The First Ever Sanction of a Crypto Protocol… What Happens Next?
Welcome back to our Weekly Rollup, the place where we help you stay caught up with the abundance of market news circulating around Web3.
This week’s rollup includes:
- The First US Treasury Sanction of a Crypto Protocol
- Reddit launching community tokens on Ethereum and partnering with FTX
- What is CC0 and why did Moonbirds move to CC0?
- Final test net completed and ETH merge scheduled
- FUD regarding the merge is explained
Let’s dig in!
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Everything You Need To Know About The Tornado Cash Sanctions
Tornado cash has been sanctioned by the US Treasury, becoming the first sanctioned crypto protocol. For everyone waiting for regulators to make their move; here it is! What does it mean?
Tornado Cash is a protocol through which users can send crypto anonymously. Basically, your crypto is getting mixed with other people’s crypto and then it’s sent to the address that you desire.
Unsurprisingly, 37% of the volume on Tornado Cash represents stolen crypto and probably dozens of hackers have gotten their money out of the markets with Tornado’s help! And that’s why the US treasury has sanctioned the protocol.
However, how do you stop a fully decentralized protocol? You simply cannot!
The US government can shut down the front end user experience (eg.. the website that users are interacting with) by reaching out to centralized actors in the space such as Circle (behind USDC) or Microsoft who’s behind Github, both of which are blacklisting addresses which interacted with Tornado.
Despite the illicit usage of the protocol, many people have used Tornado for completely legal reasons including:
- You get paid in crypto and don’t want your employer knowing all your financial details
- You pay for a service in eth and don’t want them to be able to see everything you’ve ever done on-chain
- You’ve been doxxed and are being harassed online
- You want to donate to a polarizing cause
- You’re bothered by the thought that everyone who knows your address knows more about your wealth than most of your close friends and family members
Even Vitalik has come out to say that he’s used Tornado Cash to donate to Ukraine, wanting to remain anonymous.
Then in another twist, someone has been sending tainted ETH to people like Shaq, Brian Armstrong, Logan Paul and even to PUMA. For context, everyone who interacts with Tornado could go to jail for 30 years. Will these celebrities really face prison time just because they’ve received ETH from random people? We’ll see 😆
It’s clear that this is just the start of what will be a rapidly evolving story over the next few weeks. Not to mention the number of court cases that will result from this which will lead to precedent setting rulings and eventually legislation although that will be years from now.
Question: What do you think regulators will think / feel like when they learn about ZK proofs, aka something that enables privacy and is impossible to sanction? 🤔
Quick Web3 News & Highlights
Reddit is launching their community points system on Arbitrum’s Nova, an Ethereum layer 2. It’s also partnering with FTX to use FTX Pay to make paying for gas fees a seamless experience.
BlackRock (the largest investment firm with trillions AUM) announced they are offering Bitcoin to their clients through a deal with Coinbase. This comes one year after the CEO of BlackRock said they would never buy crypto. Web3 for the Win!
The email marketing platform Mailchimp suddenly and without warning banned the accounts of thousands of crypto-related content creators and media outlets this week, including Decrypt, Messari, and Edge Wallet. Yet again another web2 platform de-platformed legitimate businesses and caused countless resources to be wasted. We recommend ActiveCampaign, ConvertKit or Beehiv which all support crypto and quite frankly are much better anyways.
🧬 Community Updates 🧬
- Web3 Academy Community
- Welcome to the 46 new members who joined last week and the 6 new members who joined our New Members Meet & Greet on Wednesday
- Upcoming Sandbox Session Wednesday Aug 17 at 4pm ET discussing Best Practices for Business Development in Web3. It’s not easy when you have to educate your consumer while also selling to them.
- Copy and content writers are going to be incredibly valuable skills in web3 so we launched a Writers Playground in our community.
- 5 days ago we launched a channel focused on IRL Meetups. Within hours there have been meetups arranged in Toronto, Vancouver & New York.
- Web3 Academy DAO
- We launched the web3academydao twitter. Give us a follow fren 🙂
- We’ve launched a Diversity & Inclusion Project with an objective to create an industry report focused on D+I across the DAO landscape.
- With over 99 members in the DAO it can be intimidating to get started. Please introduce yourself in the DAO chat and join our weekly All Hands every Monday at 4pm ET so we can guide and help you find a role.
Moonbirds Shock with CC0 Announcement
Moonbirds NFT collection transitions to CC0. Let’s break this down…
Prior to this announcement the holder of Moonbirds NFTs were given rights from Proof (the creator of Moonbirds) which gave them exclusive license to reproduce and commercialize their NFT. This model was first popularized by BAYC which has led to TV shows, restaurants and merchandise to be sold by the ape holder.
While this announcement certainly screwed the few people that were working on commercializing or licensing their NFT to another party we would guess that this was less than 1% of the Moonbirds community.
Ok so what is CC0?
CC0 (Creative Commons Zero) means that the artwork is in the public domain. Anyone can reproduce and commercialize that artwork. One of the best examples of CC0 art is the Mona Lisa, which became CC0 70 years after Leonardo Di Vinci’s death. As such anyone can use and sell prints or copies of Mona Lisa. Does this make the original any less valuable? Nope! It makes the original more valuable as it proliferates the image.
While many were shocked by this change Moonbirds is legally able to change the IP ownership of their NFTs because they own the art. So the question is why did they do this? Especially when it pissed off many people in the community and it dropped the floor price from 18eth to as low as 13eth.
Once a project goes CC0 there are no take backsies. This is forever.
Here’s why Moonbirds made this change:
- The growing use and proliferation of the imagery will lead to broader cultural significance, which will then translate to greater value in the original NFT.
- Kevin Rose (founder of Proof) web2 social platform Digg’s pioneered many features only to have them quickly mimicked and iterated upon by competing platforms. This leads to a protection mindset and resources dedicated to legal battles and ownership. What a waste!! Instead Kevin wants to lean into the values of web3 to be composable and build together in an open source manner.
What will the results be? No one knows. Should NFTs be worth $100,000+? No one knows. We’re still very early. But Moonbirds are not alone. There is a wave of CC0 projects including Nouns, Blitmap, Goblintown, Cryptoadz and XCOPY.
After months of beta, Facebook & Instagram users can now post and share digital collectibles (NFTs). The feature includes connecting a digital wallet, sharing digital collectibles and automatically tagging the creator and collector. There will be no fees associated with posting or sharing a digital collectible on Instagram.
Rentable NFTs have just been introduced and they work just like renting a car in real life. The big unlock here can be explained through an example: Let’s say Michael has a Bored Ape and is granted access to an exclusive party in New York. Unfortunately, he’s not in NY for the event so he has the ability to rent the NFT to someone else that wants to go to the event. This way, you can earn passive income on your NFT.
This could become really huge once real estate is tokenized and ERC-4907 (the tech settling all of the rental transactions) will settle all payments for real estate rentals. Can this tech bully Airbnb and Booking.com out of the game?
Coca-Cola just launched first-of-a-kind, generative, and shareable collectible on Polygon to celebrate International Friendship Day. The collectibles have a unique share-to-reveal functionality where each artwork will be revealed after being shared with a friend. The best part… these NFTs were airdropped to previous holders of Coca-Cola NFTs.
Guild.xyz launches platformless memberships. Guild.xyz is a protocol that allows Discord servers to nominate roles within the community. Now, Guild has integrated with Discord, Telegram, Twitter, Google Workspace, GitHub, and Steam in addition to 17 chains and several web3 protocols such as POAP, Mirror, and Snapshot. This means that users are now not limited to having a status solely on one platform.
See our conversation with Grant Magdanz from GM to learn more about Web3 social interoperability.
The Merge Explained
Goerli, Ethereum’s last testnet has successfully merged over to proof of stake. Next step is the full ethereum merge scheduled for the week of September 15.
However, it’s not all sunshine and rainbows when it comes to the merge, as miners are starting to oppose it. Let’s break this down…
Miners are owning very expensive equipment in order to mine Ethereum. That’s all going to go to waste now, since proof of work consensus is completely eliminated from the Ethereum ecosystem. However, (thanks to web3), anyone can fork any blockchain, if they have the necessary support.
What forking means is that Ethereum will basically duplicate and we’ll all of a sudden have 2 different chains. One operating with Proof of Work and the other with Proof of Stake.
The goal of this fork is for miners to be able to continue their activity, but on another chain.
What does this mean for UX?
The transition to PoS will not affect the user experience at all. However, when a fork occurs, all assets built upon that chain are getting duplicated. Basically, those that hold ERC-20 tokens such as USDT, USDC, UNI or ETH will double their positions.
For clarity, USDC, USDT and Chainlink have all opposed the fork. Without their support, this fork will have no value.
To conclude, we will probably end up with a bunch of duplicated tokens in our wallets that have 0 value and that are backed by nothing!
Question: What will you do with your duplicated tokens? Will you sell or hold? Let us know by replying to this email.
Hot Takes & Funny Tweets
The battle of Magic Eden vs Opensea has been taken over to Twitter. This is hilarious. 😂
Opensea corrected Magic Eden when they said that the Topshot NFT collection was a notable Ethereum project, when in fact it is on the Flow chain.
Magic Eden’s response was legendary.
But LooksRare takes the crown with their magnificent response! 💥
Twitter shouldn’t be free, lol.
Web3 Person Of The Month
Our person of the month goes out to Alona Shevchenko
Alona is the Co-founder of Ukraine DAO – a Web3-native collective helping defend Ukraine against the unprovoked Russian invasion.
Alona has raised over $8M and made the largest donation in the history of Come Back Alive (a foundation that helps the Ukrainian army).
Alona is now focusing on countering Russian propaganda and amplifying Ukrainian voices.You can donate to Alona through THIS LINK!
🚀 Action Steps For Web3 DOers 🚀
👉 Reply to this email and tell us what you’ll do with your duplicated tokens. Will you sell or hold?
👉 If you are a copywriter / content writer looking for a job, click here to apply.
👉 Secure your crypto assets by getting yourself a Ledger! With the abundance of hacks going around, we think it’s a good idea.