Issue 8 – French fry fiascos
A fast food franchise DAO apparently exists, and Hodlnaut tries to hodl on.
Hello again, or welcome, and please accept my apologies for any turbulence during the Patreon → Substack migration. I've already been able to spend more time writing and less time configuring the various posts and emails, so I'm really excited about what this change brings.
For those of you who missed the announcement, the important bits are as follows:
- If you were a free subscriber and want to continue to be, you don't need to do anything.
- If you were a paid subscriber on Patreon and want to continue to be a paid supporter on Substack, you will need to re-subscribe here.
- If you were a paid subscriber on Patreon and do not want to continue to be a paid subscriber, you don't need to do anything. You won't be charged from Patreon again (and you'll get a free paid month of Substack, meaning you get access to commenting and other perks).
- There is a new publishing schedule! Namely, my usual crypto update issues (such as this one) will go out weekly, and I'll also be adding deep dives and explainer posts in amidst the regular issues.
Thank you again to those of you who have opted to support my work financially—it really makes a huge difference to how much time and energy I'm able to devote to this work.
I am currently writing this dispatch from a gate at Logan Airport, where I await my red-eye flight to Lisbon for the Web Summit conference! I'm really excited for the upcoming week, which will feature me trying to catch as many of the crypto-focused talks as possible (and there are many), chatting with journalists and other attendees at the conference, and getting onstage for a panel and for my own talk on Friday. And hopefully maybe seeing a little bit of Lisbon in there too.
Various pro-crypto speakers include Changpeng "CZ" Zhao (Binance CEO), Nicole Muniz (Yuga Labs CEO), Cathie Wood (ARK Invest CEO & CIO), Devin Finzer (OpenSea co-founder & CEO), and a whole lot more. On the skeptic front there will be me, Ben McKenzie, Jacob Silverman, and… I think that might be it. Wish us luck!
In the courts
The Celsius bankruptcy proceedings are plugging along, and the judge seems to be aware that Celsius is ripping through cash at a startling rate as legal proceedings are underway:
The Court is also mindful of the need to push this case to a prompt conclusion if that is possible. Time is not on the side of maximizing recovery by all stakeholders… the reality here is that the Debtors will have significant liquidity issues to continue operating in 2023. Memorandum opinion, October 24
Voyager is also full steam ahead trying to get the FTX acquisition inked, though the judge wants them to shop around for other possible interested parties. If FTX acquires Voyager, customers will get around 72% of their currently inaccessible assets back (based on the value of their assets on July 5).1
In government
Sam Bankman-Fried seems maybe a little peeved about the criticism he received from the crypto community on his proposed regulatory approach. Many seemed to think it would stifle defi and smaller crypto players, presumably also benefiting the centralized and quite large FTX. "I won't push against the community's strategy, even where I think it might not be the most effective way to accomplish the goal," he wrote. "Crypto Twitter, take the wheel."2
In the industry
Apple updated their App Store policies to crack down on crypto and NFTs. Notably, any app that wants to be listed on the app store and wants to facilitate NFT trading must use Apple's in-app payments to do so—which also means giving Apple a major cut. This isn't enormously surprising given Apple's general stranglehold on its app developers, but there are a lot of unhappy crypto people out there.
The Web3 is Going Just Great recap
Note: If you're an avid follower of the W3IGG site and don't need a recap, you can scroll on past to the "In the news" section.
There were 5 new entries between October 24 and October 31, averaging 0.625 posts a day.
I'm not sure if it's been an unusually quiet week in the cryptosphere or if I've just been so busy writing my talk and otherwise preparing for my trip that I've missed things. It was a bit of a scramble, so it may well be the latter. If so, I shall (as always) backfill as I come across more!
A DAO trying to crowdsource fast food restaurant management loses half its treasury
[link]
The friesDAO "social experiment" evidently wants to see what will happen if the "crypto community builds and governs a fast food franchise empire via wisdom of the crowd". In what may turn out to be a gift to any of the poor souls who might have otherwise ended up working under such management, the group is now $2.3 million poorer thanks to an exploit that saw almost half the project's funds drained. The exploit was the same vanity address generator flaw that has affected at least three other projects, which have lost between $1.16 million and $160 million as a result.
Hodlnaut founders try to hide(lnaut) records
[link]
Hodlnaut's previous lies to its customers about the company's exposure to Terra/Luna seem to be becoming a pattern. Recent documents in the court proceedings ongoing in Singapore show that the founders and some other employees were uncooperative, obstructed the advisors' work, and tried to stop them from "taking into possession various key books and records of the Company".
Another Bitcoin miner wobbles
[link]
Core Scientific, a major Bitcoin mining firm, is one of the latest to show signs of failure stemming from the bear market and other factors. In a recent SEC notice, they warned that they would miss upcoming debt payments, and signaled that the company might seek bankruptcy. Core Scientific blamed their precarious financial situation on "the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global bitcoin network hash rate and the litigation with Celsius Networks LLC and its affiliates". Bankrupt crypto platform Celsius owes Core Scientific around $5.4 million.
Core Scientific is a publicly traded company, and its stock plummeted from around $1 a share to around $0.20 on the news, an 80% decrease. The stock started the year at $10.43 a share, and has decreased in value by 98% year-to-date.
Everything else
In the news
Connie Lin and Yasmin Gagne of Fast Company did a long article on Bored Apes and the company behind them (Yuga Labs). It's relatively friendly towards the company, but it does mention the various controversies around the project: that they jilted their primary artist of anything close to a fair share of the money they've made, the racism controversies, the ongoing SEC investigations, etc. There's also a paragraph at the end where I'm quoted talking about just how many of these damn apes get stolen all the time.
Worth a read
The incredible Tonantzin Carmona has just published a new paper on the lofty claims by cryptocurrency advocates that crypto-based projects can foster financial inclusion and "bank the unbanked". "[A] closer examination of these narratives reveals a mismatch between what crypto can actually provide and the needs of the groups it purports to serve", she writes.
Some crypto advocates have tried to make the case that crypto (most often Ethereum) is a viable tool to advance leftist causes. Jacobin critically reviews Vitalik Buterin's latest book, Proof of Stake: The Making of Ethereum and the Philosophy of Blockchains, in which he describes his political goals for the ecosystem.
Rebecca Ackermann writes about "effective altruism", a philosophy found among some of the mega-wealthy, notably including crypto executive Sam Bankman-Fried.
That's all for now, folks. Until next time,
– Molly
