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Crypto startup Layer3, which provides tools for decentralized autonomous organizations (DAOs), has raised $2.5 million in a seed funding round.

ParaFi Capital led the round, with Electric Capital, Lattice Capital, 6th Man Ventures, Red Beard Ventures, and Mirana Ventures also participating. 

Angel investors, including Balaji Srinivasan, Kain Warick of Synthetix, and Jai Bhavnani of Rari Capital, also backed the round.

With fresh capital at hand, Layer3 plans to expand its current team of two co-founders — Brandon Kumar and Dariya Khojasteh — to around six in the near future, Kumar told The Block. The startup is hiring for several roles in the engineering function. 

As a DAO infrastructure platform, Layer3 enables anyone to contribute to a DAO. It provides a marketplace of bounties where users can earn “governance tokens” by performing various tasks.

Contributing to DAOs today involves going through Discord, Google Sheets, Telegram, Airtable, and various other tools, said Kumar. “And worse, it’s difficult to get involved on a part-time basis — no matter your skillset. You’re either a full-time contributor, or a full-time shitposter. That’s what we’re fixing at Layer3,” he said. 

The platform works by listing tasks and bounties from DAOs and contributors can pick what suits their skillset. “As users complete and claim those tasks, we verify that the work was done correctly and reward them in turn with governance tokens,” said Khojasteh.

Layer3 charges a platform fee and takes a percentage of each bounty successfully claimed as its commission. “In both instances, we are paid in the native token of that DAO. We want to grow alongside the communities we partner with,” said Kumar.

Layer3’s current clients include Bancor, Rari Capital, and Index Coop, among others, said Kumar.

© 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.

Payments giant Visa has taken a step toward achieving its vision for central bank digital currencies (CBDCs). It has developed a concept that shows how various CBDCs can be interoperable with each other to make payments.

The concept, called “Universal Payments Channel” (UPC), outlines how various blockchain networks can be interconnected to allow the transfer of CBDCs. It shows how Visa can help exchange various CBDCs built on different blockchains in the future.

“This is a much longer-term future thinking concept around a way that Visa could potentially help become a bridge between one digital currency on one blockchain and another digital currency on another blockchain,” Visa’s head of crypto, Cuy Sheffield, told The Block in an interview.

Digital currencies, including CBDCs and stablecoins, will play an essential role in people’s financial lives in the future, according to Visa. And for digital currencies to be successful, Visa thinks they must have a great consumer experience and widespread merchant acceptance. “It means the ability to make and receive payments, regardless of currency, channel, or form factor. And that’s where Visa’s UPC concept comes in,” said the company.

UPC is a conceptual protocol that facilitates digital currency payments between different parties. “The UPC protocol facilitates payments through an entity, called the UPC hub (or server — we use the terms interchangeably), which acts as a gateway to receive payment requests from registered sending parties and routes them to registered recipient parties,” reads its whitepaper.

Visa’s first smart contract

As part of developing the UPC concept, Visa has also deployed its first-ever sample smart contract on Ethereum’s Ropsten testnet. The smart contract shows a payment channel that accepts both ether (ETH) and the USDC stablecoin.

“UPC’s specialized payment channels would be established off the blockchain and leverage smart contracts to communicate back with the various blockchain networks, delivering high transaction throughput securely and reliably and improving speeds overall,” said Visa.

The company is ramping up its knowledge and expertise, learning solidity, and writing smart contracts on Ethereum, said Sheffield. It will also explore other blockchains in the future, he said.

Ultimately, Visa aims for UPC to serve as a “network of blockchain networks” to move digital currencies around.

© 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.

Crypto treasury management platform MultiSafe has rebranded to Coinshift and announced $2.5 million in a seed funding round.

Investors included Sequoia Capital India, Weekend Fund (founded by Product Hunt founder Ryan Hoover), ConsenSys Mesh, DeFi Alliance, Ethereal Ventures, Fintech Collective, and Gnosis, among others. There was no lead investor in the round.

Angel investors, including Fernando Martinelli (co-founder and CEO of Balancer Labs), Sandeep Nailwal (co-founder and COO of Polygon), Ajit Tripathi (head of institutional business at Aave), and Larry Sukernik (formerly of Digital Currency Group), also backed the round.

This was an equity funding round and Coinshift’s first fundraise, founder and CEO Tarun Gupta told The Block. With fresh capital at hand, Coinshift, which is based in India, plans to expand its platform and team. There are currently six people working for Coinshift and it plans to hire around five more people, said Gupta.

As for expanding the platform, Gupta said the work is in progress to release more features for the crypto treasury management solution, including cash management and asset allocation to earn yield. “We are building a treasury management platform for very large treasuries,” he said. Coinshift’s current customers include ConsenSys, Balancer, and Uniswap. These projects currently manage the grant and other payouts through Coinshift’s platform.

Gupta was previously a co-founder of Parcel, a similar startup to Coinshift. When asked how Coinshift is different from Parcel, Gupta said Parcel only caters to decentralized autonomous organizations (DAOs), but Coinshift caters to all crypto companies. Parcel also raised $2.5 million in seed funding earlier this month.

Over the long term, like Parcel, Coinshift plans to decentralize its treasury infrastructure and become a DAO itself, said Gupta.

© 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

• In this weekly series, we dive into some of the most interesting data and developments across the Layer 1 blockchain landscape, from DeFi and bridges to network activity and funding
• Layer 1 and 2 chains have been largely built out with scalability in mind, but increased activity brings its own challenges for each ecosystem
• This week, we take a look at Solana, Terra, Cosmos, and Binance Smart Chain

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A newly introduced upgrade to the DeFi interest rate protocol Compound Finance has contained a bug that leaves some users with unusual amounts of COMP token as rewards to be claimed.

“Unusual activity has been reported regarding the distribution of COMP following the execution of Proposal 062,” Compound Labs, the team behind the Compound protocol, tweeted on Wednesday night.

“No supplied/borrowed funds are at risk — Compound Labs and members of the community are investigating discrepancies in the COMP distribution,” it added.

The purpose of the Proposal 62, which went into effective a few hours ago, was to split the COMP distribution to liquidity suppliers and borrowers based on governance-set ratios instead of the previous 50/50 share model. Minor bugs are also to be patched in the new upgrade.

But a new bug contained in the upgraded Comptroller Contract has mistakenly allowed some users to claim as much as about 168,000 COMP tokens already, worth around $50 million. 

Robert Leshner, founder of Compound Labs, said in follow-up tweets that the Comptroller contract address “contains a limited quantity of COMP” while the majority of the reward sits in a different Reservoir contract address.

Hence “the impact is bounded, at worst, 280,000 COMP tokens,” Leshner said. That is worth about $80 million as of press time.

The Comptroller contract address now has 112,000 COMP tokens left.

“There are no admin controls or community tools to disable the COMP distribution,” Leshner said “Any changes to the protocol require a 7-day governance process to make their way into production.”

Meanwhile, Compound Labs and members of the community are “evaluating potential steps to patch the COMP distribution.”

© 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.

Coinbase Pro will soon allow account holders to start trading Avalanche (AVAX) tokens on its platform, the exchange announced on Sept. 29 in a blog post. 

Coinbase Pro users are now able to transfer so-called C-Chain AVAX tokens into their account, and AVAX trading will begin “on or after” 9 a.m. Pacific time on Sept. 30, provided that liquidity requirements on the platform are met.  The asset is not currently available on the standard Coinbase platform or its consumer apps, the company said.

“C-chain Avalanche addresses start with ‘0x’,” Coinbase clarifies on its blog. “Sending Avalanche on P-chain or X-chain or any other assets to a Coinbase Pro wallet will result in permanent loss.”

Avalanche is a proof-of-stake blockchain developed by Ava Labs. Avalanche recently raised $230 million in a token sale led by Polychain and Three Arrows Capital.

Coinbase Pro will join other exchanges including Binance and BitPanda in listing AVAX tokens.

“This listing increases the accessibility of #Avalanche to a broader set of users, including those in the US,” Avalanche wrote in a Twitter update.

© 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 September 28, seven members of Congress sent a letter to Jerome Powell, chairman of the Federal Reserve, asking about the U.S. central bank’s work on cryptocurrency regulation.

The letter includes four questions, touching on the Fed’s approach to cryptocurrency custody at federal banks and including its role in establishing international standards for a central bank digital currency. It further asks about the Fed’s coordination with other financial regulators and a release date for a discussion paper on a CBDC. 

At a hearing before the Senate Banking Committee in July, Powell said: “You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency.”

The authors of yesterday’s letter seemed to take umbrage with that statement, asking: “Do you believe a CBDC would make these applications, and the cryptocurrencies that power them, obsolete?”

Earlier today, Senator Cynthia Lummis took to the Senate floor to lay out a vision for CBDCs in advance of the Fed’s much-anticipated report on the topic. 

© 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.

As of September 29, the decentralized exchange aggregator 1inch has begun geofencing U.S. IP addresses. 

Source: 1inch

Though the platform’s terms of use have apparently restricted U.S. users since April, that restriction has only recently come online on a technical level.

When reached for comment, a representative for the 1inch Foundation, which curates the aggregator, told The Block that “Today we’ve just added one more pop-up notification and technical layer to control this.”

The move aims to pave the way for a new product to launch in the U.S. The representative wrote:

“The 1inch Network is in the process of collecting the Series B funding round that has now grown to $175M (instead of $70M as was planned before). A significant part of these funds will be used for the development and launch of the 1inch Pro product which is specifically designed for the US market and for global institutional investors in accordance with all the regulatory requirements.”

Per data from The Block, 1inch is the dominant DEX aggregator on the market, accounting for almost two-thirds of overall volume. 

U.S. regulations are relatively stringent on what sorts of investments are available to U.S. users, particularly without the provision of know-your-customer information. Decentralized exchanges and aggregators like 1inch often don’t require more information than a wallet address. Though a number of international exchanges limit U.S. (and other jurisdictions’) access to their platforms, decentralized exchanges have been less apt to do so.

Such geofencing is notoriously simple to circumvent using VPNs. 

The degree of regulatory scrutiny is changing DeFi, however. Earlier this summer, leading DEX Uniswap delisted a host of tokens that resembled securities or derivatives offerings, a move that came as the Securities and Exchange Commission began to devote more attention to the DeFi space. 

© 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.

Twitter’s head of consumer product marketing Justin Taylor released a video showcasing unreleased, in-development tools for users who want to have an NFT profile picture. 

The video was recorded by Mada Aflak, Senior Software Engineer at Twitter. In the video, Aflak shows how users must click on “Change photo” for their profile picture. An option to “Select NFT” will emerge, allowing the user to connect a digital wallet from Coinbase, Metamask, or other sources. The user selects the NFT they want as a profile picture – which will have a checkmark verifying the blockchain to which the NFT belongs. 

In addition to verified NFT profile pictures, users may display other NFTs they own through the upcoming “Collectible” menu option which will sit between a user’s “Tweets & Replies,” “Media,” “Reactions,” and other activity on Twitter. 

Here’s a sneak peek👀 on what we’re working on for NFT profile verification.

What do you think? pic.twitter.com/Z8c6tH3BBy

— Justin Taylor (@TheSmarmyBum) September 29, 2021

The social media company hinted at these tools when it had launched a bitcoin tipping feature via the Lightning Network on September 23. However, it is unclear when NFT verification will officially hit Twitter.

© 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 Commodity Futures Trading Commission is setting its sights on options trading firms that it says have failed to register.

On September 29, the CFTC announced charges against 14 merchants, 12 of which offer binary options based on foreign currencies and cryptocurrencies. The CFTC alleges that the 14 have either failed to register or have claimed to be registered with the CFTC already in customer-facing information.

As its name suggests, the CFTC regulates commodity futures markets. It does not regulate spot markets for commodities like bitcoin, which in the U.S. typically register at the state level as money services businesses.

However, platforms offering futures contracts on commodities to U.S. users are required to register with the CFTC. Crypto exchanges offering futures like BitMEX have ultimately been targeted by enforcement actions for failing to do so.

Indeed, the CFTC and Department of Justice unveiled their respective civil and criminal charges against BitMEX last October. Agencies often load up such bombshell cases at the end of the fiscal year in order to maximize their budget use. 

Despite their number, the platforms targeted in today’s action are not especially high-profile, with many showing low trustworthiness scores on scam-checking websites. One, ProCryptoMinners, is misspelled. Another, BinanceFxTrade, seems to market itself off a non-existent relationship to the actual exchange, Binance.

At the same time, Binance itself is reported to be under investigation over trading activities by U.S. persons.

© 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.