This issue is brought to you by Aave GrantsDAO: 
Top Stories
“Nothing is more powerful than an idea whose time has come.”
— Victor Hugo 
Magic: The Mailbag
Q: You got me with that clickbait headline yesterday, but now you’re going to tell me something useful, right?
Well, I think my KYC’d crypto idea is a useful one. But also admittedly one whose time is not coming anytime soon.
So here’s an idea that may accomplish much of the same, possibly a lot sooner:
Sustainable Bitcoin Standard is a protocol that will issue SBC tokens to miners, 1-to-1, for each bitcoin they mine using clean energy sources.
Those tokens are expected to have value, as it will enable institutional investors to fulfill their ESG mandates: Buying 1 SBC for each bitcoin owned will effectively be a carbon-neutral way to invest in crypto.
(Or maybe better than carbon-neutral, as clean-energy bitcoin mining is accelerating the entire economy’s transition to renewable energy.)
Miners will reap extra revenue by selling SBC tokens to those ESG investors. The more investors are willing to pay for SBC, the more miners will be incentivized to mine with clean energy.
This should accomplish all the goals of my KYC’d crypto idea without the downside of further fragmenting an already fragmented market.
But, you know, I’m still a trader at heart and traders make money from fragmented markets, so it’s not my fault, I can’t help but think of ways to muddy things up.
Q: I thought you said DAOs were safe from corporate raiders, but now I see the Build Finance DAO was subject to a hostile takeover?
The news on Build Finance DAO got my attention for exactly that reason, but it was a bit of a let-down: What happened there was not a takeover, it was a hack.
The attacker hacked the DAO’s proposal process and exploited loopholes in the protocol’s code that allowed them to take control of the token contract, minting keys and treasury. They then minted a bunch of tokens, sold them all down to near zero and emptied the Treasury faster than a Magic: The Gathering player playing Mana Drain.
The token and the protocol are now both effectively worthless.
That’s more of a bank robbery than a takeover.
Q: Yeah, but it’s not like TradFi is any better, is it?
Sure it is.
For one thing, stocks generally go up on takeovers, not down. Especially hostile ones.
And for two things, corporate raiders have good ideas these days. Check out the activist proposal for Hasbro announced by Alta Fox just this morning.
Among other things, Alta Fox has nominated Jon Finkel to the board of directors. Finkel’s qualification? He’s the world’s best player of Magic: The Gathering.
How cool is that????
Q: How’s your long in LOOKS looking?
I can hardly stand to look at it.
But it’s a good case study, so let’s.
It’s actually not as bad as it, well, looks. Initially, about half of the rewards were paid in ETH, so my position has been de-risking pretty quickly. I’ve gotten about 40% of my investment paid out in ETH already.
So that’s the good lesson learned: Look for protocols that earn fees and pay rewards in something other than their own token. (There are not many of those, unfortunately.)
The bad lesson learned is that fees earned purely from tokenomics (wash trading, in this case) can be flighty. With LOOKS, when the rewards paid for wash trading fell, the APY fell with it. And the token fell with the APY.
Which I guess is obvious in hindsight. But the market knew right from the start that the APY would be cut by 50% on February 10th, so I kinda assumed it would be priced in. But when the rewards fell 50%, the token fell 50%, too.
So lesson number three is that the crypto market is still pretty inefficient. Which is good news for traders, but kind of confusing to me because I’m surprised in the other direction.
I’d say the crypto market is efficiently inefficient. And I’m not sure how to trade that.
Final lesson: Crypto moats may be a bit wider than I thought.
OpenSea appears to be surviving the LooksRare vampire attack just fine. Which is good news for crypto investors (less so for crypto users).
Q: Remind me what a SPAC is again?
Yes, we’re overdue for a reminder there because I keep seeing crypto people refer to things as SPACs that are in fact nothing like SPACs.
Ever since Andre Cronje announced his intention to turn TIME into a SPAC, it's become a trendy thing to say.
But the proposal was only to have TIME’s treasury make investments in other tokens and projects. There was nothing SPAC about it.
A SPAC raises money from investors, finds a single business to buy, and then gives investors the option to take shares in that business or have their money returned in full — a money-back guarantee.
No one is doing that in crypto.
Which is unfortunate, because I have quite a few altcoins that I’d like to return for my money back.
I know Cronje is a giga-brain and all, but I don’t think we need to gift him the power of unilaterally changing the meaning of words. Especially finance jargon words because finance jargon is already confusing enough — and when people are confused, they lose money. (I speak from experience.)
P.S. — Find this newsletter helpful?
Share it!
Was this newsletter forwarded to you? Sign up here.
This issue is brought to you by Aave GrantsDAO:
DeFi represents a powerful wave of innovation that has so far been inaccessible to traditional financial institutions. . . until now.
With Aave Arc, you’re able to supply cryptoassets to earn yield or borrow assets against their supplied collateral through a simple whitelisting process.
5,000+ investors, builders and experts will be at Permissionless, a celebration of Web3, the metaverse and NFTs.
Get your tickets before they're gone.
What's Trending
Developing Story There's a new regular in town! Each Friday we're covering the industry deals and notable hires taking place in crypto.
Was this email forwarded to you? Join over 110,000 investors who read this newsletter. Sign up for free. Update your email subscription preferences
here.
Written by @bgilliam1982 and @aaronhasapen.
Copyright ©2022 Blockworks. All rights reserved.
|
INTRODUCING BLOCKWORKS RESEARCH: INSIGHTS YOU CAN’T INVEST WITHOUT
