Terra founder Do Kwon is still wanted by Interpol, but the team behind the protocol’s stablecoin has launched a platform for building DAOs on its blockchain.



Terraform Labs built Enterprise, a “no-code” solution for DAOs looking to build on Terra. The new product illustrates that Terraform Labs believes Terra — irrespective of its missing-in-action founder — is worth building on, rather than rebranding or even sunsetting the project. But demand remains to be seen.



Enterprise was one of the first pieces of so-called Terra 2.0 — the blockchain’s attempted comeback after Terra’s native token LUNA death spiraled, torpedoing $30 billion in value in May. 



Enterprise provides the raw digital material for DAO creation, allowing users to create multi-signature wallets, new tokens or NFT communities on Terra’s blockchain with a couple clicks.



A source close to the matter confirmed Kwon was involved with Enterprise’s creation in an advisory role.



Nick Almond, protocol lead at fellow DAO builder FactoryDAO, told Blockworks the setup, really, is not purely a DAO, but “DAOs 1.0 or 0.8.” 



Though Terra flirted with catastrophe, largely to technological shortcomings, Almond doesn't see much to criticize when it comes to the new product’s backbone. 



“Investing in the whole application layer around DAOs — that's what's going to convince people to set up shop on their blockchain,” Almond said. “So, in a sense, [Terra is] somewhat ahead of a lot of the other [layer-1s]. 



But it’s unclear if a significant number of DAOs are ready to entrust their wallets, NFTs and tokens to Terra again. 



“What blockchain you set your DAO upon is like what city you set your home upon. Why would you build it on Terra?” Almond said.



“Enterprise offers developers and our community value. They can trust what is being built because they can inspect the open-source code for the project themselves,” a spokesperson for Terra told

Terra’s DAO Platform Is Open for Business

Most everyone in crypto is waiting for a regulatory crackdown. 



Financial regulators, especially in the US, namely the CFTC and SEC, were already playing a game with steep stakes — rule-making catch-up — before FTX cratered. Its demise has given fresh ammunition to lawmakers who started calling for more stringent investor protection safeguards earlier this year, when the stablecoin UST depegged and digital asset lending lost its mooring.



The question now is not if, but when. And the outcome has massive implications for the industry — especially how the cryptoassets of individual traders and firms are accounted for come tax season. 



Blockworks sat down with Paul Brody, EY’s global blockchain leader, to discuss his roadmap for regulation in the coming months, as well as how the tax landscape is shifting, plus the evolving relationship of TradFi and digital assets — a relationship, in some ways, abruptly reset by recent events. 



Blockworks: First, give me your big-picture take on the last few weeks. 



Brody: So, my general take on the last [few] weeks is that what we are seeing here is there's no happy middle in this blockchain ecosystem.



There seem to be two extremes that work well. One extreme is you’re a fully on-chain, fully transparent, fully decentralized entity. So, those entities seem to have fared pretty well, and you will hear a lot of people say, “The key lesson from [recent] weeks is that DeFi works, and CeFi doesn't.” And I will at least buy into the part that fully on-chain, fully transparent, fully visible DeFi has seemed to fare very well. 



That doesn't mean people didn't lose lots of money, but it means that they didn't lose their money to miss-allocation or a lack of business controls. 



Of course, there's another extreme, which is the fully traditional, fully regulated and intensively audited side. You're a publicly traded entity. You're regulated by the SEC; you're audited by a big four firm; you're subject

‘Uncharted Territory’ for Crypto Come Tax Season: EY Blockchain Head

Investors drawn to double-digit yields in the convertible bond market should be prepared to raise their risk tolerance, analysts say.



Coinbase and MicroStrategy, two crypto-related companies, saw their convertible bond yields surge as prices plummeted this month amid ongoing fallout from FTX’s bankruptcy. 



Coinbase’s bond — maturing in 2026 — dipped to an all-time low of 53 cents on the dollar last week, a level typically associated with distressed debt, Kaiko analysts said in a note Monday. The bond later recovered slightly to 59 cents on the dollar on Monday, trading data shows. Bond price and yield move in opposite directions. 



“Coinbase bonds look cheap to their stock,” trader Greg Foss said. “I would short Coinbase equity versus long the bonds.” 



Coinbase shares are down more than 40% over the past month, to around $42 as of Monday. 



MicroStrategy bonds, set to mature in 2028, also slumped on Monday to 78 cents on the dollar. The software company’s 2027 bonds trade at around 33 cents on the dollar and come with a 28% yield. 



If MicroStrategy and Coinbase survive until their respective bonds’ maturity dates and pay the debt in full, investors will pocket a gain. 



At the end of the third quarter of 2022, Coinbase reported about $3.4 billion in long-term debt, according to company filings. The exchange also posted a net revenue of around $576 million for the quarter. 



“We ended Q3 with $5.6 billion in total $USD resources, in addition to $483 million in crypto assets, which we believe puts us in a strong position to manage through the crypto winter,” Coinbase executives wrote in their third quarter shareholder letter.



MicroStrategy reported about $2.4 billion in long-term debt at the end of the third quarter in 2022, according to filings. The company had about $2.5 billion in assets, including bitcoin holdings worth around $2 billion at the time, MicroStrategy said.




Get the day’s top crypto news and insights

Coinbase, MicroStrategy Bonds Hammered by Industry Turmoil

In its latest move to fend off exploits, the DAO governing DeFi lender Aave has voted to freeze credit pools with low liquidity. The change comes in response to a weakness uncovered in the protocol’s lending parameters, exploited by the same trader who saddled Solana-based Mango Markets with bad debt.



Liquidity has taken a hit in decentralized credit markets post-FTX bankruptcy. But, in this instance, the temporary pause in withdrawals and deposits to certain Aave pools appears to be strictly related to security concerns. 



The move stems from a recent proposal on Aave’s governance forums. The proposal dubbed “the market situation of [certain assets as] currently volatile” — and lobbied for the freeze out of an “abundance of caution.” 



About a dozen and a half assets that trade on the protocol have been, at least in part, shut down for the time being, including MANA, 1INCH and xSUSHI.



In last week’s incident, the protocol lent out tens of millions of dollars in CRV tokens against USD Coin collateral, but when the price of CRV spiked, arbitragers were unable to fully liquidate the collateral to repay the trader’s debt. The outcome, ultimately, was more of a flesh wound: Aave wrote down $1.7 million of bad debt. But that was enough to briefly cause its native token AAVE to plummet on the news.



In a crisis, AAVE stakers are on the hook to cover protocol debts, although, at the time, protocol representatives said the shortfall was small enough to be covered via the protocol’s treasury instead.



The salve — or the latest proposal — which went into effect this week with overwhelming community support, is not the only liquidity-driven halt to Aave’s credit pools in the works. 



Aave participants Llama and Chaos Labs recently put forward their own suggestions, which would stop trading on a number of separate cryptoassets. Voters were more than 99% in favor as of publication. The mechanism, if passed as expected, would freeze new

Crypto Lender Aave Moves To Tighten Risk Controls

Crypto pros like to have a laugh, sometimes at neophytes’ expense. But when the joke is obscure enough — in this case wrapped ether memes — it can have real consequences.



Over the weekend, crypto Twitter was alight with riffs on the wave of insolvencies that have plagued the industry, by pretending that wrapped ether (WETH) was somehow a risk to Ethereum. Spoiler: It’s not.



But when enough otherwise serious people pile on to a meme, it can metastasize into market-moving “news.” For instance, Gnosis co-founder Martin Koeppelmann joined in the fun on Sunday.




As ETH gets constantly burned wrapped ETH (WETH) is no longer fully backed by it. We might see a bank run on redeeming WETH soon.— Martin Köppelmann 🇺🇦 (@koeppelmann) November 27, 2022




For crypto natives with an understanding of WETH and how ether is burned post-EIP-1559, the joke is fairly obvious.



To review: WETH is an ERC-20 version of ether that can be used in smart contracts like Uniswap. It dates back to 2017 and is not in any way like a custodial version of ether. For all intents and purposes, it is ether. As such, there’s no connection between WETH and fluctuations in the ETH burn rate due to transaction fees. Ether used as WETH is not being burned and cannot depeg.



But the joke got out of hand. Even quality crypto sources like Bloomberg were taken in. Bloomberg reported that “crypto watchers also pointed to worries about wrapped Ether, which is meant to have the same value as Ether while allowing access to more applications,” with the caveat merely that “some reports suggested the concerns stemmed from joke Twitter posts.” (They later quietly removed the offending paragraphs.)



In fact, there were no actual worries. It was 100 percent a joke from the start.



Dankrad Feist, a researcher at the Ethereum Foundation — the upcoming EIP-4844, also known as “Proto-Danksharding,” is partially named after him — found the Bloomberg fracas a bit

WETH FUD Is All a Joke, ETH Withdrawals Still a Priority

Troubled lender BlockFi has filed for Chapter 11 bankruptcy protection, making it the next victim of FTX’s fallout.



Once one of the biggest and most rapidly growing startups in the cryptocurrency space, BlockFi has been struggling to keep afloat since the collapse of Three Arrows Capital and other crypto companies in May.



In July, competitor crypto lender Nexo offered to acquire BlockFi for an estimated $850 million. But that offer was turned down by the company in favor of a $400 million revolving credit offer from FTX US. 



Now, with FTX in shambles — facing legal and financial troubles of its own — BlockFi is once again left to fend for itself.



“As part of its restructuring efforts, the Company will focus on recovering all obligations owed to BlockFi by its counterparties,” the company said in a statement, adding, “the Company expects that recoveries from FTX will be delayed.”



A representative of BlockFi declined to comment further.



No surprise



BlockFi filing for bankruptcy should not come as a surprise, a source who has closely worked with BlockFi told Blockworks.



“[It] was obvious once FTX went bust, because they had a Fugazi bailout,” the source said.



This sentiment is shared by many in the crypto community. 



“There have been a lot [of] totally unexpected things that have happened in the crypto space over the past 2 months. BlockFi filing for bankruptcy is not one of those things,” Guy Turner from Coin Bureau tweeted.



Early signs of the crypto lender’s insolvency were apparent after it suspended withdrawals earlier this month amid FTX developments.



Its latest bankruptcy filings reveal that BlockFi has roughly 100,000 creditors with $1 billion to $10 billion in liabilities and assets. 



Among them is the Securities and Exchange Commission, which the now-bankrupt company is said to owe roughly $30 million.



In February, BlockFi reached a $100 million settlement with the SEC after it failed to

BlockFi’s 'Fugazi Bailout' Condemns Crypto Lender to Bankruptcy

Andre Cronje, a long-serving figure in the DeFi space, says the Fantom blockchain project he advises is cash-flow positive, earning more than $10 million in annual revenue.



Cronje shared a blog post on Monday that claims the Fantom team maintains more than $300 million in assets without specifying how much is considered liquid. “We are still scaling up,” Cronje said.



Fantom's reported treasury, as yet unproven on-chain, is made up of around 450 million FTM ($85.7 million). There’s also $100 million in stablecoins and $100 million in undisclosed cryptocurrencies, as well as $50 million in non-crypto assets, per Cronje’s post.



Fantom is a layer-1 blockchain compatible with Ethereum Virtual Machine (and Ethereum dapps). The network competes with the likes of Solana, Avalanche and Polygon for Ethereum’s market dominance.



Cronje's blog works to reassure investors the Fantom Foundation's solvency while detailing its financial history. The non-profit firm, which currently employs over 40 staff according to RocketReach, has an annual salary burn rate of $7 million. Cronje expects Fantom’s coffers to last for another 30 years without touching its FTM stash. 



DeFi strategies are currently bringing in $6 million per year for the Foundation, said Cronje, revenue it uses to buy its own FTM tokens. Yield farming on Compound and Synthetix were cited as previous plays.



Transaction fees alongside validator and delegate earnings brings Fantom's total yearly revenue beyond the $10 million mark, although that figure excludes capital gains tax and appears based on FTM's current valuation.



Cronje returns to Fantom as it struggles to maintain growth



Cronje’s re-emergence comes as Fantom’s native asset flounders along with much of the crypto space. FTM is down more than 90% year to date, dropping from $2.25 to less than $0.20. FTM's market cap is now less than $500 million, ranked 73rd by CoinGecko.



Cronje is a prolific DeFi developer, credited

Cronje Says DeFi Saved Fantom: 'We Are Cash Flow Positive'

FTX failed, in part, because it was too centralized, according to DeFi adherents — with decentralized advocates now saying the debacle has unexpectedly given DAOs an opening.  



There was little to no transparency of where the crypto exchange custodied customer cryptocurrencies, industry participants told Blockworks. A purported lack of transparency in crypto — ironically, long considered the first open, traceable financial system — is nothing new, from Mount Gox onward. 



Decentralized autonomous organizations (DAOs), on the other hand, have mostly managed to stay out of trouble. And they argue an inherent openness to where their funds are kept and how they move is a key reason as to why. 



While decentralized protocols are still nascent — with infrastructure models and tokenomics setups still in their relative infancy — supporters argue there are lessons to be learned from DAOs in an effort to head off future digital asset blowups on the centralized side. 



DAOs have held their own in the latest market downturn. The stalwart performance, coupled with structural maturations, ought to lead to a “large exit out of centralized institutions into decentralized ones,” according to Nick Almond of FactoryDao, who goes by drnick on Twitter.



“Then, it begins to influence centralized governance,” Almond told Blockworks. 



Technology at the center



The rise of DAO governance functions — with parallels to activism in equities markets — have especially bolstered the legitimacy of such collectives, according to a DAO governance consultant who goes by the pseudonym mel.eth.



The outcome, so far: DAOs have made it possible to legitimize how decisions are made in a public, trackable manner via on-chain governance tokens, mel.eth told Blockworks. 



“DAO technology at the middle, people at the fringes — [this] is a good mental model for how a DAO is different to a company which tends to be more like a republic than a true person to person

DAOs: FTX Demise Is Win For Decentralization 

The US Securities and Exchange Commission (SEC) has long been a thorn in the side of the crypto ecosystem — and chairman Gary Gensler represents the very tip.



Securities regulations and the token economy don’t exactly mix. SEC watchdogs still map digital assets to the 76-year-old Howey Test with varying success: small-time operators are often stung while major cases tend to end in settlement.



The SEC issued guidance on how it squares digital assets with Howey back in 2019. Gensler has previously stated that most tokens on the market could be securities or investment contracts, bar bitcoin and potentially ether — toeing the line etched by his predecessor Jay Clayton.



"Nothing about the crypto markets is incompatible with the securities laws," says Gensler. But until the SEC builds a clear and novel framework in which to operate, tailored specifically for the crypto space, startups and their legal teams must read between the lines before launching in US jurisdictions.



Many firms nix the US altogether (and New York especially so) to avoid sudden SEC strikes. Crypto exchanges too are also unsure which tokens are indeed securities. This leads to fewer listings on US platforms compared to offshore counterparts operating in comparatively lax jurisdictions. 



Clear regulations have rarely felt so important, now, some three weeks after the FTX calamity. But what does Gensler’s SEC career thus far reveal about what’s in store for the digital asset space?



2021: Gensler pushes for broader SEC powers to police crypto



President Joe Biden first nominated Gensler to the role of SEC chair in Feb. 2021, a move ratified by the Senate two months later. Years earlier, Gensler was teaching blockchain and crypto topics at the Massachusetts Institute of Technology, with his lectures still available online.



“I would be surprised if 10 years from now [blockchain] isn’t somewhere in the financial system in a meaningful way,” Gensler said in 2018. Gensler

SEC Under Gensler: Crypto Power Grab or Effective Protection?

When most people think of NFTs, they think of overpriced art, digital collectibles and very expensive pictures of cartoon monkeys.



But NFTs can enable all sorts of practical applications, from securing loans to AI-powered interior design. They do this by revolutionizing how people — not Big Tech — benefit from their data. Here’s why:



Everything you care about is non-fungible.Digital representations of non-fungible things are useful (and common).Decentralizing these representations makes them vastly more useful to the end user.



Everything you care about is non-fungible



Something is fungible if it is interchangeable with and indistinguishable from other items of the same type. A fungible item can be replaced by another identical item without any loss of value, like trading a dollar for another dollar.  



Fungible assets, like money or gasoline, while valuable, are typically only important to the extent they help us acquire something non-fungible (belongings, experiences). 



Something non-fungible, on the other hand, is unique.



Bored Apes are cryptographically unique (source: OpenSea)



This includes your belongings, such as your home, your car, and even your cup of coffee. It includes your relationships, your body, and your preferences. Experiences, credentials, memories, and reputation are all non-fungible. Each is unique and cannot be replaced by an identical equivalent.



Even things that start out as fungible can become non-fungible. Cars of the same make, model, and year might seem fungible when they’re brand new, but if you’re buying a used car, you definitely want to evaluate the specific vehicle’s condition. You might not care which cup of coffee the barista hands you out of the same pot, but you probably don’t want to trade after the first sip.



Digital representations of non-fungible things are useful (and common)



Retailers keep records of their customers and what they buy. This helps them support buyers when something

Why NFTs Will Upgrade Everything

The latest crypto crisis, in many ways the biggest yet, has lined up perfectly with this year’s Thanksgiving holiday, setting investors and industry members up for the inevitable “I told you so” from friends and relatives. 



Dinner guests who had never heard of FTX or its disgraced quirky founder Sam Bankman-Fried before last week will be at the table with questions — and likely a few criticisms. 



Before you stuff your face, stuff your brain with this quick news breakdown to keep you on point.



What is FTX? 



Founded in 2019 in Hong Kong and moved to the Bahamas in 2021, crypto exchange FTX was run by Bankman-Fried, one of crypto's richest billionaires when things were good now boasts two commas at most. 



Bankman-Fried is the son of two compliance attorneys and — before losing billions in user funds — was largely adored for his down-to-earth, idiosyncratic ways. He quickly won the hearts and minds of investors, politicians, athletes and celebrities. (He slept on a beanbag! How fun and relatable!)



Why did it fail? 



It all came crashing down earlier this month when a leaked balance sheet revealed that another one of Bankman-Fried’s ventures, hedge fund Alameda Research, held a lot of FTT, FTX’s own native digital currency. If FTT were to fall, which — spoiler alert — it quickly did, Alameda would be in trouble.



Soon after, rival exchange leader Changpeng “CZ’’ Zhao of Binance said his firm was selling its FTT. Bankman-Fried responded, essentially, by saying “bring it on.” 



FTX customers became worried and started to pull their funds off FTX, which was a problem, since the money wasn’t there. The exchange halted withdrawals on Nov. 8 and filed for bankruptcy, along with more than 130 of its subsidiaries, on Nov. 11. 



Bankman-Fried later confirmed FTX needed $8 billion to satisfy creditors. He also said reports that FTX funds had been used to fund trades at Alameda — a big no-no — were, in fact, true.

A Field Guide to Thanksgiving Crypto Banter in 2022

Crypto wallet maker Ledger is rolling out its crypto debit card across the UK and Europe, as a string of scandals in the ecosystem spurs interest in self-custody solutions.



Ledger’s Crypto Life (CL) card allows users to move crypto between Ledger hardware wallets and card accounts via companion app Ledger Live.



While the card supports the French firm's cold crypto wallets — which promote self-custody — CL is developed by London-based fintech Baanx, which states that “it’s not a bank” on its website.



Similar to other crypto cards already on offer, customers can earn 1% crypto rewards in bitcoin or USDT, or 2% in Baanx’s native token BXX, when funds are spent. Users can also receive paychecks denominated in bitcoin, ether or other stablecoins.



Lithuanian banking-as-a-service provider Contis Financial handles custody of all funds kept on the card. Baanx’s website states that Contis Financial is authorized by the Lithuanian central bank, however card funds will not be covered by the country’s Financial Services Compensation Scheme or Deposit Insurance System.



“No other compensation scheme exists to cover losses claimed in connection with the account and associated card,” Baanx says in an FAQ. “We will however ensure that any funds received by you are held in a segregated account so that should we become insolvent your funds will be protected against claims made by our creditors.”



Like Mastercard, Visa supports crypto cards issued by several companies including Coinbase and Binance. Binance’s branded card is similar to Ledger’s — in fact it’s also managed by Contis — but the rewards are in BNB and held on the exchange. 



Ledger card promotes self-custody, until it's time to spend crypto



Ledger says it received over 400,000 waitlist signups for CL, after first announcing the program at the Ledger Op3n conference in Dec. 2021. 



Customers can use their cards at some 90 million merchants and online stores