Dash is evolving into a decentralized cloud cryptocurrency

https://cointelegraph.com/news/dash-is-evolving-into-a-decentralized-cloud-cryptocurrency

Dash is transitioning into a decentralized cloud cryptocurrency by releasing a platform that supports blockchain-verified user data storage and a decentralized API.

Payments-focused cryptocurrency Dash is starting to release insights into its new platform, which enables data to be stored within the network in the form of decentralized cloud service.

The forthcoming Dash Platform has been developed from longstanding ideas to evolve the cryptocurrency’s functionalities — dating back to the announcement of “Dash Evolution” back in 2015.

Dash Platform will incorporate four features: a Dash Drive, a decentralized API, or DAPI, a username layer, or DPNS, and the Dash platform protocol, or DPP.

Speaking to Cointelegraph, Mark Mason outlined what exactly the company means by “turning Dash into a decentralized cloud.”

In Mason’s words, “Dash Platform is an application development platform that leverages the Dash masternode network and blockchain by transforming the p2p network into a decentralized cloud.”

Clients will be able to integrate their applications to the Dash Platform by using the distributed, decentralized application programming interface —  the DAPI. Meanwhile, the Dash Drive provides support by enabling these clients to send, store and retrieve application data as well as to query the blockchain through a simplified interface.

“One key advantage of DAPI is that it provides developers with the same access and security of a full node, without the cost and maintenance overhead,” Mason said.

For its initial MVP release, the Dash Platform will work as a Database as a Service, or DBaaS. To this end, it will use data contracts with custom data structures defined for the applications that store their data on the Dash masternode network. This data will, in turn, be notarized via Dash’s blockchain.

Ryan Taylor, the CEO of Dash Core Group, has summarized the driving idea behind the platform as being to combine the “user experience of a centralized solution with the decentralized benefits of a permissionless network like Dash.”

The platform’s cloud functionalities mean that all data on the network will sync across user devices — e.g. tablets, desktop and smartphones.

New human-readable usernames, rather than alphanumeric cryptographic addresses, will be supported via the Dash Platform Name Service, or DPNS, layer. Platform users will be able to create usernames on the layer, “friend” other platform users and accept friend requests — as well as transact DASH using these usernames.

Dash believes that moving away from complex cryptographic identifiers will spur more people to adopt cryptocurrency by incorporating familiar interfaces and processes into its decentralized system.

As previously reported, cryptocurrency can already be transacted with usernames within a number of existing closed wallet ecosystems, though Dash claims that its service is distinct as the username layer operates natively to the blockchain.

Aragon transitions governance powers to ANT holders

https://coinrivet.com/aragon-transitions-governance-powers-to-ant-holders/

Aragon is launching the next phase of its decentralised network after it reached $350 million in assets under management.

Aragon is a platform designed for building and running decentralised autonomous organisation (DAOs), with it rising in popularity this year alongside the wave of optimism surrounding DeFi.

Under the newly-released governance roadmap, ANT holders will be given more powers in the running of the Aragon Network, creating a fully decentralised and autonomous jurisdiction.

 The initial phase, which has been dubbed Phoenix, will commence in the coming weeks and will feature the transitioning of executive powers over Aragon Court from the interim council to ANT holders themselves.

“It has been almost four years of hard work in getting the network to this stage. Today, we couldn’t be more excited to announce the next phases of our governance model, in becoming a truly decentralised and autonomous organization governed by and between ANT holders.

“This next phase of the Aragon DAO governance will be an important milestone in empowering the whole Aragon community to rally around a common mission.” Said Luis Cuende, Founder and Executive Director of Aragon Association.

Following the implementation of the Phoenix phase, ANT holders will have a host of responsibilities; primarily being the ability to enact and amend the Aragon Network agreement. Other governance responsibilities that will fall to ANT holders under the transition will include amending the governance framework of the Aragon DAO and its parameters, governing the workings of the Aragon Court, and governing the network funding pool.

Following the Phoenix phase, the network will transition to the Firebird phase which is aimed at making the network financially sustainable. Leading up to the Firebird implementation, the community will be conducting multiple fund allocation experiments, to determine Firebird’s implementation.

“The next phase of our governance collaboration under Phoenix and Firebird will ensure the most groundbreaking governance models that will enable the whole Aragon community to rally around a common mission.” Added Cuende.

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Crypto Porn Startup Says Its New Governance System Is Better than DAOs

https://cointelegraph.com/news/crypto-porn-startup-says-its-new-governance-system-is-better-than-daos

PornVisory is moving to a decentralized governance structure based on the DFO standard, which allegedly allows greater user influence than DAOs.

Cryptocurrency pornography startup PornVisory is moving to a decentralized governance structure based on the (decentralized flexible organization) ​DFO standard.

According to PornVisory, DFO governance will enable token holders to propose changes and vote on governance aspects that will be subject to community voting. Platform users will need to stack the platform’s PVY Ethereum-based tokens to access the governance system.

The announcement comes shortly before the first airdrop of the firm’s PVY token scheduled for the end of the month.

DFOs are on-chain organizations that closely resemble decentralized autonomous organizations that further emphasize the community’s ability to shape the services. 

PornVisory’s founder, Veronica Noschese, told Cointelegraph that while a DAO handles some control over to the users, a DFO allows for any aspect of the decentralized application to be changed.

Noschese explained that DAOs allow the community to set the DApp’s configuration parameters, while DFOs allow them to change the code thanks to a modular design. Because of this, she said that the community can even determine the algorithms that govern the ecosystem:

“In a DFO users can cast votes in an anonymous and censorship-resistant way, because the code can be saved on-chain and becomes readable to all forever.”

Noschese concluded that decentralization is the feature that motivated her firm to move into the blockchain space. She said that she believes that users are important for any endeavor so they wanted them to be in control.

As Cointelegraph reported in late May, PornVisory plans to reward its users with tokens for watching adult content on its platform. The tokens can then be used to pay for premium content, interact with models on a dedicated live-streaming platform and spent in specialty shops.

Could Compound’s Governance Token COMP Be Deemed a Security?

https://cointelegraph.com/news/could-compounds-governance-token-comp-be-deemed-a-security

Examining COMP’s ability to pass the Howey test for being qualified as investment contracts and to be considered a security.

Innovation springs eternal in the digital asset ecosystem, and with Compound’s launch of its governance token, COMP, last month, the burgeoning world of decentralized finance continues to pick up steam. The broader cryptocurrency community has embraced COMP, which now trades on OKEx, Binance and Coinbase Pro, among other digital asset exchanges, while other investors were dumping Compound tokens after listing on major exchanges, according to the report by Flipside Crypto. By democratizing access to liquidity and yield, DeFi is in many ways the next logical step in cryptocurrency’s seemingly unstoppable march toward disrupting the traditional financial services markets.

However, innovative blockchain and cryptocurrency applications do not occur in a regulatory vacuum. Issuances of digital tokens must always take into consideration United States federal securities laws, lest they fall victim to the cold, hard grip of the U.S. Securities and Exchange Commission, with Telegram as a case in point. Therefore, it is imperative to ask the question: “Is Compound’s token, COMP, a security?”

Related: Compound’s COMP Token Takes DeFi by Storm, Now Has to Hold Top Spot

What is COMP?

Compound is a decentralized protocol that establishes money markets with algorithmically set interest rates based upon supply and demand, allowing users to lend and borrow various digital assets. COMP, on the other hand, is the native Compound ERC-20 token that allows for decentralized governance of the Compound protocol. Those who hold COMP may debate, propose and vote on all changes to the Compound protocol.

COMP is distributed on a daily basis to users of the Compound protocol. Each time a user interacts with the Compound protocol — e.g., by supplying, borrowing or repaying assets — COMP is automatically distributed to the user.

The Howey test

A “security” under U.S. federal securities laws includes the exceptionally broad concept of an “investment contract.” Whether any asset (including a digital asset) constitutes an investment contract and, thus a security, is determined by applying the Howey test.

An asset is deemed a security when all four criteria of the Howey test are met:

  1. An investment of money. 
  2. In a common enterprise. 
  3. With a reasonable expectation of profits. 
  4. To be derived from the efforts of others.

Investment of money

While seemingly straightforward, the first prong of the Howey test does not specifically require a traditional investment of cash. As the SEC stated in the DAO Report, a digital asset can satisfy this prong if exchanged for cash or “other contributions of value.” Perhaps more importantly, as stated in the cease-and-desist proceedings of Tomahawk, the SEC has highlighted that “free” distributions of tokens or “airdrops” in exchange for economic gain can satisfy this prong of the Howey test.

While COMP is issued for “free” to users, it is offered in exchange for their participation in the Compound market. Once users hold COMP, they will be able to vote on updates to the Compound protocol, as well as the underlying lending and borrowing mechanics.

Common enterprise

In one of the SEC’s rare pieces of public guidance on the topic of digital assets and the application of the U.S. securities laws, it explicitly stated that a common enterprise typically exists in the digital asset context. With respect to COMP, the token’s purpose is to actively promote the distributed governance of the Compound protocol — making it very likely to qualify.

Expectation of profits

The third element of the Howey test requires an expected return from profits. COMP is now available on multiple secondary trading markets. According to the SEC, the existence of a secondary trading market is typically an indication that people wishing to buy the digital asset may be expecting profits. It is worth noting that COMP has been trading at a 100% premium since its initial launch on June 16, 2020. Whether or not there is an “expectation of profits” typically depends on the intent of the purchasers of COMP.

Furthermore, the expectation of ancillary benefits does not diminish or serve to undermine this analysis. Therefore, if individuals purchase COMP to earn profits but also obtain some ancillary benefits, such as governance rights with respect to the Compound protocol, then the investment can nonetheless still be deemed to be made with an expectation of profits.

From the efforts of others

The fourth and final element of the Howey test requires that a return on an investment originate from the efforts of others. It would seem clear that the value of COMP is derived intrinsically from the value, operability and success of the underlying Compound protocol and its effective implementation of DeFi.

There is also no doubt that individual holders of COMP, by participating in the governance of Compound through their COMP ownership, may contribute to such returns. Unfortunately, it would appear that Compound, albeit indirectly, may likely continue to play a leading role in the development and success of its protocol. While the company will be distributing approximately 2,880 COMP to its users over the next four years, shareholders and founders of Compound will retain almost 50% of the total supply of COMP, and Compound will continue to create and focus on services that run on its protocol. While this state of affairs by no means indicates that the return on investment with respect to COMP will originate solely from Compound itself, in order to satisfy this prong of the Howey test, profits need not come exclusively from others, but rather “primarily” or “substantially.”

The final verdict

Where does this leave us? COMP’s recent listing on Coinbase is of particular significance, given that the market views the platform as an informal arbiter in these matters — only listing tokens that it believes are not securities. Unfortunately, the SEC has the final say, and the Howey test is as expansive as it is nebulous.

Despite COMP’s utility and decentralized governance mechanics, if history is any indication, there is a strong likelihood that the SEC would view COMP as satisfying each of the Howey test prongs and, therefore, constitute it a security regardless of the fact that it has yet to make such a definitive statement concerning any of the most widely distributed tokens on major U.S. exchanges.

It is worth noting that this determination says nothing of the regulatory implications of the underlying DeFi mechanics. Participants in traditional retail lending can attest to the myriad state lending laws, licensing obligations and money transmission implications. As DeFi continues to challenge traditional lending mechanics, we cannot help but contemplate the challenges that such a structure may also pose to traditional lending regulation. However, we leave that discussion for another time.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article was co-authored by Ethan Silver and William Brannan.

Ethan Silver and William Brannan are attorneys with Lowenstein Sandler. They advise cryptocurrency, blockchain and digital asset businesses navigating federal and state regulatory frameworks. They also counsel cryptocurrency trading platforms, exchanges, custodians and related businesses with respect to federal securities laws and work with technology-focused broker-dealers and robo-advisors on formation, structuring and regulatory matters. Ethan is the chair of the firm’s fintech practice, in which Will is counsel.