A decentralized autonomous organization (DAO) that sprang up in the last week, raising $50 million in a global group effort to buy a copy of the US Constitution, failed in its bid last night.
During the Sotheby's auction Thursday night, crypto people flooded the YouTube comment box with "gm," crypto shorthand for "good morning," and during the bidding, which featured a bidder named Brooke and another named David, they asked, in confusion, things like, "Are we Brooke or David?"
After Brooke won the auction, a few reports that ConstitutionDAO had won the auction trickled out, before the DAO itself confirmed via its Discord and Twitter that it had been represented by David and not won.
I spoke with one of the ConstitutionDAO organizer's on today's episode of my podcast, Unchained, Will Papper, who explained why there was so much confusion, how the group plans to refund the money, and what he thinks the future of DAOs is. Be sure to check out this fascinating interview!
As one crypto investor put it,
Source: @iamDCinvestor
Other than that, there was a lot of other big news in crypto — read on to find out more.
On November 14th, at block height 709,632, Bitcoin’s Taproot upgrade was activated, marking the first major protocol upgrade to Bitcoin in over four years.
Credit: Boris SV
With Taproot, bitcoin transactions should be more flexible, secure, and efficient. Taproot implements three Bitcoin Improvement Proposals (BIPs) simultaneously. BIP 340 introduces Schnorr signatures, a new type of digital signature that is faster, more secure, and less-data intensive than ECDSA, the previous cryptographic method. BIP 341 essentially compresses data from complex Bitcoin transactions, reducing fees, minimizing memory usage, and improving Bitcoin’s scalability. BIP 342 defines Tapscript, allowing for more flexible future upgrades.
Put together, Taproot is a package of upgrades that increases network efficiency, lowers the cost of Lightning Network transactions, allows for smart contract functionality, and improves user privacy (as described by CoinShares and Chainalysis in two reports I highly recommend reading).
Source: @HodlSouth
Taproot was initially approved in June when it reached a 90% consensus among miners. As Bitcoin is open-source and decentralized, Taproot is a voluntary upgrade, meaning that not all miners are required to adopt the new technology. At the time of writing, 54% of Bitcoin nodes are running Taproot. According to Chainalysis, getting even 50% of miners to accept Taproot so quickly should be considered a win -- Bitcoin’s last upgrade, Segwit, was only used by roughly 50 percent of transactions two years after it passed. As of now, four years later, that proportion is 80 percent.
On Monday, President Joe Biden signed the Infrastructure Investment Jobs Act into law. The bill contains provisions that will require crypto exchanges, dubbed “brokers” by the Act, to report certain transactions to the Internal Revenue Service. Under the current language, brokers must report to the IRS any proceeds from digital asset trading, the tax basis for digital assets, the transfer of digital assets to another exchange, and transfers from exchanges to self-custodied wallets. In addition, all businesses, not just crypto exchanges, must report the receipt of more than $10,000 of digital assets in a transaction.
Credit: Pool
The reporting will go into effect in 13 months, at the beginning of 2023.
In response to the bill, lawmakers are working to change the language regarding brokers.
Senators Ron Wyden and Cynthia Lummis introduced a bill that would limit the “broker” definition to exclude miners and stakers, as well as wallet providers and developers.
Senator Ted Cruz took it a step further by introducing a bill that would strike from the record the crypto provision expanding the definition of a crypto “broker”, so it would be “as if such section had never been enacted.”
On Thursday, a bipartisan group of nine members from the US House of Representatives introduced the “Keep Innovation in America Act.” The bill seeks to modify the definition of crypto broker and the provision regarding tax code 6050I.
NFT numbers being down across the board (pun intended) did not stop Bored Ape Yacht Club, a collection of 10,000 ape PFPs, from having a crazy week. According to data from CryptoSlam.io, sales volume for the collection was up 400% over the seven days prior to the 17th. At $112 million in volume, Bored Ape Yacht Club did nearly three times as much as CryptoPunks over the same period ($43m).
The skyrocketing volume coincided with a few big headlines regarding Bored Ape Yacht Club. Last Wednesday, Rolling Stone collaborated with Mutant Ape Yacht Club, a derivative of the Bored Ape brand, to mint two NFTs of special edition magazine covers. This week, the two covers sold for a combined 147 ETH, or roughly $700,000.
Source: SuperRare
In addition, two music groups have announced plans to launch metaverse bands based on Bored Apes. Universal Group is forming Kingship, a virtual band of four Bored Ape NFTs that will perform in animated and virtual settings. Timbaland, a Grammy-winning artist, announced a similar move, dubbed Ape-In Productions. Ape-In Productions will soon release its first single and NFT collectible.
Notably, Yuga Labs, the developer of Bored Ape Yacht Club, grants NFT holders full commercial rights. This allows artists to use their Bored Ape NFTs in creating derivative art and products -- like music albums.
On top of the Rolling Stone collaboration and metaverse music, Bored Ape Yacht Club also got a boost from Jimmy Fallon, the host of the Tonight Show, who tweeted about, and changed his profile picture to, a Bored Ape.
Source: Jimmy Fallon
Acala, a DeFi platform, won the bidding war for Polkadot’s first parachain slot after committing $1.3 billion in DOT to the auction. Overall, ten projects competed for the first parachain slot, putting in roughly $3.5 billion in DOT.
While winning the first slot is historically significant, it makes no tangible difference -- as the first five parachain winners will go live simultaneously on December 17.
ParaSwap, a DEX-aggregator, announced a retroactive airdrop of a PSP governance token on Monday.
Source: ParaSwap
The protocol is distributing 150,000,000 PSP tokens, or 7.5% of the total supply, across roughly 20,000 wallets. Notably, the airdrop introduced a “heavy filtering process” to ensure the PSP was “allocated to users most relevant to ParaSwap’s vision,” the team announced.
According to Shresth Agrawal, an algorithm designer for ParaSwap, to be eligible users had to complete at least six ParaSwap transactions in the six months before the snapshot date of October 8th. Eligible users also needed to hold a minimum native token balance.
Additionally, ParaSwap users based in the US and China were excluded from the drop. As a result, only 20,000 wallets received an airdrop -- just 1.5% of addresses that interacted with ParaSwap.
ParaSwap’s founder Mounir Benchemled suggested that the robust eligibility requirements were necessary due to so many users attempting to game the airdrop. In the lead up, over 1.3 million addresses (more than 1/4th of all unique DeFi wallets on Ethereum), used the protocol. Benchemled believes many of these addresses were not real users, as he explained to CoinDesk: “The vast majority are farmers, and some of them are quite sophisticated. They use bots, sending tokens to thousands of wallets – sometimes tens of thousands of wallets – and they’re not real, active users.”
The decision to drop a token comes less than two months after the protocol said it was not planning any such action.
Last week, Quentin Tarantino announced his intention to auction off a collection of uncut scenes from the cult classic “Pulp Fiction” as NFTs on Secret Network. However, it appears the NFT sale has hit an obstacle. Miramax, which produced Pulp Fiction, is alleging that it holds the rights to Pulp Fiction.
Credit: Noam Galai / Contributor
In a recently filed complaint, Miramax alleges that Tarantino “kept his Pulp Fiction NFT plans secret from Miramax” and was “undeterred” by a cease-and-desist order.
By the sound of it, Miramax thinks that Tarantino’s decision to NFT work that has murky rights could lead to other artists making the same move.
“Tarantino’s conduct has forced Miramax to bring this lawsuit against a valued collaborator to enforce, preserve, and protect its contractual and intellectual property rights relating to one of Miramax’s most iconic and valuable film properties. Left unchecked, Tarantino’s conduct could mislead others into believing Miramax is involved in his venture. And it could also mislead others into believing they have the rights to pursue similar deals or offerings, when in fact Miramax holds the rights needed to develop, market, and sell NFTs relating to its deep film library,” concluded Miramax.
On Wednesday, ConsenSys closed a $200 million raise valuing the Ethereum developer at $3.2 billion. With the new funds, ConsenSys plans to enhance its presence in Asia, where it already supports 10 CBDC projects there. The company will also be hiring 400 people, marking a shift for a firm that laid off 20% of its workforce in 2020.
The move to expand and hire comes as a group of former employees and shareholders are readying legal action against ConsenSys AG. According to CoinDesk, the group is alleging that ConsenSys AG improperly valued key assets, such as MetaMask, during an asset transfer to a new entity in which JPMorgan is an investor.
Speaking of MetaMask, the digital wallet service reported that 21 million users actively use its platform each month. (Note: it is unclear how MetaMask measures users rather than addresses or wallets.)
Source: MetaMask
On a related funding note, this was a big week for funding rounds:
Gemini, the Winklevoss-led crypto exchange, is raising $400 million at a valuation of $7.1 billion.
The Information unveiled a report that both Anchorage, a digital bank specializing in crypto custody, and Fireblocks, a crypto infrastructure firm, are also in talks to raise funding rounds at multi-billion dollar valuations.
The Information also reported that the NFT marketplace OpenSea has received funding offers at a valuation of $10 billion -- a more than 6x increase from OpenSea’s valuation in March.
Fun Bits
ETH is hitting institutional balance sheets via TIME Magazine. The publisher is partnering with Galaxy Digital to launch a slew of metaverse-themed products, starting with a 100-company list for the metaverse and a weekly newsletter dubbed Into the Metaverse. TIME will be financing both projects solely with ether, which TIME will hold on its balance sheet.
Source: TIME Magazine
ETH is the second cryptocurrency to make its way to TIME’s book’s -- TIME has been holding BTC since April.
The National Football League announced that fans attending games through the end of 2021 will receive commemorative NFTs via a Ticketmaster digital wallet built on Polygon. NFTs will first be distributed at the Chicago Bears versus Detroit Lions game on Thanksgiving day.
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(Cover photo credit: Eoneren)
Update, November 19, 2021, 1pm EST: The original version of this article stated that 0.015% of Paraswap addresses received a token in the airdrop when the actual percentage was 1.5%.
