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SushiSwap CTO Joseph Delong has resigned from the decentralized exchange effective immediately. Delong tweeted the news on Wednesday.  

Delong’s resignation comes amid growing tension within the SushiSwap team. Former team members claimed 0xMaki — a key developer who took over the project after founder Chef Nomi took and later returned funds intended for the project’s development team — was forced out. At the time of his departure, 0xMaki’s post indicated he himself was the driving force behind the decision, but team members claim this wasn’t the case.

A leaked screenshot appeared to show Delong asking the SUSHI telegram group whether the project should ask Maki to leave. A non-core team member also claimed multiple other team members had exited following Maki’s alleged dismissal.  For his part, Delong referred to these as “absurd defamation,” though he admitted he did not see eye to eye with some former team members.

Delong threatened to quit if the community failed to support the current team. He threatened to leave if the community did not give the core team “the autonomy to continue operations, the capability to form leadership, and increase compensation across the board.”

He also submitted a proposal to SushiSwap’s governance system that all core team members save him should be compensated with 200,000 SUSHI, equivalent to $964,000, from the project’s treasury. That proposal failed, to Delong’s frustration. 

In response to the ongoing mudslinging, the SushiSwap team made a statement admitting there were mistakes made in team management given the challenges of operating through a decentralized structure. In his departure announcement, Delong said he recommended the installation of a C-suite from outside the DAO which would have the tools to effectively manage a team.

“Be wary of any self proclaimed leaders arising from the current core team,” he wrote.

Delong said he is standing by to hand over accounts or information to the next selected leader.

“I wish Sushi the best and am saddened that Sushi is so imperiled within and without,” tweeted Delong. “The chaos that is occurring now is unlikely to result in a resolution that will leave the DAO as much more of a shadow than it once was without a radical structural transformation.”

He said he plans to take a month to spend time with his family before embarking on a new project.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

On Wednesday, Congress hosted a much-anticipated hearing with six senior executives from leading crypto firms. 

Interest in the hearing was large enough that the House Financial Services Committee’s stream was initially in the five digits for viewership. As the hearing extended to nearly five hours, viewership declined. Nonetheless, it was a significant, public moment for the crypto industry. 

“This is the first cryptocurrency hearing this committee has had in 13 years [since the Bitcoin whitepaper],” the committee’s leading Republican, Patrick McHenry, told The Block. The most comparable event was the 2019 hearings for Libra, which at the time signified more of a condemnation of Facebook’s plans.

As representatives of the industry, the witnesses were on some level running defense against more aggressive regulation. But as has been the case throughout Congress lately, the reception has warmed. As several committee members observed in their questions, the fact of holding such a full-committee educational hearing was indicative of a major shift in congressional interest in crypto. 

The firms represented — Bitfury, Circle, Coinbase, FTX, Paxos and the Stellar Development Foundation — were not necessarily the largest by valuation but were among those most engaged with U.S. politics. 

As The Block wrote yesterday, the central concerns were regulatory regimes for stablecoins and trading platforms. As Committee Chairwoman Maxine Waters commented, “Currently, cryptocurrency markets have no overarching centralized framework.”

The stablecoin piece was especially pressing — Congressman Warren Davidson called it “the lowest-hanging fruit” — as it seems the most similar to existing rules for banks. And indeed, frequent crypto critic Rep. Brad Sherman lamented that Tether, the largest stablecoin issuer, “didn’t even show up.” 

Circle and Paxos, involved with two of the largest USD-backed stablecoins, did have representation present: Jeremy Allaire and Charles Cascarilla, both of whom have become familiar figures in congressional hearings. In one exchange, Congresswoman Nydia Velázquez asked the two of them to verify that all of their backings were in cash or Treasury bills before getting their support for federal standards. The two CEOs agreed.

Most prominent were the proposals to limit their issuance to insured depository institutions, or IDIs, in the recent President’s Working Group report on stablecoins. Broadly, the industry is not onboard.

“Is it consistent to take the position that only banks should be allowed to issue stablecoins, but then fail to grant bank charters to the largest issuers of stablecoins?” asked Brian Brooks, current CEO of Bitfury and a former Comptroller of the Currency. 

The other big issue was an overarching regulator for trading platforms. Both Alesia Haas, Coinbase’s global CFO, and FTX’s Sam Bankman-Fried supported some form of harmonization. However, Haas maintained, under oath, that the Securities and Exchange Commission, or SEC, had provided no further explanation for its push to shut down Coinbase’s Lend product. 

The argument for a consistent regulatory regime drew some sympathy across the committee, but the devil remains in the details. The SEC and its sister regulator, the Commodity Futures Trading Commission, are themselves arguing out their respective roles within the crypto ecosystem. There is more and more talk of expanding the CFTC’s regulatory purview into spot markets for cryptocurrency, where the commission currently only regulates futures trading. 

Historically, congressional Democrats have been more interested than Republicans in more aggressive regulation of crypto. Rep. Alexandria Ocasio-Cortez posited that “this doesn’t seem like a new system so much as an expansion of our present one.” Rep. Sherman went further, saying: “The fact is that the advocates of crypto represent the powers in our society.”

In some ways, this dynamic continues, especially as it becomes more of a prerogative of the Biden administration’s executive appointments. 

“No mistake that the Democrats who control the agenda here on the Hill are matched up with what we hear from the regulators run by Democrats,” Congressman McHenry told The Block. “The mentions of stablecoins and exchanges match with what we understand the regulators are going to move forward on. So in many respects, some of my Democrat friends are trying to provide cover for their other Democrat friends.”

Interestingly, several Democrats who entered the committee this year seemed more interested in crypto’s potential positive impacts. Rep. Ritchie Torres asked the witnesses how stablecoins could help the large immigrant population in his district in the South Bronx facilitate cheaper remittances. 

Rep. Jake Auchincloss decried the current regime of regulation by enforcement and negotiation on a “one-off basis” with the SEC and CFTC. He seemed to echo FTX’s policy push for a designated primary single regulator, at least on a temporary basis.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• This is a section from The Block Research’s upcoming 2022 Digital Assets Outlook report
• Layer-1 blockchains have seen significant growth throughout 2021, capturing market share from Ethereum and employing varied strategies to build their own ecosystems
• Incentives and increased funding have played a key role in the growth of L1 platforms
• With many L1 ecosystems reaching new all-time highs in total value locked, competition remains intense among DeFi protocols vying for user share

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Kickstarter unveiled a plan on Wednesday to build a decentralized protocol for crowdfunding and intends to use the Celo blockchain as a public technology base.

Bloomberg first reported that the firm is building a new company that will create a new platform following the Kickstarter structure but built on a blockchain. Then, it will transition its site to the new protocol in 2022. The transition should be seamless, without affecting how users interact with the site, Kickstarter told Bloomberg. 

Kickstarter detailed its plans in a blog post, stating that it intends to build a so-called governance lab to provide independent governance for its new protocol. This will be separate from both the existing Kickstarter and its newly formed company in an effort to build some decentralization into the new design. 

“We are entering a significant moment for alternative governance models, and we think there’s an important opportunity to advance these efforts using the blockchain. This lab will be led by Camille Canon, co-founder and most recently executive director of Purpose Foundation (US), an organization focused on developing and scaling alternative ownership and governance models,” wrote co-founder Perry Chen and CEO Aziz Hasan.

They went on to write:

“We’ve chosen Celo, an open source and carbon negative blockchain platform, as the best technology and community on which to build the protocol. We’re inspired by the Celo ecosystem’s thoughtful approach to building the technology they want to see in the world.”

Kickstarter pioneered online crowdfunding in 2009, but the world of decentralization has since taken things a step further through the use of decentralized autonomous organizations (DAOs). DAOs are decentralized communities with governance models that enable participants to democratically decide on proposals, including how contributed funds are used and how the DAO should operate.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The crypto research firm Messari released a new, free-to-use governance aggregator called Messari Governor that creates a framework for proposal information, voting and other key aspects of user participation in multiple decentralized automatic organizations (DAOs). 

DAOs enable members to make decisions as a group. Contributors’ usually receive tokens that allow them to have a say in what the group does, including with its funds. Since DAOs have no central leadership, they require democratic collaboration of its token-holding community members to pass proposals on actions the DAO might take.

Messari Governor streamlines what can be confusing about participating in multiple DAOs, such as keeping track of proposal information and their contexts and statuses, through a single user interface. The aggregator also enables users to vote on DAO proposals on its platform by connecting to Metamask, Coinbase Wallet or the crypto wallet platform WalletConnect. 

“There’s been exceptional progress across the Web3 landscape in the past 18 months, but there are still pain points in how decentralized communities scale operationally,” said Messari CEO and Co-founder Ryan Selkis, in a statement. “Messari Governor ensures users have reliable tools to digest information, manage resources and self-govern their communities.” Selkis did not respond in time for additional comment before publication. 

Notable DAOs of late have been now-defunct ConstitutionDAO, a collaborative effort of participants to purchase a surviving copy of the United States Constitution, and PleasrDAO, a community of non-fungible token (NFT) owners who collectively purchase culturally significant items such as a rare Wu-Tang Clan album.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Social network Reddit is expanding its Community Points beta, allowing any subreddit to request the ability to create its own token.

On Wednesday, Reddit released a waitlist for subreddits that wish to do so and has provided more information about Community Points on its website.

Community Points can be handed out as rewards for users who are active in the community. They can be given out based on the number of upvotes a community member receives within that subreddit, whether that’s for a post they made or comment on somebody else’s post.

Each subreddit can have its own Community Points, with a custom name, token and symbol. They can have value too and can be sold for other cryptocurrencies (and then fiat money if so wished).

According to Reddit, Community Points are about building a reputation. “But it’s not limited to Reddit either. Because your Points are on the blockchain, you can take your reputation anywhere you want on the Internet,” the company says on its page.

Currently, Community Points run on a testnet version of Ethereum. But Reddit is working with Ethereum layer two scaling solution Arbitrum to see if it can run on a version of that instead.

Reddit offers Community Points in the r/Cryptocurrency subreddit, called Moons, and in the r/Fortnite subreddit, called Bricks. There are also tokens in the r/Ethtrader subreddit, called Donuts, that were created as a test of the Community Points system. Donuts live as Ethereum tokens on mainnet.

The goal of introducing tokens to Reddit is that they can be used to incentivize good behavior or content creation within a specific community. They could also potentially be used in the future to run the community itself — via a decentralized autonomous organization (DAO) — although Reddit currently uses polls for such decision-making.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

“The evolution is inevitable.”

On this episode of The Scoop, Partner at Lightspeed Ventures Amy Wu joined host Frank Chaparro to discuss Lighstpeed’s investments in the intersection of crypto and gaming as well as the problems participants in that corner of the market face.

Specifically, Wu says that game developers in crypto have to worry about not only building a good game but creating financial incentives to support a robust in-game economy.

“Opening up a game economy and allowing a lot of really creative incentivization of both player and creator alike can actually deeply add to a game environment,” she said.

The rise of in-game economies

As for blockchain-focused companies, specifically, Wu said that such projects will have to abstract away the complexities of blockchain to allow for a superior gaming experience. “The primary reason for some of these games with the longest longevity is not going to be around NFT speculation at all. It ultimately will actually just be about gameplay in my opinion…it cannot be the main driver of play.”

Turning in-game assets into NFTs solves a big problem for game developers and players, allowing holders of in-game assets to tap into their value.

“Gamers have been buying digital assets in games for decades, so this is essentially just the next step towards that evolution… I think that having the ability to invest the time, actually put money into the game to buy these assets, and then sort of have some guarantee that there will be some value coming out of the assets as well is pretty attractive”.

As for hurdles such as gas fees, Wu said games in the early days might consider covering those costs as a way to acquire customers.

She suggested that future game developers may eventually consider fronting gas fees as a part of their user customer acquisition cost. “What you have on the blockchain side is another way to acquire users,” she said, adding, “Some of the future gaming companies may think of fronting gas fees as another user acquisition cost and then it really brings down the cost to play to ideally free, actually.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

UK challenger bank Monzo has hit a valuation of $4.5 billion after securing a $500 million funding round led by Abu Dhabi Growth Fund, according to the Financial Times. New investors Coatue Management and Alpha Wave Ventures also participated in the round alongside existing backers such as Accel and Goodwater. 

The new valuation represents a reversal of fortunes for the company, which has had two warnings previously in its annual reports over its ability to continue financially. However, thanks to a swell in new customer sign-ups, revenues have doubled, according to the Financial Times report.

The startup is also planning to push into new product areas. It recent launched a buy now, pay later (BNPL) tool, and per the report is planning to expand into cryptocurrency trading. 

“We’ve seen record revenues, launched new products and tools, and continued to top the charts for our services. We’ve hired some incredible talent,” Monzo CEO TS Anil told the Financial Times. 

Monzo was contacted for comment by did not respond by press time. 

The neobank’s valuation still pales in comparison to some of its European rivals. In July, Revolut’s valuation ballooned to $33 billion after an $800 million round led by SoftBank Vision Fund and Tiger Global. Most recently, N26 was valued at $9 billion after a $900 million Series E round. The bank has, however, outshined old rival Starling, which is valued at $1.5 billion. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• This month investors poured $10.4 billion into the fintech sector globally, with 21 mega-rounds of over $100 million. 
• Payments fintechs were particularly prized by VCs — $3.4 billion went into the subsector in November. 

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The EOS community today elected to stop ongoing payments to Block.one — the company that originally designed the network — over claims that it is no longer acting in the network’s best interests. 

Those running have stopped the issuance of 67 million EOS ($250 million) that was set to be distributed over the next six to seven years. This will also affect Brock Pierce — a co-founder of stablecoin issuer Tether and co-founder of Block.one — since Block.one said he would have received around half of the tokens.

“Through a super majority consensus, the EOS network has taken its future in its own hands by voting to fire Block.one and stop vesting tokens to them. This begins a new era for EOS and highlights the power of the blockchain to enable a community to stand up against corporate interests that don’t align with theirs,” said Yves La Rose, leader of the EOS Network Foundation.

What went wrong

After collecting $4 billion in an ICO, Block.one released the software for the EOS blockchain, which went live in June 2018. It is a delegated proof-of-stake network run by the top 21 block producers, who are voted in by token holders. These 21 block producers combined have control over the whole network — but can be voted out of power.

In return for supporting the EOS blockchain, Block.one was set to receive 100 million EOS ($376 million) over 10 years — around 10% of the total supply.

Over the following years, the EOS community has been somewhat disappointed by Block.one’s commitment to the EOS blockchain, in terms of providing use-cases for it, according to the EOS Network Foundation (ENF). While it did a big reveal for a social media platform called Voice, it later turned out that it wouldn’t run on EOS (and largely turned into an NFT platform anyway). Block.one then announced plans to build a decentralized exchange called Bullish — but this wasn’t to run on EOS either.

In August 2021, a group was formed by existing EOS members and block producers called the ENF. It appointed La Rose, who formerly ran the EOS block producer EOS Nation, as its leader.

In November, La Rose made a speech outlining his plans for the network. He said that EOS had been let down by Block.one and needed to find a new way forward. “What we are experiencing is a shift whereby the EOS community is placing itself in a position to be able to move away from Block.one, essentially forking them out,” he said.

A few days later, Block.one announced it had given or sold 45 million EOS to Helios, a new fund set up by Brock Pierce to serve the EOS community. Eight million of the tokens were already vested and controlled by Block.one while 37 million are still vesting (meaning they haven’t been released by the network yet). 

Block.one was contacted for comment but did not respond by press time. 

Tricky negotiations

Over the next month and a half, the ENF engaged in dialogues with Block.one. The main goal was to get hold of the EOS network’s intellectual property and the main bargaining chip was the network’s continuance of payments of EOS to Block.one.

But one key problem, according to the ENF, was that the EOS intellectual property sits on Bullish’s balance sheet, meaning that Block.one would need to purchase it from the exchange. This caused a roadblock since Block.one wouldn’t publicly commit to getting the intellectual property back from Bullish.

Instead, Block.one put out a press release announcing that it intended to grant 30 million EOS from the tokens that it was expecting to receive to the ENF. The tokens would be handed out over time at Block.one’s discretion. 

Yet this was unsatisfactory for the ENF, since it did not provide the community with rights over the intellectual property. As a result, the network’s block producers came together to unilaterally put a stop to ongoing payments to Block.one, including the tokens it had designated for Helios. It is unclear if these tokens will never be handed out or if further negotiations could lead to the release of the payments.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.