Aragon and Balancer Develop a Zero-Cost DAO Voting System

https://cryptobriefing.com/aragon-balancer-develop-zero-cost-dao-voting-system/

Aragon and Balancer Labs are collaborating to launch Snapshot, an off-chain voting platform. Through the implementation of Aragon Agreements and Aragon Court, Snapshot will enable DAOs to take their off-chain voting and record it on the Ethereum blockchain. 

Aragon Brings Lowers Cost of Governance

Before this partnership, DAO off-chain voting relied on multisig wallet holders to uphold the voters’ will. Internally, this process is called optimistic execution.

Once the latest update passes, Snapshot will enable DAOs to vote for free and pay just one time to get their decisions executed. 

Past reliance on off-chain pooling and delegated execution was a governance vulnerability and an unnecessary expense and legal liability. Multisig wallet owners could ignore their community’s desires or be legally accountable for implementing their decisions.

If the community decided to invest in a marketing campaign to promote the sale of more ANT tokens, for example, the SEC might hold the multisig operators accountable for selling securities.

Using Snapshot’s latest feature, Aragon-based DAOs can take advantage of free off-chain governance without losing their decentralized element.

Non-Aragon DAOs leverage the xDAI STAKE system to take care of governance, while execution happens on Ethereum. The benefit of sidechain systems is that DAO members avoid expensive fees for each vote. Instead, only one member needs to push the decision on-chain and get it executed.

Once the vote is complete, the proposal can be pushed on-chain to an Aragon timelock app called Disputable Delay.

During this delay, any member can create a dispute if they disagree with the proposal. Disputes are handled by the Aragon Court, which consists of three nonpartisan judges who have clear evidence and collateral on the line.

“This new approach to DAO governance will address the high costs and congestion associated with the current system. Snapshot fits perfectly into Aragon’s vision in creating the best-decentralized infrastructure for DAOs to flourish,” said Luis Cuende, Founder and Executive Director of Aragon Association.

Dfinity unveils ‘open algorithmic governance system’ as final milestone before launch

https://www.theblockcrypto.com/linked/79323/dfinity-unveils-open-algorithmic-governance-system-as-final-milestone-before-launch?utm_source=rss&utm_medium=rss

Dfinity, the much-hyped and long-anticipated blockchain-based cloud computing project, today unveiled a token-based governance system that will be used to control its “internet computer.” 

It’s the final milestone before the network’s public launch, which will occur later this year, according to a press statement.

Dfinity, which launched in 2018 and has raised more than $160 million in venture capital, aims to establish the basis for a new decentralized internet. In June, the network opened its doors to third-party developers. The newest piece, which it calls the “Network Nervous System” (NNS) is an “algorithmic governance system that onboards independent data centers to the network.”

At the center of the new governance system will be a token, called ICP (formerly called DFN). According to the release, ICP token holders will be able to lock their tokens within the NNS to create “neurons” that allow them to vote on new proposals. 

The ICP tokens can also be used to power decentralized applications, similar to the way Ethereum gas works. Specifically, the tokens can be burned to create new “cycles,” which the company calls “the fuel” to run software on Dfinity.

Since the cycles will have a stable value, they will also function as a stablecoin for use in decentralized finance (DeFi) applications on the network, according to the release.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

On Governance, safety and controlled removal of unwanted, centralised power

https://medium.com/fetch-ai/on-governance-safety-and-controlled-removal-of-unwanted-centralised-power-867f8bc8fc9c?source=rss------blockchain-5

Decentralised governance is a vital part of ensuring that power rests with the right people: the users themselves — learn more here.

Continue reading on Fetch.ai »

Dev finds major governance bug in SushiSwap, but no threat to the project yet

https://cointelegraph.com/news/dev-finds-major-governance-bug-in-sushiswap-but-no-threat-to-the-project-yet

A massive bug cannot be exploited yet, but it may put migration plans on hold.

SushiSwap appears to be vulnerable from a sneaky bug that could multiply someone’s governance power without having to acquire new tokens.

Reported by developer Jong Seok Park on Sept. 7, the bug can be described as a governance double-spend.

In essence, SushiSwap governance lets token holders delegate their voting power to another entity. However, if that token holder then transfers the tokens to someone else, the delegatee still maintains their governance power. The second token holder can now delegate tokens once again, multiplying the delegatee’s power by as much as necessary. The bug is that the token transfer does not reset delegation parameters, and this is likely the result of aggregating codebases from different projects.

SushiSwap’s governance contracts are largely a fork of Yam governance, themselves a fork of Compound. Looking at the Github source code of SushiSwap however, it appears that the token’s smart contract only modified the “mint” function from the standard implementation of ERC-20 contracts by OpenZeppelin. Yam, on the other hand, used a specific implementation of the standard that has a “moveDelegates” function called upon transferring.

In a conversation with Cointelegraph, FTX CEO and now lead for SushiSwap Sam Bankman-Fried confirmed the existence of the bug. He noted that “it doesn’t pose an immediate problem for Sushi” as governance hasn’t yet been activated.

Catching the bug before live release means that the team can now work on solutions to fix it. Bankman-Fried believes that the issue should be fixable without having to migrate the project to new contracts, but the team is “still looking into it.”

It is interesting to note that SushiSwap was hastily reviewed and audited by multiple firms as the project blew up in popularity. While one of the issues involves the same “moveDelegates” function at play here, it appears to be a different type of bug. It wouldn’t be the first time that audits fail to catch some issues, highlighting the need for the entire development community to pitch in to keep DeFi smart contracts secure.

SushiSwap itself is currently reeling from the aftermath of its anonymous founder jumping ship with a “devfund” in SUSHI tokens worth $27 million at some point.

The project is currently in a precarious state as its intended liquidity migration from Uniswap was predicated on successful audits by established security firms, in addition to the trust in the project’s anonymous founder.

Compound governance proposal seeks to end COMP yield farming craze

https://cointelegraph.com/news/compound-governance-proposal-seeks-to-end-comp-yield-farming-craze

A Compound proposal could put a major dent in the profits for all yield farmers.

A new Compound governance proposal from Gauntlet founder Tarun Chitra would see all future COMP token distributions locked in a vesting schedule.

The proposal was submitted on Wednesday and outlines several ways that the vesting could be implemented. One would involve discrete vesting where the tokens could be claimed at periodic intervals, while another proposes “continuous vesting” that frees tokens gradually as they reach maturity.

Either solution would be in stark contrast to how the reward system is set up right now, where the vesting time is effectively zero. While COMP is not immediately distributed into user wallets, it can be claimed at any point in time either by interacting with the protocol or explicitly calling a claim function. This is mostly a gas saving measure.

With no vesting, yield farmers can simply pool their liquidity to earn COMP and immediately sell it on the market. This has resulted in a somewhat perverted incentive that goes against the stated purpose of the COMP distribution. The idea behind it is to distribute ownership and governance of the platform to its users, but in reality the distribution is currently dominated by whales who are looking for an instant profit. 

Adding vesting would discourage “purely capitalist yield farmers,” as Compound Labs CEO Robert Leshner referred to them, from committing their capital to the protocol for a short-term gain.

If the proposal were to pass, however, it could have a powerful effect on the current DeFi ecosystem.

Cointelegraph previously reported that Compound is by far the largest recipient of DAI minted from MakerDAO (MKR). According to Defipulse data, the protocol currently holds 211 million DAI, which in addition to being over 46% of all current DAI, is also 55% more than its total June 30 market capitalization of $129 million.

The timeframe is crucial as DAI only became the primary yield farming asset on Compound since July 2. Cointelegraph previously reported that DAI’s recent supply surge was largely due to yield farming demand from Compound and other protocols.

While Compound is rarely the most remunerative yield farming protocol, it has been the most stable and high volume source of yield, largely due to its relatively steep distribution curve and high market capitalization. Current base yields amount to about 8% APY, which can be approximately tripled by entering a leveraged DAI position.

Tightening the yield tap through vesting could result in much of the capital unwinding, sending Compound and likely Maker’s total value locked downward. Due to a somewhat widespread belief that TVL reflects the protocol’s success this could result in token prices going down as well. On the other hand, the selling pressure would be lowered significantly, which could have a counterbalancing effect.

Nevertheless, the decision would significantly limit a major portion of total liquidity mining revenue, most likely affecting all other protocols in some way.

STRK: “Engagement Farming” protocol for a fair governance power distribution.

https://medium.com/@streakfinance/strk-growing-a-engaged-self-governing-community-with-an-equitable-power-distribution-dc4d2200f4fa?source=rss------ethereum-5

Streak is an engagement-based token distribution that aims to form a DAO that offers Decentralized Governance As A Service (DGAAS)

Huawei and Beijing work together on blockchain governance platform

https://decrypt.co/39653/huawei-and-beijing-work-together-on-blockchain-governance-platform

Huawei has partnered with the Beijing government to create a new, blockchain-powered public directory, according to a report by Jintai News. 

The Chinese tech giant has caused controversy in the West, facing allegations that their products could facilitate Chinese spying around the world. Cyber espionage and data protection inspired a US ban of Huawei products in late 2018, but this hasn’t stopped the tech company from pursuing new opportunities in China, including the first domestic attempt at applying blockchain to data governance. 

The report said this blockchain solution is designed to be people-oriented and beneficial for the city’s inhabitants. In other words, the joint-venture blockchain platform will target the areas of day to day city procedures that are not effective or transparent. 

Among the anticipated solutions will be improvements to the city’s healthcare infrastructure, which has been exposed by the outbreak of COVID-19. The report suggested the blockchain-powered solution can predict trends of epidemics in advance, using data from each hospital in the city to coordinate medical responses. 

Ripple co-founder warns the US could lose a ‘tech cold war’ with China

The blockchain-powered platform will also address other, more mundane parts of Beijing’s infrastructure. Areas of focus include addressing complaints and appeals to city government rulings, parking and road use issues, and a means to check risks relating to water, gas and electricity use in people’s homes. 

It seems that these irksome issues will now be preserved immutably.

Rebase Bug Permanently Breaks Yam Governance

https://cointelegraph.com/news/rebase-bug-permanently-breaks-yam-governance

Unaudited contracts resulted in its death after all.

A bug in the hastily-developed contracts for Yam Finance resulted in the governance contracts being “permanently broken” and $750,000 worth of Curve tokens locked from use.

Andre Cronje, DeFi developer and founder of the yEarn protocol, told Cointelegraph that this resulted from a bugged rebase function.

Yam is supposed to be a stablecoin with a similar mechanism to Ampleforth, with the contracts creating or destroying supply based on the token’s price to maintain a $1 peg.

Cronje said that a bug in the rebase function meant that each call after the first one would “exponentially increase [supply] every time by 10^1e18.” 

This results in a massive influx of new tokens, far more than there should have been.

But there were three parts to the bug, according to Cronje. The issue was compounded by an additional mechanism used by Yam to balance the token’s price. The rebase function also sells “into the yCRV/YAM pool up to a max of 10% slippage,” he said, to ensure that the price reflects the updated supply. The proceeds from the sale and remaining YAM are sent into the project’s treasury contract.

A further aspect of the system is its governance, which requires a percentage of all tokens to be committed to a proposal for 12.5 hours. While there were earlier concerns about not enough tokens being delegated, triggering a support campaign to get holders to vote, this was ultimately futile.

Since the rebase created a huge amount of new YAM and sent it to the treasury contract, it now holds the vast majority of all tokens. “This means the available YAM on the market aren’t enough to reach quorum,” said Cronje.

The result is that both the governance and the treasury are now “bricked” and cannot be accessed. The rebase bug cannot be fixed without access to governance, so this should in theory spell the death of the project — or at least its existing smart contracts and tokens.

BIS highlights decentralization and distributed ledgers with trade finance digitization competition

https://www.theblockcrypto.com/linked/73924/bis-hkma-dlt-trade-finance?utm_source=rss&utm_medium=rss

The Bank of International Settlements’s Innovation Hub is partnering with the Hong Kong Monetary Authority on a new tech-focused competition centered around the digitization of trade finance.

The BIS said in an announcement post on August 3 that it will be accepting prospective submissions until the end of the month. Participating judges will make their initial selections over the course of September and early October, with some participants being invited to give presentations between October 12 and 15. Projects that advance beyond that stage will be invited to develop full prototypes in a sandbox environment in 2021. 

The goal of the competition, according to its organizers, is to “showcase the potential for new innovative technologies to resolve problems in trade finance.” Explainer materials cast a wide net as to the technologies that could be employed, but appear to make special mention of those that center around decentralization and distributed ledger/blockchains in particular.

“Trade finance is a complex topic with insufficiently harmonised digitisation across the value chain. By the same token, there is no single solution that can solve all the pain points. To leverage the diversity of innovation and digitisation under way on this topic globally, solution providers are free to suggest any technology approaches they consider suitable to address one or more of the problem statements, including decentralised approaches based on blockchain/ Distributed Ledger Technologies (DLT),” the organizers note.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Coin Center CEO builds anonymous forum for free speech

https://decrypt.co/37558/coin-center-ceo-builds-anonymous-forum-for-free-speech

If you’ve been around the internet long enough, you may have visited the anonymous message board 4chan at least once. From wacky business advice to strange travel plans and even bizarre anime, the messaging board has long served as the epicenter of popular internet culture and expression of unbridled thought.

But with great anonymity comes great responsibility; something 4chan remarkably fails at. The site is filled with racist and misogynistic posts. While there are a few rules that users are supposed to adhere by, they are rarely enforced.

However, Jerry Brito, the CEO of Washington DC-based crypto advocacy group Coin Center, unveiled his own anonymous forum Club.P yesterday, which he described as “an anonymous and ephemeral discussion board like 4chan, but membership-based.” The idea being that it could provide internet fanatics, who want to stay private, with a safe online sandbox.

The platform seeks a move away from online-policing, conformity, and political correctness on the internet.

Brito said his effort is a response to the ads, the tracking, the trolling, the hype, and other predatory behavior on popular media, adding that Club.P is a “dark forest” that users can retreat to and get away from the mainstream world.

How will Club.P work?

Unlike completely anonymous forums like 4chan, users will be assigned a unique alphanumeric ID (like how Bitcoin addresses look) and their posts are associated with that ID. This will help to ban users for any untoward reason, all without knowing their name, email, number, or other personal info.

Coronavirus broke privacy. Crypto can help fix it

Meanwhile, Club.P is not meant as a 4chan competitor, at least not yet. Brito noted the site remains a “fun hobby project” for now, and that he reserves the right to change any of the features mentioned above or even shut it down. It was also inspired by other social media platforms.

The grand Twitter VIP club

Twitter is one of the key tools for anyone keeping up with the fast pace of the crypto world. But Brito argued it has several key problems.

“Social media like Twitter is increasingly speech-policed, status-game-focused, and less creative. Anonymous discussion boards are rollicking and generative but have obvious downsides. My experiment: Register members and charge modest $2/mo to keep out trolls, help moderation,” explained Brito.

He pointed out how power users lead the popularity charts based on likes, retweets, and follower counts. These metrics, somehow, bring forth a sense of genuineness to mere opinion—one changes their views based on how their followers perceive things around them.

Crypto entrepreneur proposes decentralized plan to exit Twitter

“Your view on the world is limited by the set of people you have chosen to follow, as well as how a platform’s algorithm has chosen to present their messages. The result is a conversation that is often performative and susceptible to groupthink and tribalism,” Brito said.

But sites like 4chan, he stated, change these interactions. Their anonymous nature fosters discussion independent of follower counts, likes or retweets, while the site’s algorithm does not push certain expressions or narratives for individual users. One sees what everyone else does.

So far, the idea has found strong support across the privacy-centric crypto community.

“For years now we’ve been stuck in the part of the cycle where people think that the current dominating organizations and social patterns are permanent. Glad to see a crop of little experiments like this one sprouting up,” tweeted Zooko Wilcox, CEO of the Electric Coin Company, which builds privacy coin Zcash.

Balaji Srinivasan, who retweeted the announcement of Club.P, last year set up his own platform designed to encourage discussion across the crypto sector. But it was marred by controversy, largely over its combination of Bitcoin-focused branding and advocacy of the wider cryptocurrency industry. Since then, the project has gone quiet. Can Club.P find the right formula for success?

Commodities trading made easy thanks to Mettalex’s decentralized platform

https://medium.com/fetch-ai/commodities-trading-made-easy-thanks-to-mettalexs-decentralized-platform-517eaca538de?source=rss------defi-5

Commodity exchanges can be complex, but Mettalex will lower the barriers to entry by providing a simple low cost, low risk solution.

Dfinity’s Internet Computer Could Be a Truly Decentralized Alternative

https://cointelegraph.com/news/dfinitys-internet-computer-could-be-a-truly-decentralized-alternative

The blockchain and smart contracts you interact with may be decentralized, but the cloud services often used to access them aren’t. Dfinity’s Internet Computer is stepping up to set that straight.

Proponents of blockchain technology herald decentralization as a key facet of its revolutionary nature.

But the majority of users are still accessing decentralized exchanges, or DEXs, decentralized finance, or DeFi, and decentralized applications, or DApps, through web browsers served by centralized cloud services.

Cointelegraph spoke to Dfinity founder and Chief Scientist, Dominic Williams, about its Internet Computer platform, which allows direct interaction with code held on the blockchain, and completely eliminates third party intermediaries from the equation.

One (decentralized, autonomous) computer to rule them all

Williams got involved in blockchain full-time in 2013. He hooked into the buzz around Ethereum and interacted with its early developers.

“I saw the potential for an Internet Computer which could eventually host everything, from search engines to email and everything in between.”

After all, if all of the world’s internet services were on one single blockchain computer, the networking benefits alone would be enormous. The idea went through several scaled-down iterations, before an oversubscribed fundraiser in 2016 convinced Williams to revert to his original vision.

No easy task ahead

Such an undertaking would not be easy. The science is several giant leaps ahead of that required for a standard blockchain. The first stage was to build the necessary structure for the organisation, which was helped by substantial backing from Andreessen Horowitz.

“Hands down we have the strongest blockchain team in the world, bar none. We have a huge capacity for research and development. You won’t get the top cryptographers for free on GitHub.”

The next issue was scalability. The complexity of standard software is immense, and a large proportion of the $3.9 trillion spent globally on IT annually goes on securing systems. The Internet Computer needed a secure protocol which was tamper-proof and unstoppable. 

“Bitcoin rewards electricity burning, and proof of stake blockchains reward staking on a server, but this doesn’t work for scaling on the Internet Computer.”

Instead, the Internet Computer rewards data centres based on the number of computer nodes they run, providing a platform on which to scale. The result is a giant blockchain computer running on the public internet, which provides performance and capacity, but also enhanced security.

Hey, you, get off of my cloud

Code on the Internet Computer is held in canisters which essentially run forever, and can be served directly from the blockchain into a browser as a user experience. This means that the users can be sure that they are interacting directly with the underlying blockchain.

In contrast, smart contracts and DApps which are accessed through websites hosted on proprietary closed cloud services provide no such guarantee. Use of cloud services creates an external point of failure, whether through hacking or other vectors.

There is also the risk that a cloud provider could block the service based on the whims of its management or the authorities. Furthermore, a web services account can only be held by a legal entity, so cannot be autonomous by definition.

“Some of the key requirements of blockchain are to be uncensorable, unstoppable and tamper proof. This is the basis of the Internet Computer.”

Dfinity recently opened up the Internet Computer to third party developers with its “Tungsten” release. The final public release is scheduled for later in the year.

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.

Polkadot Officially in Mainnet as Governance Removes Admin Rights

https://cointelegraph.com/news/polkadot-officially-in-mainnet-as-governance-removes-admin-rights

Polkadot is now officially in mainnet mode as the last centralizing shackle has been thrown off by the network.

The Polkadot blockchain is now fully decentralized and permissionless after a decision passed by community governance removed the admin rights enjoyed by the Web3 Foundation.

Gavin Wood, the co-founder of Polkadot developer Parity Technologies, tweeted the unshackling as it happened. The governance proposal to remove special admin privileges was enacted around 8 AM UTC on July 21, which signaled the true launch of Polkadot.

Polkadot was live since late May, but it began its life as a permissioned “proof-of-authority” network. The Web3 Foundation both validated the network and had special access to intervene on the blockchain if a crisis were to occur.

These measures were enacted to lower the damage from potential catastrophic security breaches and bugs in the newly-launched network. Over time, validation was decentralized to the community via a proof-of-stake system, which currently employs over half of the DOT tokens in circulation through 197 validators.

A key component of Polkadot consensus is the community governance system, which allows token holders to express their view on key ecosystem parameters. One of these parameters is the denomination of DOT tokens, as Cointelegraph previously reported.

The governance system was used to remove admin access as well, in what Wood called a “nicely poetic” ending. However, the procedure was also required from a practical perspective to test the governance system one last time.

With the vote, Polkadot struck off the “CC1” tag for its mainnet network, standing for “Chain Candidate 1.” This signaled the beginning of the true mainnet for the smart contract platform.

Gearing up for launch

In anticipation of the final launch, Polkadot was busy onboarding companies and developers to its community. 

As Cointelegraph previously reported, the modularity of Polkadot allows it to attract both developers from other smart contract platforms like Ethereum and those from more traditional backgrounds. It uses WebAssembly for its virtual machine, which accepts “Web2” programming languages like Rust and C++ to code DApps. Frameworks to deploy decentralized apps in Solidity, Ethereum’s programming language, are also being developed.

Previously, Parity began integrating Chainlink oracles onto Kusama, Polkadot’s “canary network” used for experimenting with technology in a slightly lower stakes environment.

Cointelegraph also reported that Celer Network was working to bring layer-two scalability over to Polkadot.

As part of the general vision of interoperability, the Web3 Foundation is also funding a variety of projects focused on bridging other blockchains with Polkadot, notably Bitcoin (BTC).

Why Ethereum isn’t monopoly money—or for monopolies

https://decrypt.co/35852/why-ethereum-isnt-monopoly-money-or-for-monopolies

When Thibault Schrepel and Vitalik Buterin released their co-authored article, Blockchain Code as Antitrust, during the height of the first COVID-19 wave in May, they couldn’t present it at conferences.

So, to broaden the reach of their paper, the associate at Harvard’s Berkman Klein Center for Internet & Society and the co-founder of Ethereum instead presented their paper to the public on YouTube today.

The paper lays out something of a unified theory of decentralization as it relates to untangling real-world monopolies and coding smart contracts. The authors contend that states should use public, permissionless blockchains to complement antitrust law.

“Both antitrust and blockchain seek decentralization,” said Schrepel in the video. They’re both about making it possible for everyone in a market to gain economic power. Antitrust law does this by preventing companies from holding too much economic power. Blockchains do it by reducing intermediaries and enabling peer-to-peer transactions.

Schrepel, who in addition to his position at Berkman Klein is also an assistant professor at Utrecht University School of Law, explains in the paper that legal systems try to keep markets functioning properly, but that there are “situations where the rule of law does not apply.”

Sometimes that’s because two states can’t cooperate and sometimes that’s because a state itself lacks the strength to enforce its rules.

Buterin used his screen time to swat away what he sees as misconceptions about blockchain, the primary one being that every aspect of the technology must be decentralized. According to Buterin, centralization can occur when it’s valuable to have centralized actors, from wallet providers to layer-2 infrastructure companies. 

“At the same time, there is this pressure to really try hard to reduce the extent to which this happens…at the protocol layer, we really try hard to push for more decentralization at the application layer and so forth.”

Privacy, antitrust drums beat again as Facebook acquires Giphy

Screpel agreed that the goal in both blockchain and antitrust was to create pragmatic rather than dogmatic decentralization: “It’s about decentralization that creates efficiency.”

In their paper, Schrepel and Buterin encourage governments to establish sandboxes and legal safe harbors for technology so that blockchain can become more decentralized and assist in reaching the objectives of antitrust laws.