Q: What is a DAO? [Paid #31]
DAOs and DACs are terms thought to have perhaps been DOA after their first disastrous implementation in 2016, but have quietly grown into a decentralized hedge against regulations for DeFi projects.
Well hello there, my friend!
It’s been another incredibly busy week for me, and most of the bustling activity has come from, yet again, the areas of crypto mining and NFTs. This week, much like the last few, has been filled with looming, vague pronouncements promising crypto regulations from American bureaucrats and elected officials.
I’ve been studying the current state of DAO’s this week (Digital Autonomous Organizations). It occurred to me, given the current level of sophistication of the tooling out there, that creating a DAO for an ad hoc business partnership is trivially easy and cheap using an ERC-20 on Polygon’s blockchain, a simple DAO tool like Snapshot. Without a doubt, the process is certainly much cheaper for blockchain-based projects than hiring a lawyer and drafting a partnership agreement.
Let's say you are putting together a collective to launch an NFT series, or go out for consulting business together where you will likely receive revenue in crypto; setting up a DAO, issuing tokens proportional to the negotiated percentages, and voting on funds disbursement to the stakeholders can all be executed transparently from a Snapshot DAO. What the structure lacks in legally recognizable paperwork, it benefits from a permanent record of handshake agreements and signed smart contracts.
The downside with a rapid deployment like that is that disbursement of funds isn't automatic (it still requires human intervention to carry out the decisions decided upon in a Snapshot DAO), but on the other hand, it's FAR more transparent of a process than traditional finance alternatives to the same process.
Of course, if you're entering into business with untrustworthy partners where automatic disbursal is preferred, there are options for that, though they aren't trivially easy or cheap to deploy.
Does this all sound like greek to you? You’re in luck - we’re going to explore the concepts of DAO’s and DAC’s in today’s deep dive (available only to paid subscribers!) so that you’ll have a better understanding of what’s possible using the current state of modern public blockchains.
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News bulletins of note.
Brazil prepares to adopt Bitcoin as legal tender. The Brazilian government finalizes plans to make Bitcoin legal tender and allow its use for purchases, reported Pymnts.com.
Ethereum-based blogging platform Mirror opens to all. Decentralized blogging platform Mirror announced that it has opened its doors to everyone, reported Decrypt.
Powercrypto Holdings to launch crypto mining in Hong Kong. Powercrypto, a subsidiary of Powerbridge Technologies, said that it will launch a BTC and ETH mining initiative in Hong Kong, reported CoinTelegraph.
Blockchain Behind the Scenes
Original reporting for the week.
MoneyGram partners with Stellar to develop USDC settlements. MoneyGram is reportedly partnering with Stellar to provide infrastructure for instant settlements using USDC and allow customers to exchange USDC and money.
Sky Mavis maker of Axie Infinity raises $152M led by Andreessen Horowitz. The NFT gaming industry continues to attract venture capital with Sky Mavis pulling in $152 million in Series B funding.
The Texas Blockchain Council held a conference in Austin, TX, where politicians, thought leaders and bureaucrats gave talks to the gathered 400--600 attendees. Senator Cruz reportedly had a “surprisingly thoughtful” speech to the crowd, but SEC Commissioner Hester M. Pierce stole the show by speaking fluent crypto to the crowd. Her complete remarks are available on the SEC website.
JP Morgan’s Jamie Dimon once again stuck his foot firmly into his mouth this week: "I'll just challenge the group to one other thing: how do you know it ends at 21 million? You all read the algorithms? You guys all believe that? I don't know, I've always been a skeptic of stuff like that."
SEC Jay Clayton, in his haste to classify all stablecoins as securities has inadvertently declared all gift cards securities: “My view is that if you look at the function that the product is providing to the incumbent space, you have a good handle on the regulation that applies […] stablecoins are a good example. A stablecoin that promises $1 back to you, in exchange for the coin, and is backed by cash is one such item.”
The Biden administration, according to Bloomberg News, is weighing an executive order on cryptocurrencies. The crypto markets seemingly ignored this news completely, instead surging that same day to near all time highs.
Research reported by the Financial Times show China's bitcoin hashrate share fell from 44% to 0% between May and July, as the US rose from 17% in April to 35% in August and Kazakhstan rose to 18%. I can tell you specifically from the clients that have come to me in the last few months about spinning up operations stateside that they're OVERWHELMINGLY using this to subsidize green energy production. Another narrative for nocoiners is disappearing (for more info on how this works, see my post on the topic).