Category: DAO

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DAO DeFi Ethereum NFTs

BendDAO Hit With Insolvency Crisis, Only 12.5 ETH Left

NFT lending protocol BendDAO is facing the serious prospect of insolvency as the amount of Wrapped Ether (wETH) remaining in its smart contract dwindles to just a fraction of what is owed to lenders. 

According to Twitter user and NFT market researcher NFTStatistics.eth, as of August 22 BendDAO only had 12.5 wETH while it still owned lenders an estimated 15,000 ETH – quite the shortfall:

This precarious situation has arisen partly because of a crash in the value of many leading NFT collections, including Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC).

BendDAO’s Model Based on NFT Value

BendDAO is a DeFi platform that allows users to borrow ETH using ostensibly ‘blue chip’ NFTs, such as BAYC, as collateral. The ETH that NFT owners borrow comes from other users who have deposited their ETH to the platform as a way to earn interest on their holdings. It’s these lenders who are at risk of being left holding the bag.

On paper, BendDAO’s model seems risky and, as it turns out, it is. The lender launched last year while the NFT market was particularly exuberant but the market has since taken a nosedive, exposing just how vulnerable this model is to market volatility. 

What’s Happening Now?

BendDAO is trying to boost its ETH reserves by adjusting the rate of interest charged to borrowers and paid to lenders. 

Statistics from the BendDAO website show that ETH borrowers are now required to pay over 100 percent interest on their loans (this is partially offset by 15.88 percent rewards paid in BendDAO’s own BEND token). 

Lenders are being offered a whopping annual rate of 66.9 percent on their ETH and a further 4.99 percent reward paid in BEND. Due to these high interest rates, borrowers’ levels of debt grow ever larger as the value of their collateral continues to fall.

What Next For BendDAO?

NFTStatistics.eth points out that most of the NFTs on BendDAO that have defaulted and gone to auction currently have no bids, citing two key factors: 

  1. BendDAO requires bids to be greater than the level of debt owed by the borrower and greater than 95 percent of the NFT’s OpenSea floor price; and
  2. Bidders are required to lockup their ETH for 48 hours.

NFTStatistics.eth also notes that as borrowers accrue more debt and NFT floor prices continue to fall, we’ll see many more NFTs default: 

Further according to NFTStatistics.eth, since none of the NFTs is selling, they’re not affecting the broader NFT market – but eventually they will need to sell, perhaps at a large discount, so that BendDAO can start to acquire ETH with which to pay back its lenders. If the NFTs are sold heavily discounted, we could see the prices of many NFT collections fall much further.

Decentralised Autonomous Organisations (DAOs), such as BendDAO, have been seen by crypto enthusiasts as a way to decentralise power and flatten organisational hierarchies, however recent research by Chainalysis has found that across 10 major DAO projects, one percent of token holders control 90 percent of voting rights.

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Crypto News DAO Metaverse

Sandbox Creator ‘Animoca Brands’ Launches DAO to Develop Metaverse Interoperability Standards

Animoca Brands has established an alliance with other prominent Web3 companies this week to create a new decentralised autonomous organisation (DAO) to prioritise users’ asset ownership capabilities.

The company behind smash hit metaverse game ‘The Sandbox’ has teamed up with a number of blockchain-based metaverse creators to establish the Open Metaverse Alliance for Web3 (OMA3). The DAO so far consists of popular names including Alien Worlds, Splinterlands, Dapper Labs, Upland, Star Atlas and, most notably, Decentraland. However, Animoca intends to invite many other creators on board.

Finer Detail Yet to be Revealed

The fine print of how this new DAO will operate, such as governance rules and voting power allocation, is yet to be revealed. However, it has been stated that OMA3’s main goals are to solve key challenges of the metaverse, such as the preservation of freedom of information owned by users:

We believe in a metaverse without restraining walls, where individual platforms are interconnected and fully interoperable … Users will immutably own these assets and transfer them to any OMA3 virtual worlds freely, without needing the platform’s permission.

OMA3 statement

This alliance would seem to be competition for the ‘Metaverse Standards Forum’ (MSF), which was announced earlier this week. Founded by big names in tech, such as Microsoft, Meta, Sony and Alibaba, all the companies in MSF are known for restricting user information usage and creating barriers when it comes to transfers.

OMA3 will set out to develop its infrastructure to ensure the metaverse operates as a unified system where digital assets and data are controlled by users, not platforms. Users of this infrastructure will own their assets and should be able to transfer them freely across the OMA3 world without requiring platform permission.

Animoca’s Recent Movements

‘Be Media’, an Australian digital marketing agency, sold a large stake of its company to Animoca Brands in April 2022. Animoca’s purchase is believed to be part of its incursion into Australia, as it hopes to induct more companies into Web3.

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Aave Crypto News DAO DeFi Stablecoins

DeFi Giant ‘Aave’ Announces Plans to Launch Own Stablecoin ‘GHO’

DeFi lending platform Aave plans to launch its own stablecoin, GHO, issued on the Ethereum network, the company announced in a blog post.

GHO would be a US dollar-pegged stablecoin over-collateralised by a diversified set of cryptocurrencies of users’ choice against their collateral. The proposal was submitted to the Aave DAO (Decentralised Autonomous Organisation) last week.

Stani Kulechov, founder of Aave, said the community would have to “start from a conservative angle and expand the new facilitators as the strategies become proven and battle-tested in DeFi“:

Interest Payments to Aave DAO Treasury

Users would have to borrow the stablecoin against their crypto funds and over-collateralise it just like any other Aave loan. According to the proposal, all interest payments generated by GHO minters would be transferred to the Aave DAO treasury:

If approved, the introduction of GHO would make stablecoin borrowing on the Aave Protocol more competitive, provide optionality for stablecoin users, and generate additional revenue for the Aave DAO by sending 100 percent of interest payments on GHO borrows to the DAO.

Aave governance proposal

Aave is one of the largest DeFi lending platforms, currently boasting US$6.76 billion in total value locked (TVL). The idea of launching a crypto-backed stablecoin is just one of the safer approaches taken by other cryptocurrency platforms instead of launching algorithmic stablecoins.

One protocol that has decided to back its algorithmic stablecoin is Tron Network, which over-collateralised its USDD stablecoin to prevent a TerraUSD-like collapse.

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Crypto News DAO DeFi

DeFi Lender ‘Porter Finance’ Shuts Down Bond Issuance Platform Within a Month of Launch

With recession concerns and dipping crypto prices reducing borrowing demand from the decentralised finance ecosystem, DeFi lender Porter Finance has announced the closure of its bond issuance platform:

Twin Forces Drive Lack of Demand for BI

The Ethereum-based lender allowed decentralised autonomous organisations (DAOs), such as Porter’s Ribbon DAO, to issue convertible bonds to raise funds in return for paying yields to users. However, the lack of demand for fixed-income DeFi products has meant that the Porter Finance bond issuance platform was in operation for only a month.

Porter Finance founder Jordan Meyer cited the competitive rates of traditional finance and the lack of institutional fixed-income DeFi adoption as the twin forces driving low demand for bond issuance. Meyer has also stated that his company is “no longer willing to take on the legal risk associated with bond offerings”:

Ribbon DAO, the protocol that helps users access crypto-structured products for DeFi, which was using Porter Finance to issue its bonds, is still bound by its promise to repay yields to users. The closure of Porter Finance’s first-of-its-kind service follows the implosion of other DeFi companies such as Celsius.

Other DeFi Movements

Last month’s hot topic was the DeFi sector with DeFi Yield Protocol (DYP) up by a notable 107 percent in a week. At the time, DYP was trading at US$0.43. According to Coinbase, DYP will phase in alongside five other Ethereum-based altcoins – PARSIQ, Elastos (ELA), HOPR, MATH and ALEPH – in trading pairs with Tether once liquidity conditions are met. The six altcoins will be grouped under the exchange’s new ‘Experimental’ title.

At the same time, the combined CeFi and DeFi crypto lending platform Alkemi Network announced a partnership with hardware wallet maker Ledger. The collaboration will mean that Ledger’s 1.5 million users can earn yields with their ETH, USDC or wBTC via their wallets’ interfaces. The combination of CeFi and DeFi allows users to maintain full control of their assets.

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Crypto News DAO

1% of Holders Control 90% of Voting Rights in DAOs: Report

According to data from research firm Chainalysis, a user must hold somewhere between 0.1 and one percent of the total token supply of a decentralised autonomous organisation (DAO) to create a proposal, and somewhere between one and 4 percent to pass such a proposal.

DAOs are organisations originally set up without a centralised hierarchy and intended to work in a bottom-up manner so that a community can collectively own and contribute to the decision-making process. However, recent data suggests they are not working in as decentralised a manner as they were intended to be.

Chainalysis conducted research on the workings of 10 major DAO projects and found that, on average, less than one percent of all holders had about 90 percent of the voting power:

Share of users holding 90% of all governance tokens by DAO. Source: Chainalysis

The report highlighted that although all governance token holders had voting rights, the right to make a new proposal for the community and to pass it was not as easy for everyone, as each token corresponded to a set amount of voting power within the organisation. Chainalysis estimates that between one in 1,000 and one in 10,000 governance token holders had enough tokens to create a proposal. Passing a proposal was even more difficult, with only between one in 10,000 and one in 30,000 holders having enough to do so.

DAOs All the Rage

As DAOs become increasingly popular in the ever-expanding crypto ecosystem, they are often seen as the future of decentralised corporate governance. As such, regulating them is just a matter of time, as Australian pro-crypto Senator for NSW Andrew Bragg argues. Bragg has said that DAOs pose an “existential threat to the tax base” since they are recognised as partnerships and as such are not liable to pay company tax.

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Crypto News DAO Ethereum Optimism Tokens

ETH Scaling Solution ‘Optimism’ Launches DAO, Plans to Airdrop OP Token

Optimism, a leading Ethereum layer 2 scaling solution, has unveiled its new governance structure and is preparing to release a token called OP to help power the change: 

Governance of Two Houses

Optimism’s newly announced governance structure is to be split into two halves: the Citizens house and the Token house. The Citizens house will be governing the distribution of funding for retroactive public goods, whereas the Token house will focus on driving growth, protocol upgrades, and project incentives.

The new governance token, OP, will be the power behind the Token house. It will create incentives for users to contribute to governance, as much of the project’s decisions will be voter-based. This house will be established through a token airdrop to users.

This airdrop will not just be a one-time event, as users can expect a second drop in Q2. While awaiting an official date for the first airdrop, users can find eligibility information and an allocations link within the initial announcement.

Layer 2 and DAOs

Aside from Optimism, there is a wide range of projects working to continue the expansion of the DeFi ecosystem and resolve network performance issues. Crypto News Australia has compiled an informative list of projects worth watching.  

Decentralised autonomous organisations (DAOs) are the blockchain-based version of companies that are native to the internet. There’s a lot to know about DAOs, not to mention a list of risks and benefits, but it doesn’t have to be complicated. Crypto News Australia has also published a handy guide to DAOs.

Categories
DAO Stablecoins TerraUSD

NEAR Protocol Launches Decentralised Stablecoin ‘USN’ to Compete with UST

The highly anticipated decentralised stablecoin USN has launched on the Near protocol with Decentral Bank, an independent team, taking the lead in the stablecoin initiative:

USN Stablecoin Goes Live

USN is a stablecoin designed in similar fashion to TerraUSD (UST) and can be minted by depositing NEAR tokens, the Near blockchain’s native crypto asset, as collateral. USN is led by Decentral Bank, a decentralised autonomous organisation (DAO), in collaboration with Proximity Lab, a DeFi-focused team in the Near ecosystem. USN does not pay as high a yield as previously thought, but still offers a 10 percent annual yield from Decentral Bank.

Additional Stability for USN

The Decentral Bank DAO will have a few stability mechanisms to support USN’s dollar peg, with the first being an arbitrage system that will try to ensure that the USN stablecoin trades around one dollar’s worth of NEAR tokens. The second stability measure is a “reserve fund” made up of NEAR and USDT tokens held by the DAO treasury. It is still unclear how much will be spent on this fund:

Stablecoins Should Be on the Lookout for TerraUST

In March, Terra co-founder Do Kwon outlined plans to buy US$10 billion in Bitcoin, which had a very bullish impact on the price of BTC. TerraUST also recently became the third-largest stablecoin, outranking Binance USD.

Categories
DAO NFTs Sports

WAGMI United DAO Completes Acquisition of Crawley Town Football Club

The crypto sports brand WAGMI United has acquired Crawley Town Football Club, but the “pioneering purchase” is already proving to be controversial among its fans.

They Shoot, They Score!

WAGMI United is now the first cryptocurrency company to own a football club after it announced the acquisition of the Crawley Town Football Club, based in West Sussex, England, via a press release. WAGMI – which stands for “We’re All Gonna Make It” – is a new brand that exists between the “intersection of crypto and sports”. WAGMI United last year failed in its takeover bid of another English club, Yorkshire’s Bradford City, which has aimed to rely on NFTs as an ownership model.

The group now says it wants to “empower fans to take a personal stake in telling their team’s story and shaping its future” at Crawley. Ziya Eren, the club’s chairman and owner, and chief executive Erdem Konyar are set to exit the board, with WAGMI co-founder Preston Johnson and Eben Smith taking over.

Johnson has said, “Crawley Town Football Club is a club with more than 125 years of rich history that we revere and respect. However, a conventional approach to ownership hasn’t worked and the club is losing hundreds of thousands of pounds while its fans suffer through year after year of uninspiring results on the pitch.

We’re going to shake up the status quo, try out some new ideas, and build a worldwide community of fans new and old that can be excited to cheer on the Red Devils together – stretching from West Sussex to anywhere in the world with an internet connection.

Preston Johnson, WAGMI co-founder

The pair say they want to harness the power of Web3 to expand the club’s global fanbase and open up new revenue streams, such as selling NFTs that give “fans” influence over the way the club operates.

Supporters of Crawley Town Football Club are, however, a little apprehensive and have taken to Twitter to express their reservations:

DAOs Try to Take Over Sport

This is not the first time a decentralised autonomous organisation (DAO) has tried to buy a sports club, though WAGMI has succeeded in its attempt. Earlier in the year, another DAO, ‘BuytheBroncos DAO’, tried to purchase US National Football League (NFL) team the Denver Broncos for US$4 billion.

Categories
Australia Blockchain DAO Economics

RMIT Proposes ‘Docklands DAO’ to Help Melbourne Precinct Recover From Pandemic

A report released by the Royal Melbourne Institute of Technology’s Blockchain Innovation Hub has proposed the creation of a decentralised autonomous organisation (DAO) to help revitalise the Docklands district of Melbourne, following Covid-related lockdowns and restrictions that affected the city more than most others in Australia.

The April 7 report is the second of five commissioned by the Victorian Higher Education State Investment Fund (VHESIF) to explore opportunity areas for the creation of a digital CBD in Melbourne.

Docklands Ideal Location for DAO Pilot

The report’s author, Dr Max Parasol, believes the Docklands precinct would be the ideal location for the pilot DAO project because it faces a number of challenges due both to its location and the economic consequences of the Covid pandemic:

  • It’s geographically disconnected from Melbourne’s CBD.
  • It faces inconsistent and reduced foot traffic due to work-from-home and hybrid work models.
  • Local businesses have unpredictable inventory requirements. 
  • There are negative impacts from tenant rent discounts and vacancies.

Dr Parasol said the creation of a Docklands DAO would empower businesses to overcome these challenges and reinvigorate the local economy:

A Docklands DAO would encourage community buy-in and engagement as a way to regenerate the precinct … the beauty of a DAO is that it provides greater levels of transparency, openness and democratic governance so every member of the DAO [the community] has a voice and voting power.

Dr Max Parasol, RMIT Blockchain Innovation Hub

A DAO is an open-source, blockchain-based organisation defined by rules encoded in a smart contract and governed by members who vote on proposals using governance tokens.

Docklands DAO Would Launch in Two-Stage Process

The report suggests a two-stage process for the creation of Docklands DAO. The first stage would involve the collection of anonymised local people traffic data and other key metrics such as rental costs, with the goal of assisting local businesses to more accurately predict customer numbers and business expenses.

In stage two, Docklands DAO assumes control of the collected data. Local business owners and community members, as part of the DAO, would vote on how to use the data to optimise resource allocations and improve the local economy to benefit all DAO participants.

Jason Potts, co-director of the RMIT Blockchain Innovation Hub, suggests DAOs such as the proposed Docklands DAO will help communities manage new digital resources and overcome the challenges of a post-Covid world:

The technology is just a vehicle for a new approach to community-led and community-owned discovery of new resources and opportunities with which we can continuously reinvent the local economies that make up our cities, and that has never been more important than right now. 

Jason Potts, co-director, RMIT Blockchain Innovation Hub

RMIT has been a prominent player in the Australian crypto space, having last year urged the federal government to reform crypto tax settings and being ranked second in CoinDesk’s global Top Universities for Blockchain list.

Categories
Australia Blockchain Crypto News DAO DeFi Immutable X Maple NFTs Synthetix

Australian Web3 Ecosystem Is Growing Fast, Driven By Crypto and Blockchain Technology

The Australian Web3 ecosystem has grown immensely over the past couple of years and is driven by cryptocurrencies and blockchain technology.

The emergence of NFTs, DeFi, and decentralised autonomous organisations (DAOs) has expanded the space. The days of ICO token raises have been superseded by building meaningful communities. Notable communities/projects in the space include Immutable, Synthetix, Sigma Prime, Maple Finance, and DAOunder, all of which have helped garner increasing interest in the ecosystem.

Australia web3 economy. Source: crypblizz

The branding surrounding Web3 has made the space more inviting than the nuanced word ‘crypto’ would have suggested a few years ago.

Aussie Blockchain History in Brief

  • pre-bitcoin 1970 -2000s: cypherpunk movement;
  • 2009 – 2013: the birth of Bitcoin and underground knowledge of the space;
  • 2014 – 2016: Ethereum launches and early adopters spring up;
  • 2017 – 2018: ICO boom and an influx of capital and interest;
  • 2018 – 2020: ‘DeFi Summer’, where projects started to build the foundations for decentralised finance;
  • 2021: NFTs, DeFi and DAO boom interest; and
  • 2022: who knows?

The following categories summarise the activities within the Australian Web3 ecosystem:

Communities/DAOs

These form the backbone that brings people together, and with recent events, many communities have moved online to Discord. In-person events such as Blockchain Week show that people are willing to meet in real life again. By bringing it all together, people feel a sense of community and the ecosystem grows accordingly.

Non-Fungible Tokens (NFTs)/Gaming

NFTs took 2021 by storm and a lot of people are forking out vast amounts of money for expensive JPEGs. However, a lot of great Aussie projects such as Immutable, which was recently valued at US$3.5 billion, and Illuvium have also been making waves in the Web3 ecosystem.

Decentralised Finance (DeFi)

DeFi is such a vast category that it can be been broken down into the following:

  • Layer 1 blockchains: Fantom, Algorand, ThorChain;
  • Finance layer: Synthetix, Ren Protocol, Maple Finance, Zeta Markets and Drift;
  • Infrastructure: Rocket Pool, Chainflip, Sigma Prime; and
  • Identity: ArcX and BronID.

Venture Capital

Over the past two years, traditional Web2 funds have been spinning off an extra allocation into the space. Airtree, for example, launched a US$50 million Web3 fund, which is a very healthy sign for the growth of this sector.

Media

The right kind of media is essential in this growing space, with click-bait schemes popping up left, right and centre. Influencers who are voicing their opinions in this space can be invaluable.

Legal/Regulatory/Government

Bodies like Blockchain Australia are helping form relationships and policies within the ecosystem. Collaboration between these associations and regulatory bodies will accelerate the adoption process.

Exchanges and Retail Investors

Retail investors use these exchange platforms to enter the Web3 markets. BTC Markets, Independent Reserves, Coinjar and Coinstop are some of the first Australian native exchanges.