Bessie Liu

<div id="highlights-block_6357f6b01683d" class="highlights">
 <ul>
 <li>Community members will be able to earn soulbound tokens through participating in on-chain activity</li>
 <li>Roughly 15,000 community members are active on Voltz’s Discord platform, according to Simon Jones, Voltz Labs CEO and co-founder</li>
 </ul>
 
</div>



Interest rate swap automated market maker Voltz has made the decision to move its community on-chain after a series of Discord hacks plagued Web3.&nbsp;



Members using the new open-source tool will be able to verify their identity in a programmatic and composable way, and will have the opportunity to earn so-called soulbound tokens through participating in activities and tasks within the community.



Based on their participation in DAO activities, these tokens can later be redeemed or minted at the end of each quarter.



The concept of soulbound tokens was introduced by Ethereum co-founder Vitalik Buterin. It could be described as a non-transferable NFT that represents an aspect of a user’s identity and their achievements in Web3. Ethereum layer-2 network Optimism <a href="https://cms.blockworks.co/blazing-an-optimistic-trail-on-ethereum/" target="_blank" rel="noreferrer noopener">was an early adopter</a> of the concept.



In an interview with Blockworks, Simon Jones, the CEO and co-founder of <a href="https://cms.blockworks.co/?s=voltz" target="_blank" rel="noreferrer noopener">Voltz Labs</a>, said the decision to move its community on-chain happened after a team member&#8217;s account was compromised.



“It put us in a position where we really began thinking deeply about our community and the fact that it all exists in what is a centralized single point of failure, where if one thing was compromised, you are at risk of losing a whole bunch of infrastructure that exists around your community,” Jones said.



By moving activity on-chain, Jones said that even if the Discord server completely falls apart, the community will still be able to exist.



“It kind of introduces an element of Sybil resistance because you are earning these tokens into a non-transferable single address wallet,” Jones said.



An estimated 15,000 community members are active on Voltz’s Discord channel today, according to Jones, and the process of moving them on-chain is something he sees as a “more Web3-native way of building a future.”



“As soon as you take something out of the centralized service, and you put it on-chain, it expands what can be built on top of it,” Jones said. “It’s the composability that is really exciting.”



Voltz locked in Aave- and Compound-based stablecoin rates <a href="https://cms.blockworks.co/interest-rate-swap-protocol-voltz-onboards-lido-and-rocket/" target="_blank" rel="noreferrer noopener">earlier in July</a> and has been steadily growing by 30% to 40% each week, according to Jones.&nbsp;



“It’s exciting that we&#8217;re not just innovating from a protocol perspective, but we&#8217;re also innovating from the perspective of building a community in Web3,” he said.



Updated Oct. 25 at 2:07 pm ET.



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In Search of a Discord Alternative, One Protocol Built Its Own

Shalini Nagarajan

<div id="highlights-block_634e587917466" class="highlights">
 <ul>
 <li>“The community of people making decisions on the DAO is fluid, ever-changing and different for each proposal on which they vote,” Paradigm said</li>
 <li>It argues the CFTC should identify and serve its lawsuit against individual DAO members</li>
 </ul>
 
</div>



Crypto venture capital firm Paradigm has <a href="https://github.com/LeXpunK-Army/Crypto-CaseLaw/blob/main/bZx%20DAO%20Case/paradigm_amicus.pdf" target="_blank" rel="noreferrer noopener">filed a motion</a> to join other parties in arguing that the Commodity Futures Trading Commission (CFTC) improperly served members of Ooki DAO.&nbsp;



The CFTC <a href="https://cms.blockworks.co/cftc-pursues-first-case-against-a-dao/" target="_blank" rel="noreferrer noopener">controversially sued Ooki DAO</a> in September, alleging that it facilitated unregistered margined and leveraged crypto trading products for US residents.



In the Monday filing, Paradigm said the Commission should seek to hold accountable only those who directly contributed to Ooki’s registration requirements under the Commodity Exchange Act. Paradigm argues DAO members should have been served a summons directly, rather than through a general website chat bot.



“A key characteristic of DAOs is that unrelated, anonymous people come together to decide whether to adopt ad hoc proposals about how to run the underlying protocol,” the firm said in the motion requesting to file an <a href="https://www.law.cornell.edu/wex/amicus_curiae" target="_blank" rel="noreferrer noopener">amicus brief</a>. An amicus refers to a party intending to influence the court’s decision, as it holds a substantial interest in the matter.



“A person might choose to participate once or many times, but the community of people making decisions on the DAO is fluid, ever-changing and different for each proposal on which they vote,” Paradigm added.



The regulator had settled charges against the DAO and its founders Tom Bean and Kyle Kistner, but it was unable to identify key figures attached to the DAO&nbsp; — so it served its court summons through Ooki’s website chat bot.&nbsp;



The news was met with some disbelief over whether the CFTC was serious about bringing forward a complaint against every individual member of a DAO.



<h3 class="wp-block-heading">Other groups support Ooki DAO against CFTC action</h3>



Last week, US District Judge William Orrick ruled that two crypto advocate groups — who asked to join the case — could argue the CFTC shouldn’t be able to serve the DAO through a website help bot. LeXpunK Army and the DeFi Education Fund both have filed for permission to add amicus briefs similar to Paradigm’s.



Paradigm has joined them, saying identifying all voting token holders as “members” of the same associations “threatens to seriously distort the law.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">While we are not a party to the case, we thought it was necessary to speak up against the CFTC’s attempt to expand liability to unsuspecting technology users and impair the ability of DAOs to operate in the US.&mdash; Rodrigo (@RSSH273) <a href="https://twitter.com/RSSH273/status/1582051230007799816?ref_src=twsrc%5Etfw">October 17, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Since being served, the DAO appears to have geo-fenced users with IP addresses located in the US. It was set a deadline to respond to the allegations by Oct. 13, but that date has passed with no filing from the DAO.



A hearing has been set for Nov. 30 where the various parties will be allowed to present their views.



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DAO Gains Venture Capital Ally in CFTC Suit

<div id="highlights-block_6307741886231" class="highlights">
 <ul>
 <li>Comm CEO Ashoat Tevosyan wants to build a “fully sovereign, fully end-to-end encrypted and fully private” application</li>
 <li>&#8216;Web2&#8217; app Discord remains one of the primary communication platforms for crypto enthusiasts</li>
 </ul>
 
</div>



Web3 messaging app Comm has raised a $5 million seed round led by CoinFund, funds the startup hopes will set it up to compete with Discord.



The consumer privacy startup is working on scaling end-to-end (E2E) encryption that currently only works for chat apps such as Signal or Whatsapp, with a mind to eventually replace centralized backends.&nbsp;



Ashoat Tevosyan, founder and CEO of Comm told Blockworks that he wanted to make an app that was “fully sovereign, fully end-to-end encrypted and fully private.”



Other investors in the seed round include Electric Capital, Slow Ventures, LongHash VC, Shima Capital and Eniac Ventures.



Comm is being designed so that community members host their own backend servers and only users themselves can access their data. The keyserver software is open-sourced and built to be forked (copied and implemented by other projects).



Although encrypted messaging apps can help protect individual data, many of these apps have <a href="https://slate.com/news-and-politics/2021/06/encrypted-messaging-app-anom-fbi-organized-crime.html" target="_blank" rel="noreferrer noopener">fallen into the hands</a> of organized criminals and gangs.&nbsp;



To Tevosyan, regardless of whether or not Comm exists, criminals will always find a way to access online networks to continue criminal activity.&nbsp;



“We&#8217;re creating software that puts the user in charge and ultimately, that might mean that these situations, these communities can hypothetically use the software,” he said.



Despite this, he said he wants Comm to be a software that supports larger communities and is skeptical of the idea that a large-scale social platform would attract “seedy characters.”



Tevosyan added: “It is possible, but my own perspective on this moral question is that we don’t think we’re providing a service that is good for these people [criminals].&#8221;



There are currently four full-time employees at Comm and around 12 part-time contributors to the project. Tevosyan said he plans to continue growing his team in New York City after the raise, with a handful of employees working remotely.&nbsp;



Despite this, he said his ultimate vision for the company is not yet entirely clear. Users will be able to log in to Comm via their crypto wallets, which controls their overall identity in the app, although it&#8217;s not immediately known which blockchains will be supported.



“You have an easier time bootstrapping when you have kind of like a clear vision from the top. We&#8217;re not quite there yet but we do believe in long-term and potential values [of Comm],” he said.



“Our most radical viewpoint is that in the future, everybody will have a personal private server,” Tevosyan said. “We&#8217;re gonna have a world where users are going to ultimately make the decision to build on top of a platform that offers them the privacy that they need to get to the next step of human-computer evolution.”



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Web3 Startup Comm Raises $5M in Bid to Compete With Discord

Sebastian Sinclair

<div id="highlights-block_629bdedad744f" class="highlights">
 <ul>
 <li>A malicious actor has made off with $359,000 worth of Bored Ape NFTs following a compromise to BAYC&#8217;s discord server</li>
 <li>The hack marks the third time in two months that BAYC&#8217;s NFTs have been compromised, raising questions over the project&#8217;s security</li>
 </ul>
 
</div>



A malicious actor has made off with 200 ether ($359,000) worth of Bored Ape NFTs after the Discord server belonging to the project was compromised on Saturday.



Bored Ape Yacht Club&#8217;s (BAYC) parent company, Yuga Labs, confirmed the amount in a <a href="https://twitter.com/BoredApeYC/status/1533181013815349248?s=20&amp;t=l0S14y3sVid1OW04PU6Ong" target="_blank" rel="noreferrer noopener">tweet</a> roughly 11 hours following the attack. The attacker was able to breach the security of the Discord account belonging to BAYC&#8217;s project manager Boris Vagner, according to on-chain analyst and Twitter user @NFTherder who first sounded the <a href="https://twitter.com/nftherder/status/1533037408144572417" target="_blank" rel="noreferrer noopener">alarm</a>.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Our Discord servers were briefly exploited today,&#8221; Yuga Labs tweeted via its BAYC Twitter handle. &#8220;The team caught and addressed it quickly. About 200 ETH worth of NFTs appear to have been impacted. We are still investigating.&#8221;</blockquote>



Following the successful breach, the actor was then able to post a phishing scam pretending to be Vagner that duped Bored Ape collectors into clicking a malicious link and sent their NFTs (non-fungible tokens) to the attacker&#8217;s address, NFTherder said.



Vagner was promoted to social and community manager in February, according to a <a href="https://twitter.com/BorisVagner/status/1488336821419270145?s=20&amp;t=DUcAvV7Cg4GwN-ru4d_E-g" target="_blank" rel="noreferrer noopener">tweet</a> in which he praised the founders of Bored Apes and Yuga Labs.



Questions have sprung up on social media as to how the Discord account was compromised, questioning the project&#8217;s security. Despite proper security measures by way of two-factor authentication, attackers, in this instance, may have circumvented security by obtaining a Discord ID token from a targeted victim.



One explanation for the method behind the attack was that Vagner&#8217;s Discord ID token — used to log in multiple times locally without verifying one&#8217;s identity — was also compromised. This could have allowed the actor to gain access to Vagner&#8217;s account.



The theft marks the third time BAYC has been hacked, including an instance on April 1 when a Mutant Ape Yacht Club NFT was stolen via a phishing link on Discord. Almost four weeks later, on April 25, <a href="https://cms.blockworks.co/bayc-instagram-hacked-for-more-than-10-million/" target="_blank" rel="noreferrer noopener">BAYC&#8217;s Discord and Instagram accounts</a> were also hacked when a link to a copycat website duped users into giving up NFTs worth millions of dollars.



Hundreds of users have taken to Twitter to vent their frustration at the repeated attacks and alleged lack of security.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">not getting a discord hacked is super easy. especially for projects WITH BILLIONS in revenue. honestly it&#39;s embarrassing.&mdash; UncleTravelingMatt.eth (@UncTravelinMatt) <a href="https://twitter.com/UncTravelinMatt/status/1533072701375528960?ref_src=twsrc%5Etfw">June 4, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



&#8220;They [BAYC] should consider investing a full-time security manager,&#8221; NFTherder tweeted in response to one user&#8217;s comment on BAYC&#8217;s security. &#8220;Surprised they haven&#8217;t already though.&#8221;



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BAYC Discord Compromised, NFTs Totaling 200 ETH Stolen

Morgan Chittum

<div id="highlights-block_61de179961a62" class="highlights">
 <ul>
 <li>”I have never felt that amount of anxiety in my life. [It was my] first NFT ever, and [I] got scammed,” one victim told Blockworks</li>
 <li>The majority of the stolen funds have since been transferred out of the creators’ original wallet address</li>
 </ul>
 
</div>



Creators of a non-fungible token (NFT) collection called <a href="https://opensea.io/collection/frosties-nft?tab=activity" target="_blank" rel="noreferrer noopener">Frosties</a> vanished after investors poured $1.3 million into the cartoon ice cream digital collectibles.&nbsp;



”I have never felt that amount of anxiety in my life,” a 25-year-old college student, who goes by Antique_Taco online, told Blockworks. “[It was my] first NFT ever, and [I] got scammed.”



Frosties may have been the first NFT “rug pull” of 2022 — when a project’s developers abandon it after siphoning investor funds and removing liquidity. Approximately $30 million was lost in such scams from Sept. to Oct. of last year alone, according to <a href="https://itsblockchain.com/nft-rug-pulls-30-million-dollar-loss/" target="_blank" rel="noreferrer noopener">ItsBlockchain.</a>



In the case of Frosties, the anonymous creators collected funds and left after investors had purchased all 8,888 NFTs on Jan. 9 via OpenSea, walking away with almost $1.3 million of ethereum in their <a href="https://etherscan.io/address/0xab020f50404dcf45cdb2ff0fe90d3e67205b7a35" target="_blank" rel="noreferrer noopener">wallet</a>.



The NFTs had an average floor price of 0.04 ether or $121 worth of ETH at the time. All 8,888 NFTs sold out roughly 43 minutes after the drop.&nbsp;



Shortly after, developers of the project shut down their Twitter, Discord and closed off all forms of communication. The developer’s wallet address was removed from the collection’s landing page on OpenSea. (The majority of the funds have since been transferred out from the original wallet, according to <a href="https://etherscan.io/address/0xab020f50404dcf45cdb2ff0fe90d3e67205b7a35" target="_blank" rel="noreferrer noopener">Etherscan</a>.)&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I went to eat dinner and when I came back I saw that one Frostie was revealed on OpenSea,” Antique_Taco said in a direct message on Twitter.&nbsp; “I was really confused so I typed a message in the Discord about it and as soon as I hit send the Discord disappeared…My heart sank.”</blockquote>



Frostie collectors were promised premiums with the NFT purchase such as “staking, metaverse [and] breeding functions,” as well as “[becoming] eligible for holder rewards such as giveaways, airdrops, early access to the metaverse game and exclusive mint passes to the upcoming seasons,” according to the project’s website, which has since been taken down.



Marcellus King, another Frosties collector who lost about $3,000 in ether, told Blockworks that it was his first foray into digital collectibles. 



“I figured that this was going to be my first dive into the NFT market,” King said in a Twitter message. “I was skeptical, since I thought the idea of NFTs was just sort of overhyped and overpriced. So seeing [one] that had a thriving community with a lot of activity, a roadmap, [a] legitimate looking site, [an] OpenSea account and artwork, that was actually pretty damn great.” 



<h3 class="wp-block-heading">‘Unrugging the Frosties’</h3>



Original holders of the NFTs banded together via a new <a href="https://discord.com/channels/929914686772772905/929915934217478154" target="_blank" rel="noreferrer noopener">Discord</a> on Jan. 9, dedicated to “unrugging the Frosties.”&nbsp;



The group is working on a wrapped contract for the project, which would return stolen funds into the hands of their rightful NFT owners.



“I know everyone is trying to figure out what is going on,” one moderator, who goes by “catdadcapital.eth,” posted in the chat. “We are diligently working behind the scenes to get control of the project one way or another.”



However, the project’s future is still up in the air. Members of its Discord, which has amassed 1,452 members, are still voting on its governance model and roadmap.&nbsp;



“Even though [they] got scammed with the first phase of the project, they want to keep the project alive,” Mike Fasanello, the director of training and regulatory affairs at Blockchain Intelligence Group, told Blockworks in an interview. “A big passion is still there in this community, which is fantastic.”&nbsp;



Fasanello, who has been investigating the rug pull, found out about the potential scam when he came across victim <a href="https://www.reddit.com/r/opensea/comments/s04i9y/so_what_is_going_on_with_frosties_nft_floor_price/" target="_blank" rel="noreferrer noopener">complaints</a> while browsing an NFT subreddit. Fasanello’s team sent an analysis and graph of the stolen funds to Blockworks.



Fasanello began working with one moderator of the project’s new Discord on Jan. 11. Fasanello, who did not disclose the name of the moderator, said the two may file a report with law enforcement in the near future.&nbsp;



Once Fasanello identified himself in the chatroom, however, he was kicked out — leading him to believe there may be “foxes in the henhouse.”



“For somebody to have that sort of access is a red flag,” Fasanello said, adding that two admins have access to the smart contract that underlies the NFT project.



One moderator, who goes by “Shipper,” confirmed to Blockworks that Fasanello was no longer in the Discord and that two admins did <a href="https://github.com/WarAgainstRugs/WrappedFrosties" target="_blank" rel="noreferrer noopener">create a copy of the same smart contract</a>.



“The project itself, I do have a lot of hope for, as long as the current people in charge of the server, keep their promises, which nobody can be entirely sure of,” Shipper said in an interview with Blockworks.&nbsp;



“Having the loss was unfortunate, but if there is a chance that the project is revived, I&#8217;m all for it,” King, the Frosties collector, said.



This is a developing story.&nbsp;



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NFT Creators Stole $1.3M From Investors Then Vanished, Sources Say

<div id="highlights-block_618ad477bafdd" class="highlights">
 <ul>
 <li>Users voiced concerns around the potential integration, citing the impact of cryptocurrency on the environment</li>
 <li>One former volunteer moderator for Discord described the prospective move from the app as another “[attempt] to capitalize on a Silicon Valley trend.”</li>
 </ul>
 
</div>



Discord, one of the world&#8217;s largest messaging apps, could soon have cryptocurrency wallet integration, the company’s chief executive officer <a href="https://twitter.com/jasoncitron/status/1457841222995693570?s=20" target="_blank" rel="noreferrer noopener">tweeted</a> early Tuesday morning. 



CEO and founder Jason Cintron posted a screengrab that shows Discord&#8217;s platform connecting to Ethereum via wallets such as MetaMask. If integrated, the feature could allow users to send each other crypto. The executive <a href="https://twitter.com/textfiles/status/1458102225373470726?s=20" target="_blank" rel="noreferrer noopener">doubled down</a> and later retweeted his initial post that hinted at future blockchain capabilities. 



However, the platform does not currently have this feature, as of press time.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">probably nothing <a href="https://t.co/p4P6MoNGgd">pic.twitter.com/p4P6MoNGgd</a>&mdash; Jason Citron (@jasoncitron) <a href="https://twitter.com/jasoncitron/status/1457841222995693570?ref_src=twsrc%5Etfw">November 8, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Following Citron’s tweets, certain Discord users responded with concerns, citing the impact of crypto on the environment, security issues that could ensue on the app and more. 



Some have boycotted by canceling (or have <a href="https://twitter.com/ohgoditsranor/status/1457877564144459776?s=20" target="_blank" rel="noreferrer noopener">threatened to cancel</a>) the app&#8217;s subscription service, known as “Nitro”, according to Discord’s official <a href="https://support.discord.com/hc/en-us/community/topics/360000789931-Nitro">website</a>. Outside posts under the gaming company&#8217;s “feedback” section consist of titles such as “<a href="https://support.discord.com/hc/en-us/community/posts/4412694573463-I-ll-straight-up-leave-and-use-Slack-if-you-integrate-NFTs-" target="_blank" rel="noreferrer noopener">I&#8217;ll straight up leave and use Slack if you integrate NFTs</a>” and “<a href="https://support.discord.com/hc/en-us/community/posts/4412689797527-Shout-from-the-roof-tops-how-much-you-don-t-want-crypto-integration" target="_blank" rel="noreferrer noopener">Shout from the rooftops [about] how much you don’t want crypto integration</a>.” 



Elsewhere, a <a href="https://twitter.com/textfiles/status/1457751651465449475?s=20" target="_blank" rel="noreferrer noopener">screenshot</a> of a previous Discord <a href="https://survey.alchemer.com/s3/6469752/Discord-Web3-Survey" target="_blank" rel="noreferrer noopener">survey</a> surfaced on Tuesday. The questionnaire (apparently from <a href="https://www.theblockcrypto.com/post/123752/discord-ceo-hints-at-integrating-ethereum-via-wallets-such-as-metamask" target="_blank" rel="noreferrer noopener">August</a>) asked users about non-fungible tokens (NFTs) and “Discord-native wallets” which could (in theory) allow users to have a digital wallet attached to their account. Blockworks did not have access to the results of this survey, as of press time. 



“We’re always exploring and hacking away at things we think will improve Discord for all the communities we serve,” a company spokesperson told <a href="https://www.theverge.com/2021/11/9/22772164/discord-nft-viral-tweet-social-media-backlash" target="_blank" rel="noreferrer noopener">The Verge</a>. “This includes research that helps us learn about what people want.”



One former volunteer Discord moderator, who agreed to be interviewed under the condition of anonymity, described the potential integration as another “[attempt] to capitalize on a Silicon Valley trend.”



“I&#8217;m personally against blockchain tech in its current state due to the energy consumption problem,” the ex-moderator of two years said, who was recently removed from the program after voicing concerns over leadership changes. “This is another example of Citron putting monetary gain and personal interest before user (or even employee) interest.”



Discord did not immediately respond to Blockworks&#8217; request for comment. 



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