David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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A battle has brewed behind the scenes of tech over the past few years. For power. As in, electricity.



Energy demand from tech giants has skyrocketed due to the AI arms race, to the point that companies are <a href="https://www.bloomberg.com/graphics/2024-ai-data-centers-power-grids/">reportedly</a> facing years-long waits to access local grids.



With the biggest players set to continue their stranglehold on the market, energy is now fertile ground for disruption — perhaps even via DePIN.



That’s what Framework Ventures is betting on. Co-founder Michael Anderson recently told Empire’s Katherine Ross that energy has been a huge focus for the firm over the past six months.



Anderson reasoned that most major narratives in crypto right now are aligned with general consensus — the two most obvious being memecoins and ETFs.



Energy is, on the other hand, fairly non-consensus, and should pair perfectly with DePIN — which has now proven that it can work, according to Anderson.



“But where it hasn&#8217;t lived up to the expectations is on the demand side. You know, [DePIN] is basically building a supply and demand network, where you source supply and then there&#8217;s demand for whatever resource the network provides. And historically, it seems that the supply side has been accomplished, but the demand side has been lacking,” he said.



Peer-to-peer energy startups have already had boom and bust cycles in crypto. Although they generally weren’t positioned under the DePIN umbrella.&nbsp;



Powerledger would be the largest — allowing solar panel owners to sell energy they generate back to the grid. POWR hit an all-time high market cap of about $680 million in 2018 but still trades 80% below that mark.



So much has changed for energy markets since then, and it could be that Powerledger and others like it were simply too early.&nbsp;



Framework has recently backed crypto startups in the energy space including <a href="https://glow.org/blog/what-is-glow">Glow</a> — which aims to greenify energy grids by rewarding solar farm builders with USDC and GLW on Ethereum — and <a href="https://www.daylight.world/">Daylight</a>, a project backed by IoTeX which is similarly working on decentralizing green energy via crypto rewards.



“Energy is the most liquid, fragmented and highly demanded ecosystem that could be registered over a blockchain, and is purpose-built for DePIN,” Anderson said.&nbsp;



“DePIN kind of becomes energy — it&#8217;s sort of like how DeFi becomes financial services. I think that we&#8217;re gonna see that transition become more pronounced next year.”



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



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<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

DePIN

Why Framework Ventures is focused on energy DePINs

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Framework’s Vance Spencer is a fan of Maker’s Sky rebrand.



I don’t know about you, but until I chatted with Spencer, I really hadn’t seen or heard anyone come out in favor of the rebrand. Most folks were either ambivalent or critical.&nbsp;



For Spencer — after speaking with various stakeholders — the “brand equity is actually relative to the value of a redenomination, which is just a lower unit bias. There&#8217;s a reason that stocks do this in the stock market,” he explained.



<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">Fundamentals of MKR/SKY, Endgame, Brand TLDR: I support relaunching the SKY brand in lieu of MKR Three things have become apparent to me in talking with MKR/SKY ecosystem participants 1. USDS is an unqualified success and MKR/SKY fundamentals have never been stronger. MKR is…&mdash; Vance Spencer (@pythianism) <a href="https://twitter.com/pythianism/status/1853454891928420800?ref_src=twsrc%5Etfw">November 4, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



As for the naysayers, it’s simply “too early” to determine if the strategy’s even worked yet, given that no major exchange has listed SKY.



“The brand has been confusing so far, but there hasn&#8217;t been enough adoption to tell you know, one from the other in terms of, do people not like the brand, or do people not like one big fund selling their MKR, and then a general market pullback, because, right now, MKR is ripping again, and I think people you know care less about the brand or about what their perspective is when that&#8217;s the case,” Spencer said.



<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">Now that the Sky branding is upheld, Sky Ecosystem can focus on getting to work: 1) Grow adoption of USDS by expanding to Solana and Eth L2s 2) Migrate all MKR to SKY on CEXes and coingecko 3) Prepare to launch Spark, the first Star, and SPK token rewards for USDS holders&mdash; Rune (@RuneKek) <a href="https://twitter.com/RuneKek/status/1854569937190129958?ref_src=twsrc%5Etfw">November 7, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The tradeoff of having “something that’s more retail-oriented and lower unit bias,” is more important when it comes to the rebrand. And, to add to that, the lower retail participation so far makes it hard to get a read on success down the line.&nbsp;



However, this rebrand could change the story, especially paired with the potential market rally we could see if there’s regulatory clarity (and firms aren’t at risk of sudden lawsuits).



“If we assume Wall Street institutions and retail get in and they value certain things, like fundamentals, I think they&#8217;re also going to value a brand that makes sense within the context of what the project&#8217;s trying to do, which is kind of start over for this next chapter of crypto, redenominate. Fresh chart, completely transition the token to the next one, there&#8217;s probably going to be a lot of lost tokens,” Spencer said. But it’ll end up being a “clean slate.”



Despite criticisms of the rebrand, Framework won’t be going anywhere. 



“This is something that we have a venture perspective on, and we&#8217;re going to hold for a long time. And I think what they&#8217;re doing is in the spirit of growing the fundamentals, which is really what we care about, because at a certain point, if you&#8217;re holding some of the last MKR, like, they&#8217;re gonna be buying it from you, and that&#8217;s kind of the market you want to create in the future,” Spencer added.



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Empire Newsletter

Maker’s rebrand hasn’t deterred Framework

Darren Kleine

“Are we back?”



It’s a question many have asked amidst the bitcoin buying frenzy of the past couple weeks.



All the excitement in buying activity seems to trace back to news regarding a potential spot bitcoin ETF approval, Blockworks co-founder Ippolito says.



“Are we back? Are we not back? Whatever,” Framework Ventures co-founder Vance Spencer answers. “There&#8217;s just been a lot of real work that&#8217;s been done in crypto over the past 18 months since the Luna collapse.”



Speaking on the Bell Curve podcast (<a href="https://open.spotify.com/episode/4TuAobCWyHJHEVPlgg9NL9?si=qu8EnZDUShiJCE7DJpDRtg">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/recapitalizing-the-degens-and-identifying-cycle/id1641356619?i=1000632820665">Apple</a>), Spencer points out a number of positive advancements in the crypto industry: “You have <a href="https://blockworks.co/news/on-chain-investors-us-treasury">[Treasury bills] coming on-chain</a>,” he says, adding, “I think <a href="https://blockworks.co/news/synthetix-web3-tools-kain-warwick-lightspeed-engagement">Synthetix might hit a billion of volume today</a>.”



Spencer goes on to list recent improvements to <a href="https://blockworks.co/news/dydx-ethereum-open-source">DeFi services like derivatives exchange dYdX</a>, market share gains for the Lido’s ether staking service and the imminent release of blockchain-based games by “the end of the year.”



Read more: <a href="https://blockworks.co/news/lido-centralization-debate-ethereum">Did Lido fly too close to the sun? Inside the centralization debate</a>



On top of all that, Spencer adds, “the institutions have finally adopted this, with <a href="https://blockworks.co/news/blackrock-spot-bitcoin-etf-rumors">Larry Fink on Fox News</a> shilling bitcoin.” Spencer suggests that with all the groundwork that builders are laying, “you’re probably looking at a bull market” in the next couple of years.&nbsp;



<h2 class="wp-block-heading">A shift to tailwinds</h2>



Crypto is decoupling from other markets, Spencer says, “exactly at the time you would hope it would” — a time of geopolitical uncertainty, growing debt loads and high budget deficits. “The narratives couldn&#8217;t be much better for crypto,” he says.



Spencer mentions the likely directional shift in real rates as another positive for crypto valuation. “It&#8217;s not about whether you&#8217;re at zero rates or 5%. It&#8217;s about, what&#8217;s the direction of travel and what&#8217;s the rate of change?”



It’s finally time to be optimistic about crypto market conditions, according to Spencer. Looking back at eight drops of around 30% during volatile trading periods in 2021, Spencer says each market pullback “was a pretty incredible opportunity.”



“So that&#8217;s at least where our head is at,” he says. “It’s just continuing to accumulate high quality assets.”&nbsp;&nbsp;&nbsp;&nbsp;



Blockworks co-founder Michael Ippolito says he has seen a shift from “headwinds” to “tailwinds” in the industry’s outlook.&nbsp;



Now, he says, the <a href="https://blockworks.co/news/blok-bitcoin-halving-spot-etf">bitcoin halving is in “spitting distance”</a> and potential spot bitcoin ETF approvals have created a positive buzz. Real rates, he adds, are “probably going to move in the opposite direction, which is good for bitcoin, good for crypto.”&nbsp;



<h2 class="wp-block-heading">For the first time in years…</h2>



Spencer recounts a recent anecdote that reminded him of past bull market euphoria. Strolling through West Village, he overheard a phone conversation of someone hurriedly helping a friend onboard to Coinbase on the day that “bitcoin popped.”



“There&#8217;s like this frantic scramble [to] get the app downloaded and get on Coinbase,” he says. “I thought that was pretty funny. I just haven&#8217;t heard that in, I guess it&#8217;s been almost two years.”&nbsp;



“The price action last week was pretty violent,” Ippolito says. One bitcoin trading candle printed nearly 3,000 dollars, he says, “in a very short period of time.”



“That&#8217;s the first time I&#8217;ve seen something like that happen…in years,” he says.



Read more: <a href="https://blockworks.co/news/spot-bitcoin-etf-possibilities">Blockworks podcast guests ruminate on bitcoin ETF buzz</a>



Spencer recalls a recent dinner event with a Wall Street trader, where the two got into a discussion about investment in long bonds. “I was like, how much would I make, you know, if I did that?”



The trader replied, “if rates go from 5% to 3% or to 2%, you&#8217;re gonna make 30%.”



“I was like, that is just not interesting at all.”



“And sure, you might be able to make 5% in [Treasury bills],” he says, “but we put that move in, in a day for bitcoin,” he says.&nbsp;



<h2 class="wp-block-heading">Price moves first</h2>



Ippolito cites an <a href="https://a16z.com/the-crypto-price-innovation-cycle/">article</a> by Chris Dixon and Eddy Lazzarin, which describes a counter-intuitive take on the more conventional “fundamentals drive price” adage. The article suggests that in crypto markets, price moves first, spurred by low liquidity, speculative behavior or other unknown factors that initiate an upward trajectory.



“The price gets people to make the calls that you were describing in the West Village,” Ippolito says, “like, ‘Hey, <a href="https://blockworks.co/news/coinbase-sec-motion-securities">get me on Coinbase</a>.’ Like, ‘this bitcoin thing is moving. I’ve got to get in.’”



“That price move begets more buying,” he says. “Then the media starts covering it for the first time in a positive light.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG6329274485" width="100%"></iframe>







“That begets actual fundamentals — which is devs coming in, people building products and then the VC funding cycle typically restarts — and then you&#8217;re off to the races.”



“It&#8217;s hard to predict how and when that kicks in,” he says, “but I feel like that&#8217;s the thing that has to kick in now.”



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Bell Curve

Is crypto’s bull market back?

The crypto world is abuzz with spot bitcoin ETF excitement — and many of the Blockworks podcast library’s recent guests have contributed their two Sats to the ongoing story.



Matt Hougan, chief investment officer at Bitwise, compares the current spot bitcoin ETF fervor with the advent of gold ETFs, launched in the early 2000’s. Like bitcoin, before ETFs, gold was not held by mainstream institutions, either.&nbsp;&nbsp;



It’s easy to forget, but “gold was the land of tinfoil hats and crazy people,” he says, “stockpiling baked beans and guns and putting gold bars underneath their mattress.”



On a recent Empire podcast (<a href="https://open.spotify.com/episode/2xLI27RTiLgo1TGN6tBehR?si=xDg-OF_1T7yeiZDxJ0bxYQ">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/the-bull-case-for-crypto-etfs-matt-hougan-hunter-horsley/id1554930038?i=1000632428945">Apple</a>), Hougan explains, “there were no mutual funds that allowed you to get exposure to gold. There were almost no gold mining funds. You couldn&#8217;t bring it up in common conversation.”



Following the approval of gold <a href="https://blockworks.co/tag/etfs">ETFs</a>, Hougan says, “all of a sudden, over a period of about three to four years, it transformed into what it is today, which is this institutional asset.”



Read more: <a href="https://blockworks.co/news/bitcoin-price-rally-bond-yields">A crypto perfect storm? Bond yields, ETF news collide with bitcoin rally</a>



Hougan adds that the price of gold climbed for 11 consecutive years following the launch of ETFs, “which it had never done in modern history.”



“Over that 11 year span, $100 billion floated to those gold ETFs, and it didn&#8217;t disrupt the other demand for gold,” he says. 



People often wonder if a spot bitcoin ETF will disrupt retail demand for the asset, he says, but “that’s not what gold shows us.”



<h2 class="wp-block-heading">Only BlackRock?</h2>



Amongst the most bullish of Blockworks’ podcast guests is Morgan Creek Capital’s Mark Yusko. The outspoken crypto advocate, chief investment officer and managing director has remained steadfast in his belief that BlackRock will be anointed the sole spot bitcoin ETF provider.&nbsp;



Speaking on the On the Margin podcast (<a href="https://open.spotify.com/episode/5rBZ9KpbRrm7uuSrVd5trw?si=nK68NoYATxWRqX5dYcf1uA">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/bitcoin-bounces-to-%2430k-the-bond-sell-off-continues/id1558223079?i=1000632112036">Apple</a>), he confidently declares, “BlackRock is going to be approved.”



Read more: <a href="https://blockworks.co/news/blackrock-ishares-bitcoin-etf">BlackRock takes apparent new step in bitcoin ETF prep</a>



“They are going to be approved first,” he says, adding, “I still believe they&#8217;re going to be approved only. Only BlackRock.”



On the same podcast, Blockworks co-founder Michael Ippolito adds that with Federal Reserve rates peaking, bitcoin, like gold, was due for a market turnaround. “More critically,” he says, “[gold] actually trades based on the expectation, the forward looking expectation of real rates.”



Real rates are “going to trend the other way,” which should cause bitcoin to respond positively, too, he says.



<h2 class="wp-block-heading">False start sparks real rally?</h2>



Reflecting on the false start that may well have sparked a real rally on the Bell Curve podcast (<a href="https://open.spotify.com/episode/4JfrnIYXpVP8mdQWWUvllZ?si=1JQZ255tTzq7EH9XcniWMA">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/blackrock-ceo-crypto-a-flight-to-quality-round-up/id1641356619?i=1000632033276">Apple</a>), Blockworks co-founder Michael Ippolito notes that the market retraced the brief gains seen following the fake ETF approval post earlier in the past week.



This leads Ippolito to assert that a real ETF approval is not yet priced in. “If a spot <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> ETF does get approved, and that&#8217;s looking pretty likely by February, then the market probably is going to move.”



<a href="https://blockworks.co/tag/framework-ventures">Framework Ventures</a> co-founder Michael Anderson notes that a number of potential ETFs, including Ark and BlackRock, are “lined up” for a decision deadline in mid-January of next year.



“Something will happen in that period of time and it could happen sooner,” he says, “but yeah, I think there&#8217;s positive sentiment on the ETF.”



With BlackRock CEO Larry Fink’s recent description of bitcoin as a “flight to quality” and the potential advent of an institutional acceptance of bitcoin, a pool of traditional finance buyers who have stood on the sidelines might finally be “unlocked,” Ippolito suggests. 



“They need people that they respect and look up to, essentially blessing this stuff.”&nbsp;



“This is really the super bowl,” says Framework Ventures co-founder Vance Spencer. “It’s 7 trillion [dollars] of registered investment advisor assets.”



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BlackRock

Blockworks podcast guests ruminate on bitcoin ETF buzz

James Cirrone

Seven crypto startups raised about $59 million this week.



Account Labs raised $7.7 million to build a self custodial, Polygon-based UniPass Wallet, which <a href="https://blockworks.co/news/account-labs-google-web3-wallet-bypass-seed-phrase">will reportedly be focused on peer-to-peer stablecoin transfer</a>s.



Also a boon for the upcoming wallet: it’s enabled by Google. Specifically, this means users can use existing Google logins to set up a new address.&nbsp;



This is slightly <a href="https://blockworks.co/news/mpc-wallets-security">similar to how Trust Wallet works</a> — since, like UniPass, it uses Google login as a form of authentication — though Trust Wallet uses multi-party computation. UniPass won’t initially be available for iPhones, since the app Android-only at present.



<h2 class="wp-block-heading">Other notable fundraises</h2>



<ul class="wp-block-list">
<li>Untangled Finance, which deals in tokenized assets and other products, <a href="https://techfundingnews.com/untangled-finance-raises-13-5m-to-bridge-real-world-assets-with-defi/">secured</a> $13.5 million in a seed funding round.</li>



<li>RepubliK, a platform for Web3 creators to monetize their work, <a href="https://twitter.com/RepubliK_GG/status/1711913958024884338">raised</a> $6 million at a $75 million valuation from OKX Ventures and others.</li>



<li>NFT-based fantasy horse racing provider Game of Silks raised $5 million.</li>



<li>On-chain data analytics platform Parsec raised $4 million, with <a href="https://blockworks.co/tag/galaxy-digital">Galaxy Digital</a> leading the round.</li>
</ul>



Updated Oct. 16, 2023 at 12:30 pm ET: Removed references of a Blockaid funding round.



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Framework Ventures

Crypto funding: Membrane Labs lead a $59M week

Despite the ups-and-downs of the last year in crypto, Framework Ventures co-founder Vance Spencer said his on-chain gaming thesis hasn’t changed.



“It’s become clearer in terms of how it plays out,” he said, adding: “It takes probably a couple years to build a game” and a hundred or a hundred and fifty million dollars. “And that’s not even including marketing and advertising.”



At Blockworks’ <a href="https://blockworks.co/event/permissionless-2023">Permissionless conference</a> in Austin, Texas, Spencer said first-mover advantage will play an important role in who succeeds in the nascent crypto gaming subsector.&nbsp;



“That means that the people who started building in the last bull market, it&#8217;s probably going to be one of those to market first,” he said.&nbsp;



Spencer said the timing of potential on-chain game releases has also become more clear, with the expectation that “three to four to five well-financed, well built-out, important games” will launch within the next six to nine months.



“A lot of people want to own assets. It&#8217;s the difference between playing poker for fake money versus playing it for real money.”&nbsp;



Spencer insisted that crypto games can be fun, although they don’t seem to exist yet. “We just need more shots on goal.”



“If you think about <a href="https://blockworks.co/tag/defi">DeFi</a> back in 2020, 2021,” Framework Ventures co-founder Michael Anderson said, “a lot of those were just really incentivized games.” He explained it’s a matter of iteration, building on previous formulae but adding more fun elements to the picture.



<h2 class="wp-block-heading">Clones incoming</h2>



Spencer pointed to the <a href="https://blockworks.co/news/friend-tech-financialization-goldentre">Friend.tech phenomenon</a> as an example of how the gaming market will likely play out on a larger scale. The <a href="https://blockworks.co/news/base-next-internet-jesse-pollak">layer-2 Base network</a> social app emerged from a quiet <a href="https://blockworks.co/tag/web3">Web3</a> social app scene, he said, suddenly drawing “five million revenue in the past two months.”



“All of a sudden, there’s 50 Friend.tech clones.”&nbsp;&nbsp;&nbsp;



It’s the same dynamic in every market, Spencer observed. The familiar pattern took place in early DeFi, with a few protocols proving product market fit, he said, after which “everybody chased them.”



“We&#8217;re now seeing the true believers build it out,” Spencer continued. “The next phase is going to be the chase, or one of them actually works and then all the [venture capitalists] get super fired up and start funding competitors.”



Having recently returned from Korean Blockchain Week, Spencer observed that developers from the region are building “probably 50 to 100 games in the next couple years.”&nbsp;



“It’s going to happen,” he said.



Comparing the relatively slow growth of successful crypto games, Spencer argued that many early internet ideas were not actually failures — they just took years to succeed, when key technological improvements finally enabled their original visions to work. “There was just a mobile phone size hole or some UI aspect that was missing.”



“That’s going to happen with crypto, as well.



Spencer appeared to feel most confident about growth in DeFi and <a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">real world assets</a>, saying he sees “basically, 100% certainty of those growing another 10 to 100X.” On-chain gaming faces a more challenging path, with about 60 to 75% odds of being “absolutely huge,” Spencer said. “It’s just a matter of iteration.”



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Crypto games need ‘more shots on goal’ to win, says Framework Ventures’ Spencer

It’s been a miserable few weeks for the US Securities and Exchange Commission, after multiple court rulings sided with the crypto industry, humbling the regulatory body and forcing it to scramble for its next move. But there is one simple way for the heavily scrutinized agency to save face.



In what could turn out to be an “everything is bon” moment following its scorched earth efforts, Michael Anderson expects the SEC’s messaging to shift to a “mission accomplished” theme.&nbsp;



On the Bell Curve podcast (<a href="https://open.spotify.com/episode/4S26dSA89vLpUnG2LwBhHD">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/grayscale-victory-another-spot-of-bother-for-the/id1641356619?i=1000626475111">Apple</a>), the Framework Ventures co-founder posits the SEC’s next potential shift in strategy. “The SEC is going to say, ‘We did it. We regulated it. It&#8217;s now safe.’”



Now that Wall Street folks appear to be joining in the criticism with brutal <a href="https://www.wsj.com/articles/grayscale-investments-v-sec-gary-gensler-spot-bitcoin-etp-neomi-rao-d-c-circuit-8350f660">takedowns</a> of the SEC’s moves as failed “power grabs,” the agency will likely try to turn recent events “into a positive,” Anderson says.



Read more: <a href="https://blockworks.co/news/grayscale-sec-decision-bitcoin-etf">Court grants Grayscale’s petition for review in bitcoin ETF case against SEC</a>



Framework Ventures co-founder Vance Spencer compares the phenomenon to recent about-face behavior from <a href="https://blockworks.co/tag/ftc">Federal Trade Commission</a> chairperson, Lina Khan, who has shown a pattern of being “very aggressive — and losing” in the past. “Now she&#8217;s been more favorable, waving things through,” he says.



“At a certain point you just need to stop losing,” Spencer says. “What do you do when you find yourself in a hole? Just stop digging. And then just try to crawl your way out and maintain dignity.”&nbsp;



<h2 class="wp-block-heading">Political wheels are turning</h2>



Some interesting dates to look out for a change in messaging are upcoming, Spencer says, with Sept. 12 slated for SEC chair <a href="https://blockworks.co/tag/gary-gensler">Gary Gensler</a> to testify before the Senate banking and House Financial Services committees.



A number of important potential approval dates arrive in Q4, Spencer says, “which is exciting,” with the 240 day decision deadline in Q1, March of 2024.&nbsp;



“You have 240 days to review an ETF if you&#8217;re the <a href="https://blockworks.co/tag/sec">SEC</a>,” says Jason Yanowitz. “Seven out of the eight open bitcoin ETFs — BlackRock, Fidelity, Wisdom Tree, Valkyrie, Bitwise — a whole bunch of those are in March.”



Referring to a recent <a href="https://twitter.com/VivekGRamaswamy/status/1696942250071359619?s=20">quote-post</a> on X, formerly known as Twitter, by Vivek Ramaswamy, Anderson notes “You also had one of the leading candidates for the Republican nomination quote tweet Kathryn Haun about the SEC losing three-zero.”&nbsp;



In the post, Ramaswamy describes America’s federal courts as the “only remaining line of defense against the unlawful rogue behaviors of 3-letter government agencies,” adding that the recent Grayscale decision “clears a path to keep Bitcoin &amp; blockchain innovation in the U.S. instead of overseas.”



“You&#8217;re going to start to see all the candidates start to build a perspective,” Anderson says. “You&#8217;ve got <a href="https://blockworks.co/news/rfk-jr-campaign-accept-bitcoin">RFK announcing his presidency</a> at Bitcoin Miami. You&#8217;ve got <a href="https://blockworks.co/news/us-presidential-candidates-crypto">Vivek Ramaswamy</a> talking about and quote-tweeting Katie Haun. I think this is going to become a new rallying cry.” 



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG9531954218" width="100%"></iframe>







“If you want to reach the younger demographics,” Anderson says, “this is going to be a good way to do that.” Spencer replies, “Bitcoin and crypto <a href="https://blockworks.co/news/crypto-fundamental-rights-constitution">push back against the regulatory apparatus</a>, nanny state. And I don&#8217;t think there&#8217;s many other assets that fulfill that role.”



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‘Mission accomplished.’ How the SEC can save face amidst crypto court failures

Blockchain products are often described as solutions looking for problems. The question springs up from time to time in the community — when will crypto get the “killer apps” that finally drive it into the mainstream?



It turns out that the apps are already here, says Empire podcast guest Mike Ippolito, in the form of <a href="https://blockworks.co/news/bitcoin-future-change">non-sovereign money</a> and permissionless application building, which are “already hundred billion dollar outcomes,” he says.



On the Empire podcast (<a href="https://open.spotify.com/episode/6dRTiJQczjTL78Cdxf1r9V?si=J-m4FaGJSxOiSFJcHCZm5Q&amp;nd=1">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/the-blockworks-origin-story-michael-jason/id1554930038?i=1000623848167">Apple</a>), Ippolito says, “we’re already looking at a lot of the major use cases” for crypto. “You just need to be patient and wait, that people will eventually use these things. And I believe they will. I&#8217;m really optimistic about that.”



Host Jason Yanowitz adds that <a href="https://blockworks.co/tag/defi">DeFi</a> is already a killer app, but that the use case is often misunderstood as a B2C (business to consumer) system. It behaves more like a B2B, he says, where commerce primarily takes place between businesses instead of flowing to retail consumers.



“DeFi has a dozen protocols that spit off a bunch of cash flow,” he says. “They&#8217;re sustainable. They&#8217;ve got massive businesses on top of them and funds that sit on top of them.” It’s already, Yanowitz says, an “interoperable ecosystem.”



Host Santiago Santos mentions <a href="https://blockworks.co/tag/stablecoins">stablecoins</a> as another strong use case. He sees <a href="https://blockworks.co/tag/coinbase">Coinbase</a> with its <a href="https://blockworks.co/news/coinbase-base-home-degens">recently launched layer-2 protocol Base</a> and app integration with the USD stablecoin (USDC) as a potential “everything app.”&nbsp;



“The whole vision of Base makes me incredibly excited as a catalyst with account abstraction, with USDC as that conduit,” he says, noting that in a recent discussion with Coinbase protocols lead Jesse Pollak, “You could see the vision.”



“Restaurants issue an <a href="https://blockworks.co/tag/nfts">NFT</a>, that&#8217;s your loyalty. You get points and you pay with <a href="https://blockworks.co/price/usdc">USDC</a> — you don&#8217;t even whip out Apple Pay, none of that jazz — everything just works.”&nbsp;



<h2 class="wp-block-heading">Third party innovation as the catalyst</h2>



People had ideas for what would ultimately work on the internet long before it was technically feasible at scale, <a href="https://blockworks.co/tag/framework-ventures">Framework Ventures</a> co-founder Michael Anderson says.&nbsp;



“It took catalyzing events for those things to become real,” he says, “like SSL to make e-commerce actually work and the ability to take digital photos and upload them to make social media actually work.”



Anderson expects “third party events” to “make all these things real,” admitting, “it&#8217;s really hard to predict what those events will be.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG6902703395" width="100%"></iframe>







Ippolito points to the <a href="https://blockworks.co/tag/solana">Solana</a> ecosystem as a community that “gets this.”



“You can squint at <a href="https://blockworks.co/news/drive-to-earn-app-dynamic-maps-crypto-rewards">DePIN (decentralized physical infrastructure networks)</a>, and see how this space might end up evolving,” he says. “Stuff that takes place on crypto actually leverages hardware and might eventually influence hardware and then actions that people take in real life,” he says.&nbsp;



“It&#8217;s clearly not where it ultimately needs to be, but I think you can squint at that and see a very attractive future for crypto.”



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crypto apps

The killer apps are already here. Crypto just needs to mature

Shalini Nagarajan

ParaFi Digital Opportunities, Framework Ventures, and 1kx allege that <a href="https://blockworks.co/tag/curve" target="_blank" rel="noreferrer noopener">Curve</a> founder Michael Egorov carried out an elaborate fraudulent scheme that spanned six months, deceiving them in multiple ways.



Egorov purportedly misled the three venture capitalists starting in 2020 by making false promises of granting them a stake in Curve.&nbsp;



He is said to have used their network and reputation to gain trust and legitimize Curve, according to their most recent <a href="https://webapps.sftc.org/ci/CaseInfo.dll?SessionID=1F4572B39AD289AEBB9F14C065325F8203E47EB8&amp;URL=https%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.org%26MINDS_Server%3Dhoj-imx-01%26Category%3DC%26DocID%3D08533304%26Timestamp%3D20230609013525%26Digest%3D05da02677bf2046d8a4610a17a67437b96563648" target="_blank" rel="noreferrer noopener">complaint</a> filed in San Francisco in April. The litigation, first <a href="https://www.dlnews.com/articles/people-culture/vcs-parafi-framework-1kx-sue-curve-founder-michael-egorov/" target="_blank" rel="noreferrer noopener">reported</a> by DL News, was originally filed in October.



As things unfolded, Egorov supposedly stole the plaintiffs&#8217; trade secrets, which included valuable information like industry contacts, investors and investment know-how for Curve.&nbsp;



Curve Finance is a platform meant for exchanging tokens with low fees by using pools of similar assets. Liquidity providers to the platform are rewarded with the protocols native token <a href="https://blockworks.co/price/crv" target="_blank" rel="noreferrer noopener">CRV</a> and trading fees.



Egorov is accused of fraudulently luring the plaintiffs to invest in his company. He then allegedly used their money to boost the value of Curve, denied them their promised shares and fled to Switzerland, renouncing his US residency. All this was done to keep the profits for himself, leaving the plaintiffs out in the cold, they claim.



The plaintiffs’ claimed that Egorov justified “significantly shifting the power [to govern Curve] in his favor.” Instead of letting go of his power in the Curve DAO, he sold some CRV tokens to enrich himself while still keeping significant control, they added.



“Because he deposited plaintiffs’ funds into Curve’s liquidity pools, Egorov has received CRV tokens and fees as an incentive for providing liquidity,” attorneys for the VCs said.



Blockworks has reached out to ParaFi, Framework Ventures, 1kx and Egorov for comment.



<h2 class="wp-block-heading">Egorov seeks Swiss resolution for lawsuit</h2>



According to <a href="https://webapps.sftc.org/ci/CaseInfo.dll?SessionID=1F4572B39AD289AEBB9F14C065325F8203E47EB8&amp;URL=https%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.org%26MINDS_Server%3Dhoj-imx-01%26Category%3DC%26DocID%3D08575322%26Timestamp%3D20230609020055%26Digest%3D21fc360c443dd4f9b50e8af253e5fe25bc485782">court documents</a> filed on May 22, Egorov&#8217;s attorneys claim that the lawsuit filed in San Francisco is a response to ongoing litigation in Switzerland that began three years ago. They argue that Egorov&#8217;s company, Swiss Stake (Curve’s license holder), had the right to terminate that litigation.



Egorov is now requesting to either postpone or dismiss the lawsuit filed by the plaintiffs, arguing that the case should be handled in Switzerland, as the parties contractually agreed to resolve it there.



“To justify their blatant forum shopping, plaintiffs concocted a new and compelling story painting Egorov as an evil villain who duped three naïve VC firms into giving up ‘trade secrets’ (such as the names of widely known investors) and $1M in invested funds (that Swiss Stake promptly offered to return),” Egorov’s lawyers said in the filing.



“This tale of woe — which, in three years of Swiss litigation, Plaintiffs somehow never mentioned — is fiction,” they added.



They further claimed that Egorov established Swiss Stake in 2019 in Switzerland, as the country is known for being a leading hub for blockchain tech. And during their negotiations, the plaintiffs desired to invest in Swiss Stake and engaged their own Swiss legal representation to draft and finalize an investment agreement with Egorov, they said.



Swiss Stake ultimately decided to end the investment agreement involving the plaintiffs and started refunding the funds that investors had initially paid, according to them.



While other investors allegedly accepted the refunds, the plaintiffs refused them and instead filed a lawsuit in Zug against Egorov and Swiss Stake in August 2020. They claimed breach of contract and specifically referred to the Swiss forum selection clause.



A hearing on the matter is scheduled for July 19.



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Curve

Venture firms accuse Curve founder of elaborate fraud

<div id="highlights-block_6351059f58fa4" class="highlights">
 <ul>
 <li>Draft shows modifications to language that drew criticism for being incompatible with DeFi</li>
 <li>Sam Bankman-Fried said the bill will provide customer protection without jeopardizing DeFi</li>
 </ul>
 
</div>



Details around Bitcoin and Ethereum regulation have been “circulating secretly” in Washington, DC. Now, a copy of draft language for the Digital Commodities Consumer Protection Act (DCCPA), a bill in the US Congress, was <a href="https://github.com/LeXpunK-Army/Crypto-CaseLaw/blob/main/DCCPA%20Markup%20Latest%2010.19.22.pdf" target="_blank" rel="noreferrer noopener">uploaded to GitHub</a> by crypto attorney Gabriel Shapiro. Views on the potential impact on decentralized finance (DeFi) are mixed.



The latest draft appears to cushion language perceived to be detrimental to DeFi — a category of blockchain-based solutions that aim to improve finance by replacing central intermediaries with software code.



It lays out what constitutes digital commodities, brokers, custodians, dealers and platforms. Also included in the document are rules and the core principles that apply to players in the digital commodities sphere.



Shapiro noted that the draft excludes people who develop or publish software from the term “digital commodity trading facility” — a move he said could be beneficial to the crypto industry by protecting software engineers.&nbsp;



<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">I have long been a believer in transparency and open discussion of the future of cryptolaw. Accordingly, I have obtained a copy of a draft of the notorious DCCPA circulating secretly in D.C. and am hereby making it available to the public. <a href="https://t.co/JdyomquQi6">https://t.co/JdyomquQi6</a>&mdash; _gabrielShapir0 (@lex_node) <a href="https://twitter.com/lex_node/status/1582814734587265024?ref_src=twsrc%5Etfw">October 19, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But he expressed doubt over the origin of this exclusion, calling for other commentators to review the draft and voice their opinions. The attorney, general counsel at Delphi Labs, said he shared the draft in the interest of “transparency and open discussion of the future of cryptolaw.”



The <a href="https://cms.blockworks.co/bitcoin-ether-to-be-regulated-as-commodities-by-cftc-per-new-senate-bill/" target="_blank" rel="noreferrer noopener">bipartisan bill was introduced</a> by Sens. Debbie Stabenow (D-MI) and John Boozman (R-AR) in August. Their legislation clarifies that bitcoin and ether are to be classified as commodities, as opposed to securities that come under the ambit of the Securities and Exchange Commission — implying that the Commodity Futures Trading Commission (CFTC) would have exclusive jurisdiction over them.



After the introduction of the bill, <a href="https://www.washingtonpost.com/business/2022/08/03/stabenow-boozman-bitcoin-cftc-bill/" target="_blank" rel="noreferrer noopener">The Washington Post</a> reported Boozman said in a press call that the crypto industry “almost universally” prefers to be regulated by the CFTC.



<h3 class="wp-block-heading">Sam Bankman-Fried believes draft bill won’t kill DeFi</h3>



FTX CEO Sam Bankman-Fried has expressed support for the framework, saying he was excited to see a “strong bill” that addresses customer protection in crypto.&nbsp;



On Wednesday, the crypto billionaire <a href="https://twitter.com/sbf_ftx/status/1582539579168419840" target="_blank" rel="noreferrer noopener">tweeted</a> that he was optimistic the Stabenow-Boozman bill would not jeopardize “the existence of software, blockchains, validators, DeFi, etc.”



He also shared his thoughts in a <a href="https://www.ftxpolicy.com/posts/possible-digital-asset-industry-standards" target="_blank" rel="noreferrer noopener">blog</a> on what crypto regulation should look like, specifically saying it’s important that “on-chain code and DeFi remain free and open, and uncensored.”



Even so, Bankman-Fried, chief of a centralized crypto exchange, has been <a href="https://twitter.com/richardchen39/status/1580617610789814277" target="_blank" rel="noreferrer noopener">criticized</a> for supporting a bill that appears to threaten decentralized protocols.



<h3 class="wp-block-heading">Concerns about Congress choking decentralization</h3>



On the critical side of the debate, Web3 startup accelerator Alliance DAO disparaged the DCCPA bill, saying it forces human intermediation and compels projects to sacrifice decentralization.&nbsp;



The DAO reckons the bill does not clarify what a digital commodity is, or make clear the distinction between tokens that are commodities and those that aren’t.



<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">The DCCPA greatly threatens DeFi innovation. The proposed bill: &#8211; gives CFTC new powers to regulate spot markets &#8211; forces human intermediation &#8211; forces projects to sacrifice decentralization It favors centralized incumbents and kills startups. Alliance opposes the DCCPA. 🧵&mdash; Alliance 👽 (@alliancedao) <a href="https://twitter.com/alliancedao/status/1582800340520312833?ref_src=twsrc%5Etfw">October 19, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Framework Ventures’ co-founder Vance Spencer also <a href="https://twitter.com/pythianism/status/1582816353634832385" target="_blank" rel="noreferrer noopener">voiced opposition</a>, saying the venture capital firm “opposes the DCCPA and the shadow cabal that is trying to make it a reality.”



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“DCCPA kills DeFi and cedes market share to the centralized exchange that is pushing it,” Spencer added.</blockquote>



Most crypto exponents hope the draft can be amended to treat DeFi fairly.



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Alliance DAO

Leaked Draft of US Congress’ ‘DeFi Killer’ Bill Sparks Debate

Bessie Liu

<div id="highlights-block_632c547e14184" class="highlights">
 <ul>
 <li>Most recently Immunefi facilitated a 400 ETH transaction from Arbitrum to a white hacker</li>
 <li>Investors that participated in the round include Electric Capital, Polygon Ventures and Samsung Next</li>
 </ul>
 
</div>



Immunefi, a Web3 bug bounty platform adopted by prominent projects including MakerDAO, Compound and Chainlink, has secured a $24 million Series A led by Framework Ventures.



Framework Ventures previously led Immunefi’s seed round in May last year, but the latest round will be the largest check the prominent venture capital firm has ever publicly written, Roy Learner, principal at Framework Ventures said in a statement.



“As it stands, Immunefi is by far and away the most widely adopted solution in the crypto security and bug bounties space,” Learner said. “We’re excited to see the company scale and amass talent as more and more key projects onboard into their ecosystem.”



Other investors that participated in the round include Electric Capital, Polygon Ventures and Samsung Next.



Mitchell Amador, co-founder of Immunefi came up with the idea for the company after losing a significant amount of money to smart contract hacks.



“There is a whole world that is enabled by [blockchain] technology and it can not exist without security…we mapped the whole stack and concluded that the most critical piece, which the space will not solve on its own, is the disclosure layer — the 911,” Amador said.



The security company rewards white hat hackers for reviewing blockchain projects and disclosing vulnerabilities — creating monetary incentives for experts to make dapps safer. It currently boasts a community of over 11,000 developers, auditors, CTOs and hackers.



According to Amador, rewards can range from a few thousand dollars to upwards of millions of dollars for a single bug report.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“If you do good for the community, not only will you become rich, but you will also become a hero,” Amador said.</blockquote>



Immunefi has previously facilitated a $10 million bug bounty payment for a vulnerability discovered in the cross-chain messaging solution Wormhole, and a $6 million exposure discovered on a bridge and scaling solution Aurora.&nbsp;



Most recently, Arbitrum, a layer-2 Ethereum scaling solution, <a href="https://cms.blockworks.co/arbitrum-saved-from-major-eth-loss-by-white-hat-hacker/" target="_blank" rel="noreferrer noopener">paid 400 ETH</a> (almost $550k USD) to a white hat hacker through Immunefi as a reward for uncovering a vulnerability.



The latest fundraise will be going toward growing the Immunefi team, Amador said.&nbsp;



“We need better technical expertise — we cannot keep up with the level of activity,” Amador said. “We just need more people.”



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bug bounty

Framework Makes its Largest Single Bet Yet on Immunefi

Sebastian Sinclair

<div id="highlights-block_625ed85ad344c" class="highlights">
 <ul>
 <li>The firm said it&#8217;s earmarked $200 million for blockchain gaming startups</li>
 <li>Framework now oversees approximately $1.4 billion, making it one of the largest VCs in blockchain </li>
 </ul>
 
</div>



Venture capital firm Framework Ventures has raised $400 million for a fund focused on investing in early-stage startups involved in some of the crypto industry&#8217;s frothiest sectors.



Framework&#8217;s third fund (FVIII) is expected to target blockchain gaming, Web3 and DeFi startups, as well as networks in the hope of banking big on the next successful crypto vertical, according to a statement Tuesday.



Of the total $400 million, 50%, or $200 million, has been earmarked for blockchain gaming, Adam Badrawi, the firm&#8217;s communications partner told Blockworks in an email. Badrawi declined to comment on where the remaining 50% would be split.



The firm now oversees approximately $1.4 billion, pole-vaulting it to one of the largest VCs in the blockchain industry. The majority of Framework&#8217;s assets stem from a small set of institutional stakeholders.



Considered by some as one of the <a href="https://decrypt.co/16943/why-framework-ventures-is-going-all-in-on-defi" target="_blank" rel="noreferrer noopener">earliest</a> DeFi (decentralized finance) venture capital firms, Framework planted its roots in 2019 by leveraging an $8 million raise slated for the budding growth of DeFi.



Now intending to expand upon its beginnings, Framework said its investor team had &#8220;identified&#8221; the industry&#8217;s gaming sector as an area of &#8220;significant growth&#8221; over the next five years.



The company said it was &#8220;reinforcing its commitment,&#8221; having already dedicated large swaths of capital to various segments of the gaming sector following early round investments in Stardust and the $6 billion project shooting for a Triple-A title, Illuvium.



“We believe we have pioneered a new style of crypto investing&#8230;and intend to deploy it aggressively across other major verticals in the blockchain industry,” Framework Co-founder Vance Spencer said. &#8220;We believe we’re well-positioned to outperform our competitors, including the <a href="https://www.theinformation.com/articles/no-longer-just-crypto-curious-sand-hill-road-investors-get-blockchain-fever" target="_blank" rel="noreferrer noopener">Sand Hill</a> set that is only now coming into crypto and Web3.&#8221;



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Adam Badrawi

Framework Ventures Launches $400M DeFi Fund Targeting Gaming, Web3 Startups

Morgan Chittum

<div id="highlights-block_624af03a29568" class="highlights">
 <ul>
 <li>Framework Ventures and Delphi Digital are two of the leading investors in the round</li>
 <li>Polemos announced a strategic funding round of $2 million in November</li>
 </ul>
 
</div>



Polemos, a GameFi platform and play-to-earn guild, announced a $14 million seed round on Monday. This brings the startup and forthcoming decentralized autonomous organization (DAO) to a $100 million post-money valuation.&nbsp;



The capital will go toward staff expansion, gaming investments and tech development, Polemos co-founder Sascha Zehe told Blockworks.&nbsp;



“We have significant costs for the development of the tech, and that is one part where we want to heavily scale both the team and also contractors to build even better and faster [on the] main tech stack that we&#8217;re aiming to put into the space,” Zehe said.&nbsp;



Polemos currently has around 25 employees but expects to reach at least 50 by the end of the year.&nbsp;&nbsp;



Framework Ventures and Delphi Digital are two leading investors in the round.&nbsp;



Michael Anderson, co-founder of Framework Ventures, told Blockworks that gaming guilds like Polemos are the “potential next phase of what an esports franchise could look like.”



“Guilds [are] something that have existed in games for a long time, but now that we have NFTs, we have massive swaths of players that are coming into these games. The role of a guild has a much more pronounced function within this ecosystem than previously,” Anderson said. “It’s one part asset management, one part technology company, and one part recruiting and marketing.”



Other participants in the round include QCP, GoldenTree, IOSG and LD Capital, along with the founders of Sushiswap, COTI, Tokemak and Altered State Machine.



Last year, Polemos announced a $2 million strategic raise at a $40 million valuation.



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