Kate Irwin

This is a segment from The Drop newsletter. To read full editions, <a href="https://blockworks.co/newsletter/thedrop">subscribe</a>.



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As most of you probably know by now, Doodles — the rainbow-barfing Ethereum NFT collection of 10,000 PFPs of the 2021 NFT boom — is launching a token on Solana.&nbsp;



Response so far has been pretty mixed. A lot of Crypto Twitter loves a token, especially one from an established brand, but there’s also been some criticism. First, there’s the token allocation. As one poster has pointed out, the Doodles team may receive up to 57% of the DOOD tokens, once you combine the parts of the pie that goes to the team plus the other pieces that could go to the team. That doesn’t look too cute, considering how tokens are often marketed as a way to “give back to the community.”



And then there’s the issue of timing. Is launching a token now, on a different chain than the NFT collection, too little, too late? Will DOOD serve any functional purpose, besides offering exit liquidity, a memecoin, and a way to get a bit more attention?&nbsp;



The market has been rough out there for art- and gaming-related tokens lately. PENGU, the Pudgy Penguins’ token, is still down 67% in the past month. PIXELS, the token behind the Ronin-based game of the same name, is also still down 50% in the past month. Apecoin, the once-hyped token behind the Yuga Labs world, remains down 50% in the past year.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcG4up-Vn0LJexf2fkJAjSvocp-TBM5cpYvfpNrp0lX9jEIBNEm9UwHZaz8hw5mq2Jhvon0Cw6V8V4D4yqFt0cUE9XcasMGE2NRJ2hO-zHl9LdI5HJugatjUKLSUuEzMHy7M-X4wA?key=xnUEi2Lbmszt8LaPf2XfzfBf" alt=""/></figure>



The Doodles team has tried other brand plays to generate interest in its IP, from striking a deal with rapper-producer Pharrell to join as their chief brand officer in 2023 to partnering with McDonald&#8217;s to release cups in November. Despite those high-profile deals, however, Doodles NFTs haven’t soared above the rest.



The DOOD announcement hasn’t really rejuvenated excitement around the NFT collection either, when we look at sales and volume traded. In the past week, Doodles sales volume is down 32%, according to CryptoSlam data.



Launching a token seems to be the latest way for crypto projects to monetize their IP. While I do think the Doodles’ art and aesthetic is cool in a minimalist way, I’m not sure their token will have a different fate than so many of the others currently out there. Time and time again, we’ve seen an initial pump and then a selloff, followed by flatlining or slowly declining price action.



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Doodles’ Solana token fails to impress

Macauley Peterson

Story is a sovereign layer-1 blockchain built using the Cosmos SDK and CometBFT consensus, with an added EVM execution — a custom Geth fork. This choice allows for full governance control, optimized execution for intellectual property workflows and a staking economy based on the $IP token.



Standard blockchain environments — even high-performance chains like Solana — struggle with modeling the recursive licensing structures that intellectual property ecosystems require, the team said. Story’s <a href="https://blockworks.co/news/crypto-funding-story-protocol-dex-brinefi-investor">unique</a> graph-based architecture is specifically designed to handle the complex relationships between intellectual property assets, the team said.



While Story Protocol’s vision of a graph-based <a href="https://blockworks.co/news/story-protocol-ritual-ai-provenance">intellectual property economy</a> is ambitious, its decision to launch an entirely new layer-1 with its own token instead of, say, a validium rollup, is worth scrutinizing.



Many projects claim to need a custom execution environment, only to ascribe an L1 premium to their tokens. Could Story not have built this as a rollup with a purpose-built intellectual property layer on top?



The Cosmos SDK grants Story more sovereignty, but at the cost of fragmenting liquidity, security and developer mindshare. Do we really need to bootstrap yet another staking economy? Many similar application-specific chains have struggled to justify their independence beyond token incentives. Rollups benefit from <a href="https://blockworks.co/news/ethereum-native-rollups-scalability">inheriting</a> Ethereum’s deep liquidity and mature validator set, and even Cosmos chains are trending toward greater use of Interchain security.



<h2 class="wp-block-heading">The role and tokenomics of $IP</h2>



$IP serves multiple key functions in the Story ecosystem, according to a <a href="https://www.story.foundation/blog/introducing-ip">blog</a> released today. Such functions include:



<ul class="wp-block-list">
<li>Securing the network: Validators stake $IP to participate in consensus.</li>



<li>Gas token: $IP is required for all on-chain interactions.</li>



<li>Governance: Token holders shape the future of Story Protocol through governance decisions.</li>
</ul>



Story has structured $IP&#8217;s supply and distribution to prioritize long-term community participation. The total supply is set at 1 billion $IP, with an initial unlocked supply of 25%.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=1024&amp;h=1024" alt="" class="wp-image-97195" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/02/unnamed.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Source: <a href="https://www.story.foundation/blog/introducing-ip">Story Protocol</a></figcaption></figure>



A portion of $IP is burned with each transaction, potentially reducing supply over time.



<h2 class="wp-block-heading">‘Fair Launch’ staking</h2>



Unlike <a href="https://blockworks.co/news/0xresearch-newsletter-eigen-tokens-transparency">many token launches</a> that benefit early insiders, Story’s staking mechanism ensures no one earns staking rewards before the community does. February is part of what the protocol is calling the “Singularity Period,” during which users can stake or delegate tokens without earning rewards yet. Only after the “Big Bang” event on March 2 will rewards begin accruing to all participants at the same time.



Public mainnet access is set to launch alongside an initial claim for the community. Importantly, locked tokens will also have their staking rewards locked for a minimum of six months, though that may be extended, a spokesperson told Blockworks.



“We will not allow locked tokens to sell staking rewards anytime soon, and we believe the community should have the ability to set up staking and receive rewards,” the team said.



<h2 class="wp-block-heading">AI and IPFi</h2>



A fascinating prospect is the potential for intellectual property-based DeFi primitives — or IPFi. Teams like Unleash, Verio and Color are already developing marketplaces, restaking mechanisms and lending/borrowing infrastructure for intellectual property-backed assets. The example of Aria securing real TVL on intellectual property, <a href="https://x.com/StoryProtocol/status/1881713146274156951">including assets</a> like <a href="https://blockworks-research.beehiiv.com/p/wednesday-february-5">Justin Bieber’s Peaches</a>, is interesting. However, the real test will come once public mainnet launches.



For now, whether intellectual property assets can be meaningfully used as collateral outside of Story Protocol remains theoretical. That said, LayerZero (LZ) integration means that some form of cross-chain composability will be possible from day one — an indicator that Story’s intellectual property-backed assets could plug into Ethereum-based DeFi protocols if liquidity and demand exists.



The mention of a new DeFi-oriented API leveraging LZRead functionality is intriguing. If Story can abstract complexity and make intellectual property-backed lending as seamless as USDC or wBTC lending, it could position itself as a unique RWA-like collateral class for DeFi lenders. But that’s going to be a mammoth task.



<h2 class="wp-block-heading">AI meets intellectual property</h2>



Story Protocol isn’t just about digitizing intellectual property — it’s building a blockchain-native economy for AI and creativity. By removing intermediaries, enabling automated licensing and supporting agent-based transactions, Story is positioning itself as a fundamental layer for digital ownership.



&#8220;The easier you make it to register [intellectual property], the easier you make it to license [intellectual property], the easier you make it to transact on it — the more this turns from an oligarchy into a true marketplace,” Story Foundation president and Roman emperor-styled “Marcus Devrelius” <a href="https://x.com/storyprotocol/status/1887591351988158558?s=46&amp;t=yjAdM2ddX0KgGQimu7jcDQ">said</a> in a Twitter Space.



Updated Feb. 7, 2025 at 4:55 pm ET: Clarified company role of Marcus Devrelius.



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Story Protocol turns the page with intellectual property token launch

Katherine Ross

David Canellis

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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<h2 class="wp-block-heading">Go troll yourself</h2>



Imagine you’re a DAO. Just chugging along and continuing to grow using open-source technology. All of a sudden, you’re slapped with a patent infringement lawsuit.



That’s what happened to DAI issuer MakerDAO (and Compound Labs, though the suit initially targeted Compound Protocol) two years ago. The pair had been locked in linked, but separate, legal battles with True Return Systems and its founder-slash-patent owner Jack Fonss.&nbsp;



The patent in question was approved by the US Patent and Trademark Office in 2018. It, according to its <a href="https://patents.google.com/patent/US10025797B1/en">patent page</a>, is a “system, method and computer readable storage medium for storing, creating, monitoring, managing, and modifying measurement, descriptive differences and parameters of the records of distributed computerized ledgers works through a separation and linkage of stacked modular data storage and processing.”&nbsp;



Fonss and TRS claimed that the patent covered systems linking offchain data to a blockchain.&nbsp;



The patent wording itself is admittedly vague, something that the DeFi Education Fund was quick to point out when it filed an Inter Partes Review challenge with the USPTO.



For a series of reasons (including the fact that Fonss died before any of the legal action could be cleaned up), the IPR and the lawsuits were still ongoing until earlier this month, when DEF <a href="https://blockworks.co/news/def-patent-lawsuit-makerdao-compound-protocol">announced</a> that it had reached an agreement to buy the patent from TRS.&nbsp;



DEF will dedicate the patent to the public and the two lawsuits in question were voluntarily dismissed by TRS.&nbsp;



Here’s the thing: While these cases have been wrapped up there are two strings I want to tug at (and that’s why we’re chatting about something as boring as patents — though this case brings some spice).&nbsp;



The first is the criticism I saw in response to DEF’s announcement.&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">“DEF purchased the TRS patent” You shouldn’t enrich bad actors. It incentivizes (and possibly funds) more patent trolling.&mdash; OpenΞsquire (@OpenESQ) <a href="https://twitter.com/OpenESQ/status/1822997147756765652?ref_src=twsrc%5Etfw">August 12, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Amanda Tuminelli, chief legal officer at DEF, told me that they don’t want to promote further patent trolling — especially in DeFi — but they had to take the situation into account, which is what led them to just buy the patent even though Tuminelli felt good about their odds of winning the IPR.&nbsp;



Outside of that, there was also the fact that the cases were originally brought against Maker — a DAO that had to get member support to bring on a lawyer for the case — and Compound Protocol, which is the software and not the entity behind the technology (aka Compound Labs).&nbsp;



The two, Tuminelli said, had the money to take on the legal cases. But smaller projects may not.&nbsp;



Tuminelli is overall hopeful that the DeFi space won’t see more cases like this, noting that it’s a “bad look” to try to patent open-source technology, but DEF — through this legal battle — sought to signal that it won’t take these legal challenges lightly.



Now whether the USPTO totally understands DeFi or blockchain technology (and they probably don’t, in all fairness, given the newness of the tech) is still up in the air.&nbsp;



“Just looking at how slow that evolution has been in the patent legal realm, it can only get better,” Tuminelli said. While her case was one of the first blockchain ones that some of the lawyers representing DEF had seen, they were quick on their feet to learn about the necessary tech, Tuminelli noted anecdotally. Perhaps the USPTO will be adaptable, too.



Overall, we probably won’t see an uptick in patent infringement cases, and we can pretty much count out these cases being brought against smaller firms.



Josh Tucker, intellectual property law partner at Pillsbury, confirmed that these legal cases generally mean that there’s potentially a lot of money to be won in damages (on the patent owner&#8217;s side), which is what leads to them. And they’re generally “incredibly expensive.”



“It’s really rare to see a patent suit against somebody doing just a few million dollars in revenue,” he said.



And, Tucker added, the power balance has shifted which would benefit projects being targeted by patent infringement suits.



DEF succeeded in ending the patent trolling in this case, and perhaps this is enough of an example for the community to rally around keeping open-source technology, well, open-sourced.



— Katherine Ross



<h2 class="wp-block-heading">Data Center</h2>



<ul class="wp-block-list">
<li>The MakerDAO protocol has been profitable every month since at least January 2020, <a href="https://dune.com/steakhouse/makerdao">ranging</a> from $38,000 in May 2020 to $22.35 million profit in May 2021.</li>



<li>February 2024 was MakerDAO’s second-best month in that period, earning $21.8 million profit. Most of its revenues come from interest.</li>



<li>DAI’s supply has increased by $1.3 billion over the past year, from $3.9 billion to $5.2 billion, but almost all of that growth occurred last November.</li>



<li>Crypto is mostly red so far <a href="https://www.coingecko.com/">today</a>, but only just. SATS (11.5%) and EOS (1.6%) are the only top-100 tokens to gain more than a percent.</li>



<li>dYdX is currently the top chain for daily derivatives <a href="https://defillama.com/derivatives/chains">volume</a>, posting $1.283 billion to Hyperliquid’s $1.218 billion. Monthly dYdX volume is up 300%.</li>
</ul>



<h2 class="wp-block-heading">Burn after reading</h2>



Deflationary cryptocurrencies are extremely rare.



You can probably blame the SEC for that. It used to be that projects would primarily fund themselves with initial coin offerings, as was the case with TRX, BNB and TON.&nbsp;



Now that Gary Gensler’s agency has all but stamped those out, making new supply is how development teams and other entities pay themselves for the work that they do, and it’s also how early investors capitalize on their funding rounds.



It’s of little surprise then, that out of the top 250 or so by capitalization — a group which represents the overwhelming majority of the crypto market — less than two dozen have seen their circulating supplies reduce over the year to date.



That mostly includes coins with burn mechanisms tied to user activity, as with TRX and LEO. There’s more gimmicky schemes found in memecoins MOG and NOT. Others have minor differences in supply that would barely make a dent to overall market dynamics.



TRX, for instance, has burned $169.7 million in TRX, valued at current prices, a supply reduction of 1.51%, while LEO has burned 0.25% of the supply worth $2.6 million right now.&nbsp;



It’s unlikely those initiatives have really made a difference, but they couldn’t hurt.



Prior to the Dencun hard fork, which brought a cheaper layer-2 fee market to the Ethereum ecosystem with blobs, ether was also deflationary.&nbsp;



Loyal Empire readers would <a href="https://empire-31ed59.beehiiv.com/p/trading-tea-leaves?utm_source=empire-31ed59.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=trading-tea-leaves">know</a> that encouraging so much user activity to move over to layer-2s like Arbitrum, Optimism and Base has come at a cost.&nbsp;



There’s fewer mainnet fees to burn but still the same amount of ETH to distribute to validators each block — those two conditions make for a steady stream of inflationary Ethereum blocks.



As of this morning, ETH’s supply had grown by 0.07% so far this year, equal to 87,181 ETH ($238 million).



BNB is otherwise by far the most valuable experiment in token burns.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf-YLPlQtS9vg4iG2vLOrCvTzZjyRDwDOfI0Su-CzUuHKrQaUYDxV6kadKtSsDI503sKt3hoC7dpH4X9Mpfxx7jfziAuevknhWCyVful4lbHxwHrrg8kwYQow4vcsYhMWRfxC6B2DOZT7h-E3Tmu2rsa6-7?key=X1tpmKAPySWbeZHCV_Kybw" alt=""/><figcaption class="wp-element-caption">BNB’s supply has reduced by $11.6 billion since October 2021, valued at current prices</figcaption></figure>



The team behind BNB actively destroys billions of dollars of the token every quarter. Burns come from a variety of places, including a slice of BNB Chain gas fees and tokens that have been proved to be lost (which can be reclaimed via a special program).



For scale, the Solana blockchain over the year to date has added $5.5 billion to the SOL supply — equal to 8.72%. Zooming out to three years, SOL&#8217;s supply has increased by 59%, worth over $25 billion at current prices.



Not that any of it seems to matter. SOL outperformed practically the entire crypto market while billions were being added to its supply.&nbsp;



And BNB, for all its burns, has closely tracked the price of bitcoin in the past three years, sans a small break in the correlation around the collapse of FTX. If burns really do make a difference on the price of BNB, then whatever impact is yet to appear.



Special mention goes to the TON Foundation. It locked 25% of TON supply in April — $6.9 billion at the time — those tokens will eventually be seeped back into the market starting next year.&nbsp;



The price of TON rose up to 25% in the five weeks after the supply was locked, but it has since given up all of those gains.&nbsp;



The TON supply has also continued its inflationary bent since the lockup, increasing by almost 4.5% in the past 11 weeks, the equivalent of $674.5 million at current prices.



But at least for the big two, it’s safe to say that burn functions are mostly good for headlines and positive vibes, rather than any meaningful impact on prices. Maybe over a longer horizon, and especially if bitcoin stops leading the market.



— David Canellis



<h2 class="wp-block-heading">The Works</h2>



<ul class="wp-block-list">
<li>Hamster Combat, the viral crypto game on Telegram, <a href="https://www.coindesk.com/markets/2024/08/13/hamster-combat-says-it-skipped-vc-fund-offers-bashes-exit-liquidity-behaviour/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">said</a> it turned down venture capital funding and called it “exit liquidity.”</li>



<li>The liquidators of Three Arrows Capital are seeking $1.3 billion from Terraform Labs, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-08-12/three-arrows-liquidators-seek-1-3-billion-over-2022-luna-crash">reported</a>.</li>



<li>Binance executive Tigran Gambaryan is ‘<a href="https://www.theblock.co/post/310800/detained-binance-executive-tigran-gambaryans-family-calls-for-release-says-he-is-mostly-bedridden-as-health-worsens?utm_source=rss&amp;utm_medium=rss">mostly bedridden</a>’ as his health deteriorates in Nigerian prison. </li>



<li>A report from Halborn warns that DeFi hacks remain a threat despite a huge decline last year, CoinDesk <a href="https://www.coindesk.com/business/2024/08/12/defi-hacks-remain-a-major-threat-despite-50-decline-in-2023-halborn/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">reported</a>.</li>



<li>Polymarket announced that it’s <a href="https://blockworks.co/news/polymarket-perplexity-ai-partnership-news-summaries">teaming up</a> with Perplexity AI, which will provide AI news summaries. </li>
</ul>



<h2 class="wp-block-heading">The Riff</h2>



Q: Is gambling on news headlines the next big thing in crypto?



No question that prediction markets have been legitimized. So much so that we haven’t even seen the usual fear <a href="https://www.independent.co.uk/tech/donald-trump-assassination-market-blockchain-augur-a8464516.html">mongering</a> from the mainstream media about crypto-powered assassination markets this time around!&nbsp;



It would be great to keep the ball rolling for Polymarket, especially outside the context of betting on the US election.&nbsp;



A prediction market for every news headline and pop culture event would go a long way for that, even if it would surely be tacky at times (remember betting on the <a href="https://blockworks.co/news/polymarket-titanic-betting-prediction">fate of the Titan submersible</a>?)



Gambling is one of the oldest use cases for crypto (and blockchain for that matter). Early <a href="https://sourceforge.net/p/bitcoin/code/1/tree//trunk/uibase.cpp">versions</a> of Bitcoin had even the sketches of an integrated, onchain poker game, included by Satoshi Nakamoto. Polymarket is just carrying the torch.



— David Canellis



I don’t know if I want to say it’s the “next big thing” but it’s definitely a use case. And, hell, it’s a good example of “put your money where your mouth is.”



I could see folks getting exhausted and burnt out (not to imagine spent) on trying to bet on the right outcome for big news events, but we haven’t quite gotten there yet.



We’re seeing markets for things like the topics Elon Musk and former President Donald Trump would hit on (which ended up a $5 million market) and whether or not Trump would tweet again before the election (spoiler alert: he did and there was nearly $830,000 on the line).&nbsp;



Then there are non-political markets like who’s going to win the Super Bowl — $5.9 million has been bet so far, and the season hasn’t even started. Maybe there’ll be niche markets for reality TV shows like Love Island US, given that folks are already betting on Baby Bieber’s gender.&nbsp;



I think there’s definitely a place for these markets, and it helps to build a bit of a community with financial stakes. But I’m wary of the human attention span post-TikTok.&nbsp;



Gambling’s having its moment both in and out of crypto, though, so perhaps I’m wrong and this is one of the best use cases we’ll ever see for crypto.&nbsp;



— Katherine Ross



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How burn functions impact price

Jack Kubinec

This week, crypto descended on Brussels for EthCC.



Given that Ethereum popularized smart contracts and was the home of NFTs during the space’s <a href="https://blockworks.co/news/nft-craze-rages-on-as-august-sales-near-900m">2021 craze</a>, it seems like consumer applications could have been prominently featured at the yearly Ethereum gathering. But some attendees felt that apps were too muted at the conference — and that crypto’s infrastructure era has overstayed its welcome.



The social lead of the Milk Road newsletter <a href="https://x.com/Raul_Impact3/status/1811045339144585292">wrote</a> that it “[f]eels like we&#8217;ve come to a consensus that we don&#8217;t need more infra. We just need usable apps.”



2077 Collective director Emmanuel Awosika <a href="https://x.com/eawosikaa/status/1811788222076494295">said</a> “one of those things I&#8217;m excited about is people finally (!) acknowledging consumer apps are necessary.”



Arbitrum developer Offchain Labs’ A.J. Warner said he “heard 10x the number of interoperability/crosschain proving ideas compared to novel user applications” at the conference.



Crypto may still be lacking in compelling consumer apps, but EthCC exit reviews definitely showed that the desire is there. This wishful thinking has shown up in other places too: The Arbitrum DAO notably is <a href="https://blockworks.co/newsletter/research/issue/post_dd5f18da-fa69-4bbb-b755-0264dd06ea37">aiming to pour</a> $215 million into crypto <a href="https://blockworks.co/tag/gaming">gaming</a> projects.


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" width="2560" height="1707" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=1024&amp;h=1024" alt="" class="wp-image-89265" style="width:491px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=2560 2560w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/1000151795-scaled.jpg?w=80 80w" sizes="auto, (max-width: 2560px) 100vw, 2560px" /><figcaption class="wp-element-caption">Source: EthCC</figcaption></figure></div>


Read more: <a href="https://blockworks.co/news/crypto-infrastructure-lacking-apps">The crypto infrastructure is here, but where are the apps?</a>



This week, Electric Capital general partner Maria Shen released a “market map” categorizing over 1,500 crypto projects. Interestingly, more than one-third of the projects were labeled as apps.&nbsp;



There’s also a case to be made that insisting on more apps might be putting the cart before the horse. Celestia Labs CEO Mustafa Al-Bassam <a href="https://x.com/musalbas/status/1811039551957156013">said</a> that crypto should focus on mastering its original use case of payments before it moves on to more complex applications.



Read more: <a href="https://blockworks.co/news/helio-upgrades-solana-pay-plugin-for-shopify">Helio upgrades its Solana Pay plugin for Shopify</a>



There are also crypto apps with real users, even if they don’t currently compete with the titans of Web2. Telegram has a lot of users, and the loosely-associated TON blockchain is drawing lots of attention (alongside lots of bots) to (admittedly rudimentary) Telegram games.



And <a href="https://blockworks.co/news/crypto-x-users-solana-blinks">with Solana blinks</a>, you can now <a href="https://x.com/sol_idity/status/1810692504934846564">play</a> Pokemon onchain directly within your X feed. So that’s something, right?



<h2 class="wp-block-heading">Story Protocol is launching a layer-1</h2>



A16z-backed Story Protocol <a href="https://x.com/StoryProtocol/status/1810705596250980677">announced</a> this week it would be launching the “world’s first [<a href="https://blockworks.co/tag/intellectual-property">intellectual property</a>] blockchain” with its new Story network.&nbsp;



The chain will let creators upload their intellectual property to the blockchain, where they can then set the terms for how the intellectual property can be used and monetized. Story cast the onchain intellectual property as being like legos, saying the chain would create an internet “legoland.”



In a seeming homage to the week’s frustration with crypto’s dearth of widely-used applications, Story co-founder S.Y. Lee <a href="https://x.com/storysylee/status/1810741771845939298">said</a> the protocol wouldn’t just be the “millionth defi chain/app without a clear use case in mind.”



<h2 class="wp-block-heading">One interesting stat:</h2>



<ul class="wp-block-list">
<li>Farcaster’s daily active <a href="https://dune.com/pixelhack/farcaster">users</a> hit an all-time high for seven-day trailing average at around 67,000 late last week, according to a Dune dashboard.</li>
</ul>



<h2 class="wp-block-heading">Also of note:</h2>



<ul class="wp-block-list">
<li>Blockchain analytics firm Elliptic published a <a href="https://www.elliptic.co/blog/cyber-scam-marketplace">report</a> linking “pig butchering” crypto scams to a “multi-billion dollar marketplace” popular in Southeast Asia named Huione Guarantee.</li>



<li>Soccer stars Lionel <a href="https://x.com/BitDegree/status/1810678040575566268">Messi</a> and <a href="https://x.com/ikuzoeth/status/1811128692212633774">Ronaldinho</a> promoted a memecoin called WaterCoin.</li>



<li>The forthcoming mobile shooter game “For The Win” <a href="https://x.com/jungle_xyz/status/1811027368116392229">announced</a> it would be building on Solana.</li>
</ul>



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Web3 Watch: EthCC attendees ask: “Where are the apps?”

Intellectual property-focused Story Protocol is partnering with decentralized AI protocol Ritual to make AI models and outputs trackable and monetizable.&nbsp;



The pair hope to create sprawling intellectual property graphs where developers can see how their AI models are being deployed and fine-tuned. Additionally, they want to ensure that content produced by AI models is watermarked and tracked on-chain. It’s the latest attempt at integrating blockchain technology into the lucrative world of AI development.



AI models, like OpenAI’s ChatGPT, have rapidly improved in their ability to draw conclusions and generate content. However, their creators often lack information as to how and by whom the models are being used. Story co-founder Jason Zhao said the protocol is in talks with some AI developers who simply want to track all of the derivative models being spun off their core model. And the distribution of off-chain AI content can be generally difficult to control.&nbsp;



Read more: <a href="https://blockworks.co/news/decentralized-artificial-intelligence-innovation">Funding Wrap: Decentralized AI is all the craze</a>



Story Protocol makes creation and monetization involving intellectual property easier through blockchain tech, with this <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> project being one of its early use cases.&nbsp;



For its part, Ritual helps inferences, or conclusions that AI models make when given new data, interact with smart contracts on-chain. It developed a software development kit (SDK) for its so-called Infernet that brings off-chain compute on-chain.&nbsp;



Through the Story-Ritual collaboration, developers will be able to set rules for how their AI models powered by Ritual’s Infernet are being utilized downstream, and also set terms for how the AI model’s outputs are used. For example, a developer could set a non-commercial license where no one can earn revenue from generative images created by a certain model, Zhao said.&nbsp;



Read more: <a href="https://blockworks.co/news/artificial-intelligence-decentralization-web3">Decentralized AI platform Ritual lands $25M in seed funding</a>



“We’re enabling a network where models can be remixed and built on, and the rights, ideas and licensing of each developer&#8217;s model is tracked and protected on-chain,” Ritual co-founder Niraj Pant said in a direct message.&nbsp;&nbsp;



Blockchain’s potential for AI model development is an ongoing subject of interest in the crypto world. The models themselves wouldn’t necessarily go on-chain, but blockchain could help around the edges. Ethereum co-founder Vitalik Buterin <a href="https://blockworks.co/news/vitalik-buterin-crypto-ai-integrations">enumerated some possible integrations</a> in a blog post.&nbsp;&nbsp;



Among the more popular ideas, one approach involves leveraging blockchains to authenticate the content used for training AI models or generated by them. In January, FOX Corp teamed up with Polygon in unveiling a <a href="https://blockworks.co/news/fox-authenticate-digital-media-sources">tool for tracing the origins</a> of content being used to train AI models. Now Media <a href="https://www.businesswire.com/news/home/20240226113025/en/Now-Media-Deploys-on-Base-to-Build-the-Future-of-Authenticated-Media">released</a> Sovereignty, a content verification tool on Base meant to combat misinformation in the “age of AI and fake news.”



Read more: <a href="https://blockworks.co/news/blockchain-ai-misleading-narrative">What can blockchain do for AI? Not what you’ve heard.</a>



Story is betting that as more content is created with the help of AI, a market will emerge for a protocol governing ownership of the models and outputs. Tokens are sometimes referred to as programmable money, where dollar-equivalents can be staked to secure blockchains or lent through DeFi protocols, Zhao said. According to Zhao, intellectual property is still stuck in its “dollar bill era.” Story hopes to make intellectual property similarly programmable, where content can be remixed or co-created without arduous legal processes.&nbsp;



“With all these powerful tools, almost god-like tools, and the god-like distribution of the internet, why is Hollywood on strike? Why are creators struggling to monetize?” Zhao said. “There&#8217;s a real need in AI for value capture, [intellectual property] provenance and attribution.”



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Story Protocol to help AI developers register and track their models with Ritual

Shalini Nagarajan

NFT artist Ryder Ripps and his business associate Jeremy Cahen are ordered to pay $1.57 million to Bored Ape Yacht Club creator Yuga Labs for their satirical NFT collection.



In an Oct. 25 court order, US District Judge John Walter said that making the defendants give up their profits would stop them from continuing to step on the Yuga Labs’ trademarks.



In May 2022, Ripps and Cahen launched the Ryder Ripps Bored Ape Yacht Club (RR/ BAYC) collection, a set of NFTs closely resembling Bored Apes, which Ripps claimed were promoting Nazi symbols.



In June that year, Yuga sued Ripps and his colleague, accusing them of producing and selling imitation NFTs that undermined the worth of the original pieces. By April 2023, the court <a href="https://blockworks.co/news/bayc-yuga-labs-ryder-ripps-lawsuit">granted Yuga injunctive relief</a> along with monetary damages.



Yuga asserted it was a calculated move to inflict damage on the NFT project by causing consumer uncertainty over the association between the RR/BAYC NFTs and the genuine BAYC.



However, the defendants claimed their creations were a form of &#8220;appropriation art,&#8221; designed to draw attention to Yuga&#8217;s supposed engagement in spreading &#8220;racist, neo-Nazi, and alt-right messages and symbols,&#8221; pushing Yuga to own up to its conduct.



Despite their claims during trial that their RR/BAYC NFT collection was meant to parody or critique Yuga&#8217;s BAYC series, the court <a href="https://storage.courtlistener.com/recap/gov.uscourts.cacd.855658/gov.uscourts.cacd.855658.431.0.pdf">said</a> that evidence clearly shows they merely used the BAYC Marks to develop an NFT collection directing to the same images as Yuga&#8217;s NFTs.



Furthermore, even after Yuga initiated legal proceedings to assert its trademark rights, Ripps and Cahen didn&#8217;t cease their marketing or promotion of their RR/BAYC NFT series, the order said.



The court concluded that Yuga Labs will be award $1.37 million from the defendants&#8217; profits, an additional $200,000 in statutory damages and an undetermined amount covering legal fees.&nbsp;



Yuga Labs must submit all billing records and documents supporting its claim for attorneys’ fees and costs by Nov. 1.



In a further win for Yuga Labs, the judge issued a permanent injunction against Ripps and Cahen, prohibiting the defendants from further infringing activities. They were directed to hand over control of two domain names and two X accounts.



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Yuga Labs awarded $1.6M in landmark Ryder Ripps NFT case

James Cirrone

Ten crypto startups raised over $111 million, with three firms managing to secure eight-figure cash injections. 



Story Protocol was the clear standout, pulling in nearly half the total with $54 million.&nbsp;



The open intellectual property infrastructure provider’s Series A round was led by a16z Crypto, with participation from dozens of other individual investors, venture capital companies and one celebrity investor: Paris Hilton’s 11:11 Media.&nbsp;



Other noteworthy backers include Samsung Next, dao5, and former Coinbase chief technology officer Balaji Srinivasan.&nbsp;



Story Protocol’s goal is to offer creatives — writers, artists, game developers, musicians, etc. — a platform that allows them to track the provenance of their work.&nbsp;



“Our current [intellectual property] infrastructure is too unwieldy to support remixing, community lore, and co-creation as foundational pillars of creativity,” Story Protocol said in its inaugural <a href="https://mirror.xyz/0xcbDf9ea2DD2C36D558f108835F06B2AD98DF2c40/u8cNYQb1k_lTJfdWEBt1bpms-2nBRbBXk36Q-5HRf20">blog post</a>. “Instead of leaning into the fundamental force of the internet — openness — most [intellectual property] models emphasize a defensive stance, adding friction to the creative process.”



<h2 class="wp-block-heading">Brine Fi, GenTwo are top fundraisers</h2>



Decentralized crypto exchange Brine Fi secured a $100 million valuation this week after raising $16.5 million in a Series A round.&nbsp;



The fresh funding came courtesy of lead investor Pantera Capital. Elevation Capital, StarkWare, Spartan Group, and angel investors supported Brine Fi as well.&nbsp;



This relatively new DEX is powered by StarkWare’s zero knowledge proof technology. Brine Fi opened for business in May, <a href="https://dashboard.starkware.co/starkex/brine">serving</a> just over 400 users with a cumulative trading volume of $505 million.&nbsp;



Total value locked, coming in at $592,640 as of Friday, has seen somewhat of a plateau since the beginning of August.&nbsp;



Earlier in the week, fintech platform GenTwo garnered $15 million via a Series A round led by Steve Cohen’s Point72 Ventures, according to a <a href="https://www.gentwo.com/press-release/gentwo-raises-series-a-led-by-point72-ventures/">statement</a>.&nbsp;



As part of Point72’s investment, the company’s co-head of fintech investments, Pete Casella, is joining GenTwo’s board of directors.&nbsp;



Through GenTwo’s platform, customers can fashion real estate, fine art or crypto into investable assets.



As of now, GenTwo serves 250 clients and has helped launch over 1,200 investment products.



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



<ul class="wp-block-list">
<li>Trident Digital Group is a crypto lending business started by former Coinbase executives. The startup raised $8 million from White Star Capital and New Form.</li>



<li>TRLab, which helps create digital art experiences, <a href="https://www.prnewswire.com/news-releases/art--tech-innovator-trlab-announces-us5-million-seed-round-led-by-hivemind-capital-and-okx-ventures-301918587.html?tc=eml_cleartime">saw</a> a fresh $5 million from Hivemind Capital Partners and OKX Ventures.</li>



<li>D3 Global <a href="https://twitter.com/D3inc/status/1699137122051981367">locked down</a> $5 million to launch an on-chain marketplace for legacy web domains. Shima Capital led the round, and there were around 10 other investors.</li>



<li>Layer-2 interoperability protocol Socket <a href="https://twitter.com/SocketDotTech/status/1699454854329225431">secured</a> a $5 million strategic investment from Coinbase Ventures and Framework Ventures. </li>



<li>Kotani <a href="https://techcrunch.com/2023/09/04/kotani-pay/?guccounter=1&amp;guce_referrer=aHR0cHM6Ly9jLm5ld3Nub3cuY28udWsv&amp;guce_referrer_sig=AQAAAMqVFr0GPUMIUD8noamLpXMMq-rZrkewkgDWBtNVdHsKgTc3iilbOfh0C1E_1wukqrJjPVnR9GbKVja9SfuArKME9ArCLUGIKLx8rw8YnfT9XDJnxhtyrh9micy8XF6mOxLImL_SwcpZoboUXUiLwgG3x2kCHQATrOYrk98dys9N">closed</a> a $2 million pre-seed round to continue developing a solution for sending remittances via stablecoins.</li>



<li>Nestcoin <a href="https://twitter.com/Nestcoin/status/1699750215023259813">raised</a> $1.9 million from Hashed Emergent to build Onboard Wallet, a self custodial wallet.</li>



<li>Gleen, a customer support firm using generative AI, <a href="https://gleen.ai/blog/gleen-solves-hallucination-in-generative-ai-lands-4-9m-investment/?twclid=2352f1jvukofb7r7mmcu0df3l2">raised</a> $4.9 million from two notable crypto backers including Coinshares and 6th Man Ventures.</li>
</ul>



Updated Sept. 28, 2023 at 1:02 pm ET: Details of one fundraising round have been removed at the request of the company, as the round has not yet concluded. The week’s fundraising totals have been adjusted to reflect that.



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Crypto funding: Summer doldrums end as firms raise $111M

Bessie Liu

Web3 media company Doodles is revamping its treasury, the Doodlebank, to enhance support for community projects.



Earlier in January, the Doodles community appointed an advisor to oversee the Doodlebank project. It recently created a community council that will focus on establishing council governance and developing a budget and proposal vetting process.&nbsp;



The community council will also be held accountable for communicating Doodlebank updates to its community members.&nbsp;



As of now, there are roughly $5 million in crypto in the Doodlebank waiting to be deployed.



<h2 class="wp-block-heading">Removing the $100k commercial license cap</h2>



One of the most significant updates about the Doodlebank project is its removal of the $100k commercial license cap for projects which are supported by approved Doodlebank proposals.



In an interview with Blockworks, Julian Holguin, Doodles CEO said that the initial purpose of the $100k cap is to protect Doodles&#8217; intellectual property, or IP.



“We want to ensure that we can control the IP and create the business opportunity for our company and our community,” Holguin said.&nbsp;



But with projects initiated through the Doodlebank, creators won’t just have the opportunity to use their one individual NFT, he noted, they will also have access to other parts of the Doodles brand to build out their ideas.&nbsp;



“So not only are we going to lift the cap and make a real business opportunity for you [the creators], we&#8217;re going to fund it for you too,” Holguin said.



Holguin notes that, currently, the Doodlebank is given a percentage of money from the sale of Doodle NFTs — though the goal for the Doodles business is to diversify that source of revenue eventually.



“We have a flagship retail experience launching this summer, there will be ticket and merchandise sales, and sponsorship opportunities around it,” he said. “You can think of it as a scaled-down version of Disneyland.”



Ultimately, the Doodlebank initiative is designed to bring the Doodles community closer together by giving more opportunities to the NFT holders.&nbsp;



“We’re going to be bringing our community into the world of Doodles — they’re already a part of it, but now they get to be part of this fantasy world as well, that’s the sense of identity that does not really exist with IP right now,” he said.



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Doodles CEO Imagines a ‘Scaled-down Version of Disneyland’

Ornella Hernandez

<div id="highlights-block_6319d73558517" class="highlights">
 <ul>
 <li>Metaverse trademark registrations through 8 months of 2022 have eclipsed all of 2021</li>
 <li>ENS is the top ETH collection with the most volume on OpenSea within the past seven days</li>
 </ul>
 
</div>



This week Blockworks looked at <a href="https://cms.blockworks.co/venture-capital-bullish-on-building-gamefi-in-a-bear-market/" target="_blank" rel="noreferrer noopener">the state of the nascent GameFi market</a> and how venture capital is keen on pouring money into it during a bear market.



Additionally, a new Solana NFT collection, y00ts, <a href="https://cms.blockworks.co/latest-solana-nft-collection-gives-ethereum-nfts-a-run-for-their-money/" target="_blank" rel="noreferrer noopener">has already generated</a> over $7 million worth of secondary sales since Monday despite minting delays.



Blockworks recaps other notable stories that caught the eyes of the Web3 Watch.



<h3 class="wp-block-heading">Metaverse trademarks are booming</h3>



4,150 trademarks relating to Web3 and the metaverse have been filed with the United States Patent and Trademark Office (USPTO) so far in 2022. This is slightly more than twice as many as the total metaverse trademark registrations in all of last year — 1866.



Three major brands have put in their own filings in the past week alone, including carmaker Ford, <a href="https://tmsearch.uspto.gov/bin/showfield?f=doc&amp;state=4804:24nzyj.5.1" target="_blank" rel="noreferrer noopener">with 19 trademark applications</a> for virtual cars, trucks, vans and clothing, as well as an NFT marketplace.



Sony Music filed trademarks for its Columbia Records logo to be used in association with NFT-backed media including art &amp; music NFTs, music and podcast production as well as artist management and music distribution services.&nbsp;



Luxury goods retailer Hermes also <a href="https://tmsearch.uspto.gov/bin/showfield?f=doc&amp;state=4804:24nzyj.6.7" target="_blank" rel="noreferrer noopener">filed trademarks</a> for its name to be linked to NFTs, an NFT marketplace, virtual clothing and footwear, fashion shows and cryptocurrencies. It also mentions plans to create game software featuring avatars, alongside plans for user authentication services for e-commerce transactions.



Metaverse and NFT-focused applications are growing all over the world. The European Union Intellectual Property Office (EUIPO) claims to have registered 205 applications using the term “metaverse” in 2022.



The number of NFT-specific applications was 1,277 in 2021, but as of September 2022 there have been 1,157 applications.



<h3 class="wp-block-heading">For hoops fans who fancy NFTs</h3>



The National Basketball Association (NBA) and the National Basketball Players Association (NBPA) <a href="https://www.nba.com/news/nba-nbpa-sorare-fantasy-game-release" target="_blank" rel="noreferrer noopener">teamed up</a> with French startup Sorare to launch a free-to-play fantasy basketball game this Fall.



Sorare is mostly popular in Europe for its NFT-based fantasy soccer game. After partnering with the Major League Baseball (MLB) association in July, it has now turned to basketball fans as it expands within the US.



This partnership makes Sorare the official NFT fantasy partner of the NBA and gives it the rights to use official NBA league and team logos across its products.



The fantasy game will be released in time for the 2022-23 season and plans to enable fans to buy and sell digital NFT cards representing their favorite players and teams, while putting together a line-up that can earn them points based on the real-life performance of NBA players.



The NBA is no stranger to NFTs and already counts on the Dapper Labs-run NBA Top Shot&nbsp; NFT marketplace where sports fans can buy, sell and trade video clips from basketball games.&nbsp;



<h3 class="wp-block-heading">GameStop links up with FTX</h3>



GameStop partnered with FTX, making the video game retailer FTX’s preferred retail partner in the US.



The partnership intends to “introduce more GameStop customers to the crypto exchange’s community and its marketplaces for digital assets,” a press release stated.&nbsp;



While additional details including the financial terms have not been disclosed, one known perk is that GameStop stores will begin selling FTX gift cards.



GameStop recently launched its own NFT marketplace and its own crypto wallet. When the company submitted its Q2 2022 earnings report on Wednesday, however, it noted that any recent financial success may not stem from these new products.



“Revenues earned from our digital asset wallet and NFT marketplace were not material to the condensed consolidated financial statements for the three and six months ended July 30, 2022,” its quarterly SEC filing <a href="https://gamestop.gcs-web.com/static-files/3a9d968d-b9f5-415a-877f-895d5ac83ed3">stated</a>.&nbsp;&nbsp;



Additionally, <a href="https://cms.blockworks.co/ftx-bringing-crypto-swaps-to-reddit/" target="_blank" rel="noreferrer noopener">FTX also recently partnered with Reddit and Arbitrum</a> to allow users to pay gas fees on Reddit’s “Community Points” tokens using fiat currency.



<h3 class="wp-block-heading">New blockchain game alert&nbsp;</h3>



The top Solana marketplace Magic Eden <a href="https://cms.blockworks.co/solana-marketplace-magic-eden-to-offer-ethereum-nfts/" target="_blank" rel="noreferrer noopener">recently expanded to the Ethereum blockchain</a>. One of its first ETH NFT mints on the Magic Eden Launchpad includes a collaboration with Web3 game studio Azra Games.



Azra, which recently closed a $15 million seed round led by Andreessen Horowitz (a16z), announced plans to launch a collection of profile picture (PFP) NFTs called “The Hopeful,” as part of its upcoming “Legions &amp; Legends” game.&nbsp;



This game is an ETH-powered collectible and combat role-playing game (RPG) set in a sci-fi fantasy universe. The company is led by Mark Otero, former General Manager of EA Capital Games, whose credits include Star Wars: Galaxy of Heroes.



Magic Eden recently shifted its focus to gaming by <a href="https://cms.blockworks.co/web3-watch-gamestop-opens-nft-marketplace-magic-eden-fund-focuses-on-web3-gaming/" target="_blank" rel="noreferrer noopener">launching a new venture capital fund</a>, dubbed Magic Ventures, that focuses on investments in Web3 games from third parties as well as its own. 



<h3 class="wp-block-heading">Vitalik polls crypto Twitter </h3>



Ethereum co-founder Vitalik Buterin has been <a href="https://twitter.com/VitalikButerin/status/1566763265291681793?s=20&amp;t=tUl1e0BorDII4mHyLfgsCg" target="_blank" rel="noreferrer noopener">tweeting</a> out a slew of polls lately — from personal random questions, like which crypto personality he respects the most, to what a fair price for a 5-letter .eth domain name is. 



In response to the latter, 91,130 participants chimed in and around 50% of the crypto community thinks that the fair price for a 5-letter .eth domain name for 100 years is less than $100. The same goes for .eth domain for 10 years.&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">What is a fair price that someone should have to pay to register and unconditionally guarantee ownership of a 5-letter .eth domain for 100 years?&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1566421042872164355?ref_src=twsrc%5Etfw">September 4, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



At the same time, Buterin has called for Ethereum Name Service (ENS) domain taxation, suggesting a 3% yearly fee on ENS domain names for the highest bidder.



For example, an investor with $500,000 as the highest bid on their domain should pay a $15,000 taxation annually to maintain ownership. According to him, this would demotivate people from hoarding domains they aren’t using.



ENS has been trading at the top of the secondary sales charts on OpenSea, as the ETH collection with the most volume within the past seven days.



It <a href="https://twitter.com/ensdomains/status/1565374366791057409?s=20&amp;t=QtnSDYyIgx2haUUm3qqE1Q" target="_blank" rel="noreferrer noopener">registered</a> 301,000 new .eth domains in August and touts a total of 2.17 million names so far.



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Web3 Watch: GameStop Partners with FTX and Sorare Creates NBA Fantasy Game

<div id="highlights-block_630f9b55eda23" class="highlights">
 <ul>
 <li>Licenses provide open source codified versions of intellectual property rights</li>
 <li>Murky IP licensing has recently caused confusion regarding rights of NFT buyers</li>
 </ul>
 
</div>



Venture capital firm Andreessen Horowitz’ crypto arm, a16z, released six NFT-specific copyright licensing frameworks on Wednesday as part of a free and public set of “Can’t Be Evil” Licenses, in the style of <a href="https://creativecommons.org/">Cr</a><a href="https://creativecommons.org/" target="_blank" rel="noreferrer noopener">e</a><a href="https://creativecommons.org/">ative Commons</a>.



A blog post from Miles Jennings, general counsel at a16z, and Chris Dixon, a managing partner who founded a16z, <a href="https://a16zcrypto.com/introducing-nft-licenses/" target="_blank" rel="noreferrer noopener">stated</a> that the firm is addressing the existing ambiguity and confusion around NFT licensing.



Their aim is to clarify an NFT creator, buyer or seller’s rights regarding the artwork of digital assets in order to “democratize access to high quality licenses and encourage standardization across the web3 industry.”&nbsp;



The “Can’t Be Evil” set is meant to serve as a template for NFT projects to consider when creating and selling NFTs, <a href="https://a16zcrypto.com/wp-content/uploads/2022/08/Cant-Be-Evil-Licenses.pdf" target="_blank" rel="noreferrer noopener">according</a> to its Terms and Conditions.&nbsp;



The slate of open source licenses are based on US law and relate to copyright only, excluding other forms of intellectual property, including personality rights, stated the document. US copyright laws do not automatically grant buyers of both traditional and digital assets the right to reproduce, adapt or publicly display the artwork without a license.



The six options each outline different degrees of freedom intended to help creators protect or release their intellectual property (IP) rights, especially those enabling buyers to modify the artwork or create derivative works.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="411" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png" alt="" class="wp-image-29747" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Screenshot-2022-08-31-at-19.40.25-1024x411.png?w=50 50w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: <a href="https://a16zcrypto.com/introducing-nft-licenses/">a16zcrypto</a></figcaption></figure>



The Licenses were developed in partnership between a16z Crypto and the law firms Latham &amp; Watkins LLP and DLA Piper LLP. Available on GitHub, NFT projects are able to add a reference to a specific license directly into a smart contract.&nbsp;&nbsp;



The “Can’t Be Evil” title was inspired by Google’s “don’t be evil” slogan and puts the trust in the code, according to a16z



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Instead of trusting people or corporations to not be evil, we can ensure through code that they “can’t be evil,” the company stated.&nbsp;</blockquote>



<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">can’t be evil &gt; don’t be evil&mdash; cdixon.eth (@cdixon) <a href="https://twitter.com/cdixon/status/1470223992757927936?ref_src=twsrc%5Etfw">December 13, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Creative Commons licenses have lately been put in the spotlight by NFT projects such as Moonbirds, whose founders recently <a href="https://cms.blockworks.co/from-moonbirds-to-cryptopunks-terms-of-service-are-changing/" target="_blank" rel="noreferrer noopener">moved to a Creative Commons Zero (CC0) license</a> and rescinded its holders’ commercial art rights without warning.&nbsp;



Yuga Labs-owned CryptoPunks and Meebits have also updated their terms and conditions to allow NFT holders to use the image of their NFT however they want, without permission from Yuga Labs, which legally still owns the rights and title of the art.



NFTs are, at their core, a piece of software code. It is quite common for the actual image or artwork to be stored off-chain on a remote server, while only the metadata is on-chain.&nbsp;



When an NFT is bought and transferred to a crypto address, the purchaser is only acquiring the metadata associated with the remote image, and not the actual content file. That’s why intellectual property rights are a murky subject.



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A16z Creates NFT Licensing Framework to Standardize Collectors’ Rights

<div id="highlights-block_6308d5541e879" class="highlights">
 <ul>
 <li>The largest bank in Japan, MUFG, has become a new Animoca Brands Japan partner</li>
 <li>Japanese regulators are considering easing taxation rates on crypto assets</li>
 </ul>
 
</div>



Animoca Brands KK (Animoca Brands Japan), a subsidiary of Web3 firm Animoca Brands raised $45 million from its parent company and from MUFG Bank, the largest bank in Japan, the company <a href="https://www.animocabrands.co.jp/whatsnew?id=7LgoXXkSD18iJnd73DsqHr" target="_blank" rel="noreferrer noopener">announced</a> on Friday. The Japanese unit intends to use the new capital to secure local licenses for popular anime and manga intellectual properties (IP) and additional investments. 



Each investor contributed $22.5 million. Prior to the raise, the company’s valuation was approximately at $500 million.



Animoca Brands Japan aims to “promote adoption of Web3… while fostering the development of a safe and secure NFT ecosystem in Japan.”



MUFG first <a href="https://www.bk.mufg.jp/global/newsroom/news2022/pdf/newse0303.pdf" target="_blank" rel="noreferrer noopener">stated</a> its intentions to collaborate with the gaming and metaverse powerhouse in March “in order to energize the NFT market in Japan.”



The bank also hopes to support the issuance and listing of NFTs and provide services for their purchase and storage.



Other Animoca Brands Japan partners include Hello Kitty creator Sanrio, NFT platforms MADWorld and Ucollex, and others.



In June, <a href="https://cms.blockworks.co/web3-watch-ghost-in-the-shell-and-bill-murray-get-new-nft-collections/" target="_blank" rel="noreferrer noopener">Blockworks spoke to Robert Tran</a>, a member of Animoca Brands Japan’s Board of Directors and the CEO of both MADWorld and Ucollex, when the partnerships were announced.



The news brought with it the IP of popular manga series published by Kodansha, “Ghost in the Shell” and “Fairy Tail,” into the Animoca Brands ecosystem.&nbsp;



“Ghost in the Shell is a seminal work for a generation of science fiction authors and movie directors,” according to Tran, “and the foundation for what we perceive and recognize as the metaverse.” Hollywood adapted this manga into a screenplay with Scarlett Johansson in 2017.



Tran added that the opportunity for Japanese IP to be developed into NFT projects is “enormous,” given that international sales of anime surpassed Japan’s for the first time in 2020 and the global anime industry is currently estimated to be worth between $24 billion to $26 billion.&nbsp;



<h3 class="wp-block-heading">Regulatory environment in Japan</h3>



Japan is not the most crypto-friendly country due to tight regulations, such as a 30% tax on profit from crypto holdings, including unrealized gains. This sparked Japanese advocacy groups, Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA), to recently ask the government to lower corporate tax rates that could be “stunting the local digital asset industry’s growth,” Bloomberg <a href="https://www.bloomberg.com/news/articles/2022-07-27/japan-s-crypto-groups-call-for-tax-cuts-to-stem-talent-outflow?sref=gni836kR#xj4y7vzkg" target="_blank" rel="noreferrer noopener">reported</a>. 



The Financial Services Agency and the Ministry of Economy, Trade and Industry (METI) in Japan decided this week to review and potentially amend the corporate taxation of crypto assets, <a href="https://www.yomiuri.co.jp/economy/20220824-OYT1T50011/" target="_blank" rel="noreferrer noopener">according</a> to local news outlet Yomiuri.



The proposed changes include removing capital gain liabilities for undisposed corporate crypto assets at the end of each taxation year, and revising the classification of virtual assets, “so as not to impede the growth of startups and prevent the outflow of crypto assets from overseas.”



Japan also recently <a href="https://cms.blockworks.co/japan-passes-legal-framework-for-stablecoins/" target="_blank" rel="noreferrer noopener">made clear the legal status of stablecoins</a>, defining them as digital money and restricting issuance to licensed financial institutions.



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Animoca Brands Japan Raised $45M To Foster Local Web3 Efforts

<div id="highlights-block_62ffe9ce52e48" class="highlights">
 <ul>
 <li>World of Women is the only top-25 collection attempting to confer intellectual property rights on their NFT buyers</li>
 <li>Yuga Labs is a $4 billion NFT company that owns 63% of the implied market cap of the top 100 NFTs</li>
 </ul>
 
</div>



Crypto merchant bank Galaxy Digital has studied the current NFT market and concluded that Web3’s promise of digital ownership and property rights “remains far off.”&nbsp;



Galaxy Digital reviewed licenses for top NFT (non-fungible token) collections such as Bored Ape Yacht Club (BAYC) and CryptoPunks for its latest report, “A Survey of NFT Licenses: Facts &amp; Fictions,” <a href="https://qa.fictive-galaxy.net/preview/post/4GqapWjUs9FsTrklUdsOIR" target="_blank" rel="noreferrer noopener">published</a> on Friday by the firm’s research team.&nbsp;



While more than $118 billion in NFTs has been traded in the year-over-year period on Ethereum alone, monthly trading volume has fallen by roughly 90% since January, according to Galaxy.



These declines were largely attributed to the greater cryptocurrency market downturn that has caused many NFT investors to sell at a loss.&nbsp;



In contrast, <a href="https://nftgo.io/analytics/market-overview" target="_blank" rel="noreferrer noopener">NFTGo data</a> shows the number of addresses that hold NFT investments (excluding traders) continues to rise despite the bear market, particularly leading collections.



<h3 class="wp-block-heading">Almost no top NFTs convey IP rights, Galaxy found</h3>



The report found that the vast majority of top collections convey zero intellectual property ownership of their underlying artwork or media.&nbsp;



Azuki, Doodles, Nouns and VeeFriends NFT projects were also surveyed.



Recently, some blue-chip collections including Moonbirds, CryptoPunks and <a href="https://cms.blockworks.co/from-moonbirds-to-cryptopunks-terms-of-service-are-changing/" target="_blank" rel="noreferrer noopener">Meebits have changed their terms of service</a> — placing discussions regarding NFT license agreements in the spotlight.



In the case of Moonbirds, Galaxy found its switch from commercial use licensing to Creative Commons (CC0) — without community consent —&nbsp;highlights the fact that Moonbirds holders never owned any intellectual property (IP). The parent company behind Moonbirds and Oddities was calling the shots.



“CC0 licenses are too permissive,” Galaxy said, because it moves the IP fully into the public domain, which means no one truly owns it. This makes it “unfeasible for entrepreneurs to integrate NFTs into their businesses due to the lack of legal protections.”



As for newly acquired Yuga Labs collections CryptoPunks and Meebits, the report found the new license terms (which were enacted on Monday) are “significantly more professional and explicit in the ownership and license terms.”



Yuga Labs has acknowledged it has the right to unilaterally update or alter the license terms for these projects, which is “usually buried” in terms and conditions policies or “never clearly stated” on secondary trading platforms such as OpenSea.&nbsp;



On the other hand, Galaxy labeled BAYC’s license potentially misleading. It’s unclear whether Yuga Labs intends to confer identical commercial use rights to holders of Apes and Punks.



“If Yuga Labs does intend for the licenses to be functionally identical, they should update the BAYC license to remove misleading phrases like ‘you own the underlying Bored Ape, the Art, completely,’” the report said.



When it comes to Yuga Labs’ “Otherdeed for Otherside” NFTs, the plots of metaverse land are the first tokens issued by Yuga Labs that don&#8217;t confer commercial rights, the report said.



The NFTs’ terms and conditions state that while owners have the ability to use and transfer the virtual land they purchase, Otherdeed owners have no rights to the copyright for associated media, including artwork.



However, owners of Kodas, the creatures that roam the Otherside, do have full commercial rights for the art consistent with the BAYC license.



<h3 class="wp-block-heading">World of Women or world of litigation?</h3>



Galaxy’s report lauded one collection as the only project to attempt to transfer full IP rights to NFT holders: World of Women (WoW).



“WoW attempts this through the provision of a novel copyright assignment agreement,” a governance framework which transfers the copyright of each artwork to whomever owns the WoW NFT.



Still, there’s a problem. It’s unclear whether the IP agreement continues to hold in the secondary market, Galaxy pointed out.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Unless both minter and secondary purchaser agree to these terms, there’s no guarantee that the IP assignment agreement will pass from minter to secondary purchaser,” the report said.</blockquote>



Galaxy concluded that metaverse realms Decentraland and The Sandbox do a “decent job of attempting to assign IP ownership to their users for user-generated content while properly disclaiming what users do and don’t own.”



The firm offered three suggested action items to achieve a future of digital ownership: NFT holders should fight for their IP rights; NFT issuers must fix their agreements for Web3 to have a chance; and the decentralized metaverse must enable intellectual property rights by default.



“While there is no requirement that NFT issuers specifically confer full intellectual property rights to purchasers, the lack of intellectual property rights undermines grand pronunciations by NFT and Web3 promoters that this technology will revolutionize digital ownership,” the report said.



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Web3’s Promise of NFT Intellectual Property Rights ‘Far Off,’ Says Galaxy

Casey Wagner

<div id="highlights-block_6262dc662c5e9" class="highlights">
 <ul>
 <li>Centralized NFT platforms must find a solution to intellectual property issues before regulators step in, attorneys warn</li>
 <li>There is currently no effective system for authenticating NFTs and intellectual property</li>
 </ul>
 
</div>



As Web3 and NFT spaces continue to grow, infrastructure is not expanding at the same rate, causing headaches for many attorneys in the space.



The biggest issue that centralized NFT exchange FTX faces is making sure that users are only listing content that they actually own, Ryne Miller, the exchange’s general counsel said during a panel discussion at the Cornell Blockchain Conference in New York, Friday.



“The ‘right click, save’ thing, is the issue,” he said, referring to how people can copy another NFT (non-fungible token) and mint it as their own. “Our biggest issue is making sure people don&#8217;t list NFTs for which they don&#8217;t own copyright, or whatever other intellectual property they need, and it&#8217;s a very manual process. It takes a ton of effort and energy.”



A potential solution, Miller said, might be a community-driven, incentive-based moderating system where users could keep each other in check, similar to <a href="https://opensea.io" target="_blank" rel="noreferrer noopener">OpenSea</a>’s current system of verified collections.



The concept is not that different from what currently exists in the legal system, other panelists pointed out.



“Ultimately, what intellectual property is, is society recognizing that this thing is real, and this is not real,” James Rathmell, general counsel at Haun Ventures, said. “I mean, it&#8217;s a government-granted license for that, but ultimately, it&#8217;s society agreeing on what things you own and what things you do not own.”



Consumers also have to be aware when interacting with these marketplaces, Miller said, but consumer protection laws are going to come eventually, and platforms should be prepared.&nbsp;



“Tell buyers to do their own research, that would solve this problem,” he said. “‘Do your own research’ is a good solution, but you&#8217;re going to have governments and consumer regulation folks step in before that.”



Some NFTs are designed to have utility, so while a copy may look the same, it will not be accepted by smart contracts tailored to an original. That opens up the possibility for authentication not available in other forms of digital art.



The space is moving much faster than regulation, Rathmell agreed. Web3 platforms and regulators need to have a mutual understanding of what risks they are trying to mitigate.&nbsp;



“They need to get that information out into the market so that everyone is on the same playing field,” he said.



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