimistic-zk rollup whose primary focus is privacy around business transactions, specifically supply chain networks. In its most notable project to date, the Polygon team partnered with Big Four accounting Firm Ernst & Young (E&Y) to launch ‘The EY OpsChain Supply Chain Manager’ on Polygon Nightfall which aims to help businesses move and track inventory at a low cost. A token is created for each inventory item or asset and is then tracked on the blockchain in correlation with the physical product. The privacy aspect ensures that only selected parties can view this information, protecting companies’ private information. The product is currently in beta testing at: https://blockchain.ey.com/

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Polygon Edge: The Modular Blockchain That Allows You To Build Your Own Blockchain

Polygon Edge is a modular blockchain that allows users to run their own Ethereum compatible blockchain network. The idea of this is that this allows users to use Polygon Edge’s customizability to build a blockchain specific to their project. Users can customize the type of consensus used, who are the validators, and much more. In the future Polygon Edge is focusing on their cross-chain bridge solution.

Polygon Avail: For Standalone Chains, Side-chains, and Off Chain Scaling Solutions

Polygon Avail aims to enable standalone chains and side-chains to “bootstrap validator security without needing to create and manage their own validator set by guaranteeing transaction data availability”. They advertise that chains created with CosmosSDK or Substrate can benefit by using Avail.

Polygon Hermez: The ZK-rollup Bringing Scalability to Ethereum

It was announced in August of 2021 that the Hermez Project will be joining forces with the Polygon team to form Polygon Hermez. Polygon Hermez is a layer two zk-rollup built on top of the Ethereum network designed to bring scalability to Ethereum. Hermez uses mathematical proofs to verify and settle transactions and the project boasts 2,000 TPS (compared to Ethereum’s current 12-15 TPS).

This impressive suite of projects could fast track scalability and high gas fees that the Ethereum Mainnet has run into in recent history. As users have moved their activity to blockchains with faster transaction times and lower gas fees, Polygon’s scaling solutions look to bring back the users to the Ethereum networks by increasing scalability.

Axie Infinity Launches Its Mobile Game on Android

The popular cryptocurrency game Axie Infinity has now launched its mobile game ‘Axie Infinity: Origin’ on android mobile devices.

Prior to this, users could only play the game on PCs. The game is not currently on the Google Play Store, but is downloaded using the APK file through the official link. Those looking to download should be cautious and double check the link to avoid malicious actors using fake links. With the launch comes a beginners gameplay guide to celebrate the Android deployment. The download includes three free starter Axies, aimed to help incentivize new users to the game.

Arguably the most popular blockchain based game, adding the ability to play on mobile devices will likely not only increase the users playing the game, but the play time of current users as they will have more opportunity to play given the fact that they won’t be limited to being near a computer to play. More users and more play time should equal more revenue to the project. Considering that Axie and the Ronin network were subject to A $625 million dollar hack earlier in the year, this new feature brings a much needed uplift in the news cycle of the game.

Around the Fire: Community Updates

• Chainforest founder Amit (@AmitMukherjee) tweeted his thoughts on the comparisons of the UST crash with that of the Lehman Brother’s crash:

• Chainforest member Nick van der Vink (@USA_pharoah) hosted the Moonshot Research Podcast and discussed UST’s depeg and the future of algorithmic stable coins. A link to his podcast can be found by clicking here.

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TLDR

• A look at Elon Musk’s controversial history with cryptocurrency and the crypto friendly investors who contributed to his purchase of Twitter.

• Terra’s crash shocked the market, what was the buildup that led up to the crash?

• Accounting for DAOs, Mark Cuban’s thoughts on the current market, and the SEC is stepping up crypto enforcement.

Will Elon Musk’s Purchase of Twitter be a Net Positive or Negative for Crypto?

What will Twitter look like after Elon Musk takes the company private? And will the new era of Twitter be a positive for cryptocurrency or a negative?

Twitter is arguably the quickest way of distributing information to the masses and has the power and reach to give a platform to nontraditional users, including several Web3 projects. It also has the power to influence elections and spread misinformation. This article will not debate whether the purchase of Twitter by Elon Musk will be positive for free speech and inclusivity but rather to look at one specific aspect of that formula. Will Elon Musk taking Twitter private be an overall positive for cryptocurrency or a negative?

Elon Musk is a controversial figure, both in everyday households and in cryptocurrency. Elon has been vocal about his love for the meme coin Dogecoin, has publicly stated he owns Bitcoin, Dogecoin, and Ethereum, and his company Tesla made waves when they announced that they would be accepting payments for their cars in Bitcoin, only to withdraw that offer soon after. As it stands now Tesla accepts Dogecoin payments for its merchandise, currently the only cryptocurrency the company accepts. On the B Word podcast Elon called money an “information system for labor allocation” and that the current system is neither secure nor efficient. He stated that he believes Bitcoin could replace the status quo.

However, it hasn’t been all positive from Elon. He has criticized Web3 in several tweets, stating “Web3 sounds like bs'' and asking “Has anyone seen Web3? I can’t find it”. He views Web3 as a “marketing buzzword” and former Twitter CEO Jack Dorsey has also criticized Web3.

He further doubled down on this thought replying to Elon’s tweet asking if anyone has seen Web3 in a now famous response stating “it’s somewhere between a and z” in reference to the VC fund a16z.

Could Elon’s reluctance towards NFTs and Web3 slow down or even stop the progress Twitter had previously made implementing it onto its platform? Twitter has previously partnered with OpenSea, allowing users to verify their NFT profile pictures and has implemented a ‘crypto unit’ to explore more opportunities in Web3.

Elon is not purchasing Twitter with only his own money. It was announced that Binance is contributing $500 million to Elon’s $44 Billion purchase of Twitter. Other crypto friendly investors include Fidelity ($316 million), Sequoia Capital ($800 million), and a16z ($400 million). Changpeng Zhao, Binance’s CEO, stated to CNBC “We hope to be able to play a role in bringing social media and Web3 together and broadening the use and adoption of crypto and blockchain technology.” Both Zhao and a16z’s Ben Horowitz have stated that preventing cryptocurrency giveaway scams is a must. These crypto friendly investors could have the tools and influence to implement blockchain technology into twitter.

However, Elon’s actions regarding cryptocurrency isn’t the only action that’s likely to split opinions of crypto twitter. Elon has described himself as a “free speech absolutist” and he has ruffled feathers with the likes of Elizabeth Warren, Alexandria Ocasio-Cortez, the SEC, and Bill Gates, amongst others. It was also just announced that Musk vowed to reverse Trump's Twitter ban, calling it “morally wrong”. Many have pledged to leave Twitter following the announcement of his purchase because of these actions. In terms of crypto, the most important social media platforms are Twitter, Discord, and Telegram. While no one is saying twitter will go away, could Elon’s purchase cause a significant chunk of crypto twitter to leave the platform?

Even more alarming is the potential loss of staff, something Twitter harped on as a concern in a filing to the Securities and Exchange Commission (SEC). A mass exodus of employees following taking Twitter private could lead to operability issues, leading to frustration amongst users.

At times Elon Musk has been an advocate of cryptocurrency and at other times he’s been a critic. It would be an overstatement to say that the entire future lies in Musk’s hands, after all he has to answer to other investors contributing to his $44 billion purchase, but as the majority owner he has the ability to influence the future.

The Luna Ecosystem Crashed the Market

Terra made news this week for its massive crash leading to the depegging of its stablecoin $UST. TerraUSD ($UST) is an algorithmic stablecoin which currently sits as the #48 crypto on Coingecko. Unlike fiat backed stablecoins, $UST maintains its peg to the US dollar by its incentivization of arbitrage. This is done by creating a working relationship between the stablecoin and the currency Terra ($LUNA). This relationship works such that if $UST is valued over $1, more $UST is made and given to people who trade in their $LUNA tokens for a small profit. If $UST is valued under $1, people can trade in their $UST for $LUNA, also for a small profit.

The Luna ecosystem quickly grew to the most popular algorithmic stablecoin and grew so big that it secured a $40 million dollar sponsorship deal with the Washington Nationals. This rapid growth was due in part to the Anchor Saving Protocol. Terra’s anchor savings protocol promised people a return of 20%. This high return drew a lot of new users and investors into the ecosystem. Anchor had billions of dollars locked up into this savings protocol.

In the beginning of May, a new rate structure was enacted that would make rates more variable in the Anchor protocol. Rates were expected to lower by about 1.5% per month until the rates stabilized. Despite the expectation that users would begin to withdraw their funds from the Anchor protocol because of the lower interest rates, the opposite happened. The Anchor protocol reached its highest deposit amount in early May at around $18 billion dollars.

Historically, most algorithmic stablecoins eventually lost their peg, in what is known as a ‘death spiral’ (example being $IRON/$TITAN), where people quickly lose faith in the project and sell off the coins. Since these coins are not collateralized, or at least fully collateralized, by assets the price of the stablecoin falls below its peg. So why was the $LUNA/$UST pairing viewed as the pairing that will break through as the first truly successful algorithmic stablecoin. Additionally, there was a recent purchase by Luna Foundation Group (LFG) of $230 million worth of Bitcoin to help back the terraUSD stablecoin.

However, it was not all clear skies for Terra. The market reached a down point in early May, leading to a sell off of many currencies, including $LUNA. This sell off of $LUNA caused downward pressure on $UST, which took it off its $1 peg around May 7th. On May 9th, the Fed announced an interest rate hike, leading to a crash in stock and crypto markets. This caused more selling pressure on both $LUNA and $UST, leading to a dramatic drop in the price of both $LUNA and $UST. The break of the peg caused a lot of users who were leveraged to be liquidating, increasing the selling pressure.

There are rumors that Blackrock and Citadel were involved in the collapse of LUNA, but those are unsubstantiated. In total, $LUNA fell almost 50%, while $UST depegged all the way down to about 20 cents. The Anchor protocol saw almost $7 billion dollars withdrawn over a couple of days.

Can Terra recover from this massive crash? Terra is voting to tweak the algorithm of $UST to get the $1 peg algorithm to work faster, however this would be at the expense of $LUNA. TerraForm Labs could also try to use its Bitcoin reserve to help bring back $UST to its peg of $1 and stabilize the price of $LUNA. Unfortunately, this is also likely to bring increased regulatory pressure from the SEC, especially considering that Terra has previously been subpoenaed by the SEC.

This is a down time for the entire market, and a myriad of unfortunate circumstances caused Terra to spiral downwards very quickly. However, it wouldn’t be unreasonable to expect $UST and $LUNA to succeed in the future if it can last through the next few months.

Around the Fire: Community Updates

• Chainforest member Vasanth featured in Twali’s newsletter discussing accounting for DAOs. A link to the article can be found here: Accounting: the Most Pressing Need for Crypto w/ Twali's Accounting Guild & Vasanth Thiruvadi

• Mark Cuban had a thoughtful thread about the current state of the market:

• The SEC is gearing up to enforce crypto tax evasion by doubling the size of its crypto asset enforcement unit: https://www.sec.gov/news/press-release/2022-78

• Chainforest hosted its second Twitter Spaces with Moonshot Research and Beanstalk. A link to the recording can be found here: https://twitter.com/i/spaces/1nAJEYQwpMaJL.

• An inside view into one of the hottest NFT communities from the perspective of a holder.

• Coinbase NFT launches its beta and sees modest usage.

• Onjuno is a product that converts your paycheck into crypto for you.

A Chat With A PROOF Protocol NFT Holder

It’s fair to say that the hottest NFTs on the market right now are Moonbirds. Moonbirds racked up $282 million of primary and secondary sales in the first two days (more than BAYC in the previous 30 days combined).

With the launch of Moonbirds, the PROOF Protocol brand is leading the charge on utility driven NFTs. Moonbirds racked up $282 million of primary and secondary sales in the first two days (more than BAYC in the previous 30 days combined). But according to Kevin Rose, a PROOF Protocol founder, he doesn’t focus on the sales. Speaking on the Bankless Podcast Rose stated that instead he focuses on the amount of unique holders of the projects (PROOF has 933 unique holders), the quality of discussion in the Discord, and building a community through virtual and live events.

Kevin also added that the process of PROOF and related NFT projects is a great way to monetize a brand. Kevin started out hosting a podcast on NFTs and found that the content was being hindered by the amount and types of ads he had to have on his podcast. Even with the ads, he found himself barely profitable. With PROOF and Moonbirds royalties, he can focus on creating top level content and hosting live events with less stress on constantly finding advertisers.

Chainletter had previously written on the PROOF protocol and the idea of utility driven NFTs. This week, we will get an idea of what Moonbirds and PROOF protocol is like from the perspective of an owner, Abraham (@abraham_l_l).

How did you hear about PROOF Protocol?

A friend of mine who is a big fan of Kevin Rose picked up two passes and told me about the project shortly after. Truthfully, at first I was pretty skeptical; given that ~$10,000 is quite a-lot for what seemed to center around discord access. But, I liked the high unique holder count, the team, and what the membership group generally stood for; so I bought one.

What has been the most surprising or interesting thing about being a part of PROOF?

The diversity of the group. We have artists, tradfi employees, full-time web3 folks, and many more.

Do you feel like membership to the Discord has given value to you (whether in terms of educational conversations, alpha, private access to PROOF projects)?

Yes, without a doubt. I’ve personally received the most value from the connections I’ve made through the group and private access to PROOF projects. Proof isn’t really an alpha group, it’s grounded in helping each other out and growing long-term.

What excites you most about the future of PROOF?

The team. I think the Proof team is the creme de la creme of teams in NFTs. I’m looking forward to the innovations and high-quality work they will bring to the space.

Have you/do you plan on attending any of the live events?

Yes, I’ve been to both official NYC events and plan to attend future live events. The first was held at a rooftop type bar venue in NYC and had probably ~50 attendees. I think this one was technically not an official event, but Ryan Carson was there etc. General vibe was kind of networking and just talking to people about how they got into the space etc. This event was for only Proof holders i believe. The second event was held at Betaworks studio in NYC and was a similar vibe but with more formatting; Q and A with Kevin and Ryan etc. Probably 100-150 people there. All proof holders; although there were some pre-events which +1s could come too.

CoinBase NFT Launches Beta

Coinbase launched a beta version of its official NFT platform on April 20th to a few people on its 3 million person waiting list. For a limited time the platform is waiving all fees as it begins to roll out the platform to more users.

Coinbase NFT is differentiating itself from other NFT marketplaces by adding a social media aspect to its platform. According to their blog post users will create a profile, be able to follow other profiles, comment on NFTs, and upvote and downvote comments as they see fit. In addition, Coinbase NFT will make personalized NFT recommendations based on your purchase and search history. This is likely to make the service more interactive and allow creators to engage more with their communities. It could also bring cyberbullying and other inflammatory comments, which would likely bring some form of content moderation. Coinbase has yet to comment on what that would look like.

The project is powered by 0x, as announced in a tweet by 0x. 0x brands themselves as a “decentralized exchange and the trusted open-source standard for swapping NFTs across many blockchains”. Currently 0x supports Ethereum, Polygon, Fantom, Avalanche, Optimism, BNB Chain, and Celo. They also offer up to 54% gas savings compared to other NFT marketplaces. Partnering with Coinbase NFT is a huge partnership, which was reflected in a 60% price increase of its ZRX token. The good news kept coming in for 0x as they also announced that they raised $70M in a series B round.

The Coinbase NFT platform has seen modest usage in its first week according to Dune Analytics. In its first week, the platform saw about 900 total transactions with 681 total users. This low interaction with the platform is likely due to the fact that a small number of users were allowed into the beta testing, but it will be interesting to keep an eye on the usage after Coinbase NFT announced availability to everyone.

As the most popular centralized cryptocurrency exchange in the United States, the Coinbase NFT platform will likely onboard a lot of new users into the world of NFTs, especially when they roll out the feature to purchase NFTs directly with a credit card.

An Easy Way To Get Paid In Crypto

For those who believe in the future of cryptocurrency, many have wished or considered getting paid in cryptocurrency. OnJuno is a fintech company that is allowing users of the service to easily convert their paycheck into cryptocurrency. Partnering with Ledger, all a user has to do is connect to their bank and select what percentage of their paycheck they would like to receive in crypto (BTC, ETH, and USDC are offered). This is an effective way to essentially get paid in cryptocurrency when it may not be an option given to you by your employer.

Around the Fire: Community Updates

April 23rd marked the one year anniversary of ChainForest! In a little over a year the ChainForest community has grown to almost 400 members, hosted several live meetups, cultivated interesting and thought provoking discussion in its Discord, and is in the process of raising its first fund.

Upcoming Chainforest Events

Set your reminders for Chainforest’s next Twitter Space coming May 5th at 9:00 P.M. EST (10:00 PM UTC). The conversation will be hosted by Moonshot Research (@nvandervink & @KidQuartz1) and feature guest speakers from @BeanstalkFarms (@isthispublius, @LawDumpling, and @itsmod323).

A link to the event is here: https://twitter.com/i/spaces/1nAJEYQwpMaJL

Further, we are looking for writers to extend our newsletter and media branch. If that’s you, DM us on Twitter @chainforestxyz.

From the Community

All about threads this week.

Aric has been writing incredible summaries on Twitter breaking down complex topics such as MEV (Miner Extraction Value), and modularity. Find them below.

Julia Lipton wrote about her learnings accrued from starting her own fund.

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Dusko: on Artists as Market Makers, NFTs, and Personal Mythologies with Dakota Blue

Recently, I have been working with the founder of Dusko, a man by the name of Dakota Blue. Dakota is an incredibly talented, multi-media artist who’s been writing the surrealistic, satirical comic book series, Dusko, for seven years now. Based off his time in the service industry, the series paints the world as a sort of technicolor dystopia — frenzied, bright, and misaligned.

In between penning future volumes, an in-print book, and developing the series for TV w/ Paradigm Talent Agency, I sat down to hear about how he understands the operations of networks, NFTs as methods for collective value capture, and the nuance of an artist as market maker online.

D: What’s the history behind Dusko? When did you start writing it? What prompted you to start writing it? Was there a genesis story that you sought to capture?

DB: I’ve always been drawing and writing stories. These illustrations and characters were pretty disparate though, until coming together with the inception of the Dusko universe in 2015.

At the time I was juggling a pretty messy schedule: evening shows for my band, followed by 4AM opening shifts at the coffee shop I worked at. Somewhere in between, depraved of sleep and near delirious, Dusko was born. 

The scenarios, storylines, and characters are all inspired by customers and coworkers I dealt with over the years. Waking up for a job that didn’t matter to me, to sell things I didn’t care about, quickly came to feel like some surreal cartoon stuck in a loop. One day after work, I sat down to draw and Dusko just started writing itself.

D: Why NFTs? Obviously, NFTs allow for more immediate value capture for your work. But I feel that is only scratching the surface.

DB: Okay, so a few things.

1. Personal value capture. I’ve been sharing my music and art digitally for years now. I was reliant on Instagram to spread word about my latest record or sell copies of the original Dusko comics. Promotion like this makes me feel I’m aimlessly tossing my work in the void in hopes someone would see it. It devalues both the art and the artist in the process. It’s honestly degrading. NFTs sort of solved this, collapsing advertisement and asset into one single item, and making it so I’m able to sustain a living off my work — a luxury in its own right. 

2. Collective value capture. Being a successful artist is, to some degree, about market making. I understand the phenomena of marketing making like this. People self-organize around certain causes to form networks. When networks form, markets emerge, strengthening the networks they emerge from For artists, NFTs make the formation of markets in online networks exponentially easier. 

   In the past, a fan’s experience of interacting with me would work like this. They discover my art. They buy a print and wait for it to arrive. It arrives, they cherish it for a while, grow attached, but then need some money. They find a like-minded community online, and (hopefully) identify and sell it to another fan who they believe would value it as they did. They ship it out. The speed, or lack thereof, of “trade” in this network reduces its ability to succeed.

   Now, with NFTs, they can buy and sell the JPEGs, the thing that caught their eye in the first place. This eases and accelerates this market making, and thus the value (and general) retention of my network of patrons.

   Further, with the whole pfp trend, it’s so easy to tell who is a fan. To boil it down, NFTs allow artists to leverage the scope and speed of online distribution while increasing the value retention of their network by expediting the process of market making.

3. Immersible multimedia experience: NFTs, combined with the tooling out there, allow me to provide my community with a more interactive project. For example, they could (and probably will) be used as ways to vote on what character I should add to the next volume, what characters they want more of, or where they want to see the story go next. The possibilities are pretty endless, especially as the TV series gets going.

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D: What’s your creative process? What are you listening to right now? Do you have an optimal workspace or time of day to work?

DB: I’m not sure if I have a specific creative process, or optimal time. I feel like the right time, the right place, allows for excuses to not work.

I’m always listening to music when I draw. What that music is varies drastically, but recently it has been some Genesis, early Ozzy Osbourne, and a substantial amount of experimental jazz.

D: So why not use Discord, why Urbit?

DB: Discord’s a wreck. We wrote a thread about this for launch. It’s like this bad neighborhood honestly, where you run the risk of clicking the wrong link and potentially losing money or NFTs. It’s in no way conducive to onboarding new patrons also, people not yet. Urbit, on the other hand, has none of that. No phishing, no hacks. It’s invite only, and offers file storage, blogging — features communities string across a series of different platforms when they’re confined to Discord. It just makes me feel safer, with all the hacks, again today with BAYC, it just makes me feel safer, and lessens the noise and things I have to manage. No artist wants to run a Discord server.

D: What are other NFT projects you draw inspiration from?

I love watching what Sartoshi is doing in the space. What he has done with his mfers is really interesting. His commentary about the realities of buying and selling jpegs are humorously spot on. 

But yeah I’m a fan of a ton of projects out there: Deadfellaz, Milady, Tiny Dinos, Easy Cowboy, Dankbots, Sad Girls Bar. The list goes on and on.

D: What’s planned for the future of Dusko?

DB: I have a lot of future plans for Dusko. Obviously, the comic will continue. I’m working on a lot of new stories right now. But up next, I’m putting the three volumes already out into print — free for Dusko holders. A bit ago, I signed with Paradigm Talent Agency, who also represents people like Brian Cox, Stephen King, and Sydney Sweeney. Together, we’re developing Dusko into an animated show for TV. I’ll be putting on a party in NYC towards the end of May. Keep your eyes peeled for a teal colored poster. A few characters of mine from the third volume have been reserved for the Archmission, this non-for-profit sending digital time capsules up into space, moon mission with Space X at the end of the year. I have some ideas for how music is gonna be more prominent for Dusko. I’m most stoked though by making physical goods down the line: merch, Dusko figurines would be great. We’ll see.

Mint Dusko’s Second Collection of 137 Here!

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Community Updates

Rainmaker Niccolo has joined Diagonal Finance as Head of Operations.

• Diagonal enables businesses to integrate streaming payments in their existing payment stack, through audited smart contracts, simple APIs and reliable off-chain infrastructure. We simplify the entire process providing a developer experience that is as simple as integrating Stripe.

• Our first mission is empowering providers (i.e. newsletters, discord/telegram channels, RPC providers, analytics, research...) to monetise their services through crypto-native frictionless subscriptions.

Rolling the Dice: on Terra & 777s w/ Ed

Adept in all things Terra, Ed has been a wealth of knowledge to Chainforest as we explore the ecosystem. I sat down with him recently to discuss the mechanisms of the Avalanche <> Terraform Labs treasury swap and its effects on the “Peg.” Conversation quickly turned to discussion of the (internally) infamous 777 casino, a community owned, open-door online casino. What do I mean by open-door? You’ll find out.

(Also experts in Casino & Gaming Regulation, reach out to him on Twitter)

D: How do you understand the Avalanche Labs <> Terraform Labs treasury swap?

E: TFL is trying to do is create more release valves for when USD gets off its peg. To recap, in May of 2021, there were cascading liquidations on Anchor, people were dumping Luna, and UST fell off peg as a result. Market supply of UST outstripped demand and no one was confident enough in recovery to want to hold UST and didn’t see enough use cases for it. We’re here to tell the tale because Do (Kwon) essentially swooped in acted as the backstop — buying up all this cheap UST. The second he gave that confidence signal, UST went pretty much back up to $1 and Do made a really healthy profit from the arbitrage. With the Avalanche swap, he wants to make sure that doesn't repeat. Historically with algorithmic stable coins, the larger they get, the less potential there is for a single actor to step in and stop a depeg if it happens. Do can no longer step in and say Oh, I'm just gonna use my personal wealth to buy up the UST, because there's now 16 and a half billion dollars worth of USD in the market.

With Avalanche, Do is trying to create these release valves to act as that backstop in the event of a depeg. He's doing that through a lot of different things — this Avalanche reserve, the Bitcoin reserve. The way that I understand it working is, there's going to be a pool of avalanche coins from the $100 mil OTC deal that will fill a virtual AMM living on the Avalanche chain, essentially like Curve, that let you swap UST for 98 cents of Avalanche; 98 cents because Do is looking to make this only activate in the case where UST goes far off peg — say dropping down to 90 cents. There would then be an 8% opportunity for arbitrage. Thus, by draining this reserve of Avalanche, the supply of UST is shrinking and the price of UST goes back up. I think the Avalanche reserve is now $200 million actually and the Bitcoin reserve is now $2.5 billion.

It's a pretty genius idea. What other people are worried about is that obviously when you swap UST for Avalanche, the arbitragers don't want to hold Avalanche. They are going to dump it and when they dump the AVAX, AVAX tanks. This is why you hear some people saying this is bad for Bitcoin or bad for Avalanche. They think it will cause a death spiral and so it's a really interesting debate. I actually don't know who is correct and believe the truth is probably somewhere in the middle. Some people legitimately want to hold the avalanche, some want to dump it. That’s just how the world works. It certainly will be exciting to see how it plays out once it is live.

D: Where does the Terra ecosystem still need to be built?

E: Terra is still underdeveloped as an ecosystem for how large (in terms of TVL) it is.

1. We're still missing a true perps protocol.

2. We don't have options on Terra yet.

3. The NFT space is super underdeveloped. There's no NFT lending and, while there are a lot of NFT marketplaces, there's no true blue chip NFT yet that rivals BAYC on Ethereum or Degen Apes on Solana.

4. Tooling for DAOs, tracking portfolio, doing analytics are all lacking. There's no Nansen for Terra. There’s no tax software like Koinly. Apollo did just make a multisig, though.

Builders in the space should definitely take a look at the Terra ecosystem because, while it’s missing things it’s also growing fast.

D: Tell us more about 777s.

E: I'm in love with this 777s.casino thing. I feel like people don't get it because they haven't tried it. I think it's really interesting. 777s.casino is a community owned casino with live table games, slots, and sports betting. It's community owned meaning 33% of the profits each month —(the casino is about a month old and dividend last month was about $5 and set to double this month)— go to people that hold this NFT that 777 sold to initially bootstrap casino funds. The casino experience is extremely engaging. They use live dealers meaning, if you want to go play blackjack, you sit down at this blackjack table, and you're watching a camera. It's like a zoom call. There's a real human being dealing out cards. They've got these camera systems that recognize which cards got dealt to you and when you hit the dealer knows to show you. It's awesome. When I started doing diligence, I found all the best online casinos with really big brands — FanDuel, DraftKings —use live dealers. I think they actually use the same company for live dealers. The rooms look really professional. The dealers speak English. Also, access is open door. There is no KYC. You click one button, you're in. They take all kinds of currency — LUNA, ETH, USDC, everything. You just deposit it into their escrow account for casino credits. I was looking at this stuff yesterday, on a Monday night, there were 150 blackjack tables live. That’s just not possible in a real casino. They don't fill up 150 blackjack tables, it's just not possible. The VIP tables had people playing $2,000 hands of blackjack. The adoption is insane.

I'm very optimistic that this thing will grow 10, 20, 30x. If that’s the case, the cashflow to these NFT's will be insane. I would love to talk to someone familiar with casino and gaming and regulation to assess the risk. Could this legitimately get shut down? Regardless, in the meantime, I still think there's so much runway, just because they're so young, that they're gonna go under the radar for a really long time. Certainly in foreign countries, they won't even have this problem.

For the last week, I've been thinking about this casino idea a lot. I've been trying to find the other major competitors to this. There’s a few on Ethereum — Gambling Apes, Slotie. Neither of those are exactly the same as 777s. Slotie is just doing slot machine stuff. It's also community owned and you can buy Slotie NFTs on Opensea. Some alpha though, 777s is in talks with Slotie to provide table games for their casino because they've already got the connections. There may be some kind of partnership where, you know, they become one ultra mega casino or something like that. Time will tell.

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Further, we are looking for writers to extend our newsletter and media branch. If that’s you, DM us on Twitter @chainforest_DAO.

TL:DR;

• A new approach to governance of DAOs, called Optimal Autonomous Organizations (OAOs), aims to improve efficiency while maintaining the spirit of crypto

• Solana’s new app STEPN rewards users just for moving

• Chainforest hosts its first ever Twitter Spaces, with a discussion on the Ethereum merge and rollups.

In the past week, 13 new Rainmakers have joined the forest.

The top three channels were: 🎨 │ nfts-general, 🎮 │ gaming-general, and 🎙 │ general.

Optimal Autonomous Organizations

The article Optimal Autonomous Organizations, written by Curtis Yarvin — Urbit’s initial founder — argues that the current structures of DAOs is not the best form it can be. Instead Curtis argues for what he calls optimal autonomous organizations (OAOs), whose governance would more closely resemble a well run corporation versus the traditional direct democracy governance that most DAOs have today. His argument for this structure? Despite your political leanings, virtually everyone would agree that most governments have bureaucratic processes that make them inefficient at times. However, look at a large company such as Apple, and you will find a very well oiled machine with one goal in mind; give value back to the shareholders.

Curtis states that in order to be efficient, the only goal of the governance holders must be the success of the DAO/OAO. It sounds simple but what hinders efficiency is when governors have conflicts of purpose, which could be just a difference in goals of the organization, or a vicarious conflict. This is something that may not be in direct conflict with the goal of the DAO, but distracts or disrupts from that goal.

In addition to defining the goal of the organization, the governing structure must be set up in a way to “maximize the combination of efficiency and accountability”. This structure, as defined by Curtis, is not the traditional DAO structure of a direct democracy but rather the governors (token holders) vote by proxy the board of trustees, who in turn votes in the chief executive. In this structure, it is assumed that the governors will vote in the board of trustees who have the OAO’s best interest in mind. The board of trustees should remain anonymous even to each other, as to prevent influence from external and internal sources. Additional responsibilities of the trustees is to control the majority of the project’s assets (i.e. cold storage).

The board will not be active in the day to day operations of the OAO, with the exception of appointing the CEO/Executives. The CEO (or executives) will be in charge of setting the direction for the OAO, and in theory should be the best person for the job as they were selected by the anonymous board of trustees who should have the organization's best interests in mind.

One can see that by having one, two, or three people in charge of the operations that the entity would be a lot more efficient than the traditional DAO, which requires a vote for any major decision. The board of trustees will keep the executives accountable.

In a perfect world, this setup makes sense for many DAOs/OAOs that require quick decision making to operate effectively. Take an investment DAO for instance. There needs to be a small group of educated people making fast decisions on what to invest in, when to sell, when to buy, etc. It may not be the perfect structure for all purposes but given the inefficiencies we have seen in current DAOs, I believe it deserves consideration for future projects.

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Solana App STEPN Rewards Users Just for Moving

STEPN ($GST) is an app run on the Solana network that rewards users for walking, running, or jogging. It markets itself as the ‘Move-To-Earn Crypto’. Twitter user @Route2FI posted a thread explaining the process to get started on the STEPN app. Essentially, the process is to buy a pair of sneakers (represented as a NFT). These sneakers allow you to start earning rewards essentially by walking or running. There are more nuances to earning, such as the type of shoes you buy, how many pairs you buy, etc. But for simplicity purposes, if you own one pair of STEPN shoes you can earn between 5-10 $GST (at current prices approximately $17 - $34) a day.

In terms of web3, this is a novel idea. However, apps similar to this have existed on web2 for sometime now. This has not stopped notable VCs such as Binance Labs, Alameda Research, Sequoia Capital, and Solana Ventures from investing in STEPN and the interest from users has exploded. The price of $GMT has skyrocketed over 3,500% since opening on March 11th.

However, not all are convinced about the long term success of STEPN. As explained by Rainmaker Devin - @0xMZO:

The thing that makes it obviously unsustainable is that the "game" is premised on "earnings'' and those "earnings" have to come from other players seeking "earnings" themselves. As much as they try to deny it, it's really just an obfuscated ponzi scheme.

In order for an app like this to be successful long-term, users have to not only seek the “earnings” but also use the app for fun. They use it because they want to, not because they are making money using the app. It was also suggested that STEPN is early and adding a tracking feature such as who runs the most in a certain amount of time, or who runs the fastest could add entertainment for those with a more competitive side. Amit points to the success of Strava as evidence of this.

We have seen web2 ideas translated into web3 before, some have been successful while others haven’t. Several aspects of STEPN resonate as a potential success. One is the utility of the NFTs, users need a NFT shoe to operate in the ecosystem. One can only imagine the potential for a market based not only on function, but on the design of the shoes (similar to how sneakerheads collect shoes IRL). The other is that who wouldn’t want to earn money while doing something healthy such as walking? STEPN has taken the Solana ecosystem by storm and there is potential that it remains one of the top apps in the Solana ecosystem.

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Around the Fire: Chainforest Hosts its First Twitter Spaces

Chainforest hosted its first twitter spaces on its twitter page @chainforest_dao on April 20th. The space features Aric Chang, Yousuf Haque, and Mark Xu as they discussed the Ethereum merge and the rollup ecosystem. The twitter space was a success as over thirty people tuned in. A recording of the space can be found here. Stay tuned for more twitter spaces to be hosted by Chainforest weekly.

Further, we are looking for writers to extend our newsletter and media branch. If that’s you, DM us on Twitter @chainforestxyz.

TLDR

• The PROOF Collective, an overview of the highly successful exclusive NFT club

• Live casinos bring new life to online crypto gambling

• Ethereum layer 2s begin to roll out, how do they compare to alternate layer 1s?

The PROOF Collective: Bringing Value Back To Its Members

An increasingly popular trend rising in web3 is ‘Gated Communities’, in which access to the community is controlled or limited, generally by ownership of the project’s NFT or holding a certain amount of that project’s token. The most known example of a Gated Community is Friends With Benefits DAO (FWB), which is as much of a social club as it is a value add to its community members.

A well designed gated community can create a culture of in-depth and thought provoking conversations, alpha on upcoming projects and drops, and new connections formed from online chat and IRL events. The idea is that the barrier to entry incentivizes users to participate in the project’s activities more, and in turn that increased participation rewards the members through increased knowledge, early access to projects, airdrops (such as $APE coin drop to all BAYC holders), etc. Several of these communities have popped up in the past year, however, one making waves as a masterclass in gated communities is The PROOF Collective.

The PROOF Collective is a NFT community where membership is determined by ownership of one the 1,000 membership NFTs. Launching a little over four months ago the floor price for one of these NFTs has skyrocketed to a floor of 85 ETH, an indication of the high demand to join this exclusive community. Perks of membership include access to the private Discord, early access to the PROOF podcast, in-person events, and access to collaborations created exclusively for PROOF NFT holders. Some of these exclusive collaborations include the Grails, Emotes by Heartyou, and Moonbirds.

The Grails Collaboration included 20 pieces of art, created by 20 unique artists, where each PROOF Collective NFT holder was able to mint one NFT. What made this mint unique? Artist’s names were hidden during the minting process and it was not known who would mint which NFT, creating almost a game theory of who would mint which NFT. This information was only revealed after minting in a livestream hosted by PROOF. The floor of a Grail NFT is currently at 2 ETH with some being worth 70 or more ETH.

The Emotes by Heartyou Collaboration was another PROOF exclusive mint. The project markets itself as “a project of self understanding, love and acceptance of the whole self, including our shadow self” and boasts that it is “the first Proof + Artist PFP collaboration project featuring 1433 generated NFTs”.

The upcoming Moonbirds mint, was also a PROOF collaboration and also unlocks private membership to the PROOF Discord and additional benefits that release the longer you hold the NFT (they dubbed this waiting period nesting). Holding a Moonbird will also grant access to the PROOF-built metaverse project in which PROOF describes as “uniquely different” from any other Metaverse project.

Communities such as FWB, Crypto Packaged Goods, and The PROOF Collective create an exclusive environment where deals are made and personal and professional relationships are formed, almost like the web3 version of a country club membership. Successful communities who deliver great value to their members command a high price of entry.

Online Crypto Gambling Sees a New Twist

One of the first real use cases of cryptocurrency was undoubtedly online gambling. And it makes sense, listen to a few podcasts with early crypto adopters and when asked how they got into cryptocurrency you are bound to hear the response of “I was into online poker when my buddy introduced me to bitcoin back in 2011” or something along those lines. Naturally, with so many online gamblers, they found a way to combine their passion for online gambling with the emerging technology of blockchain. Fast forward a decade and there are dozens of online sites that offer online gambling denoted in cryptocurrency.

Using cryptocurrency as an online payment method for online gambling is not a new concept and it makes sense. Crypto offers privacy for the users, while offering fast and secure transactions for the casino itself. What’s missing from online gambling is the experience. The bright flashing lights, the ringing of the slot machines, and the human interaction between the player and the dealer. Enter 777s.casino, a website that features a “live casino” which is a casino that offers the ability to play with a real dealer without visiting a physical gambling establishment. 777s Casino offers users to gamble in 15 cryptocurrencies (including ETH and LUNA).

When I first heard of a ‘live casino’ I pictured some dealer sitting in a basement with a subpar webcam, dealing cards on a folding plastic table. After joining a reputable live casino, I found out I was wrong. Instead I found a well-dressed dealer seated at an actual blackjack table with multiple high quality camera angles. A chat box allows you to interact with the dealer and other players, bringing back human interaction to online gambling. The experience mimicked an actual casino as much as possible given the online nature of the activities.

The human aspect of a live casino can also reassure many users. For example when you roll the dice in a game of craps on a traditional online casino, you do so via a random number generator. This random number generator can be coded to work heavily in the casino’s favor. In a ‘live casino’ the dealer rolls physical dice to determine your number. Assuming the dice is not manipulated with, you are guaranteed the same odds of winning as if you were to walk into a casino on the Las Vegas Strip.

Online casinos that offer cryptocurrency as a payment method are a real world use case for cryptocurrency. Combine the user experience of live casinos with the pandemic and you can see why this form of online gambling has been on the rise lately.

Before running off to gamble on 777s Casino, please note that the site is only available outside of the United States or by VPN. Users should do their own research on the legality of online gambling sites with respect to their resident country’s laws and regulations.

Ethereum Layer 2s Vs Alternate Layer 1s

The long awaited transition from proof-of-work to proof-of-stake on the Ethereum network is set to take place by the end of Q2 this year. With that in mind there has been essentially a PSA that this transition will not immediately result in cheaper gas fees on Ethereum layer one. Instead those looking to reduce their gas expenditures should look towards layer 2s. But what will this landscape of L2s look like, and what are the benefits and risks of operating in such a system?

Looking at the blockchain trilemma, Ethereum focuses heavily on decentralization and security. It's the reason why so many investors trust their money on the network. An $80 transaction cost is worth the peace of mind when dealing with hundreds of thousands of dollars worth of assets. However, not everyone is investing millions of dollars into crypto, and paying high gas fees can really dig into your profits. Perhaps that is the reason we have seen the rise of alternate layer ones that brand themselves as ‘Ethereum Killers’ such as Solana, Avalanche, and Cardano.

Ethereum will look to improve as an ecosystem through layer 2s such as rollups. Those looking for more information on how rollups will improve the transaction speed while maintaining securities should check out Aric Chang’s medium article, An Investor's Perspective on Rollups. In the article Aric outlines how rollups would lower transaction fees but notes the fact that current rollup gas fees from projects like Optimism and Arbitrum are still higher than alternative layer 1s.

The Ethereum merge will aim to keep the security and decentralization of the ethereum layer 1 network while improving tps and reducing gas fees through rollups. Some may be wondering, wouldn’t the bridging from layer 1 to layer 2s expose your funds to great risk? After all, two of the largest crypto hacks to date (Solana Wormhole hack and The Ronin Bridge hack) happened as a result of weaknesses in a cross chain bridge. Vitalik doesn’t see bridging as a weakness in the Ethereum ecosystem, as explained in a  reddit thread.

Simply put, the perfect project does not exist. Solana boasts of the ability to process 50,000 transactions per second (tps) but has repeatedly suffered outages lasting in excess of 8 hours. Avalanche aims to solve the blockchain trilemma but only has approximately one validator per Ethereum’s 270. Cardano has promised a lot but has only recently launched its dapps.

So does a world exist where the world operates on Ethereum layer 2s and layer 3s while other branded ‘Ethereum Killers’ fade into nothingness? Likely not. There will always be a market for healthy competition, similar to androids and iphones. There will always be the people who swear by iphones and vice versa. There will also be people who gravitate towards the better product for their needs.

Overall, there is not likely to be one ecosystem that solves everyone’s problems and we should view that as a good thing. Ethereum is currently the leader and many see it staying that way in the future, however that’s not to say that other layer 1s can’t coexist.

For those interested more in this topic, Chainforest along with members Aric - @AChang_888 and Markxu will be hosting a twitter spaces on Rollups. The Twitter space will be on 4/20 at 8pm EST.

🌴⛓ Chainletter

Our weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, the conversations in our Discord, and an in-depth dive on a project or issue our community is focused on.

Chainforest is always searching for passionate, inquisitive individuals to welcome into the fold. Don’t hesitate to apply here.

Further, we are looking for writers to extend our newsletter and media branch. If that’s you, DM us on Twitter @chainforest_DAO.

TL:DR

• Can Tom Brady’s NFT platform Autograph blossom into a true competitor?

• In the aftermath of the Ronin exploit, we ask do see similar hacks in the traditional web2 world?

• Chainforest debuts its new logo.

• ~tirrel Corporation’s Christian Langalis on where blockchain necessity truly lies and the power of p2p.

In the past week, 6 new Rainmakers have joined the forest.

The top three channels were: 🎨│nfts-general, 🟡│bitcoin, and 💸│defi.

Autograph: All Hype or a Legitimate NFT Platform?

By Elijah Keaton @bigshot_Bigsby

Autograph is a NFT platform, co-founded by NFL superstar Tom Brady, that specializes in creating personalized NFTs for some of the biggest stars in sports and entertainment. The site launched in August of 2021 and already boasts collections from the likes of Tom Brady, Tiger Woods, Tony Hawk, and The Weeknd. The Board of Directors boasts an equally impressive staff in their own right, including GPs Arianna Simpson and Chris Dixon from a16z, GP Ilya Fushman from Kleiner Perkins, Eddy Cue from Apple, and Sam Bankman-Fried from FTX, amongst others.

With a cast like this people are bound to get excited about the project. This led to a Series B funding round valued at $170 million, less than 5 months after its initial launch. In many aspects the hype makes sense. Autograph distinguishes itself from other celebrity web2/web3 sites simply by its star studded cast. This isn’t like Cameo, where you can get personalized messages from washed up celebrities and Tik-Tok stars. Autograph features the best of sports. In addition to the names already mentioned, there is also Derek Jeter, Wayne Gretzky, Naomi Osaka, Simone Biles, and more. Clearly the goal is quality over quantity.

But will the hype last? There are several aspects that make me skeptical of the project. Where does the hype originate from? Is it from the product that Autograph is creating, or from the names attached to the project? We have seen plenty of big names launch products only to fail months later because the hype fizzled out.

The celebrities incentive is also likely cash, and not a passion for the project. Just check out Tom Brady’s cringe tweet to Vitalik. In addition, we have to look at the long list of failed celebrity NFT drops, some of which border on scams. I could list out dozens of failed celebrity NFT losses, but for those interested in a more detailed list and history I highly recommend checking out Coffeezilla (Youtube Page) on Youtube. He regularly exposes the NFT scams from the likes of Jake and Logan Paul, Floyd Mayweather, Melania Trump, and Tai Lopez.

The other concerning factor to me is the price of the NFTs. This signed Ruby edition of Tom Brady NFT is on the market for $750,000. For reference Tom Brady’s ‘final touchdown ball’ (before he un-retired) sold for $518,000. An authentic Tom Brady signed jersey sells for $2K-$3K on sports memorabilia sites. Without sounding too much like a boomer, a game thrown football or a signed jersey in which Tom Brady had to sit down and physically sign, has more value than a ‘signed’ JPEG designed by a graphic designer with likely little input by the actual sports star.

However, markxu brings up a good point, that the success of a NFT project isn’t always based solely off the product being sold:

Feels like a big boost from Tom Brady and the other athletes/famous people. Though at the same time, in the NFT space hype, community, and fandom are key drivers of success so that could also be viewed as a tailwind because of free marketing from people with huge fanbases.

There is additional support for the possible success of Autograph by looking at Dapper Labs ‘Topshot’ marketplace. NBA Topshot amassed over $700 million of sales in its first year and regularly makes headlines for its moments of Lebron James that sell for over $200,000. By all accounts NBA Topshot is still a successful NFT marketplace, although it definitely peaked in its early stages when the hype was at its max. In my opinion, Autograph will follow a similar path, incredible hype in the project’s beginning stage leading to ridiculous prices and over time it will settle down to more reasonable prices and sales.

Ronin Network Suffers Largest Crypto Hack To Date, Is This a Problem With Crypto?

By Elijah Keaton @bigshot_Bigsby

The Ronin Network suffered what may be the largest hack in crypto history. According to Ronin, the attacker “used hacked private keys in order to forge fake withdrawals”, which resulted in over $625 million worth of assets being stolen. Axie remains “committed” to reimbursing their players as soon as possible but did not offer a guarantee that funds will be returned to those who were hacked. This could have long standing financial implications, especially to those in the Philippines who have made a career out of play-to-earn games like Axie Infinity. For reference, Axie Infinity recently valued at 3 billion dollars, so naturally a hack that stole 1/5 of your assets is bound to crash the price of your underlying asset, right?

Kind of. Ronin ($RON) token did drop approximately 20% when news of the hack came out, but evened out around the $1.83 price point (from about $2.23 prior to the incident). Axie ($AXS) saw very little price action, as pointed out by Amit:

Though Axie ( $AXS ) is down ~10% since the news of the Ronin exploit came out, it’s still up 20%+ over the past 7 days. Similar trend with $SLP.

In fact Axie is back up to pre-hack prices. But why? Perhaps it’s because Axie could easily raise VC funds still as pointed out by Amit. Perhaps it’s because the funds will likely be recovered. As of early April the majority of the stolen funds are sitting in a fresh ethereum wallet that will likely be the most watched wallet over the next few months. Blockchain analyzing companies such as Chainalysis, as well as several authorities are actively working to recover the funds and identify the hacker. The fact that all activity on the blockchain is open for anyone to view means the hacker will have to be creative in how they launder the stolen funds, likely using a scrambler of some sort. One slip up and the hacker will be exposed instantly.

Other implications resulted from the hack. Chainforest member wilsonhauntsyou attended an Axie event after the hack and describes the vibe:

So I went to the Axie meetup in LA last night, the team made it seem like they were still planning on moving forward with origins. Strange vibes all around and there was a CNN reporter interviewing drunk Axie stans left and right.

Axie would later go on to announce the delay of the “Origin” upgrade, in order to investigate the breach to ensure the security of the upgrade. Crypto hacks have been a constant problem in the industry, with the wormhole hack also resulting in $325 million stolen funds in February of 2022. Personally, I see this as growing pains (albeit expensive growing pains) of a new and emerging industry.

I also don’t see this hack as a crypto specific problem. Fortune 500 companies have had several hacks of private consumer data that could include credit card numbers, social security numbers, etc. Just for reference Equifax was hacked and over 143 million peoples’ personal information was compromised. They reached a deal to pay up to $700 million to regulators to settle probes related to the incident. So when regulators and politicians eventually use the Ronin hack as reason crypto is evil, consider the fact that crypto has been around for under 15 years, while these public companies have thousands of employees and are facing the same issues as new crypto projects with a tenth of the staffing.

Around the Fire: Community Updates

Chainforest debuted a draft of its new logo this week:

Personal Servers, Scene, & Blockchain Necessity: the Christian Langalis Interview

by David Feld @dchristrf

Two issues back, we chatted with dcSpark and ~tirrel to hear about what they were building for the Urbit ecosystem.

We expand on those conversations in this issue, diving deeper with Christian Langalis, ~tirrel’s founder, to discuss the relationship between Bitcoin and Urbit, consensus thresholds for DAOs, and where there is true necessity for blockchains.

David: How did you first get interested in Bitcoin and Urbit?

Christian: My original interest in this space was, and is, Bitcoin. I came out to San Francisco in 2017 after I graduated to work at Pantera Capital, one of the first Bitcoin funds. Urbit actually became my social circle when I when I came out here. After leaving Pantera, it became obvious that Bitcoin and Urbit were these complementary systems: Urbit solving a lot of off chain coordination problems that crypto has in general. As a result, I felt compelled to join Tlon for two years to help them build a Bitcoin wallet that released last year, bringing commercial capability on Urbit from zero to one. Now, I have a new independent Urbit company called the ~tirrel Corporation, devoted to extending Urbit’s commercial capabilities even farther. Primarily, that means integrating US dollar payments into different Urbit applications, alongside developing other general purpose, commercial applications.

David: Would you say more about how Urbit was your social circle?

Yeah, so, the thing is Urbit actually has a scene. It’s really one of the few crypto projects that isn’t primarily composed of speculators — deterritorialized Crypto bros who trade shitcoins — but rather is this beautiful, culturally adept community. It actually has the ambition of being a larger, broader cultural force that emerged out of people who were interested in crypto and crypto anarchy.

2017 was still a year where the crypto anarchy ideology was burning very brightly. It’s since been watered down a bit as we’ve gone making the necessary bargains for scalability. That being said, I think there’s still that spark, which is what my core interest with Urbit is — that people (maybe not all) want completely undesignated and dis-intermediated ways of relating. To really put my crypto anarchist hat on, that’s really the core of I think what Urbit and Bitcoin are both going for. Can we have a a digital society, a digital economy that isn’t minimized by its exposure to a third party or state interest?

David: What is the relationship between Bitcoin and Urbit?

Christian: So Bitcoin and Urbit agree on one really important thing. They agree a personal server or a personal node is an implementation of sovereignty, of personal sovereignty online. If you’re not running your own computer, if you’re not running your own Bitcoin node, you’re relying on some third party that could ultimately have undue influence on your interactions. Thus, Urbit is sort of the not your keys, not your coins, but not your data, not your not your digital experience, so to speak.

And ultimately, you need both. If it were just data, then Urbit or a personal web would have already existed on top of Dropbox. Simple storage as a commodity is not enough. You really need a persistent digital agent to be acting on your behalf, rather than expropriating your data, shipping interfaces designed to hold you captive, and subject to their own economics: basically, to serve you ads. Obviously, we don’t want a digital subjectivity, we want to escape that. And so Urbit is really I believe, along with several other projects, like Umbrel, an honest attempt at successfully ending the era of digital subjectivity.

David: Obviously there are scaling problems to personal servers. How do you think about addressing these? Do you think certain companies will move over to a personal server paradigm and smooth this out?

Christian: Really it may come down to which web2 companies want to attempt to transition to the personal server world? There’s a degree to which I am loathe to use Silicon Valley speak, but it really boils down to self disruption. The first book that people tell you to read, once you arrive in the Bay Area is, “Oh, you got to read the innovators dilemma: a core tenant of which is no one wants to disrupt themselves.“ We’ve seen talk about Twitter’s Blue Sky, but I’m frankly skeptical of whether these companies are really going to be able to do it.

1. I think that one of the main shifts is once you have an Urbit, you actually have to explicitly acquire the computing hardware to run it. There is this new generation of Urbit hosting companies and service providers basically bridging the gap until we all have a hardware Node running on our modem, or something like that. Companies like Tlon, Urbit Host, and Third Earth will be the ones to really scale Urbit as a physical network.

2. The second part of scaling is educating users about the necessary shift in economics arising from personal servers: the explicit, formals costs of access to that hardware.

3. What is most confusing about web2 are all these free services, which no one really understands how they monetize, except to vaguely know, in the back of your head, okay, they’re probably just reading what I’m writing, selling that data, building a model, etc.

David: Do you see a future where Urbit integrates with multiple chains?

To be frank, because I’m a Bitcoin maximalist, while Uqbar is interesting to me, it pales in comparison to just the use case of money. I think general smart contract execution is a smaller market and will be a much smaller addressable market than money itself. It remains to be seen, Bitcoin is already very much working on evolving through the expressiveness of its own smart contracts.

I don’t think it has to be Urbit’s battle to bring that up. It’s certainly possible to do it one day. But I really hope there’s a Bitcoin implementation on Urbit. I really came to Urbit from the standpoint of almost a Bitcoin colonist. I wanted to see Bitcoin have the benefit of all of this off chain coordination that can be provided by a network of personal servers. You can actually accomplish a ton of stuff without a blockchain.

While it is in everyone’s interest to develop use cases for personal servers — Shout out to projects like Umbrel — they don’t necessarily need to be on chain. I think blockchains, as became obvious in 2017, can be this solution in search of a problem. There are limited cases where a global, consistent state for everything is needed. Making a large settlement payment between two financial institutions, that absolutely warrants a blockchain. But if I’m just saying, hey to my Drainer friends on Urbit, showing them the latest blade track, I absolutely don’t need a blockchain for that. Urbit already has cryptographic authentication for its messaging. This goes back to just the speculative mania. When you have a hammer — or a blockchain — everything looks like a nail. Everyone just wanted to make a quick buck. You’re trying to say, oh, yeah, we’re doing this blockchain social media network. But it’s massively costly to do that and doesn’t make sense to the point where you couldn’t fairly doubt the earnestly of someone trying to sell you that solution.

For example, in the case of DAOs, a federation of Urbit servers that represent a DAO could come to a sufficiently strong consensus on the actions of a DAO — managing assets, signing multi-sig transaction, a lot of that can happen off chain and just peer to peer.

There are definitely places where it needs to be improved. That’s why we built the bitcoin wallet on orbit because, well when was the last time you dm’d yourself a bitcoin address? It’s this one half of the computer talking to the other. Obviously, you want to unify your digital life to the point where that’s not needed. And while a sovereign, unified platform is paramount, it doesn’t necessarily need to be on chain.

Courtesy of Christian, Timothy C. May's email signature

The Chainletter is written to promote the projects and discussions within this community. Do you have a topic or a project you find interesting? Reach out to David (David C R Feld#4743) or Elijah (Ric_Astley (∞)#4612) on Discord.

In order to unsubscribe, click here.

If you were forwarded this newsletter and you like it, you can subscribe here.

Created with Revue by Twitter.

🌴⛓ Chainletter

Our weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, the conversations in our Discord, and an in-depth dive on a project or issue our community is focused on.

Chainforest is always searching for passionate, inquisitive individuals to welcome into the fold. Don’t hesitate to apply here.

Further, we are looking for writers to extend our newsletter and media branch. If that’s you, DM us on Twitter @chainforest_DAO.

TLDR;

• A discussion in the Bitcoin channel sparked debate about the future price of BTC, why countries use Bitcoin instead of other cryptocurrencies, and the classic gold vs. BTC debate.

• Soul-bound NFTs promise a new use case for NFTs, storing personal data on the blockchain, but are they compromising on privacy?

• The Chainforest community grew stronger with two IRL events happening on opposite sides of the country.

In the past week, 16 new Rainmakers have joined the forest.

The top three channels were: 🎙│general, 🎨│nfts-general, and 🌎│terra.

Are Soulbound NFTs a Compromise on Privacy?

By Elijah Keaton @bigshot_Bigsby

Recently Vitalik Buterin has proposed the idea of Soul-bound NFTs in his post found here. Soul-bound NFTs, modeled after the World of Warcraft feature, prevents an item from being traded or sold to another user. Essentially, this proves that the owner of the NFT has accomplished a task, or created that information, not purchased it off an open market.

Vitalik mentions that POAPs would be more useful as Soul-bound NFTs, since it would prove that you actually attended said event. Other uses of Soul-bound NFTs could be personal information, as pointed out by Amit:

I see a lot of use cases for holding vital information about a person - your academic transcript, healthcare records, etc.

However, Rainmaker Autologic disagrees with having information like this on-chain and could be accomplished with on-chain history:

“In our view many of those things shouldn’t really be on chain things in the first place (eg. medical records etc.), second of all, it can be handled entirely on the display side of the fence (eg. if someone transfers the diploma NFT to another wallet they can’t attest to owning, its displayed with FRAUD in big red letters overlaid). You don’t need this added complexity of non transferability. On chain history is proof enough.

Expanding on that point, Autologic mentions that ETH, SOL, BTC are all surveillance chains and smart analysis could infer who a certain person is based off when they switch providers, what illnesses they have, etc. Bad players in crypto could easily use this information to run scams, hack you, etc.

Ultimately it comes down to privacy. Our phones listen to everything we say and have the ability to send us targeted ads that are pretty damn effective (from personal experience). Do we really want to give our medical information, identification numbers, and other private data to a blockchain that can be viewed by anyone with a computer?

Why are Countries Adopting Bitcoin?

By Elijah Keaton @bigshot_Bigsby

Conversation in the Bitcoin channel sparked after Amit posted the following illustration predicting the future price of BTC:

Predicting a $1.3 million dollar price point by the year 2030, Chainforest member Eric - @epochso broke down his method for calculating Bitcoin’s total addressable market:

The way I look at BTC’s TAM is some multiple of non-jewelry gold + some percentage of non-gold central bank reserve assets.

For reference:

1x non-jewelry gold = 205238 above ground tonnes * 32150.7 troy ounces per tonne * 54% that is non-jewelry * 1924 current price per ounce = ~6.8 trillion or 326k per fully diluted BTC.

Contrasting the $1.3 million dollar price point, Eric’s method predicts a $326K per BTC total addressable market. This formula factors in Bitcoin’s utility as a store of value, but as Bryan - @bryan_linton brings up, what about the value from businesses adding BTC to their balance sheet, or countries adopting BTC as their national currency?

In my opinion the news that Honduras is expected to declare Bitcoin legal tender in the country is one reason predicting the price of Bitcoin is extremely hard to predict. It feels like a game of tug-of-war between the traditional USD dominated fiat system and the emerging technology of Bitcoin. Set BTC free without the regulatory bodies of major governments and the technology would likely flourish. However, so much of the United States’ world power comes from having USD as the world’s reserve currency. China and Russia fear that cryptocurrency would enable capital outflow and economic freedom from its citizens. Naturally, major world powers have incentive to prevent the growth of cryptocurrency, especially Bitcoin.

But why would countries adopt Bitcoin?

In the case of El Salvador one thing to consider is that they were already a dollarized economy and thus had no control over their currency so having no control over Bitcoin is not necessarily a downside. It’s just replacing a foreign authority with no authority at all.

As for why Bitcoin and not other currencies, it has the widest network, deepest liquidity and longest history of operation” - Knifefight

The theme here is that countries don’t want to be reliant on the US dollar, and Bitcoin has several advantages that gold does not have. One such advantage is speed. While not typically thought of for its transaction speed, Knifefight mentions that Bitcoin is a settlement layer, and therefore evaluation of speed should be placed on finality, not payment speed. A credit card payment may be instant, but those payments can be reversed weeks into the future, a BTC transaction is final after approximately ten minutes.

Bitcoin is also unpredictable, something emphasized by both Eric and Knifefight. This is not an attractive quality for a currency. A currency should be stable, to prevent wild gains and losses while holding the currency. This is why the US dollar has been so successful. However, connecting back to recent events, the US dollar has lost some of its stability, with the US showing their ability to declare nations’ reserves held in the US dollar worthless (Russia lost over $600 million over sanctions). Couple that with the highest inflation seen in years and the US dollar is not the reliable currency it once was.

Where does that leave Bitcoin and its future price? It’s tough to say, Bitcoin could become many countries’ national currency, be on the balance sheets of most fortune 500 countries, and used as a medium of exchange by millions. In this case a $1 million dollar/BTC price point seems more than reasonable. On the other hand, if world powers do everything they can to shoot down crypto growth, we could see a relatively modest price increase between now and 2030.

For those interested in reading the full conversation, it can be found starting

here.

Around the Fire: Community Updates

There was no community meeting this week, however a couple of IRL events happened this week to help grow the Chainforest community:

At the Harvard Blockchain conference, over 20 Chainforest members met. Amit also represented Chainforest on a panel.

At the Game Developer’s Conference in San Francisco, ten Chainforest members met for dinner prior to heading to events hosted by Axie Infinity and FTX/Solana.

The Chainletter is written to promote the projects and discussions within this community. Do you have a topic or a project you find interesting? Reach out to David (David C R Feld#4743) or Elijah (Ric_Astley (∞)#4612) on Discord.

In order to unsubscribe, click here.

If you were forwarded this newsletter and you like it, you can subscribe here.

Created with Revue by Twitter.

🌴⛓ Chainletter

Our weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, the conversations in our Discord, and an in-depth dive on a project or issue our community is focused on.

TLDR;

• LimeWire is set to return as a NFT marketplace in 2022

• Is Crypto and Web3 shifting the status quo of diversity and inclusion, or is it more of the same?

• Chainforest Members set to meet IRL and the Game Developer’s Conference in San Francisco

In the past week, 12 new Rainmakers have joined the forest.

The top three channels were: 🎙│general, 🟣│solana, and 💸│defi.

From the Mouth of the Forest

The Return of LimeWire

Growing up in the 2000s, LimeWire was the place to download music for free, circumnavigating the $0.99 cost per song on iTunes. Eventually shut down in 2010 for copyright infringement (and probably rightfully so), LimeWire has been dormant for over a decade. Until now.

LimeWire will relaunch in May of 2022, this time as a NFT marketplace, focusing on music (limited editions, unreleased demos, etc). The service intends to be more user friendly for the average person, with prices denoted in USD and the ability to purchase tokens via credit card. Starting off as a centralized trading platform, eventually additional capital will be raised via the LimeWire token, which will grant the ability to vote on changes to policies and artists featured.

Will the nostalgia of the name be enough to catapult LimeWire into competition with the likes of OpenSea, Rarible, and others? Their Discord boasts over 30,000 members and their advisory board includes the manager of the Wu-Tang Clan, Tareef Michael. Nostalgia may be enough to draw users in, but ultimately it will come down to the quality of the artists they can draw in and the community they build. Join the waitlist for LimeWire here.

Diversity and Inclusion In Crypto

Conversation broke out in the general channel regarding diversity, inclusion, and harassment in Web3. The beginning of the thread can be found here. Beginning after Amit posted about Bain Capital’s tweet highlighting their all male, mostly white team on International Women’s Day. Bain Capital was quick to apologize (tweet).

Unfortunately, all-male teams and panels are all too common in Web3. Additionally, several news stories of bullying and discriminatory actions by major players in crypto including Brantley Millegan of ENS posting homophobic and racist tweets. There is also the story of a woman who was ‘virtually gang raped’ in Zuckerberg’s Metaverse. Should these actions get said people ‘cancelled’ or should freedom of speech and a free economy dictate crypto, no matter how offensive or harmful it is to others? Amit continues the conversation by connecting it to the NBA’s Daryl Morey and cancel culture:

Chainforest member Tom - @tmcleod3 highlights that the concept of ‘cancel culture’ is not black and white but really a nuanced topic:

Finally, Azi - @MagniofAzi connects this topic to the Metaverse and how the concept of pseudo anonymity and less accountability will impact online harassment:

Game Developers Conference

The Game Developers Conference (GDC) will take place March 21-25 in San Francisco. Designed to bring the gaming community together to “exchange ideas, solve problems, and shape the future of the industry”, this year’s conference will feature a heavy crypto presence.

Immutable, Axie Infinity, FTX, and Solana are all hosting events the week of GDC. Chainforest members in the Bay Area should consider reaching out to Alex - @awettermann, as he is creating a Telegram chat with events and meetups at GDC.

Around the Fire: Community Events

Town Hall

At this week’s town hall, we continued to focus on building ChainForest as a brand. Discussions included talk about sector mod’s role as helping create a ‘deal team’ for SLCF on a deal by deal basis. Sector mod’s would create a team of experts to help SLCF evaluate potential investments. IRL events were discussed and the desire for a variety of events, not always dinner and drinks, but also speakers and other team building activities. Greg and Lisa discussed the need for our brand messaging to be cohesive, the brand strategy document can be found in the links below.

• Link to Chainforest’s brand strategy doc can be found here.

• Find the Chainforest Town Hall presentation here.

• Find this week’s notes here.

Ancestry, Immutability, and Dynamic Artifacts: The Renata Morais Interview

Renata Morais recently joined Chainforest as a Community Builder. She is helping us strengthen our own efforts towards diversity and inclusion, and with her strong transdisciplinary academic background and design strategy expertise. Renata is also a fellow at both FWB and Kernel and likes to describe herself as a multipotentialite who “ticks every box but does not fit in any.” In our conversation, it became clear how polymaths such as herself bring a colorful edge to Web3.

David: How did you end up in Web3?

Renata: A key element in my academic work has always been about exploring the relationship between culture and technology. The first time I worked on the intersection of technology and diversity was when I wrote about how Afro-Brazilian communities had used social media to build an entire Afrocentric school curriculum focusing on Afro-Brazilian history. I have always been interested in the ways we can use technology to promote cultural diversity, especially through digital art and aesthetics. Other than highlighting diversity, my work also focused on a search for universality, for what we all have in common as humans and a common sense of responsibility for our shared Earth. These universal values are there to be found at the crossroads of technology and art.

From 2015 on I became interested in digital aesthetics in art, and I started to review works by artists such as Tara Donovan and Fabien Bürgy. From there, I started to curate a lot of digital art and became involved with Ello, which was the first social network that was focused entirely on digital media design — specifically 3D images and GIFs. I connected to a lot of important 3D artists such as Alessio De Vecchi, who went on to become a highly influential NFT artist, and who showcased his art at Transductions, an art exhibition I’ve curated in Melbourne around that same time. That same exhibition also featured Holly Herndon as well, who was a speaker at the Alien Aesthetics panel I’ve organized. Bruce Sterling, the iconic sci-fi author, was part of the same panel as Holly. That exhibition was already representative of the culture and aesthetics of Web3, and was the seed of a book I’ve organized and published in 2017 called Transductions: A Global Experiment in Digital Art Curation.

David: You have minted some NFTs as well, right? Can you tell us a bit about that.

Renata: In 2019, I started to do a research project on data visualization with the Department of Psychological Sciences at the University of Melbourne, in collaboration with Dr. Simon Cropper, who specializes in visual cognition. We started to experiment with how artificial intelligence could be used to visualize dreams. I discovered ArtBreeder, which is this Open AI platform where you can mix various visual “genes”. So I started to use AI to “breed” images that were correlating to the dreams I was having. These images I made, based on a mix of visual “genes” of symbols from my dreams at the time, I began to mint as NFTs. Some of these I have minted on Tezos, and are a collection called House of Metamonsters, which has its own metaverse gallery. That was my first introduction to blockchain. I had no idea my entire life would be transformed by this encounter with Web3.

This was the beginning of a really powerful process of transformation for me. It’s hard to put into words, but it changed my life completely. The dream research that I was doing with the University of Melbourne, working so closely with my own subconscious, created these feedback loops within my dreams. They started to be populated with themes of my Indigenous ancestry, my Indigenous grandmother, and all the memories from my childhood that were telling me about my Indigenous ancestry but that were lost. This one particular time there was a powerful image of this gaping wound in my belly which represented to me this wound of the trauma of the erasure of my own ancestry that I had to heal. Jung calls it the ancestral unconscious, and it was emerging right there in my dreams. I wrote a paper that chronicles this entire journey and shared it with the Kernel community. Andy Tudhope read it and did this beautiful, loving gesture: he named me Blue Phoenix and committed my entire paper to the Kernel permanent repository on Github. Blue Phoenix was one of the symbols that emerged in my dreams to signify this rebirth of my Indigenous ancestry and identity. It has been my handle ever since.

From there I stopped everything I was doing. All the research I was doing with AI and psychology. Everything. I knew then that I had to dedicate myself to healing this wound of cultural genocide and erasure, not only in myself but most importantly to stop the chain of intergenerational trauma from happening again. We need to preserve the little that is left from extinct cultures and to safeguard those who are under threat of extinction for future generations so that my children and their children don’t go through the loss I went through. I knew that blockchain has a huge potential for supporting cultural heritage and also economic sovereignty as well. NFTs can provide economic incentives for immutably preserving and maintaining ancestral cultures. I then partnered with André Blas, who also happens to be a Brazilian anthropologist with Indigenous ancestry, and Bacely Yorobi, who is an internationally-renowned diversity expert from Ivory Coast and also a Solidity developer, and from the three of us working together Tapuya was born as a Web3 project. We are a highly international team: I’m based in Dubai, André is based in New York and Bacely is based in Paris. I spend a couple of months per year in Brazil as well.

David: Fascinating. What is Tapuya about and where do you see Tapuya going in the future?

Renata: We’re currently co-creating Tapuya right now, and I’m the ambassador of this project as a fellow at both Friends with Benefits and Kernel. At base, Tapuya is using NFTs to decentralize cultural expression and to preserve ancestral heritage. We are being careful and taking things slow, starting small with Indigenous communities who are facing the threat of extinction such as the Dâw people and currently working with the Pataxó people in Brazil. My co-founder, André Blas, who’s based in New York, is currently in Brazil collaborating with Tanara Pataxó.

Our latest achievement for Tapuya was partnering with fellow Kernel member Sparrow, who is launching Blackboxdotart, a curated NFT gallery soon to be launching on the palm.io ecosystem. I feel we’re totally aligned because their position is to be a place where all of the art is surrounded by detailed social and cultural context. For Tapuya, we want to create these capsules of experience so that people don’t simply buy an NFT, but rather have a cultural encounter through an artifact. The subtlety of this encounter is at the core of the intercultural experience we want to create, and it can not be constricted just around heritage and preservation. It has to be dynamic, about activating a data sovereign node in each Indigenous community, activating financial sovereignty for that specific people. Another exciting opportunity is that I’ve joined ArkiveDAO as a curationist, collaborating with their team to rethink cultural preservation in Web3. Tapuya is about co-designing ancestral futures. That’s what we are building as we go through the incubation process now at Kernel and Friends with Benefits. Anyone can get in touch with us to get involved or learn more and also to donate to the project at https://tapuya.xyz/.

David: Can you tell us a bit more about this idea of Ancestral Futures?

Ancestry is not in the past. There is a misconception about what ancestry means, that it is something that is not here right now, some kind of memory. However, the true meaning of ancestry is continuity. We are our ancestors. They live in us right now, and at this moment, we embody the ancestry of the future generations. By becoming aligned with this core value of Indigenous culture, that of reverence towards our ancestors, we are empowered as active representatives of our lineages in the present moment. We can then create the conditions for the flourishing and transmission of our cultural legacy for future generations. Ancestral futures happen through the present, through our conscious alignment in the present moment that connects past wisdom to future generations. Our actions matter, what we do at this moment shapes the future.

David: What are the challenges you see for building community in the Web3 space? What are the best practices a community builder can implement?

Renata: For me building community is about belonging, it’s about making sure that people have an open space where they feel safe. For me, that’s the most important thing: a nonjudgmental space, where you have a community of care, and people feel that they are welcome, where there’s a sense of being welcome. It’s also about creating value together and sharing our resources together. I think it’s really connected to Indigenous ways of knowing and community culture. For Indigenous peoples, community is always about sharing. My personal experience as an ally of various Indigenous peoples is that the moment I arrive in any Indigenous community, the first thing that happens is the children come running to greet me. Instantly. The children immediately and intuitively know that if you are there, it means that you’re part of their community. So they come and they immediately start to share basically everything with you: watermelon, cassava, you name it. There’s no sense of this is mine, this is yours. You are part of the community, so everything is ours. And that’s just the way it is. I think we have so much to learn from Indigenous ways of coexistence and community, especially in relation to sharing common responsibilities for the well-being of everyone. It’s not just the stewards or leaders that have responsibilities, everybody in the community is responsible for everybody else as well. So I think that culture is the most important element in a healthy community because what connects us as a community is our values. Amit always talks about values. I think he places so much emphasis on values because, without values, you cannot have a culture. When there are strong values, people know what kind of behavior is or isn’t accepted. That’s why it is important to have leadership roles in the community as well, so the right behaviors are being displayed within the community.

David: What do you think are examples of healthy community culture in the Web3 space?

Look, the first one that comes to mind is FWB. I’m going to be honest here, I haven’t seen any kind of community culture that can compare to FWB. It’s simply the best one, the ultimate standard. We are lucky in Chainforest to have so many cross-membership with FWB, because they really are role models when it comes to community. I think one of the reasons why the community is so strong at FWB is that lifestyle is at its core. You might think that most community members at FWB would just focus on the NFT channels, or just chasing alpha across various channels, etc, but that’s not how it works. You know, it’s the silly things that make FWB great. It’s about sharing dog pictures, memes, sharing about how your day went, etc - this human, authentic level of empathy and connection. We should strive to also have a culture in Chainforest where we are not only about the alpha and the nerding out all the time, but also feel safe to be silly and personal and vulnerable, so we can build a community of care as well.

The Chainletter is written to promote the projects and discussions within this community. Do you have a topic or a project you find interesting? Reach out to David or Elijah on Discord.

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🌴⛓ Chainletter

Our weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, the conversations in our Discord, and an in-depth dive on a project or issue our community is focused on.

TL:DR;

• Luna Bitcoin Forex Reserve, Yearn, and Randi Zuckerberg Speaks Out

• Chainforest Fills Out Community Roles

• Bitcoin, Through the Lenses of Game Theoretical Artificial Intelligence: the Knifefight Interview

In the past week, 7 new Rainmakers have joined the forest.

The top three channels were:  🎨│ nfts-general, 💸│defi, and 🌎│terra.

From the Mouth of the Forest

Luna Foundation Guard’s (LFG) Forex Reserve:

The Luna Foundation Guard (LFG) has closed a $1 billion private token sale to establish a decentralized $UST Forex reserve denominated in $BTC. With funding led by several big players in the crypto sphere including Jump Crypto and Three Arrows Capital, the reserve aims to reduce the volatility of $UST by pegging the reserve to assets less correlated to the Terra ecosystem ($BTC). The official release from The Block can be found here. 

Chainforest member Ed - @wengzilla thinks this diversification is important for the Terra ecosystem given the unproven record of algorithmic stable coins, but questions if $1 billion dollars is truly enough to stop a bank run. $LUNA has a market cap of approximately $31 billion, so a $1 billion reserve would likely not be enough to stop a bank run. With that said, Ed mentions that the incentive for other chains to integrate with $UST is a bullish sign.

David C R Feld || @dchrisrf made the case that as Terra adds Bitcoin to its reserves, it very much mirrors the stockpiling of gold by a nation-state during a war. This, alongside other portfolio diversification by L1s, lends itself to the thinking that they are similar to nation states in the sense that they run their own economies, produce value internally, and transact their tokens with other protocols/DAOs (similar to foreign relations).

Since this release, $LUNA is up almost 70% and is sitting at #7 on the market cap, ahead of $SOL, $ADA, and $AVAX. 

Randi Zuckerberg’s Call for more Women in Web3

Did you know Mark Zuckerberg had a sister? Randi Zuckerberg is a founder of @thehugexyz, a Web3 creator platform & growth incubator. Randi also has another hobby; as noted by Amit - @AmitMukherjee, Randi Zuckerberg makes cringe and cheesy parody videos including #WAGMI and  Hello - it’s me.

Despite being difficult to watch in full, Chainforest member Steve - @AFZ0478 makes a good point in saying the target audience of these videos is likely 30-50 year old moms with very little to no crypto experience. Her videos serve an important role for onboarding new members into Web3.

Randi’s videos are nowhere near as bad as Heather Morgan’s aka “Razzlehan”, the “entrepreneur” who conspired to launder $4.5 billion in stolen Bitcoin from the 2016 Bitfinex hack. 

Yearn Finance

Yearn Finance (YFI) and other crypto projects were sent into a downward spiral on Sunday, March 6th, after Anton Nell announced via twitter that he and Andre Cronje are leaving the crypto/DeFi space. While this does not mean that Yearn Finance is shutting down, Cronje was the one who came up with the protocol. 

@thedefiedge on twitter shares their thoughts on Cronje leaving crypto via this twitter thread. Chainforest member Ed - @wengzilla echoes this thread by highlighting that the Solidly launch was filled with issues. These issues caused criticism, leading to Andre getting fed up and deactivating his twitter.

What happens to Yearn Finance, Solidly, and the other projects Andre was involved in? The general consensus is the projects will fight on, as Yearn has hundreds of other contributors and Andre’s role in the project may have been overstated. Solidex has also pledged to maintain the Solidly UI going forward.

Community Updates

From the Town Hall

Discussion of the roles at ChainForest continued in the weekly community meeting, with a list of open roles posted here. Those interested in filling one of these roles should reach out to Amit. 

Tomas, Head of Tokenomics, posed the question to the community: if ChainForest were to launch a token, what would be the desired utility of that token? Anyone with ideas should reach out to Tomas. 

Emphasis was put onto how we amplify awareness of the ChainForest brand? Ideas floated to raise awareness included Twitter spaces and collaborations with other DAOs.  

Notes (courtesy of Sloan - @Sloan0_0): March 6th, 2021 Community Meeting Notes  

Sovereignty, Irish Optimism, and Some Interesting Things: on Bitcoin w/ Knifefight

Recently, the sharp (and temporary) climb in Bitcoin’s price can definitely be attributed to whispers of a post dollar world brought on by the War in Ukraine. Whether or not this is the case, Chainforest has circled back examining digital gold and the promises it holds.

This week, I sat down with our dearly beloved, Knifefight. Author, father, and former industry man and aged authority on Bitcoin, he shared a series of ways he’d recommend thinking about both the opportunities Bitcoin has and the challenges it faces.

David: How did you first get into Bitcoin?

Knifefight: It took me a long time to even take Bitcoin seriously enough to go read the white paper. I was so confident it couldn’t work. At the time I heard about Bitcoin, I was a student of mechanism design. Bitcoin to a student of mechanical design was as a perpetual motion machine would be to a student of physics, I initially thought it was impossible. And once I became convinced it was possible, I was endlessly fascinated by it. The reason I went from being a skeptic to a believer was because Bitcoin didn’t die after the fall of Mount Gox and the bust of the Silk Road. The death of the largest exchange, and the death of the largest sort of nominal use case for cryptocurrency at the time within a few months of each other should have killed the network. If an irrational bubble, it would have had to collapse and, when it didn’t die, that needed explanation.

David: What are ideas/theories/concepts you’d recommend for those beginning to learn about Bitcoin use? For example, you mention the Lindy effect. I would mention Lyn Alden’s article on the Fraying of the U.S. Global Currency Reserve System.

Knifefight: At my newsletter — somethinginteresting.news — I have a reading list of the things that I think are worth reading. To call out one in particular, the essay, Shelling Out by Nick Szabo, is incredibly useful for understanding what money really is, which I think we as a society have a tendency to talk about money in very incorrect ways. There’s people who believe money is a shared fiction, which is total nonsense. There’s a lot of people who believe that money is debt, which is more sophisticated nonsense, but it’s still nonsense. Shelling Out, which was written before Bitcoin, is, in my mind, one of the strongest arguments for Bitcoin. The human urge to save collectibles, it argues, derives from a raw instinct based on an understanding of how truly practical real money is. It’s not a luxury. It’s not a product of civilization. It’s a base level human instinct because it’s a survival trait to be able to transact across inheritance, dowries, and ransoms. I really recommend it. It’s full of very specific historical examples. It’s not an abstract speculation about what things might have been. He lays a really concrete case out for how we initially gathered scarce objects as a way to trade at critical moments with people that we didn’t necessarily have trust with, such as when we were ransoming people in time of war. From this, over time, the market consolidated on the collectibles that were the hardest to reproduce, and had other useful monetary properties. And that’s the path we went from: from gathering shells and putting them on necklaces to treating gold as the base currency of the world.

There’s a difference between doing that with capital and doing that with money. Capital, for example, could take a lot of time to build a really nice tool, and then you can inherit my tool for me, and it will still be useful for you. That’s capital. Money is only useful as an object of transfer. It has no intrinsic utility. It is strictly for the purpose of making trades happen. That’s the argument Szabo makes. It’s not just the human desire to save, give, and trade. It’s an evolutionary impulse to value objects which have no purpose other than to be traded in dire circumstances. It is this fundamental human urge to collect scarce objects, to collect seemingly valuable things. Nick Szabo would argue it is the same thing that makes people covet Honus Wagner cards and enormous jewels — this kind of fundamental human instinct to gather something which is hard to gather, so that later if you need something from someone, you can trade them something that they know is actually scarce. Over time, he argues, that scarcity is most valuable when everybody’s going to the same marketplace. And that’s how one money comes to dominate. It’s similar to the phenomenon where we keep evolving crabs: the idea that the crab body structure is so useful that you could wipe every crab off the earth, and it would be 50 years before there were crabs. Crabs are just such a natural product of how to solve for being alive on earth, they’re inevitable. It is the same with money. Money will naturally happen. Every memory that gold is money could be eradicated and we would eventually come back to using money, and to specifically using gold as money.

David: So there is the perspective that Bitcoin may actually be beneficial for the environment since it is a system whose energy capacities create a vacuum for waste energy and thus drive the innovation and harnessing of renewable energy sources. Can you speak to this?

Knifefight: A lot of people paint very simplistic pictures about bitcoin’s energy use. A good rule of thumb is that economic systems aren’t generally simple so, if someone’s telling you a simple story, they’re probably not telling you the real story. Simplistic stories get clicks, get concern, and it’s sort of a useful, frankly, propagandistic tool. It’s a little disappointing. That’s not to say that there are costs to Bitcoin or crypto in general. There certainly are, but such a complex issue requires a nuanced conversation in order to have a meaningful conversation. 

So Bitcoin is a large user of energy, but the way I always try to characterize it to people is that bitcoin is not an energy predator. Bitcoin is an energy scavenger. It looks for cheap energy, and will generally drift towards the least expensive energy, and least expensive is another way of saying least useful. If it was more useful energy, people would pay more for it. So a good example of that is what you alluded to earlier, that idea of all the energy that’s in a volcano, that energy is essentially free. It’s being generated all the time, and anyone can just go gather it, there’s no limitation on that. What’s expensive about it is transportation. The battery technology isn’t good enough to store that energy efficiently and transportation technology is very expensive and lossy for a variety of reasons. So that energy is free to use, but it’s not free to use anywhere. Similarly, solar energy is cheap to use, cheap to produce, but it’s not easy to use at night. You can only use Solar energy during the day when it’s plentiful, that’s challenging for renewable energy producers. It means they’re producing the most energy at the time when they’re competing the most with each other and driving the price down. When the sun is the brightest, there’s the most solar energy, but there’s also the least value in selling that solar energy. But you can’t save it because battery technology is so expensive.

Bitcoin provides a sort of baseline purchaser that says your energy is always at least x valuable, which isn’t very valuable, but it’s not zero. That purchaser is infinitely deep. In other words, Bitcoin will consume all of the energy that it can consume below a certain price point. If you’re a solar energy producer, that’s really good news. In the middle of the day, when you’re producing tons of otherwise worthless energy, you can dump that otherwise worthless energy into the Bitcoin network. And then you can, during the times when more ordinary uses are driving demand, sell that to the network at a higher price. When the power network needs power, you can sell it to the power network. When it doesn’t, you can sell it to the Bitcoin network. This isn’t just a weird hypothetical. ERCOT, which is the power people down in Texas and the area around Texas, have a cool map that shows what percentage of the time the power grid in any particular region is at negative prices. And you can actually see in northern Texas, and in most of Oklahoma, the power grid is actually at negative prices around 20+% of the time. The reason for that is the supply of wind energy outstrips the demand usually and, because the turbines can’t just store energy or easily be shut off and one, they end up paying people to consume the energy so that it doesn’t overwhelm various parts of the grid. So literally 20% of the time producers have power in Oklahoma and are paying instead of getting paid. Bitcoin would be a godsend, right. They can dump all of that energy into the Bitcoin network. And when wind energy gets more profitable, more wind energy will be produced. That means more wind energy available for the rest of us when we go to turn on our toasters or run our electricity or whatever. So like, the fact that Bitcoin is subsidizing renewable energy, ultimately benefits the infrastructure that produces renewable energy on a long enough timeline. In a short term timeline, obviously, that doesn’t have that effect. Because you can’t build power. You can’t build power plants on a dime. But renewable power companies like the example I tend to reach for is CT, which is a, I believe Norwegian solar energy company has started investing in Bitcoin miners explicitly because they believe it makes their business model more efficient.

I find it really fascinating that we’ve built a technology that makes solar energy more profitable, makes wind energy more profitable, and makes any renewable energy more profitable. And somehow people are painting that as bad. From a renewable energy perspective, it takes such a strange perspective on the market to come to that conclusion.

David: A core theory of the Bitcoin narrative is that it will one day take the dollar’s place as the world’s reserve currency. How do you think the War in Ukraine, and all subsequent events have impacted the dollar’s standing?

Knifefight: It’s a very potent threat to the dollar as the reserve currency. I think that’s beyond dispute. Powell actually said in testimony to the House of Representatives, that it was possible, we might find ourselves in a world where there was more than one reserve currency, which is an extraordinary thing for the Fed chair to be saying. That being said, I personally think it’s easy to predict the death of the dollar and it’s hard to achieve. The dollar has a very powerful network effect and a lot of the things that drive that network effect are still 100%. If you sit down and you say to yourself, I’m gonna put my money somewhere I believe I will have the best chance of accessing it when I want it, and you are choosing between a Russian bank, a US Bank and a Chinese bank, you’re still gonna probably prefer the US Bank. Even with this Asterix on the system, I still think they’re unambiguously the best place to be trusting your wealth and your purchasing power. This could be the crack that starts the trend in the other direction. That’s certainly possible. Russia has already agreed to move all of their credit cards over to the Chinese system since they got blacklisted by MasterCard and Visa. So there is this kind of consolidation that’s happening in a sort of Eastern Bloc. That being said, I still think that Eastern bloc is a pretty small part of the world economy relative to the part that remains. So I still think the dollar’s network effect stands. I don’t see Bitcoin becoming the thing that unseats the dollar yet. I think there’s still a long term horizon threat there. But in the short term, the people who are the most motivated to oppose the dollar have no interest in Bitcoin, and are huge owners of dollar debt. So the dollar stays king. But I do think that this is a significant moment of realization about what that power really means, in practice. A lot of countries are looking around and saying, wow, okay, I need to change my balance of foreign reserves. Gold is more valuable, dollars are less valuable. Maybe renminbi is more valuable. Certainly, I think there’s going to be a shift in how people position themselves, but I still think when the dust settles, the dollar remains.

David: It maybe be a little wishful thinking but, similar to how the dollar retained its power in the 70s through the establishment of the “petrodollar,” do you think there is an opportunity for Bitcoin to rise to power through tying itself to cheap energy markets?

Knifefight: Ultimately, I do think energy markets are some of the most important markets and, if bBitcoin becomes a critical pillar of the energy market, it will naturally have an advantage of being the currency of that market. If every single renewable energy producer is going to have to handle Bitcoin anyway, because they’re all Bitcoin miners, they’re probably going to just have more receptiveness to using Bitcoin as their main currency. So I think in a somewhat literal sense, I think that’s true. I don’t think the path that Bitcoin adoption takes though will look similar to the path that dollar adoption took. It will look fairly distinct. I do think one thing that you might be interested in, if you enjoyed that perspective on the petrodollar, is the work of Jason Lowery. Lowery is an officer in the US Space Force writing a thesis that argues that Bitcoin is a military technology, and that it is a way to project power in a non kinetic war. 

His perspective is all war in some sense derives from a competition over wealth. Maybe it’s a strategic resource, maybe it’s a population center, or maybe it’s literally gold, but in some sense war is always about control of some wealth. Thus, the more wealth moved into the Bitcoin network, the more that kinetic war will be useless at trying to capture that wealth. And so you can basically think of preserving national access to the Bitcoin network as a matter of national security. For example, maybe both the US and China maintain strategic Bitcoin mining forces so that they can never be excluded from the Bitcoin network. Thus their attempts to acquire more hash rate becomes a way of doing an arms race where nobody ever gets shot.

Another example is, to the extent that Ukraine’s wealth is in Bitcoin, it can’t be seized, even if Russia wins the war. There’s no way to seize anything that’s stored on the Bitcoin network. There’s no way to destroy anything that’s stored on the Bitcoin network. You can go in and destroy infrastructure but you can’t destroy Bitcoin. There’s things about it that are abstracted away from war.

David: What do you think about the threat of centralization of the Hash Rate?

Knifefight: So, the predicate security of Bitcoin is based on the idea that at least half of the miners at any given time are, quote unquote, honest. You could also think of it as being selfish. They’re working strictly on this notion of earning from the system, according to the rules of the system. If more than half of the miners are cheating, dishonest, or attempting to do something other than maximize their own profits, things go wrong in the system. When enough mining power gets concentrated in a single source, that it looks like they might be able to overwhelm the network, there’s a couple of reasons you don’t necessarily have to be directly worried about that. One is, you mentioned mining pools. So mining pools operate on the premise that it’s so rare to find Bitcoin these days that if you mined by yourself, you would probably never make any money from it. You’ll probably do the whole lifetime of your rig and never actually make any bitcoin. To compensate for that, people form mining teams and then, when anyone on the team finds Bitcoin, they distribute that Bitcoin in proportion to how much people contributed to hash rate — whether or not they were the one that scratched off the winning law. Mining pools are what you see graphs of when you see graphs of concentration on the Bitcoin mining network. In the same way that exchanges represent lots of users with a small number of addresses, mining pools represent lots of miners with a small number of control points. The reason that matters is if one of those mining pools starts to misbehave, individual miners can easily move their hash rate to a different mining pool. There’s nothing that ties them to that mining pool. It’s a temporary allegiance, not a lock in of control. The vision people have of a large warehouse that a person is in charge of is not necessarily the case. It may be a global network of individuals that happen to be working together. It’s hard to say. Conversely, a large warehouse of miners may be split up among three different mining pools to mitigate worry. If you have 51% of the network, everyone’s gonna panic so you may form three separate teams, because all of these mining pool graphs are self-reported.

The concentration here is kind of not interesting, both that if we could know it wouldn’t tell us much and that we can’t even really know it. Like, we neither know mining pool concentration, nor do we know what mining pool concentration would mean. And if you want to talk about concentration in the network, the place I would worry about is in the manufacture of new mining machinery. There’s only two or three companies in the world that make Bitcoin mining equipment. So if you’re like an evildoer that wants to harm the network, I think what you probably do is you capture those companies. And then you either redirect a significant amount of production to yourself, or you somehow backdoor the equipment that you’re making, and then use that as the attack vector on the network, not the mining pools. And so there is actually significant centralization there. There’s a real reason to worry there, especially because, you know, people often talk about, well, if the miners misbehave, we’ll just change the algorithm. Yeah, you can do that. But that’s not easy to do. Because you need to find a way to convince everyone under the sun to adopt the same algorithm. And then you need to adopt that algorithm fast enough that attackers can’t just buy up resources to outcompete your now tiny network and overwhelm it again. And both of those things are basically impossible to do in my opinion. So I kind of think we’re actually stuck with the mighty network we have and if that goes wrong, then it will be the end of Bitcoin.

David: Another threat posed to Bitcoin is what will happen when the block rewards run out. What will secure the network and stop it from being compromised?

Knifefight: In my opinion, this is the most legitimate reason to think Bitcoin will fail. It’s one that I don’t hear very often, but it’s the only one that I really don’t have a firm answer for. The optimistic answer is, when the Bitcoin rewards run out, there will be enough people using Bitcoin to generate enough transactions competing for block space and pay for security necessary to secure the network and generate the same amount of bitcoin. Or, thanks to adoption, the value of Bitcoin may go up enough that a smaller number of Bitcoin actually equals a larger purchasing power — in terms of security. Because ultimately, miners are priced in electricity, not in Bitcoin. So if you can increase the value of Bitcoin, you can still pay them with a smaller amount of bitcoin. That’s the optimistic answer.

The pessimistic answer is that we haven’t seen a lot of that level of activity yet. The Bitcoin network has mostly been unclogged. When it’s been clogged, it’s been at times of market bull crazy or crash — people rampaging to exchanges to sell or to buy or whatever. It’s not generally crowded. If you were to just naively look at the history of the network, you would be a little worried about whether transaction fees will pick up and cover that difference. We also don’t necessarily have much testing about what possible attack patterns look like in a world where the majority of the value comes from fees. 

That’s actually a really significant problem in some of the more complicated networks. In Ethereum, there’s often discussion of a thing called minor extractable value, or MEV. There’s a bunch of reasons why MEV is problematic. The reason I think it is is because the more that miners are paid by something other than transaction fees, the less loyal they are to the network. For example, imagine a world where there was one NFT. There was an auction for it, and that NFT was more valuable than all the transaction fees on Ethereum for that day. This is obviously very contrived, but gives you a sense about how this can overbalance the network and make it so all of the miners, rather than building on top of the most recent block, would go back in history and try and build a future where they won the big expensive NFT. You would end up stuck in this space until the situation around the NFT had resolved itself. In summary, the larger the value of things outside of the transaction fees, the more the risk that value topples the incentives protecting the network, and then the miners are suddenly more incentivized to attack the network in order to capture that bounty, then they are to defend the network in order to capture the block reward slash transaction fees.

David: A lot of people have a lot of different strategies for buying Bitcoin. What’s yours?

Knifefight: I believe sincerely that for basically everyone they should be dollar cost averaging in and not paying attention to market movements at all. People should buy and sell Bitcoin on the basis of when they want to save, and when they want to spend — not on the basis of whether Bitcoin will go up or down. 

What I would say to everyone is you should pick an amount of bitcoin to get to, a time to get to it by, and then buy on a regular basis. Obviously, I think Bitcoin will go up over time, so I think it’s generally good to buy sooner rather than later. There’s no requirement that you get in early, it’s just a matter of to what extent do you feel like you want this as part of your portfolio? I have an article called, everyone should have a Bitcoin insurance policy. And it’s basically the argument that every adult that’s managing their own portfolio should own whatever amount of Bitcoin makes you indifferent to the world where Bitcoin takes over and the world where it collapses. If you worry about Bitcoin collapsing, you should sell until you stop worrying. If you worry about Bitcoin taking over, you should buy until you stop worrying. And if you aren’t worried about either possibility, you own the right amount of bitcoin. So that to me, is how I recommend people think about. Buy slowly, buy over time, and buy whatever amount is necessary for it to stop being a thing you think about. 

In terms of on-chain metrics I trust some, but it’s good to recognize that you’re probably just doing astrology in some sense. The number of factors which determine price are so much more than could possibly be captured in those numbers. For example, probably the single most important piece of information you could have about the price of Bitcoin in the next 12 months is what the fuck is going on in Putin’s mind. If you understood what Putin was thinking that would be by far more valuable than any line drawn on the chart. That’s going to be the most dominant thing that impacts bitcoin’s price in the next 12 months.

The Chainletter is written to promote the projects and discussions within this community. Do you have a topic or a project you find interesting? Reach out to David or Elijah.

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🌴⛓ Chainletter

Our weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, our projects to come, and a roundup of the best (twitter) threads and articles sparking conversation within our Discord.

In the past 7 days, 10 new Rainmakers have joined the forest.

The top three channels were: 📈│ charts, 🎨│ nfts-general, and 🎮│ gaming-general.

A Reserve for the New Eden: the Cyrus of EdenDAO interview

Chainforest’s long been interested in projects experimenting with making markets for carbon credits. What feels like eons ago, we all gathered for the chaos of the KlimaDAO launch. Since, we’ve paid close attention to the evolution of alternative projects such as EdenDAO — whose founder, Cyrus, we’re proud to call a Rainmaker.

In this issue, I sit down with Cyrus to discuss carbon markets and the nuances of Eden.

D: So how I understand it is the end goal of EdenDAO is to create a reserve currency pegged to high value carbon assets which will be purchased by either the DAO (on the way in) or by different corporations (on the way out). Is this correct?

C: Yeah so, the end goal of EdenDAO is to create a reserve currency initially pegged to $1 = 1 year of permanence and backed by by high value carbon assets which will be purchased by either the DAO (on the way in) or by different corporations (on the way out).

D: EDN will then become a stablecoin which is used by companies to purchase carbon credits. How will the carbon credits be brought back off line, into the real world?

C: There’s many ways to approach this, and we’re still figuring out what’s best right now. Something that would make sense is that a purchaser would have to redeem their credits with the DAO through a proposal, which could issue a real-world certificate.

D: What makes some carbon assets high value? For example, how do the carbon credits that EdenDAO seeks to accrue differ from those used by Klima?

C: There are actually many kinds of carbon credits. The ones we focus on are removals, which remove carbon from the carbon cycle and heal our planet. In that sense they’re similar to MCO2 (issued by MOSS Earth) and NCT (issued by Toucan Protocol). An analysis of BCT showed that they were mostly emissions reductions credits, not removal credits. Those represent “we threw out less garbage into the atmosphere” credits. They don’t actually represent the healing of our atmosphere. MCO2 and NCT are “nature-based” removal credits, and we could support them too. Nature based credits are one type of removal. They’re like the AAA Prime of the carbon market. The Wagyu A5 are “permanent” removal credits, which we like to focus on. In the traditional carbon markets, these are way more expensive than NCTs and MCO2, and at the rate we’re going, it would take years before it would be profitable for these players to bridge to Klima.

D: How will the protocol integrate with the existing tokenized carbon offsets?

C: MCO2 (issued by MOSS Earth) and NCT (issued by Toucan Protocol) underlying TCO2s would likely be eligible for the global carbon reward.

D: How could projects / people get directly involved? Like say I’m a carbon credit tokenization platform. Where do I fit into the protocol? do I fit into the protocol?

C: Carbon credit tokenization platforms are like carbon credit marketplaces in that they aggregate many projects together, and have access to a pool of real world carbon assets. With our protocol, these folks play the role of carbon chain bridgers — bringing CO2 on-chain. A lot of these folks have to straddle both the sourcing of projects and the selling of these assets. With the Eden Dao Protocol, they could focus just on sourcing qualified projects, knowing that there is a floor price for their assets and a commitment from the protocol to purchase these assets. Eventually, as on-ramps mature, carbon removal projects could communicate with the protocol themselves. Another group of people are DeFi investors. They will be able to purchase our EDN token for $1, LP our Global Carbon Reserve, and participate in platform governance. They legitimize the fact that $1 = 1 EDN, which sets the floor price for carbon.

D: You say reflective liquidity creates a money-source carbon removal market to disrupt the existing money-sink markets. Can you explain this?

C: In the real world, corporations and consumers are expected to pay a cost to heal the atmosphere. The upcoming wave of Regenerative Finance DAOs operate similarly, in that they seek to transfer capital from the crypto money bucket into the real world money bucket. The medium for this transformation is the tokenized asset. This is fine, but there’s an opportunity to reframe how we think about carbon altogether. Instead of carbon as a cost, why don’t we think about carbon as a source of money? This idea isn’t as out there as it might seem. It’s inspired by the past really. It’s like how when we found more gold, we felt richer — and we had more “money.” Gold had some properties that made it convenient for physical use, but now with blockchains we’re beyond that. Carbon as a source of money is an interesting one too because carbon removal isn’t an extractive industry like oil and gas — it’s a healing industry. The properly evaluate carbon removal we need the right ruler. You wouldn’t measure length in kilograms, for example. And one of our insights about the carbon removal market is that the underlying “measure” is ton•years. That is, how many tons of CO2 stored permanently for how many years? Our protocol establishes a global carbon reward of 1 EDN for every year of permanence, for every ton of CO2 removed. EDN is minted by the protocol to reflect the value of the permanence of CO2 removals, a value which has never been tokenized before.

D: What do you think the largest challenge facing the Eden Dao is?

C: I think the largest challenge is getting the attention of massive amounts of crypto-capital to participate in the protocol. Attitudes are conservative across DeFi. Carbon is uncorrelated with DeFi, and there’s a lot of money to be made here, which is why countries, multinational corporations, and hedge funds are already racing to get their hands on as much carbon as they can get. Meanwhile crypto-retail is busy buying Pixelmon, you know?

Different Types of Carbon Credits (Eden uses Carbon Removal w/ Long-Lived)

From the Mouth of the Forest

OpenSea Hack

• A phishing attack caused $1.7 million worth of NFTs to be stolen from the OpenSea marketplace.

• Though a relatively small attack in the big picture, OpenSea’s reputation has taken a hit, as several twitter users have complained of the lack of response when submitting a support ticket.

• Amit - @AmitMukherjee mentions that it is illegal to sell a stolen good, so those who purchased a stolen NFT may not be able to resell it, providing a terrible user experience.

• OpenSea CEO Devin Finzer explains the attack in the thread below.

Devin Finzer (dfinzer.eth)

@dfinzer

I know you’re all worried. We’re running an all hands on deck investigation, but I want to take a minute to share the facts as I see them:

10:53 PM - 19 Feb 2022

Chainforest’s ETH Vs BTC Debate

• Not your typical BTC vs ETH conversation broke out in Chainforest’s Bitcoin channel

• Discord user joao_beraldo - @0xJ010 asked about innovation in the btc sphere saying it could become a “boomer coin” 

• Knifefight defends Bitcoin saying that its main proposition is being difficult to change, so rate of innovation will always be subpar when compared to Ethereum.

• An interesting article was shared, highlighting the trouble with Ethereum The Trouble With Ethereum

• Yusuf and Knifefight debate ETH vs. BTC

Ukraine Receives Crypto Support

• Ukraine has set up Bitcoin and Ethereum wallets to accept donations to help repel the invasion by Russia. The wallets have received almost $11 million USD as of 2/26/22.

• The request for donations comes from the official twitter account of Ukraine.

• The Ukrainian Digital Ministry would not elaborate on how the funds would be spent.

• A separate Ethereum based token project Help Ukraine ($HUKR) has been set up to donate to Support Ukrainian Sovereignty, which pledges to distribute its funds to various Ukrainian Charities. Almost $300K has been raised so far.

Community Updates

From the Town Hall

• Link to this week’s Town Hall Notes and Town Hall Recording

• The Chainforest fund has taken steps toward officially launching the fund, creating a SVB bank account and setting up legal infrastructure. 

• Once infrastructure is set up, Chainforest can start closing on deals. 

• Greg Bresnitz will be helping with CF’s brand strategy. He has previous experience in helping FWB on their brand strategy. 

In the Community

• Alex @awetterman has been running token sales at CoinList, in addition to being a founding member and gaming lead at Chainforest. Starting next week, he will be transitioning to leading crypto investments and incubations at ac0 (AlleyCorp’s new crypto fund) with fellow rainmaker, Cam Porter. Alex is excited to continue collaborating with the amazing Chainforest community to build and invest in the best projects in crypto.

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🌴⛓ Chainletter

Our new weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, and our projects to come. We’ll also offer a collection of the best threads and articles sparking conversation within our Discord.

In the past 7 days, 13 new Rainmakers have joined the forest.

The top three channels were: 🎨│ nfts-general, 📈│ charts, and 🎮│ gaming-general.

Urbit, Uqbar & The Digital Domestic: The ~hodzod-walrus Interview

A few months ago, Chainforest dove deep into Urbit, the world’s only p2p networked operating system focused on making the internet cozy. “⬜│ urbit” was spawned and a deep dive session with Rainmaker ~hodzod-walruscurrently building Uqbar, a blockchain built on Urbit, was organized by Cam Porter and David Feld.

In this issue, we dive again into the computatively esoteric world of Urbit with ~hodzod-walrus to learn more about it’s structure, solutions, and what distinguishes Uqbar from the rest of L1s.

D: In your words, what is Urbit?

HW: Urbit is a purely functional definition of a computer that allows people to perform things that are very difficult to do in the traditional computing environment that we’re all used to. What I mean by that is it is very difficult for every person that uses a computer to run services — hosting, uploading, streaming, etc. This leads to people basically using their computers as terminals to interface with other people’s computers instead of running services on their own. Those other people are usually corporations, which then post, store, and do what they want with your activity and data. Instead, Urbit makes some technical choices that basically rebuild the whole stack from the ground up and let running services be an everyday thing.

D: How did you get into Urbit?

HW: I had heard about it like years ago, just because it gets posted on Hacker News. I had looked into it and had no idea what was going on. In college, though, studying CS, I started getting into functional programming like Haskell. Then I saw Urbit again. I recognized that the entire operating system was functional, which inspired me to get on the network in 2020. 

What has kept me super interested is the fact that everybody I meet on the Urbit network is super interesting, in one way or another. It really is a new way of being social on the internet. We’re all used to having a bunch of different accounts, spread across different platforms, having pseudo-anonymous identities. Making friends is a pretty bad term for what we traditionally do on the Internet. It’s mostly just liking posts, and searching for engagement and stuff. Urbit is not like this at all. It really is a more accurate reflection of how humans socialize. A user has a permanent identity, acquires a reputation attached to that identity, and accesses public and private groups related to the interests that they have. It lays the groundworks for making connections with people in a very nice way. I already use Urbit more than I use the regular internet.

D: What will bring the next million to Urbit?

HW: So the irony is Urbit is supposed to be easy, but up until recently it’s been hard. Urbit ID’s live on Ethereum, which is expensive. That cost, up until a couple days ago when layer two planets became available, created friction. Now, there’s a bunch of people giving them away and, if you know who to ask, you can get a planet for free. 

But then there’s the matter of making the pipeline of owning an Urbit ID to running it smooth and simple. A lot of people are working on low cost hosting for that — $5 -10 a month can get you hosted on Urbit. The pipelines for onboarding to Urbit are becoming easier and easier. There are now, by default, peer-to-peer social networks called Groups which make what I think will bring the next million to Urbit possible. Onboarding the next million people to Urbit is going to come down to making Urbit the best place to run your DAO: having proposal creation, voting, social feeds, multisig transactions, in the same space as sending and receiving messages — right on your Urbit ship. That’s what we’re doing at Uqbar. 

Right now, DAOs are really scattered across a bunch of different platforms. They use discord for communication. They use mods and bots to bring the chain to discord, to demonstrate I own this NFT, that I’m a part of this DAO. They use snapshot for voting, gnosis for wallet management, Discourse, Notion, for documentation.

The silly thing about that is it’s not your state on the chain, or that state of your data, that is connected to your discord status. It’s a one- time thing that can get out of sync. It’s a workaround. There are a lot of pain points there, in those separate states. The state of the DAO on chain, and the state of the DAO’s assets on chain, should be synchronous with the state of whatever you’re using for your place of meeting at all times.

D: What are the differences between galaxies, stars, and planets? Are they operational privileges?

HW: Yeah so, I think everybody’s going to be able to use their planet level to host their DAOs. There’s no gatekeeping at the star level in terms of who can use a DAO or run a DAO service. So that’s not a worry. Stars are useful for being a more trustworthy identity on the network, because they come at a higher cost. There’s some really interesting theory around this that I’m excited to see in practice: how much is a star worth simply for being a certain class of node on the network? 

Right now, being even a planet is a very high trust thing. I trust planet owners, to a certain degree. This is basically the premise of why we have Urbit IDs and why they’re not infinite. If somebody is running a planet, they’re a real person. They might own other planets, but this is clearly an identity that they’ve invested something into. It’s a pretty cool thing to have a planet and be immediately recognized as a first-class Internet user.

Yeah. So yeah, you can look at all Urbit IDs as equal in that realm of capabilities, belonging to organizations, DAOs, stuff like that. It’s just an identity, a login to stuff. It’s one identity for everything.

D: How does Urbit governance work?

HW: Urbit governance is poorly understood by people who aren’t on the network. t’s no fault of their own. It’s been a pretty esoteric project for a while. We’re just starting to make things approachable. Urbit IDs are first class computers. They have the same set of things that they can do. The ID hierarchy serves two major roles. 

1. It demonstrates skin in the game, and just generally status. Rare things are valuable for being rare. NFT’s have proven this. Owning rare address space, just like owning prime real estate, is a valuable thing. 

2. Even more significant to Urbit governance is the Urbit ship. You receive your software on your Urbit ship, you can receive the default software, what comes with your computer, when you buy it, from your star, which receives it from its Galaxy. Thus, the Urbit software needs to be governed or chosen by galaxies. Right now, everyone is on the same page. Everyone is downloading the same Urbit software from one galaxy which is run by Tlon, the company actively developing Urbit. But it doesn’t have to be this way. Anybody can choose to set the source for updates to whatever ship (galaxy, star, planet) they want. However, users need to coordinate if they want to communicate with one another, and be “on the same page”, in terms of what protocol they’re running. So Galaxies, of which there are 256, actually do have what’s called, “the Galactic Senate”. This is where they get together and they say, okay, you know, “we’re all on the same page with the protocol here” — the apps, the operating systems — that we’re going to be pushing down by default to all the ships beneath us in the address space. That’s the extent of it. Now, there might be a case where two parts of the network are in disagreement about what the protocol is, and they’re not communicating with one another. That’s okay. That’s a fork of cryptocurrency. Forks have happened in the past. Usually one fork wins, because it achieves more adoption, and the other dies. That’s fine. In Urbit, planets could migrate their host or their sponsor to a galaxy, to get that specific set of apps and version of OS. So the whole thing boils down to optionality. There’s no reason to ever be locked in to one galaxy or star that’s providing you with software updates, you can go to any other galaxy or star or planet for that matter. It’s totally decentralized.

D: How will Uqbar and Urbit merge with existing blockchains?

HW: We want to be able to really tightly integrate the Ethereum chain with Urbit stuff. We’re very interested in Ethereum’s potential to stick around as a base layer to settle to and to hold critical information and assets. I don’t want to position, you know [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]. What I can say is, there’s going to be tools for interacting with Ethereum in the Urbit environment. I’m not talking about bridging assets. That’s down the road. I’m talking about using an Ethereum wallet that’s on your Urbit ship to directly read data off of Ethereum and use it in a DAO context.

Diving into Urbit really has been a community effort. Below are some resources compiled that helped us dive deeper into this exquisite project whose ambition knows no bounds.

Understanding Urbit - shared by Amit Mukherjee

Urbit: the Good, the Bad, & the Insane - shared by Schottsy

Introduction to Urbit & FAQ - shared by ~hodzod-walrus

What Da Beep is Web3 w/ Galen (Tlon), TobyShorin, Ed (Urbit), & Sam Frank - shared by David Feld

From the Mouth of the Forest

On Bitcoin:

• A proof-of-work vs. proof-of-stake discussion sparked in the Bitcoin channel, citing these two twitter threads: Lyn Alden on Proof Of Work & Ryan Selkis on BTC Dominance

• Mark Cuban jumped in the comments with a harsh response

• In the Chainforest Discord, yousuf  - @yousufhaque brought forward the argument that proof-of-work is also subject to economies of scale, as those with more capital can purchase more computing power.

• Chainforest member @americanpharoah brought forward an interesting point, stating that Ethereum took a better path to decentralization and inclusion by being a proof of work project for ten years before switching to proof of stake.

P2E Gaming:

• Conversation broke out discussing play-to-earn crypto gaming vs. “play and earn” in the gaming channel/ general channel.

• Alex - @awattermann shared an interesting article about the financialization of crypto gaming.

• General consensus was reached that a game needs to be fun to play before anything else in order to have a long term future.

• Personally, I have my doubts about P2E gaming, as right now VCs are flooding the market with capital, so earning “money” on a P2E game is not incredibly difficult.

• What happens when that influx of money stops? Does it take the route of online poker where only the best survive until eventually there is no one left?

Crypto Superbowl Ads:

• The Superbowl saw advertisements from all the centralized exchanges that operate in the U.S. The number of prominent crypto ads, including ads from Coinbase, FTX, and Crypto.com, represents a moment for the crypto industry as a whole. It indicates that these companies have generated enough wealth to spend tens of millions collectively on crypto ads. More importantly, it suggests the crypto industry believes the average American is ready to adopt crypto. Our favorites:

• Overall Winner: Coinbase, whose floating QR code for $15 in BTC sparked 20 million visits to the Coinbase site.

• Most entertaining: FTX. In various points in history, Larry David’s character rejects major inventions such as the wheel and electricity, eventually rejecting cryptocurrency.

• Critics lashed out at the ads, calling them irresponsible for promoting ‘FOMO’ over educating people on the risks of investing in crypto.

• This article by The Verge makes an interesting connection to 22 years ago when 17 dot-com startups bought Superbowl ad slots. Those 17 companies no longer exist.

Alive and Well

ETH Denver:

• Several members of Chainforest met up at ETH Denver for happy hour and dinner, the turnout was impressive (over 20 members). It was nice to put faces to discord names.

• Other “unofficial” happy hours and meet ups occurred throughout the week of ETH Denver.

• At my first crypto conference, I found it impressive how organized it was, how friendly everyone was, and how almost all events were free (open bar too).

• Big musical names were also hired for certain, including DeadMau5, Tiesto, and Pussy Riot.

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In the past 7 days, 18 new Rainmakers have joined the forest.

The top three channels were: 🎨│ nfts-general, 🟡│ bitcoin, and 💡│ project-ideas.

Pianos & Inner Worlds: the Josh Lavine Interview

Josh Lavine is a Holistic Personal Development Coach focused on leadership and teamwork who’s worked with Chainforest’s Conscious Leadership Development group in the past. A practitioner and figurehead of the Enneagram, he’s recently begun producing a variety of content intended to make the Enneagram more digestible and accessible. Check it out here.

D: What is the Enneagram and What is the History of It?

J: The Enneagram, as we know it today, was developed into a personality typology in the 60s by a guy named Oscar Ichazo. It is a map of the human psyche that illuminates with precision and robustness the shadows of your inner world. It’s basically a night vision goggles for your inner world, and it’s a tool for Self Realization — for becoming the best version of yourself. 

The history of it is mysterious. The symbol itself is impossible to know where it came from originally, but the geometry of it suggests it came from a culture that was advanced in mathematics, like, it certainly is consistent with Pythagorus and his contemporaries. But it could have been from a much more ancient culture that was also advanced. 

The symbol was discovered by a guy named Gurdjieff, who was an Armenian mystic in the late 1800s, early 1900s. As a young man, he became convinced that there was ancient knowledge that had been lost pertaining to how human beings could become more than their automatic reactivity and fully self-actualize. He and a group of people that he called the Seekers after Truth would go on these long quests all around places like the Middle East and Northern Africa, seeking ancient wisdom, and they would come back and convene and share what they learned. From this, Gurdjieff distilled their findings and created a whole framework of psychology, spirituality and cosmology called the Fourth Way. He developed a following of students in Russia, and the Enneagram symbol was a big part of his teachings, though he didn’t teach it as a personality typology. He taught it as a central sacred symbol that, according to him, anything in the universe could be understood through. He thought the Enneagram was like this divine key that unlocked fundamental insights about anything that you applied it to. It wasn’t until the 70s when a guy named Oscar Ichazo came along that it became a personality framework. Ichazo was a Bolivian born spiritual seeker, who kind of like Gurdjieff also spent a lot of his youth traveling and reading about self actualization from ancient traditions. Drawing on Kabbalah and Christian mysticism, and some ideas from the Neo Platanus, he developed the nine personality types of the Enneagram as we know it today. 

D: What is your relationship to the Enneagram and what about it captured your interest so strongly/changed the way you think about yourself?

J: Yeah. I was 27 when I learned about the Enneagram. I’m 34 now. I was living in St. Louis, three years into a journey of learning how to play the piano and then playing piano professionally at a piano bar. So I was playing piano in St. Louis and a friend of mine, who was from St. Louis was like, “Hey, I just took this weekend workshop on a thing called the Enneagram. I think you’d like it.” I was like, “Sure.” So I went just on the recommendation of a friend. 

The class had an unbelievably profound effect on me. I was already pretty introspective. The whole journey of me becoming a piano player itself was a whole kind of revolution, where when I was 24 I realized I’d never done anything for myself, and I wanted to find something for myself, that was just for me. And so I quit being an academic tutor and physics teacher, and then decided to learn how to play piano and become this piano bar player. 

The word authenticity was a big deal to me at the time. Now, when I learned the Enneagram, three years later, I learned that I was a type three. The virtue of type three, the literal word that they use for the virtue of type three is authenticity. The whole structure of the type three was about this idea of chasing success, not knowing who you really are, and losing yourself in the pursuit of validation. Living from the outside in, and not the inside out. Learning about the Enneagram clarified, and gave language to, something that was already very clearly in my mind as the journey I was on. At the same time, it revealed things about me that I considered very private. Things I’d never really shared with anyone, that were very plainly and compassionately written about in this book, that were just like, oh, yeah, here you go. This is the thing you don’t really want to look at. But this is the truth about you.

I remember my jaw being literally on the floor as I was reading through the chapter on type three in this book, and then taking the class and learning about becoming healthier type three, and fully revealing myself to strangers in a way that I never had before. It just was a total cracking open of the parts of myself that I didn’t really know existed or maybe had buried. And there was something so real about it, and so deep, and so accurate, that I was like… even though I was skeptical about some ancient system using an occult-looking symbol, I was just like, “This is real. I have to look at this.” And I kind of haven’t looked back since. 

D: What practices have been most successful for you when it comes to integrating the Enneagram into your life?

J: Well, first, in terms of growth, having a community of people also doing this kind of work was one of the most important things I ever did. It formed a container within which I felt accountable and felt continually called upon to dive deeper and deeper into myself, especially when the journey was too painful and too confusing and too scared to do it myself. It was this same community that I went back to on a regular basis in St. Louis with this one teacher. That also included a two year long program where we met every quarter to check in with each other. And we were challenged to take on practices for ourselves. And we did exercises every quarter with each other. The whole thing was very powerful for me.

In my daily life, committing to a daily personal growth or spiritual practice was very, very powerful. For example, meditation. I’ve had a more or less consistent meditation practice for years. Sometimes it flickers on and off, but for the most part, it’s been there. So much so that I notice now that if I don’t have it for a while, I’m called back to it. Before I started meditating, it was hard for me to do it. Now it’s kind of like I notice when I’m off. The internal equilibrium point has shifted.

Also, various forms of journaling have been tremendously useful. One I would highlight was a 100 day commitment to write a letter of appreciation to someone daily. To be clear, this was not like a three sentence thing. I spent sometimes hours a day writing. It was a very significant, very time consuming practice. The daily practice of consistency, like I’m writing a letter about someone that I really care about, and tears because I’m realizing how much I love this person, how beautiful they are, and doing that every day. It really awoke this part of my heart. Yeah. And that was very cool. 

Another one of the most powerful things that I’ve ever come across is something called The Work of Byron Katie — capital W. She’s this lovely, lovely older woman who had this powerful awakening in her 40s. She now teaches this method of inquiry where basically you fill out a worksheet. You put all of your petty thoughts on the worksheet, and then you go through each thought that you’ve written down and question it from different angles, you ask yourself questions about it. And it’s actually very similar to CLG, thinking of the opposite of the story and reasons why the opposite is true. 

D: What’s your favorite song to listen to on the Piano?

J: Um…. *sighs*… Blue Fields, which is a classical song by Nobuo Uematsu from Final Fantasy VIII. It’s my favorite piano piece.

D: What’s your favorite song to play on the Piano?

J: It changes a lot, but right this moment, it’s the song from Supertramp called Take the Long Way Home. It just grooves so hard. It’s a very heavy left hand bass song. It stays on one note of the bass for most of the song and has this thumping kind of feel that’s very fun to play. Also, it fits my voice really well. So it’s nice to sing it. 

It’s actually an Enneagram Nine song — a song about this experience of fading into the background and being ignored. I realized that I was kind of feeling that way myself. And this whole recent arising into creating all this content and bringing myself into the world has been like an antidote for that. It has felt really good.

Josh will be hosting a 12 week live program for founders, investors, coaches, starting on March 7th.

And, on February 25th, he’ll be giving a talk with Human Ventures on the Enneagram in the context of startups.

From the Mouth of the Forest

Scandal Rocks TIME Wonderland:

• @zachxbt doxxed Wonderland’s treasury head @0xSIFU as Michael Patryn, formerly Omar Dhanani of QuadrigaCX - zachxbt’s conversation with Daniele.

• In addition to his connection with QuadrigaCX, SIFU has previously been convicted of conspiracy to commit credit card fraud and burglary.

• It was discovered that Daniele Sesta knew of SIFU’s true identity a month before he was doxxed but chose to withhold this information.

• A summary of the SIFU scandal was written by rekt.news - Rekt News SIFU Scandal

• Despite recommendations to wind down $TIME, users voted to continue as ‘Wonderland 2.0’ as outlined in this Medium article - Wonderland 2. 0 Medium Article

V1/V2 Punks Drama:

• In 2017 LarvaLabs issued cryptopunks. However, the first version contained a fatal flaw in the code and as a result v2 Punks were issued and the “v1” Punks were quickly disowned.

• Emerging NFT marketplace LooksRare.org allowed these “v1” Punks to be wrapped and sold as “Classic Punks” or “Wrapped CryptoPunks v1”.

• Larvalab’s actions drew many harsh criticisms on twitter:

• DC Investor Response

• Cobie’s Thoughts on Larvalabs’ Actions

• NFTStatistics.ETH Response

• Despite an initial price crash of almost 15 ETH on the floor price, the price quickly rose to stable floor prices of almost 50 ETH.

Chainforest: the Next Stage

• Conversation took place on whether Chainforest Key Roles should be filled internally or externally.

• For those interested, a list of key roles can be found here. Reach out to @amitmukherjee on Twitter for more information.

• A conversation regarding the size of Chainforest took place, with Amit advocating for around 300 so that carry from the fund is significant.

• A suggestion that we bring NFT founders and other crypto cavaliers into the town hall meetings to discuss their visions was proposed.

Making It Rain

Rainmaker Abraham Litwin-Logan (abeisr on discord) is the co-founder of Coterie Capital, a DAO launching and management platform, is launching next week. Focused on providing a seamless user experience, they will be offering two products at launch .

1. An automated purpose-built DAO set-up tool, giving users optionality where they need it most. 

2. A bespoke DAO service where they can work on a one on one basis with clients looking to set up and manage complex digital organizations.

• https://twitter.com/Coterie_Capital

• https://discord.com/invite/Uv5wctwrhm

Rainmaker Jeff Park is joining Bitwise as their first Active Portfolio Manager to help build its flagship active product, as well as the broader active management platform architecture.

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🌴⛓ Chainletter

Welcome to the Chainletter. 

Our new weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, and our projects to come. We’ll also offer a collection of the best threads and articles sparking conversation within our Discord.

This Week - NY Crypto Regulations, a Sushi Scandal, a Polygon Nightmare, a Jack Controversy, and Community Updates and Projects

🗽 NY Crypto Regulation Breakdown

While we could dedicate several Chainletter issues to the topic (and myriad sub-topics) of crypto regulation, today we’re going to focus specifically on NY state’s “Virtual Currency” policies. Though it’s a NY state policy, the bulk of the impact is felt in NYC, given that much of the crypto community driving innovative and promising projects is based here and the surrounding metro area. So what gives with the hyper-intense regulation in the home state of the financial capital of the world?!  

First, we must understand the dreaded BitLicense (aka NY State’s required business license for any crypto company to operate. More details in the above link). Most agree that some level of regulation is good. However, many also agree that NY state’s byzantine approach is stifling participation, for individuals, companies, and DAO’s, in the most disruptive tech movement since the advent of the internet.

Alex Adelman and Aubrey Strobel of Lolli wrote a thoughtful piece - Kill the BitLicense - earlier this fall outlining major pitfalls with this regulatory approach. When creating the BitLicense in 2015, NY state thought it would serve as a model for other states to follow in their regulatory footsteps, yet none of the other 49 states have issued as much red tape. So what’s up??? Per the linked article:  

“Why, then, does New York continue its commitment to the BitLicense? It certainly helps that the primary source of NYDFS funding comes from institutional banks. Bitcoin and cryptocurrency exchanges threaten to disrupt the hegemony of the traditional banking system; therefore, one can easily see why the department would beat back companies disrupting traditional finance.” 

Yikes…but not all hope is lost! A few weeks after this article was published, crypto-friendly Eric Adams was elected as NYC’s newest mayor, taking effect January 1, 2022. While he has already stirred up some controversy with his relationship to bitcoin billionaire Brock Pierce (details here), it’s clear that he’s committed to addressing Albany head-on to positively position NY state on riding the crypto wave instead of letting Miami, San Francisco, and Austin surpass us within the states, and the ROW crypto community at large. While the future of NY state regulation remains uncertain, it’s clear that crypto/web3 is here to stay. We have a once in a lifetime opportunity to embrace a new approach to the intersection of technology, finance, and culture that will benefit the many instead of the few.

🍱 Too Many Cooks in the Kitchen? - A Sushi Scandal

Combined Arca & Frog Nation Restructuring Proposal - Proposals - SushiSwap

Contributors Arca and Daniele/Frog Nation have combined elements of both initial proposals to provide a final version of the proposed restructure.

forum.sushi.com

• The recent report on the Sushi Scandal by rekt.news has demonstrated that the protocol is in need of restructuring.

• Many love the project, such as Daniele, who has called for Sushi to merge with Abra. The proposal has gone through a series of iterations to reach the final stage linked above.

• Many, in and out of Chainforest, are paying close attention to Sushi.

0x7d54

@0x7d54

For my latest long-term investment, yesterday I bought ~500,000 $SUSHI (0.39% of total @SushiSwap circulating supply). I think the risk/potential reward equation with SUSHI is just too good right now.
Here's why: A 🧵
1/

3:11 PM - 20 Dec 2021

😈 A Polygon Nightmare

Polygon's Surprise Code Change Triggers Questions and Controversy - The Defiant

In web3, there aren’t many words more fought over than “decentralization.” So if someone calls a blockchain’s decentralization into question, it’s going to draw a crowd.

thedefiant.io

• While forking is a very standard practice in crypto, unannounced hard forking of a decentralized protocol is not. Especially when the upgrade to the Polygon codebase seems to have happened far too easily to not be centralized.

• At the time of writing, Polygon had yet to formally respond to inquiries regarding the situation. However, Co-founder Mihailo Bjelic, tweeted that a security partner discovered a vulnerability in one of their verified contracts and promised a blog post detailing the situation is underway. Also, co-founder and COO Sandeep Naiwal tweeted the silent upgrade was best to avoid exploiting the vulnerability.

• In the aftermath, many have provided hot takes against Polygon, wondering why anyone is surprised that this project, as well as DeFi overall, is not more decentralized. Much to ponder. 

🌱 Jack and the VCs

jack⚡️

@jack

You don’t own “web3.”

The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.

Know what you’re getting into…

10:51 PM - 20 Dec 2021

• This controversial take comes from Jack Dorsey, ex Twitter CEO, notable BTC maxi, and now (according to Crypto Twitter) web3 public enemy number one

• Many in Chainforest disagree with his take, specifically the black-and-white way he describes VC/LP “ownership” of web3. In web3, what does that statement mean?

• While there are centralized services and organizations in web3, there is also power in the fact that crypto is lowering barriers to entry in many capital formation and allocation products in ways that have never before been achieved.

🫂 Community Updates

♀️ Women in Chainforest

• The #Women-In-The-Forest channel talked for the first time this past Thursday in the Chainforest Lounge! Spearheaded by Amira, following the holiday season this meeting is hoping to become regularly scheduled, so if you’re a women or nb individual who would like to join, feel free to drop days and/or times that work for you into the channel.

Urbit Learning Group

• The Urbit learning group met on Thursday as well, covering the ecosystem’s basics. If you’d like to learn more about Urbit, you’re encouraged to read and ask questions in the #urbit channel, join in the next group session, or watch this Urbit primer video.

Chainforest Media

• The Chainforest community continues to expand, and Chainforest media is growing into an integral part of it. Over Q1 ‘22 we hope to increase consistency of the Chainletter and expand the in-house media content to include a limited-run Podcast that may or may not be supplemented by Twitter Spaces. More to follow…

🎄⛓ Community Projects

Very $MERRY Gift Basket & Gift List

Following a post by Parker, David and Amira collaborated on a simple tool, allowing you to give $MERRY, a basket consisting of 25% BTC, 25% ETH, 25% LUNA, and 25% MATIC. Built with Set Protocol, $MERRY will be available at verymerry.holiday.

Also, please donate to the below Ethereum address if you’re feeling generous. This will be used to reimburse our team for the expenses incurred from hiring a dev.

0x91cC8CeDE7D959Dba66E174ced6116d88f012cD6

Further, a very $MERRY Holiday also has a gift list component which we would love to get a designer on. Please reach out to ChainforestDAO on Twitter if you’re interested in helping out!

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🌴⛓ Chainletter

Welcome to the Chainletter. 

Our new weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, and our projects to come. We’ll also offer a collection of the best threads and articles sparking conversation within our Discord.

This Week - The Question is, to Buy a Punk, to Not by a Punk?, Urbit & Community Developments!!

⚡️ Bitcoin .vs. Ethereum

Holy wars are nothing new to crypto: Bitcoin over Ethereum, Ethereum over Bitcoin. Thus, it is always nice to see a nuanced, respectful engagement between those looking to develop the best risk-reward asymmetry for their portfolio. Below you’ll find a follow up from the Bitcoin vs Ethereum thread stitched together last week between Chainforest Users.

On Ethereum and its non-deterministic supply

On Bitcoin, the Economic Security of its TXN Fees and the Cost of Entry vs Ethereum

To dive even deeper, the BTC v ETH allocation thread has been dug up from the archives for this week’s feature.

🤔 To Buy or Not Buy a Punk?

WHAT THE PUNK? Is the question floating around the NFT space lately as CryptoPunk floor prices drop, signaling a possible flippening of BAYC [Bored Ape Yacht Club] to become the NFT collection with the highest floor prices to date. Here is a comparison between the two projects. 

Regardless of personal art preferences, we’re looking at this from a long-term investment point of view and the two projects have very different investment theses. Punks are culturally and historically relevant given they are credited as the oldest / most popular NFT, whereas BAYC is focusing on utility supported by a roadmap, CC0 (Wondering what this is? Check this article in the context of Punks vs Apes), and content. Is one better than the other? Nope, they are simply different approaches, which we’ll expand on below. 

Punks

• Holders aren’t fussed by CC0/IP & commercial rights and care about the historical relevance of the project above all else and don’t feel the need to add further utility 

• Holders expect the overall art market to increase via NFTs and Punks will valuable as long as NFTs are valuable 

Apes

• Holders are hype that IP rights are limited to individual owners and allow further monetization of their initial investment via derivatives (merchandise, content, branding) of the art 

• Holders expect BAYC to stay relevant and increase in value through partnerships, exclusive events, and gamified participatory community & art initiatives   

With that said, one project is not more important than the other given they have entirely different purposes. If you’re looking for a more passive investment that carries significance then Punks may be the way to go. However, if you want to leverage a super active community focused on utility then Apes and other projects are likely a better fit. With that said, both projects should be supportive of each other to bolster the overall NFT market and community. There is no reason these two projects can’t coexist while finding mutual, yet different, types of success long-term. WAGMI!

🪐 Urbit Learning Group

2PM EST, this coming Thursday, December 16th, Chainforest will gather to examine Urbit. A two part, groundbreaking project that has risen over the past 20 years, the Urbit foundation tackles the very architecture of the internet, looking to replace it with a decentralized operating system to facilitate sovereign software and corresponding digital identity to match. Conversations will be guided by experts on the project as well as individuals working directly on Urbit and its upcoming projects.

Some Resources to prepare for the learning group:

Understanding Urbit | Podcast on Spotify

Listen to Understanding Urbit on Spotify. As a highly secure personal server, Urbit aims to deliver on many of the ideas pioneered by the Cypherpunks. After nearly 20 years in development the platform has begun a phased launch. Urbit gives us persistent digital identity, a new benchmark for secure computing, and maybe even an open source response to modern social computing platforms like WeChat and Kakaotalk.

open.spotify.com

Urbit for Normies • Blog • urbit.org

A layperson’s guide to the coming new internet.

urbit.org

Urbit | Your own place

If you want to learn more about Urbit, visit https://urbit.orgCredits:Script by ~minder-foldenVideo by ~rivpyl-sidfylMusic used in this video:Khan & Polo - S…

www.youtube.com

🌴 DAO Dashboard: Chainforest at Large

A massive congratulations goes out to Parker Jay-Pachirat for making the NYC FinTech Women’s 2021 list of Inspiring FinTech Females!

Wallet security has been a hot topic lately, and it’s as important as ever, especially when a wallet is tied to a personal ENS or high value NFT. Join the conversation in #wallet-security, under Tech/Dev/Infra.

CF is talking about Proof of Stake, and Yousef wrote some great thoughts on the essay “Proof of stake is a scam and the people promoting it are scammers”.

After some confusion, Ed explained the options, puts, and calls needed to understand this tweet about the Ribbon Eth Put Selling Vault.

Joao and Tomas have been busy brainstorming an improved onboarding flow inspired by the Blank community, in which the onboarding flow is run entirely within discord, including the application and approval process. This would be done through having a few public entry channels where potential members apply publicly to the existing CF community, and are auto approved as members based on predefined criteria, i.e. number of thumbs up reacts or votes from existing members on their post. They’re looking for community feedback, so let them know your thoughts here!

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🌴⛓ Chainletter

Our new weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, and our projects to come. We’ll also offer a collection of the best threads and articles sparking conversation within our Discord.

This Week - Mr. Buterin & The Witches - Crypto Coven, Terra Learning Group, Vitalik's Family Tree, and, of course, Gaming, Gaming, Gaming

🧙‍♀️ Crypto Coven

Y'all know that in Chainforest we love aping into solid projects together as a community. Why? Because it’s fun, informative, and we can nerd out on reveals and project trajectory together instead of annoying our non-crypto friends and family. Most recently, at least 11 Chainforest members participated in the Crypto Coven NFT mint! 

So what makes this project so solid? For starters, they have an all female team (this is rare…most female-focused crypto projects have men on the team…not necessarily a bad thing, just an interesting point!), all female pfp features, intricate lore, super inclusive and friendly community, and endorsement from high-profile influencers in the space (e.g. Gaby Goldberg, Sarah Guo, Katherine Wu, Tess Rincearson to name a few). 

Taking it a step further, these aren’t just jpegs. Each unique and generative portrait falls under one of six different archetypes - Enchantresses, Hags, Mages, Necromancers, Occultists, Seers - but also have names, astrological signs, and articulations (side note-wondering wtf an articulation is? TL;DR an articulation is a WITCH description that one of the founders created using a combination of her own writing plus OpenAI’s GPT-3 Playground to ensure each WITCH within the 9,999 collection maintained high quality uniqueness. More details can be found here). In addition to the portraits, the team is hard at work building an immersive world for the WITCHES and the roadmap is outlined on the homepage - cryptocoven.xyz. 

Suffice to say, this isn’t your average mint & flip scenario. An incredible amount of detail has gone into creating AND sustaining this project long term. Lastly, it’s abundantly clear how welcoming this project is to newcomers as evidenced by their very detailed website sections: THE ROLLOUT and HOW TO MINT. We love to see this. No one should be intimidated to participate in web3 and projects like Crypto Coven will continue to pave the way for web3 mass adoption!

Want to know more? Head on over to the # | crypto-coven channel to chat with fellow Chainforest members about the project. 

🌖 Terra Learning Group: Round 2

This week Ed @wengzilla led us in another round of the Terra learning group over zoom. It was perfect timing, as the volume of $LUNA finally flipped that of $DOGE and entered the Top 10, perhaps spelling out a strong future for the Terra Ecosystem. With the imminent launches of Stader and Prism, Terra is shaping up to have some serious staking contenders within its own ecosystem. If you’d like to join the next learning group but don’t know where to start, Ed recommends checking out Coin Bureau’s video on $LUNA.

⛓ Links of the Week

Buterin.com: A Chainforest member has dug up a true gem: Vitalik Buterin’s dad’s personal website. If you don’t know about Dmitry, I won’t spoil anything, though I will say the site provides context helpful towards understanding the environment within which Vitalik came to be. More about Dmitry here. 

Rekt - Snowdog: A few weeks ago, a few Chainforesters, looking for some thrills over the Thanksgiving weekend, gathered to participate in Snowdog: an ambitious, yet ridiculous, and ultimately dreadful attempt to turn meme coin $SDOG into Avalanche’s reserve currency. Some are trying to make sense of the wreckage, one such source being Rekt.

Vitalik’s latest post on Endgame: Chainforest members have been excited by the recent release of Vitalik’s post detailing his vision for the endgame of Ethereum. It raised conversations again about the titanic struggle between Bitcoin and Ethereum for dominance as the more “sound” resource. Check out the BTC v ETH allocation thread in 🔵│ ethereum.

👀 Eyes on the Ecosystem - Gaming, Gaming, Gaming

Ubisoft Becomes First Major Gaming Company to Launch In-Game NFTs - Decrypt

After years of dabbling in the crypto and the NFT space, game publisher Ubisoft will implement them within a major release.

decrypt.co

FaZe Clan partners with MoonPay on crypto and NFTs for esports | VentureBeat

FaZe Clan has partnered with crypto payments firm MoonPay to celebrate gaming lifestyle, esports, and youth culture.

venturebeat.com

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🌴⛓ Chainletter

Our new weekly newsletter covers Chainforest - a recap of our latest happenings, our members’ accomplishments, and our projects to come. We’ll also offer a collection of the conversations within our Discord. You’ll even find featured pieces written by the community!

This Week - Has Olympus Fallen? Chainforest's Grail Fund, and Portfolio Syncs

Winter for Olympus ⚡️

Back around August, the inception of Chainforest was marked by a learning session about the beloved Olympus DAO. Since then, with the near-freakish manufacturing of OHM forks across every imaginable chain, sentiments amongst Chainforest members have evolved.

Key criticisms and points were recently leveraged against Olympus DAO by some Chainforest members in a discussion #🤑 | defi. I will summarize them briefly here.

1. OHM is not investable from an institutional standpoint. The fact that the founder has “lost the key” to the contract which allows anyone to print infinite amounts of money is a turn off for institutional investors.

2. Staking creates non-desirable smart contract risk. The promise of sky-high APR forces uses to stake because of the inflation rate, which, at the same time, locks all the asset in a single smart contract, creating a single point of failure. See: OlympusDAO mistake lets user spend $50,000 to buy $1.43m in OHM.

3. Not great conversations around OHM. The reputation of the community and protocol as wildly defensive and unwilling to seriously engage with real criticisms implies the protocol is a ponzi scheme rather than a legitimate protocol attempting to become the world’s reserve currency.

Chainforest's Grail Fund ⚱️

Drumroll please! We are hype to announce the first official investment product of Chainforest is underway - the Chainforest NFT Grail Fund! 

What: 

• The fund will focus on blue chip on-chain NFT projects with a solid “grail” trajectory (e.g. CryptoPunks and Fidenza) and high likelihood of being recognized for their cultural and historic value for years to come.  

Why: 

• The $2 Trillion TradArt market is long overdue for a major overhaul! NFTs are projected to 10-100x and take significant market share of the overall art market. Plus you can invest in a piece of not only crypto history, but also culture history (and maybe flex a little bit to your friends and family that you knew what was good with the JPEG craze early on). Suffice to say, this is good for your investment portfolio. This is also very good for artists and collectors. And like…lots of other stuff too. 

Who: 

The fund is for everyone! Including if you’re:

• new to NFTs and want to dip your toes into high quality projects with expert selection (and secured custody!) 

• a seasoned NFT collector who wants to diversify their NFT investment strategy, access high quality projects without directly paying high floor prices, or have FOMO from missing drops/passing on projects you’ve now come around to  

• a Bitcoin Maxi, DeFi degen, or anywhere in between, ready to take the leap into NFTs 

• …or really anyone who wants to invest in NFTs with their communities and friends! 

More details can be found on the link, including the initial Target NFT List and terms of the fund. The structure is still TBD but is actively being jammed on by Amit. Any questions, comments, or feedback? Head on over to #🤑|chainforest-nft-fund channel and fire away! 

Portfolio Sync 💼

Last Friday, a few Chainforest members got together to chat about where they see the market heading over the next 6 - 8 months.

Conversation kicked off with a macro level examination of Bitcoin, forecasts for its top in December, subsequent estimation of a “cycle-top” in April - May, and the theory of rolling tops: a theory some hear whispered amongst VCs about the effects of a DeFi summer-like event, next summer, bringing in quick retraces and subsequent tops around the estimated “cycle-top” time, instead of a large retrace.

Also discussed was the upcoming release (hopefully by EOY) of the Gravity Bridge, the long-anticipated Ethereum-Cosmos bridge, which is expected to be nothing short of monumental for the growth of the Cosmos Ecosystem.

The DAO Dashboard 🌴

Community Updates 🎙

• Evan Fisher: Portal, an early-stage venture capital firm spun out of Insight Partners ($60B+ AUM, 50+ IPOs) with a focus on crypto, Web3, and the decentralized economy, led by Evan Fisher, now has a Twitter!

From the Town Hall 🏛

• Investors - thinking about the best way(s) to leverage and utilize the immense value generated within the Chainforest community and among our members, and create an avenue for available capital to invest and help support projects that Foresters are behind. If this conversation deeply interests you, contact Amit on Discord (upekkha#4316)!

• Media - It all started with the Chainletter, and now Chainforest is working on building out our media strategy and goals for 2022. In the Town Hall there was great discussion on quality vs. quantity of media produced by Chainforest, and what quality levels must be realistically sacrificed at certain points. In January ‘22, we’re hoping to drop a podcast episode, host a couple of Twitter Spaces, and of course continue our weekly Chainletter. If you’d like to get more involved with Chainforest media, contact David!

• Onboarding - Joao is leading the onboarding effort, and is currently identifying and working through strong onboarding flows of other groups to get a sense of what Chainforest needs to do. Check out #🏂 | onboarding to join the fun!

If you have an update you’d like to share with the community, fill out this form, and tell us about it hear! You’ll be included in the next issue.

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