sharing-A Guide to Multi-Chain Yield Farming

A Guide to Multi-Chain Yield Farming
By: [email protected]tack.com


September 3, 2021 at 09:55AM Link: https://ift.tt/3yJH394

Contents


The best yield farming opportunities on Solana, Avalanche, and Terra. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌
https%3A%2F%2Fbucketeer-e05bbc84-baa3-43

A Guide to Multi-Chain Yield Farming

The best yield farming opportunities on Solana, Avalanche, and Terra.

Ben Giove Sep 2 Comment Share

Get full access to Market Mondayearly access to podcasts, and exclusive debrief episodes!

Join the Bankless Nation


Dear Bankless Nation,

We live in a multichain world.

But then again, we always have.

Coinbase, Gemini, Binance, Kraken—these are just centralized sidechains that use chains like Ethereum and Bitcoin for asset registry and settlement.

What’s new is the number of non-Ethereum “DeFi” chains with apps, yield, and users. I put “DeFi” in quotes for a reason. I’m skeptical if these chains are decentralized enough to warrant the title. Once again open finance is probably a better term.

Are they corruption-resistant enough to be the base layer of the world’s money system?

No, not yet…not from my perspective.

I also don’t think the world’s financial system will be based on Binance or RobinHood or Flow either. But that doesn’t mean they don’t have a role to play in crypto and DeFi. FinTech and crypto will blend together in 1,000 new ways this decade.

So what role are these non-Ethereum chains playing now?

They offer yields.

A savvy Bankless reader can collect that yield and turn it into any asset they prefer. USD, ETH, BTC…or something else.

Here’s what I said in a recent open thread:

Bankless will always cover bankless ecosystems, whether that’s Bitcoin, Ethereum, or something else. But I’m personally way less interested in “DeFi” that’s easily controllable at the base layer by neo-banking cabals. Discovering the difference is part of the bankless journey we’re on and it’s not easy.

We aren’t backed by VCs. We’re backed by values. So our aim is to be open minded on approaches and not blinded by bags, but also to remain resolute on values. Bankless is a thesis driven media company.

There’s a version of crypto that’s good for the world and there’s a version that makes everything worse. We’re fighting for the former.

Not Bitcoin Maximalist. Or Ethereum Maximalist. Bankless Maximalist.

Remember the protocol sink thesis. Remember why we’re here.

And also…have fun and enjoy the yields!

– RSA

P.S. If you’re into sports collectibles, you should check out SoRare. It’s the biggest platform for trading official football player cards (soccer for Americans!).


🙏 Sponsor: Aave—Experience DeFi: Deposit, Earn, & Borrow with Aave


📺 Watch our recent panel on Solana with Santiago & Konstantin

Nmw5JOUf_eM

We chat with Santiago Santos from ParaFi Capital and Konstatin Lomashuck from Lido on the rise of Solana and its prospects as an Ethereum competitor. Watch it!


TOKEN THURSDAY

Bankless Writer: Ben Giove, Bankless Contributor & President of Chapman Crypto

A Guide to Multi-Chain Yield Farming

Graphic by Logan Craig

We live in a multichain world.

As high gas fees on Ethereum continue to persist, yield-hungry users have been forced to look elsewhere in the neverending quest for returns. An ape needs to eat.

Fortunately, there are several networks well-positioned to help absorb crypto natives’ ravenous appetite for using these systems by providing them with cheaper and faster transactions—albeit with lower security guarantees. The best part is that the applications, and sometimes even the network itself (or both), are offering substantial liquidity mining incentives for yield farmers willing to take the risk, make the move, and deploy capital into these newer systems.

Value locked in crypto. Source.

Below we’ll touch on a few of the opportunities available for farmers on three of the ecosystems currently experiencing the bulk of the growth: Avalanche, Solana, and Terra.

These are certainly not the only opportunities—or even the highest-yielding. But given that many protocols in these systems are extremely early and less battle-tested, the ones listed intend to strike a healthy balance between risk and reward.

As always, please ape responsibly!


1) Avalanche Yield Opportunities

The Avalanche ecosystem has experienced tremendous growth in recent weeks.

The network has seen value locked explode from $339 million to $2.2 billion in less than three weeks, catalyzed by the announcement of Avalanche Rush—a $180 million liquidity mining program. The program will soon feature solid incentives on staple Ethereum DeFi protocols like Aave and Curve.

To go along with a surge in the price of AVAX and Avalanche DeFi tokens, there are numerous high-yield opportunities for savvy farmers willing to cross the bridge and take advantage of fast confirmations and significantly reduced gas fees, which only range from $0.50-$2.00.

Chart      Description automatically generated

Avalanche’s growth in value locked. Source.


🚆 Onboarding to Avalanche

As an EVM-compatible chain, onboarding to Avalanche is incredibly straightforward, as users simply need to just add the network to their wallet, and then bridge funds across from Ethereum.

  • For a guide on how to add Avalanche to your MetaMask, click here

  • To access the bridge between Ethereum and Avalanche, click here


Avalanche Opportunity #1: BenQi

  • ROI estimate: 2-12% APY 💰

Given Aave has yet to launch on Avalanche, BenQi is the current king of the network’s money market sector. The protocol has experienced incredible growth, attracting over $1.21 billion in TVL in the two weeks since its launch. This emerging money market protocol has been a key driver in catalyzing the infusion of capital into the Avalanche ecosystem. BenQi currently features a $3 million liquidity mining program, where depositors and borrowers are incentivized to participate in the system through earning QI and AVAX rewards. 

Graphical user interface, text      Description automatically generated

The protocol currently supports deposits and borrows for AVAX, wETH, wBTC, LINK, DAI, USDC, and USDT. It’s important to recognize that depositor yields range between 2.20-11.76% depending on the asset, with the yield consisting of a combination of interest and token rewards. On the other side of the market, borrowers can earn a net APY (rewards – interest) anywhere from 0.24% to 6.80%. This means that farmers can be paid to borrow, and enables a variety of different strategies.

For example, a wBTC holder can employ a strategy in which they deposit their tokens to earn 3.78% APY, which they can then use as collateral to borrow and earn 5.30% APY on their outstanding debt. This allows a farmer to earn a yield on their assets while minimizing liquidation risk, as the value of their debt will move in tandem with that of their collateral. (The more degenerate among us can recursively repeat this process.)

Avalanche Opportunity #2: Trader Joe 

  • ROI estimate: 20-85% APY 💰 💰 💰

Trader Joe is the largest decentralized exchange on Avalanche, holding over $455 million in liquidity and facilitating between $100-200 million in daily volume since August 23, notably surpassing the first-mover Pangolin in both metrics.

The protocol is currently incentivizing 23 different tokens pairs where liquidity providers can stake their LP tokens to earn JOE rewards, the DEX’s native governance token, along with a trading fee of 0.25% on every swap. These pairs vary dramatically in terms of asset composition, yield, and of course, risk, allowing farmers to express a variety of different viewpoints.

A screenshot of a game      Description automatically generated with medium confidence

For instance, risk-averse farmers who do not want price or impermanent loss exposure can enter the USDC/DAI and USDT/DAI pools to earn a yield currently sitting between 23-24% APR.

Additionally, farmers who believe the market will be rangebound and are willing to take on some risk can earn between 29-86% APR in the wETH/USDT, wBTC/USDT, and AVAX/USDT pools. Finally, a farmer who’s willing to take on maximum price and impermanent loss exposure can earn upwards of triple-digit yields in some of the protocol’s riskier pools.

🧑‍🌾 Bonus Yield Opportunity

  • JOE Staking—29% APR —Stake JOE to receive 0.05% of every swap in the form of xJOE tokens.


2) Solana Yield Opportunities

Solana is another ecosystem that has experienced strong growth over the past several months. Spurred by a rise in the price of SOL, new protocols launching on the network, a mini-NFT mania, and the adoption of Phantom Wallet, Solana has seen its TVL rise nearly 6x to $3.6 billion since July.

Even though it’s still in its early stages, with 500ms confirmations and sub $0.01 fees, there are several noteworthy opportunities for farmers to put capital to work.

Chart      Description automatically generated

Solana’s value locked. Source.


🚆 Onboarding to Solana

While not an EVM compatible chain, the process for onboarding to Solana is similar to that of Avalanche.

Rather than add the network to MetaMask, you’ll instead have to download a new web wallet. To get funds into the system, users can either go through a centralized exchange, or use a bridge such as Wormhole (It’s worth noting the bridge site recommends holding off on doing so until the deployment of Wormhole V2)

  • To see a list of Solana web wallets, click here (Phantom recommended!)

  • To access the Wormhole bridge between Ethereum and Solana (V2 is not yet live!), click here


Solana Opportunity #1: Raydium

  • ROI estimate: 17-154% APY 💰 💰 💰

Raydium is the largest AMM on Solana, with over $1.35 billion in value locked and daily volumes north of $220 million dollars. Raydium is unique as it provides liquidity to Serum, a Solana-based central limit order book (CLOB) DEX. This means that traders can access liquidity in either protocol to get the lowest slippage for their trade, and LPs can boost their returns through Serum volumes.

A screenshot of a computer      Description automatically generated with medium confidence

Raydium provides two types of opportunities for yield farmers. 

The first are “Raydium Farms” where liquidity providers for the RAY-SRM, RAY-ETH, RAY-SOL, and RAY-USDC, RAY-USDT pairs can stake their LP tokens to earn RAY rewards, to go along with a 0.22% fee on every swap.

These yields currently range between 66-117% APY depending on the pair, with RAY-USDC and RAY-USDT at the higher end of this spectrum, likely due to farmers pricing in the increased risk of impermanent loss these pools may incur in a trending market.

Raydium farmers can also enter “Fusion Pools,” which are incentivized trading pairs of other projects within the Solana ecosystem. There are currently 13 Fusion Pools, with prominent protocols such as Mango Markets, Mercurial Finance, and Cope incentivizing the MNGO-USDC, MER-USDC, and COPE-USDC pairs with their native governance token respectively. These pools are currently yielding between 17-154% depending on the token, but of course, come with increased risk of impermeant loss.

🧑‍🌾 Bonus Yield Opportunity

  • RAY Staking—20% APR—Stake RAY to earn 0.03% of every trade made on the platform in the form of additional RAY tokens.

Solana Opportunity #2: Saber

  • ROI estimate: 28-34% APY 💰 💰

Saber is a decentralized exchange that’s optimized for trading between like assets, as well as for facilitating cross-chain swaps by routing liquidity across token bridges. The protocol has attracted over $897 million in liquidity, which like its EVM-based competitor Curve, provides LPs with a way to earn a yield while minimizing the risk of incurring impermanent loss.

Graphical user interface, application, Teams      Description automatically generated

Saber is currently incentivizing 18 different pairs with SBR rewards, which depositors can earn in addition to a 0.04% swap fee on trades made within the pool. While each differs in its exact composition, they can largely be placed into three distinct groups: stablecoins, Bitcoin, and non-Bitcoin assets.

The highest yielding in each category are the MAI-USDC, pBTC-renBTC, and wLUNA-renLUNA, which are earning liquidity providers 34%, 28%, and 29%, respectively.

An important factor to keep in mind with Saber are that some pools have withdrawal fees. For instance, the USDC-USDT pool charges liquidity providers wishing to exit 0.5% to remove their capital, meaning that farmers are operating at a loss until they recoup that fee!


3) Terra Yield Opportunities

Terra is yet another smart contract ecosystem that has experienced incredible growth. Fueled by a rise in the price of LUNA, adoption of UST, the network’s native stablecoin, and the strong product-market-fit of its applications, Terra is now home to crypto’s third largest DeFi ecosystem.

With over $7.53 billion in value locked, the chain places behind only Ethereum and Binance Smart Chain. While there are fewer prominent applications on the network than Avalanche, there are still several stellar opportunities for farmers.

Chart      Description automatically generated

Terra’s value locked. Source.


🚆 Onboarding to Terra

Like Solana, Terra is not an EVM compatible chain. That said, the onboarding process is similarly simple, as users just need to download a Terra compatible wallet, and then bridge funds over from Ethereum or another network.

  • To see a list of different Terra wallets, click here

  • To access the bridge between Etherem, Terra, and Binance smart chain, click here

📡 For more on how to download Terra Station, check this guide out!


Terra Opportunity #1: Anchor

  • ROI estimate: 12-38% APY 💰 💰

Anchor is the leading money market on Terra, with more than $2.72 billion in value locked. The protocol utilizes a novel design that pays out a fixed interest rate to UST depositors and enables the use of staking derivatives as collateral to borrow said UST.

Through a process known as bonding done via the protocols interface, borrowers can use their LUNA to mint an identical amount of bLUNA, which can then be used as collateral within Anchor (worth noting that there is a 21-day wait to unbond LUNA!). In addition, the protocol also supports bETH, a Terra-wrapped version of Lido’s staking derivative, stETH, as collateral within the protocol. 


🧠 To get an in-depth description of how Anchor works and the mechanics behind generating the fixed yield for depositors, click here.


Albeit with the risk of liquidation, borrowers can earn a net APR of 12.9%, which is derived from a 38.3% yield from ANC rewards and a 25.4% borrow APR. Currently, the yield paid out to UST depositors sits at 19.4% APY, just below the protocol’s 20% target.

It’s worth highlighting that Anchor can serve several different roles for yield farmers.

For starters, risk-averse farmers can lock in a fixed yield on their stablecoins at a rate far higher than that seen on other money markets such as Compound and Aave. An additional strategy that a farmer can pursue would be to deposit bLUNA or bETH as collateral, borrow UST, and then redeposit UST into the protocol. This would allow a farmer to earn a 12.9% yield on their collateral, as well as a fixed 19.4% yield on their outstanding borrowers. However, it should be noted this strategy is inherently risky as it introduces the threat of liquidations.

Terra Opportunity #2: Mirror

  • ROI estimate: 27-99% APY 💰 💰 💰

Mirror is another leading application on Terra that provides lucrative farming opportunities. A protocol for minting and trading synthetic assets currently holding over $1.46 billion in value, users can deposit UST as collateral to generate one of 28 different mAssets supported by Mirror.

These include stock market indices such as mSPY, equities like mAMZN, commodities including mGLD, and crypto assets mBTC and mETH. Liquidity for the trades is routed through Terraswap, the network’s largest AMM.

There are two types of farming opportunities for Mirror participants. 

The first is long farms, where users can provide liquidity to mAsset pairs and earn trading fees along with additional MIR rewards. The yields span from 27% APR on synthetic crypto assets like mETH to as high as 48% APR on equities like mHOOD, a synth of Robinhood stock.

The second is short farms, where farmers can use UST, aUST (UST deposited within Anchor) LUNA, or another synth, as collateral to mint another mAsset in the form of an sLP token. This sLP token is automatically staked by the protocol to earn its holder MIR rewards. Currently, the yield on short farms ranges from as low as 0.3% APR on mAMZN to 99.6% APR on Google, with most sitting between 30-40%.

Closing Thoughts

It’s apparent that DeFi has gone multi-chain. After juicing these new ecosystems with tokenized incentives over the past few months, there are now billions of dollars locked away, powering these emerging crypto economies.

But it’s still early for all of these ecosystems. For those looking to take the risk to explore these multi-chain opportunities, there are certainly rewards for it. Better yet, you get to experience DeFi without the insane gas fees that currently exist on Ethereum. Anyone can swap, deposit, lend, borrow, and everything else for a few cents or dollars with virtually instant transaction confirmations.

That said, Ethereum’s Layer 2 ecosystem is knocking at the door. With Arbitrum’s recent mainnet launch and Optimism close behind, users get to access the same fast & cheap transactions—all with Ethereum’s security guarantees.

We should expect that these Layer 2 protocols will run the exact same playbook that’s succeeding for competing Layer 1s. Therefore, we can only imagine it’s going to get competitive, and the yields might get crazy.

But guess who will win?

The users 🙂


Action steps

  • Explore multi-chain yield farming opportunities

  • Download the main wallets for each chain!


Author Bio

Ben Giove is the President of Chapman Crypto and an analyst for the Blockchain Education Network (BEN) Crypto Fund, a student-managed crypto fund built on Set Protocol. He’s also a proud member of the Bankless DAO!


Go Bankless. $22 / mo. Includes archive accessInner Circle & Badge(pay w/ crypto)


🙏Thanks to our sponsor

Aave

👉 Experience DeFi: Deposit, Earn, & Borrow with Aave

Aave is a decentralised, open source and non-custodial liquidity protocol enabling users to earn interest on deposits and borrow assets. Aave Protocol is unique in that it tokenizes deposits as aTokens, which accrue interest in real time. It also pioneered Flash Loans and Credit Delegation as innovative DeFi building blocks. The Aave Protocol V2 makes the DeFi experience more seamless with features that allow you to swap your assets for the best yields on the market, and more. Check it out here.


Want to get featured on Bankless? Send your article to [email protected]

Write for Bankless


Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.


Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

Comment Share

You’re on the free list for Bankless. For the full experience, become a paying subscriber.

Subscribe

© 2021 Bankless, LLC. Unsubscribe
1732 1st Ave #20904, New York, NY 10128

Publish on Substack


sharing-Understanding Social Tokens

Understanding Social Tokens
By: Jason Hartgrave


September 1, 2021 at 10:46AM Link: https://ift.tt/38utoby

Contents


Social tokens are one of the many innovations the crypto space has brought forth in recent years. With celebrities from Akon to Ja Rule launching their own social tokens, mainstream media is catching up with this new way of leveraging permissionless blockchains. This article is looking to summarise social tokens, create some conceptual clarity, and open up the discussion around what might make these tokens valuable. 

The necessity for artists to find new ways of monetizing their work during COVID-19 has surely catalyzed this increased attention to social tokens. Platforms from Youtube to Spotify have gained increasing power over the distribution over the last decade and are increasingly competing with their own original content. For those reasons, creators are excited about building a medium that allows for Direct-to-Consumer relations, interacting with fans on their own terms. For example, Youtube takes 45% of the advertising revenues creators to generate for the platform and has a reputation of aggressively demonetizing content that might be considered sensitive. Spotify pushes people to original content like Joe Rogan Show rather than 3rd parties to avoid paying royalties. The promise for creators is that by moving off central platforms, they can control the means of production, distribution, and commercialization directly. 

As Linda Xie writes in her beginner’s guide to NFTs, “Social tokens are a broad category of tokens issued by individuals and communities.” However, 2020 was the year social tokens entered explosive growth as a category, as documented in Forefront’s article “Social Tokens Year in review”

Understanding Social Tokens Outlier Ventures

The promise of a digital “ownership economy” for art and communities is to resolve many of the current economic pressures and to unleash a new era of creativity and innovation. However, there is also a real danger that our social relationships become increasingly transactional, eroded by an over-financialization and commoditization. More research is needed precisely because of this superposition of promise and peril that the technology of social tokens holds. 

Personal vs. Community tokens

Social tokens have been created by both individuals and by communities, and we can therefore distinguish between Personal tokens and Community tokens.

Understanding Social Tokens Outlier VenturesPersonal/Creator tokens

Personal tokens are created by and centered around individuals (usually, individuals with a public profile like entrepreneurs or artists – that’s why they are also called “creator tokens”). Most personal tokens we’ve seen so far can be redeemed against services provided by their creators. Matthew Vernon launched one of the first personal tokens at the beginning of 2019: BOI can be redeemed for Matthew’s time as a designer. 



Individuals could have different reasons for launching a personal token: 

  • Alex Masmejean financed the start of a career and a move to San Francisco.
  • Coin Artist wanted to incentivise engagement and connect with fans. 
  • RAC built a platform and direct distribution channel. 

A range of different mechanisms have been experimented with, some of which produce tokens with a clear financial aspect like ‘token-redeemable-labour’ or ‘income share agreements’, while other tokens look more like loyalty points or club memberships. How these tokens are then “redeemed” for services or grant access is entirely up to the creators themselves. In practice, this is often done ad-hoc, e.g. over email or Discord. The current iteration of personal tokens is enabled by blockchain technology, but this doesn’t mean there haven’t been attempts before that: Meet “IPO Man” of 2008, who wanted to tokenize himself even before Bitcoin. 

A more specific kind of personal tokens could be described as “clout tokens”, which aim to measure the social reputation of influencers through market mechanisms. An example is BitClout, which issues tokens on behalf of Twitter influencers, who can claim their profile including the founder rewards allocated to each token (allowing influencers to “monetize” as their token appreciates). Idea Markets takes a similar approach, except that revenues are generated primarily through interest paid on the capital (Ether) locked in the smart contract, as required to invest in “clout tokens” on the platform. 

Community tokens

Understanding Social Tokens Outlier Ventures

Community tokens are centered around communities rather than individuals and are often used for memberships that regulate access and participation within the respective community. This token-gated access is the main use case for most of today’s community tokens.

 

In practice, current implementations of community tokens often involve a communication platform like Discord, Slack, or Telegram that is regulated by a token. This means that only people with the right tokens can enter the platform: Either a certain amount of fungible tokens or access NFT. One of the first projects that pioneered token-gated access is the Karma community, a group chat limited to a maximum of 650 members, gated by its own community token. 

  • Token-gating is often achieved through tools like CollabLand. Similarly, Unlock and Mintgate are used to gate access to exclusive digital content. This core functionality of token-gated access can also be facilitated by NFTs instead of fungible tokens with the same tools. 
  • Access NFTs can create an experience very similar to the access key cards or company badges we are used to from the physical world. 

In addition, community tokens can be an effective tool to set incentives for desired behaviour within a community, for example incentivizing contributions and disincentivizing freeloading. A token can also meaningfully enhance community cohesion and identity. A great example is Donuts, a community token for an Ethereum-related subreddit. Members are continuously rewarded with Donut tokens, according to how active they are in the community.

Friends with benefits, another leading token-gated community, uses their $FWB token to incentivise community members to be active in the Discord, attend calls, and host events. There are currently around 3k holders of the $FWB token, which is valued at a fully diluted market cap of ca. $85M. Seedclub is running an incubator/accelerator program focused uniquely on social tokens. 

Social tokens are able to set stronger incentives than conventional “points” (from loyalty badges to Reddit karma) for three main reasons: 

  • Tokens can’t be taken back again and are portable outside of the platform and therefore “truly owned”. 
  • In successful cases, tokens end up being used for decision-making and therefore as a means of control over valuable resources. 
  • As a result, they sometimes develop a market value themselves and, if liquid enough, allow early contributors to exit with an upside comparable to early startup employees at IPO. The shared ownership from the beginning glues token-based communities together. 

These advantages of social tokens hold no matter whether the focal point is an individual creator or a broader community. In fact, most social tokens might start around an individual creator and over time develop into a community token, as argued in this a16z piece. For example, the FWB community first catalyzed around Cooper Turley, who leads crypto strategy at Audius. 

Understanding Social Tokens Outlier Ventures

What makes social tokens valuable?

Social tokens, as ERC20 Ethereum tokens, are freely transferable and therefore tend to be listed on exchanges as they have initial success (whether on Decentralized exchanges like Uniswap/Sushiswap or on social token platforms such as Roll). As a result, they have a (fluctuating) market price, giving them a clearly defined value. Early members can use these markets to “cash-out”, and new prospective members use them to buy their way in.

Low barriers to entry and exit make sense in the context of the gig economy and younger generations exploring identity. More generally, these developments epitomise the fluidity of belonging on the internet itself, the transitory nature of group identity online. 

Intrinsic community value 

Social tokens are at once the entry key to a community and at the same time a financial instrument tracking the perceived value of that community. 

How valuable a specific social token mainly depends on which community it represents. intrinsically, through information sharing and collaboration within the community. What we call Intrinsic community value (ICV) is the value members get from being a part of the community. This value can take many forms but usually is mediated by exclusive access, including access to information, to talent, to deal flow, or to expertise, to events, etc. 

Even if it is hard to compare qualitatively, the type of access that is provided by the community is an important factor. Crucially, the access should be provided by the community collectively to count towards its intrinsic value, as opposed to provided by only a few persons (e.g. founders).

Finally, there is also an undeniable socio-emotional element involved: status. Being a member of the most popular communities confers exclusive status. By showing off your Cryptopunk, you self-identify either early to NFTs and/or rich enough to spend 100s of thousands on a pixelated JPEG.

Understanding Social Tokens Outlier Ventures

Note that ICV is socially constructed and subjective to a large extent. As such it is hard to quantify directly – we will discuss an indirect method as well as some relevant proxies in the second part of this article. 

Financial value flows

In the case of some social tokens, there is an aspect much more straightforward to value: financial flows. These financial flows can either be direct (in the form of dividends) or indirect (as token buy-backs) and make the tokens that confer them applicable to valuation by the traditional Discounted Cash Flows method. 

The direct variants are cash flows that are directly paid out to token holders, like dividends in a limited corporation. An example is $Alex, who entered an Income-share-agreement (ISA) with token holders, promising to payout 15% of salary over 3 years, capped at 100k. 

However, considerations around security laws might make this option less attractive in the future, and tokens with direct value flows will likely be regulated more strictly. This is why indirect value flows have gained popularity over the past years. 

Most indirect mechanisms work through token buy-backs, whereas the tokens are bought back from the open market by the treasury of the community at a predetermined rate. Typically, the tokens acquired are burned, that is to say, permanently removed from the supply. This is how value is indirectly transferred to token holders: If the supply decreases while the demand stays the same, the token price goes up and distributes value to token holders proportionally. For example, Kerman is buying back tokens with 5% of the revenues of his newsletter “DeFi weekly

In addition, a popular mechanism for increasing token value is by offering products and services exclusively to token holders (or at a discount). 

For social tokens, exclusive services are especially relevant: For example, “Dapp Boi”, a designer focused on crypto, has tokenized his time, offering consulting services for his tokens. Among others, Kerman is also offering retweets for tokens. 

Digital goods are another frequent value add in the social token space, especially NFTs. Increasingly popular are  POAP badges, certifying attendance at specific events. They primarily work on a status level, communicating “I’ve been there too”. An example is the NFT badges the newsletter Bankless offers to its premium subscribers. At last, even physical goods have been used, like RAC’s physical tape tied to the $TAPE token

Outlook: When money becomes social

Understanding Social Tokens Outlier Ventures

The social tokens space is extremely novel and evolving rapidly, so the thoughts here are not conclusive by any means but merely a starting point for conversation. 

Even if token categories often overlap (a side effect of tokens being programmable money), it seems clear that social tokens are distinct from governance tokens in important ways. The notion of intrinsic community value and the status conferred with social tokens are key differentiators from governance and other utility tokens. However the community creates its value, social tokens allow it to more effectively capture and distribute the fruits of its collaboration to its members. 

The early experiments so far have only just scratched the surface of the potential of social tokens that will unravel in the coming decade. As new use-cases and best practices emerge and more diverse communities choose to issue a token, the different ways ICV can manifest will become increasingly clear. Leading communities will offer exclusive access to information, relationships, and capital to their members. 

Over time, social tokens could become the norm for digital status signaling, showing off membership to prestigious groups in a digital-native way, for example, members or alumni of leading companies or universities. Finally, social tokens could also become a coordination mechanism for political action: Tokens that represent a credible commitment to political or social causes could allow strangers to trust each other without knowing anything else about each other, for example when meeting as pseudonymous virtual avatars in the metaverse. 

At Outlier Ventures, we are especially excited to explore these new frontiers of Crypto Social. How does social identity manifest in the Metaverse? How do social NFTs interact with avatars and virtual land? How are social tokens baked into self-sovereign identities? 

While the potential for social tokens is exhilarating, it is important to consider the downsides and pitfalls in advance. There are important considerations around personal privacy, for example. One could imagine a pressure on creators who launched a personal token for ever-more-frequent updates and to share every detail of their lives, becoming virtually enslaved to token holders. And what if the personal economy crashes and token holders lose their money? 

Perhaps an even greater danger is the erosion of social relations for their own sake. If every social interaction is mediated and rewarded by tokens, this over-financialization might crowd out the intrinsic motivation for people to behave prosocially. We need to build social tokens that empower creators and communities without making every interaction transactional. In light of these considerations, combined with unhinged experimentation, it seems clear that the token engineering risks for social tokens are heavily underappreciated.  

In a forthcoming article, we will explore some of these considerations from a token design perspective, as well as dive deeper into how we could proxy ICV and which other factors support token value. 

 

The post Understanding Social Tokens first appeared on Outlier Ventures.


sharing-This NFT expert explains how digital goods may have more use cases than luxury watches

This NFT expert explains how digital goods may have more use cases than luxury watches
By: Frank Chaparro


August 31, 2021 at 12:09PM Link: https://ift.tt/3kBYbc2

Contents


20210824_TheScoop_Franklin_Fitch_16x9-80

 

Franklin Fitch, Head of Growth at Blockparty, sees the commodification of culture as the future of the internet.

Indeed, Fitch believes that a well executed NFT strategy could very well be a make-or-break opportunity for legacy brands as well as for the brands of the future:

“When you start to connect physical events, digital signaling, memes and collectibles all into one, I think you create this really superpowered sort of wave of commodification of culture and commodification of status and commodification of membership. And also combine that with all the crypto native benefits of global payment rates, easy ability to transact and send peer-to-peer so it becomes really liquid and moves quickly.”

As household name companies (such as Visa or Coca-Cola) begin to explore NFTs, Fitch sees an opportunity forming for brands to commodify “what culture is” for their brand and community. He related the growth in NFTs to luxury watches and their collectors, both of which are dependent on a community of buyers to maintain their value. With NFT’s, he argues, the marketplace is built into the ecosystem of NFTs and he believes its ease of access will help to maintain a product’s liquidity.

On this episode of The Scoop podcast, Fitch also touched on how NFTs can be collateralized in the same way products like Yeezy sneakers can be collateralized via the fractional art market with companies such as StockX.

“It’s easier to have that liquidity. It’s easier to have that peer-to-peer price discovery.” Fitch told Chaparro.

Much like the way watches are collected to connote social status, NFT’s can actually be built to have additional use cases to unlock VIP access within the Metaverse. Fitch observed how NFT’s are being used as a means to unlock experiences within online communities and in the Metaverse:

“Now we have ways to codify, financialize, commodify artifacts of culture, and we have ways to communicate them peer-to-peer, socially, signal with them, unlock experiences with them.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


sharing-📹The world comes together at the #CardanoSummit2021 🌍Register now to join the biggest #Cardano event ever!👉https://bit.ly/3xnvGTKApply to hos…

📹The world comes together at the #CardanoSummit2021 🌍Register now to join the biggest #Cardano event ever!👉https://bit.ly/3xnvGTKApply to hos…
By: Cardano Announcements


August 18, 2021 at 02:37PM Link: https://ift.tt/3gbtTeP

Contents


The world comes together at the #CardanoSummit2021 🌍

Register now to join the biggest #Cardano event ever!
👉https://bit.ly/3xnvGTK

Apply to host a local meetup in your city.
👉https://bit.ly/3xK2Gpx

#CardanoCommunity


sharing-Terra Delegation Program

Terra Delegation Program
By: Jared


August 15, 2021 at 12:18PM Link: https://ift.tt/3yNlGVl

Contents


Starting 8.11.21

The Terra Delegation Program (TDP) is back!
To celebrate this incredible month, we are maximizing your opportunity to be included.

There are only 4 qualifications this round:

  1. Have a complete Validator Profile:

Example of a perfect pull request Here.
Example of a perfect finished profile Here.
Notice that the example has an updated readme. This step is often missed and means your previously summited profile might not be complete.

That’s right. You might have a checkmark, and not have a complete profile. Look over the examples, and be proactive.

  1. Commission at or below 10%: at all snapshots.
  2. Bombay Testnet must be active: at all snapshots.
  3. You must apply at the link below by 8.18.21 9 PM KST: https://forms.gle/Sycuk24t38Pu72UX9

What is the snapshot? Once a week I will be taking a snapshot, and then publishing the results. They will not be announced to prevent gaming the system. They will be public so you can track your progress.
The first of these snapshots will be taken next week. Links will be posted publicly on Discord and Twitter when snapshots are complete.

Delegations will be weighted for decentralization. This means, the TFL fund will weigh distributions to flatten the voting curve.

Last round this meant that validators with over 1.5m luna (.43 voting power), did not receive delegations. Remain vigilant on the weekly reports, you will get to see the potential delegations before they are released. There will be no surprises this round.

“I have more Delegations than the cutoff point, why doesn’t TFL support me? I deserve recognition.” Your recognition is the vote of the delegators. If you don’t need a TFL delegation to stay afloat, you are doing well. Keep up the good work, and share your tactics with the validator community.

Delegations are targeted for disbursement by the 4th week of September. Those of you that participated last time know, releasing funds can be a long process. Some Alpha to reward you for your reading this far, by the end of the year we will have a tool that runs the TDP autonomously.

If you are a Rust developer, contact Jared, you could have a chance to work on it first hand.


Terra Delegation Program was originally published in Terra Money on Medium, where people are continuing the conversation by highlighting and responding to this story.


sharing-Tools for NFT Summer ??

Tools for NFT Summer ??
By: [email protected]tack.com


August 14, 2021 at 11:51PM Link: https://ift.tt/3g47nEy

Contents


A selected list of resources to help you surf this summer’s NFT seas! ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Tools for NFT Summer 🏖️

A selected list of resources to help you surf this summer’s NFT seas!

Metaversal is a Bankless newsletter for weekly level-ups on NFTs, virtual worlds, & collectibles


Dear Bankless Nation,

What many were expecting to be DeFi Summer 2.0 has shaped up to be NFT Summer instead!

However, there’s so much going on around NFTs right now that it can be quite challenging to keep your finger on the pulse of this booming ecosystem’s constant happenings. 

No worries, though. The way to overcome this challenge is by knowing the right tools and services to turn to when you want to readily analyze and act on NFT data. 

For today’s Metaversal, then, I’m going to walk you through a handful of NFT resources that I’ve found useful lately and that you may find useful, too. 🔍

-WMP


🙏 Sponsor: Upshot—get paid to appraise NFTs. Start now!


Selected Tools for NFT Summer!

Analytics

  • CryptoSlam! — NFT marketplace analytics service that tracks activity across Ethereum, Polygon, Ronin, Flow, etc. 

  • DeGenData.io — Previously covered in Metaversal, this NFT analytics service helps users easily search through granular data on popular projects like CryptoPunks, Bored Apes Yacht Club, VeeFriends, and more. 

  • niftyriver.io — An upstart NFT marketplace analytics platform that’s useful for tracking OpenSea’s hourly NFT sales.. 

Price floors

New drops

  • rarity.tools Upcoming NFT Sales — rarity.tools is primarily used by collectors looking to analyze trait rarities in NFT collectibles projects, but the site also has a nifty “Upcoming NFT Sales” section for keeping up-to-date on impending mint events. 

Gas management

Wallet management + tracking

  • NFTBank.ai — A smart NFT portfolio management service that helps NFT users track a wide range of analytics about their NFT inventories. 

  • Rainbow — A mobile Ethereum wallet that makes it easy to track your DeFi and NFT activities in a single app. 

  • Zapper — An Ethereum wallet dashboard for managing your DeFi and NFT positions. 

Trading

  • Sudoswap — A peer-to-peer (P2P) protocol for trading “collections of ERC20/721/1155 tokens.”

  • NFT Trader — A P2P NFT trading protocol for swapping baskets of tokens. 

  • swap.kiwi — Another user-friendly NFT swapping protocol. 

Community

Metaverse

  • Awesome Metaverse — A sprawling repository filled with metaverse resources compiled by metaverse specialist Jin

  • The Open Metaverse OS — An extensive research report on the contemporary possibilities of the metaverse composed by the Outlier Ventures network. 

Polygon NFTs


Action steps

  • 🕵‍♀️ Pick one of the NFT resources mentioned above that you haven’t used/seen before and explore it!

  • 📰 Read “How to mint NFTs on Zora” in Metaversal


Subscribe to Bankless. $22 per mo. Includes archive accessInner Circle & Badge.


🙏Thanks to our sponsor

UPSHOT

Get paid to appraise NFTs with Upshot!

Upshot is a protocol that pays NFT experts and collectors for honest insights – unlocking opportunities for a new generation of appraisers to capture value from their expertise and enabling a wave of powerful new DeFi primitives.

👉 Visit Upshot.io and start appraising NFTs today!


Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.


Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

Comment Share

You’re on the free list for Metaversal. For the full experience, become a paying subscriber.

Subscribe

© 2021 Ryan Sean Adams Unsubscribe
548 Market Street PMB 72296, San Francisco, CA 94104

Publish on Substack


sharing-An inside look at Bullish, the billion-dollar crypto exchange that’s just begun its test pilot

An inside look at Bullish, the billion-dollar crypto exchange that’s just begun its test pilot
By: Frank Chaparro


July 29, 2021 at 03:44PM Link: https://ift.tt/3yhcQ1O

Contents


Bullish, the Block.One-backed cryptocurrency exchange, has been making a flurry of headlines, joining the long list of crypto firms preparing a SPAC deal to go public, raising millions in the private markets, and onboarding former New York Stock Exchange president Thomas Farley as its CEO. 

The firm has been able to do all of this without having a live product. But Bullish isn’t just a white paper and a dream: the firm is entering a public test phase of its exchange. And over the course of the next seven weeks will take in feedback and then gear up for a more public launch. 

Ahead of its test phase launch, The Block got an inside look at Bullish’s exchange product. Here’s what it looks like under the hood:

The front-end of the exchange platform looks similar to most on the market, a sleek view at the market for a given asset — showing the trades printing on the right side and the depth of the order book on the bottom. The charting capabilities are powered by TradingView. 

Cost to trade is zero basis points for liquidity takers and 10 basis points for liquidity providers, according to Ian Smith, Bullish’s chief product officer.

Bullish offers a twist on the traditional exchange model by leveraging both centralized liquidity providers and its own internal automated market-makers (AMM) to enhance liquidity on the platform.

This is the key feature that makes the offering unique relative to its soon-to-be competitors. The idea behind the structure is to ensure liquidity even during shaky periods when market-makers might pull bids and make it more difficult to trade.

AMMs

The exchange is leveraging its own internal AMMs versus platforms run by a third party, which would already have ample liquidity. Bullish’s internal AMM will need to somehow incentivize users to provide that liquidity, which is easier said than done. 

Bullish Earn — which allows users to stake their assets across various pools for a yield — is another feature. Indeed, it is those staked assets that will provide liquidity for Bullish’s AMMs. It’s not exactly clear what those yields will be, but the firm will leverage its own treasury of crypto “to further strengthen the product offering of the platform,” according to a media release.

In order to withdrawal staked assets, clients have to wait an entire week while the platform manages the withdrawal. 

A user can view the totality of their crypto trading picture on Bullish via a portfolio overview page, which includes views of the growth of their portfolio, the balance of their spot and margin accounts amount the amount of assets they have staked in its liquidity pools. 

The pilot launch is slated to last until September 13, according to a blog post. The exchange is expected to fully launch to the public in 2021.

Listen to our full episode of The Scoop with incoming Bullish CEO Tom Farley, here

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


sharing-Taleb Vs. Taleb: A Question Of Time, Lindy And Portfolios

Taleb Vs. Taleb: A Question Of Time, Lindy And Portfolios
By: Joakim Book


July 28, 2021 at 07:43PM Link: https://ift.tt/377P906

Contents


The famous economist often acts contradictory and has denounced Bitcoin despite examples of previous understanding.

I joined Nassim Nicholas Taleb’s very extensive block list about two years ago. It’s not a very exclusive crowd and many more erudite people than me have received the patented “Imbecile” tweet that signals an imminent Taleb block. My crime? I had quoted “Antifragile” back at him in an argument over something I can no longer remember. (I proudly cherish the screenshot of the last tweet I ever saw of his).

image1.jpg

For his Bitcoin nonsense released in June 2021 — the paper ‘Bitcoin, Currencies, and Fragility’ (an earlier version used “Bubbles” in the title instead of “Fragility”) — we might repeat the exercise of quoting his own words back at him.

Mr. Taleb, prone to making extravagant claims and denouncing everyone from journalists and politicians to economists and foreign policy experts, now seems to have joined the ranks of other well-known Bitcoin skeptics: Robert Shiller, Paul Krugman, Nouriel Roubini, and — somewhat puzzlingly — the world’s foremost expert on hyperinflations, Steve Hanke. Worse is that Taleb might be one of the first vocal supporters to unlearn what he once knew, or perhaps pretended to know; in 2018 Taleb wrote the preface to Saifedean Ammous’ “The Bitcoin Standard”.

Many people further down the rabbit hole than Taleb took apart his impressive-sounding but surprisingly fragile paper (I can highly recommend Louis Rossouw’s take or Sevexity’s piece). A brief summary of the paper’s argument is:

  • Bitcoin failed to be a currency because currencies need stable prices and price fixing.
  • It’s a lousy store of value.
  • It lacks the properties of an inflation hedge.
  • And because of a non-zero probability of hitting the absorbing barrier of worthlessness, its present value is therefore zero.

These are, as Robert Solow once said in an Ely Lecture fifty years ago: “words, all words.” 

Which, by Taleb’s own admissions, do not matter. All that matters is what’s in somebody’s portfolio, per his own rule in his book, “Skin in the Game”: “Don’t tell me what you ‘think,’ just tell me what’s in your portfolio” (p. 4). Or, “Those who talk should do and only those who do should talk.” (p. 28).

One of several areas where I think Taleb’s ideas approach Austrian economics is the “Action Axiom” – that actions speak louder than words; that talk is cheap and therefore unreliable; and that valuation comes from doing, not saying. When was the last time Taleb transacted using bitcoin, I wonder? Has he ever tried buying his macchiato using the Lightning Network? Did he ever write code or build something that uses Bitcoin?

A few chapters into this otherwise great book (published around the same time as his infamous preface to “The Bitcoin Standard”) we get a personal anecdote. Taleb tells of once having to comment on stocks in a TV roundtable discussion:

“The topic of the day was Microsoft, a company that was in existence at the time. Everyone, including the anchor, chipped in. My turn came: ‘I own no Microsoft stock, I am short on Microsoft stock, hence I can’t talk about it.’ I repeated my dictum of Prologue 1: Don’t tell me what you think, tell me what you have in your portfolio.’” (p. 63)

So, do we trust the man’s twenty-odd years of writing and living according to the ethics and arguments explored in his books, “Fooled by Randomness,” “Antifragile,” or Skin in the Game”? Or do we throw that seriously-contemplated and well-argued body of work overboard in favor of some brief Twitter anger and the intellectual acceptance of his fellow Bitcoin critics? Though perhaps he is staying true to his skin-in-the-game argument and is actually short a lot of BTC. But then, per his own rules, he would have to say so publicly.

In the preface to Saifedean’s book, Taleb wrote:

“Bitcoin will go through hick-ups. It may fail; but then it will be easily reinvented as we now know how it works. In its present state, it may not be convenient for transactions, not good enough to buy your decaffeinated espresso macchiato at your local virtue-signaling coffee chain. It may be too volatile to be a currency, for now. But it is the first organic currency.”

He saw then the very same problems that he now echoes in his new paper to establish bitcoin’s long-term value at zero. But in 2018 he didn’t think those same problems were problems. He didn’t see them as insurmountable challenges, but rather technical issues that could and would be overcome. Cue growing widespread adoption since then, 400% price increase, a functional Lightning Network and a multisig revolution in the makings. But Taleb, the king of contrarians, does a one-eighty just when the rest of the world is catching on.

An Expert Called Lindy

Another argument that pervades Taleb’s writing is that time is the ultimate test of everything. Short term, you can fool your accountant or your regulators. For a surprisingly long time you can even fool large political audiences. But you cannot fool reality. If you plant fragilities, given enough time, they blow up. Reality is the ultimate arbiter.

The only thing that matters, Taleb repeatedly taught me, is time. So far, Bitcoin has survived everything thrown at it and the industry surrounding it is thriving.

Twelve years from inception to a $1 trillion market cap is ludicrously fast. We’ve used money on and off for about 5,000 years, commodity money with a layer-2 banking system for some 500, and floating fiat currencies run by megalomaniac central bankers for about 50. Taleb is at his most persuasive when he chants the Lindy effect – the tendency of things that have already endured the test of time to last even longer. Again from “Skin in the Game,” an awfully convenient Taleb-busting book, we get “time is the expert” (p. 140) and “the only effective judge of things is time” (p. 142).

It seems odd, then, to denounce Bitcoin as untested and insufficiently proven in 2021, when in 2018 the very same Lindy-wielding probability theorist wrote:

“Which is why Bitcoin is an excellent idea. It fulfills the needs of the complex system, not because it is a cryptocurrency, but precisely because it has no owner, no authority that can decide on its fate. It is owned by the crowd, its users. And it has now a track record of several years, enough for it to be an animal in its own right.”

You publicly denounced Bitcoin, Nassim, as is your prerogative. But it’s all okay. Your contributions are your great books, not your poorly argued paper or the occasional pompous TV appearance. “Impeccable work,” writes Scott Raines, “does not imply personal infallibility.”

For those achievements — and despite your human flaws — we, the Bitcoin community, thank you.

This is a guest post by Joakim Book. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.