Explore the latest developments in Web3 through Dot.alert() reports.
Last updated
Explore the latest developments in Web3 through Dot.alert() reports.
Last updated
10th December 2024 | A report by Eliud K.
The Web3 job market brings a wealth of opportunities for go-getters. But as more people earn income through blockchain platforms, navigating taxation becomes a challenge. Without proper guidance or tools, these complexities can lead to costly mistakes.
Traditional companies have the obligation to send you tax summaries to report on the wages paid to you over a year. But this is generally not the case for Web3 projects and startups, as they don't provide anything similar. Whether you're earning in stablecoins or cryptocurrencies, it's often up to you to create receipts for your income by tracking on-chain transactions.
When it comes to taxes, choosing the right legal structure for your Web3 work is also very important. A sole trader or freelancer faces different tax liabilities compared to a registered company or a startup. In both cases, a major hurdle is that most accountants are not yet familiar with the Web3 industry, which means that workers likely have to create their own templates for handling tax reporting.
Even though there are different crypto tax software available today, those are still in early stages of development and often fall short of sifting through the complexities of multichain transactions. Most tools are not equipped to accurately track and record specific activities like staking income, liquidity provision rewards, or airdrops.
If you're involved in ecosystems like Ethereum or Solana where DeFi platforms can allocate some of their native tokens to their recruits, you will probably need to use separate portfolio management tools to capture all of your balances. And this could very well mean spending extra thousands of dollars each year just to minimise the risk of getting in trouble with tax authorities.
Tax laws surrounding cryptocurrencies are not only complicated, but they also vary widely depending on your country or state. In some jurisdictions that officially recognise cryptocurrencies, you can find helpful resources online every time there are big changes. In others, because cryptocurrencies are outright banned, your options for registering your business activities will be limited.
Working out your earnings might be straightforward when you are employed at a registered company in the Polkadot ecosystem, but the absence of taxation guidelines makes it difficult to know when and how you should report your earnings. You will still have to be extra cautious during tax time, since the legal consequences of your on-chain transactions are never clearly spelt out.
There is a significant risk in misreporting income from Web3 gigs such as bounties in your annual tax reports, which includes potential penalties. Misunderstanding your tax obligations can lead to hefty fines, even when the mistake is unintentional. Doing your taxes cannot be entirely automated from one year to the next, as you will miss on the chance to review and correct your previous reports.
Therefore, it's crucial to run your own system for recording your inbound and outbound transactions to get a clear idea of your monthly or quarterly earnings. Never discard your records after filling your tax reports, as these need to be kept for a long time. Tax authorities and government organisations may request audits or issue lawsuits years after contentious transactions occurred, especially when they are empowered to do so by new laws.
A Web3 career can seem like the holy grail for people who are self-driven, but managing taxes in the industry remains a headache. Improving your skills in bookkeeping as well as keeping up-to-date with tax regulations is necessary to maintain minimal compliance.
12th November 2024 | A report by Eliud K.
As decentralized technologies gain traction, traditional employment structures regarding pay are being disrupted. If you’re entering this industry as a job seeker, it’s crucial to understand potential risks related to Web3 salary and payment methods.
Payroll systems ensure that employees and contractors are paid regularly and on time. They are also useful for handling taxes and deductions. By contrast, decentralized projects tend to lack formal payroll structures. Payments are often handled through community-managed treasuries, smart contracts, and multisig accounts.
With blockchain technologies, international payments may be faster to complete, but these disbursements are rarely standardised by the issuers. This lack of predictability can cause delays and inconsistencies, especially because Web3 projects typically don’t have HR departments to oversee these transactions. As a result, the risk of errors in payment processing increases, directly impacting workers' financial stability.
In Web3, standards for salaries and wages are far from established. Salaries can vary widely depending on the project’s size, funding, and location. For example, developers working within the Cosmos ecosystem might receive different compensation than those working on Avalanche. There’s also a lack of transparency that can lead to favouritism and nepotism in some communities and DAOs. This undermines the principles of meritocracy and equal opportunities that decentralized projects want to champion.
Without clear salary expectations, workers often have to negotiate their pay check blindly. New contributors and participants from developing countries might accept much lower pay than what their counterparts would earn for the same role in traditional tech sectors. Over time, this makes it challenging to assess the fair market value of their contributions.
While traditional jobs offer fixed paydays and fiat amounts, Web3 projects pay their workforce in cryptocurrencies or tokens of volatile value. This presents significant challenges for workers, because their earnings can vary considerably even after payments are made. For instance, a payment that appears adequate in one moment may lose significant value within hours if the exchange rate of a stablecoin crashes. This can dramatically impact workers' financial stability.
Additionally, in ecosystems like Polkadot and Cardano that use decentralized on-chain treasuries, it can be hard to find support for top-up requests when funding falls short of expectations. Project teams could also be left in a vulnerable position if they rely exclusively on Web3 payments for their regular income. With no official authority to ensure that contributors and contractors receive their dues in various situations, long-term financial planning remains difficult for the Web3 workforce.
Multi-level marketing (MLM) involves a business model where individuals earn income not only through their sales, but also by recruiting new participants. However, this is very problematic because it blurs the lines between legitimate employment and unsustainable recruitment tactics.
Such schemes are used by some projects in the Web3 industry to give the illusion of growth: they prioritise recruitment metrics over direct compensation for work done. As such, it’s crucial for workers to evaluate the small print of their salary packages to avoid being trapped in exploitative cycles where the goal posts keep moving and work remains unpaid.
While the Web3 job market offers unique opportunities, candidates need to actively engage in discussions about pay and transparency in the early stage of their job search. New recruits must constantly advocate for themselves to ensure that they receive fair and consistent compensation.
8th October 2024 | A report by Eliud K.
Web3 has fundamentally changed the way companies and individuals interact and work by introducing the concept of decentralisation at many levels. This transformation in workplace conditions is also bringing in some risks for the workforce on a global scale.
A Human Resources (HR) department typically handles employee relations, conflict resolution, compensation structures, and workplace policies. However, many Web3 projects operate without a formal HR department, which can lead to issues around conflict resolution and staff grievances, because nobody is responsible for addressing these concerns. With no point of call for mediation or support, workers have to fend for themselves in case disputes arise.
Conventional jobs typically come with benefits such as health cover, life insurance, and retirement plans. Meanwhile, the majority of Web3 roles don’t offer any form of social security, not even in ecosystems such as Bitcoin or Ethereum. This means that most of the Web3 workforce has no access to essential safety nets during periods of illness or unemployment. Without these financial buffers, individuals are put in a vulnerable position which can lead to unexpected financial difficulties. They need to set aside a portion of their earnings independently for their future. This requires a lot of discipline and a good understanding of investment plans.
Workplace protections such as labour laws, union representation, and safety regulations are often absent in the Web3 industry. But these legally binding arrangements are critical to ensure fair treatment, job security, and safe working environments. Without them, workers can face problems like arbitrary termination, non-payment, or overwork. For example, freelancers and contractors who make up a significant portion of the Web3 workforce often have no recourse if their contracts are unfairly terminated or if payments are delayed.
While the Web3 industry can offer lucrative opportunities, career growth is not as straightforward as during periods of boom. People who are well-networked may find pathways to stability, often landing high-profile roles or advancing quickly. However, for many others, career progression is limited and job-hopping between projects may be necessary to gain professional recognition. Since many Web3 projects operate like startups, they need a lot of funding from their ecosystems before they can offer long-term positions to their team members or staff. With no room for advancement, employees may find themselves stuck in roles that do not allow them to showcase their skills or upskill.
It is crucial for interested candidates to weigh the risks and rewards of a career in Web3 before joining the workforce. The realities of this decentralised industry can be challenging to face, so taking proactive steps to safeguard your professional and financial well-being should remain your top priority.
10th September 2024 | A report by Eliud K.
The Web3 job market is primarily a remote-first environment, attracting talent from across the globe with the promise of decentralized workspaces and lucrative salaries. But the job market itself is riddled with potential pitfalls for both job seekers and employers.
The Web3 job market attracts not only genuine job seekers, but also scammers. These bad actors usually post fake job listings with exaggerated salaries and benefits with the aim of enticing job seekers and eventually collecting their personal information. To avoid such cases, you should verify recruiters’ history and companies’ track record on public forums and social media platforms. If a job application requires you to submit a lot of identity documents upfront, and especially your Bitcoin or Ethereum private keys, it's likely a scam.
Recruiters in the Web3 job market also face the risk of fake job applicants, meaning they may end up hiring incompetent people. Usually, these applicants flood job postings with fake resumes and portfolios to secure a position. Later, they disappear after causing disruptions and denying a blockchain project the chance to hire qualified professionals. In some extreme cases, fake applicants can send resumes as downloadable zip files that contain spyware designed to collect sensitive information about important projects.
One of the most significant risks in the Web3 job market is the lack of formal contracts. Most Web3 jobs, especially those in decentralized autonomous organizations (DAOs) or startup projects, operate without traditional employment contracts. This leaves both parties vulnerable to various risks: employers find it difficult to enforce accountability while employees risk not getting paid for the work done. Although the lack of formal contracts is primarily due to the dynamic nature of the Web3 job market, it's best to insist on having clear agreements in place.
Web3 is an inherently complex industry with rapidly changing technologies and regulations. For example, the Bitcoin ecosystem still grapples with regulatory challenges to this day, despite being the most established project in the decentralized space. Newer ecosystems such as Cosmos and Polkadot are constantly evolving, which can add confusion for those who contribute to their developments as a workforce. Job seekers may find themselves unprepared for the demands of their roles, while recruiters may struggle to find qualified candidates.
While the perks of Web3 jobs are appealing to professionals looking to start a career in the industry, there are still some notable downsides. Navigating these risks requires a cautious approach to opportunities that may seem too good to be true.
13th August 2024 | A report by Eliud K.
Web 3 is the next generation of the internet that is built on top of blockchain technology. Unlike Web2 which is controlled by centralised entities, Web3 promises to give users control of their own data, in an open and transparent model, without any intermediaries. As this revolutionary shift in the internet model takes root, there has been a boom in the Web3 job market. If you're looking to transition into a career in Web 3, here are some answers to the questions you might have been asking yourself.
Web3 attracts a diverse range of professionals, such as developers, designers, data analysts, content creators, marketers, and community managers. Currently, developers are in high demand because they are skilled in blockchain programming languages such as Solidity for the Ethereum ecosystem and Rust for the Polkadot network. As the blockchain industry matures, traditional roles such as legal advisors and compliance experts will be in demand to help investors and entrepreneurs navigate the regulatory landscape.
Most Web3 jobs are posted on dedicated Web3 job boards which include CryptoJobsList, Web3.career, and Remote3. Startups in the Web 3 space post open positions on their official websites, social media channels, and traditional platforms like LinkedIn and Indeed. To get more Web3 job openings, you may also consider networking with fellow Web3 enthusiasts on Reddit, Discord, and Telegram.
Web3 jobs are well known for their flexibility and remote working conditions. Essentially, you can work from anywhere in the world, which is a true reflection of the decentralised nature of blockchain technologies. Usually, web3 companies consist of diverse groups of talents spread across the world who prioritise creativity and getting things done rather than the number of hours worked. This setup promotes work-life balance and fosters a culture of learning and experimentation.
Web3 jobs offer lucrative rates that, in many cases, exceed those offered in traditional job markets. Salaries are usually paid in stablecoins or cryptocurrencies. Additionally, most Web3 companies and startups will offer their employees and contractors a stake in their project which can then be redeemed for other tokens or coins later on. Performance bonuses are also common, as they help align the interests of the team with the long-term goals of the project.
The Web3 job market is flooded with opportunities in various technical and non-technical fields. Whether you are a developer, designer, or marketer, there is likely a place for you in this exciting new world. As blockchain ecosystems like Bitcoin, Solana, and NEAR continue to grow, the demand for skilled professionals will only increase, making now an ideal time to explore a career in Web3.
10th June 2024 | A report by Amed K.
Host: Polytope Labs
Over the past few years, Liquid staking has become a very popular derivative tool for DeFi users looking to release liquidity for staked tokens and get extra yields across different platforms.
This report recaps on the discussion led by Seun Lanlege (founder of Polytope Labs) and Thomas (community lead at Bifrost) as they explore the fundamental role that bridges play in facilitating the operations of multi-chain liquid staking protocols.
Liquid staking is a mechanism that token holders can leverage to earn income from both non-custodial staking and DeFi farming. Bifrost is a DeFi protocol that allows users to mint Liquid Staking Tokens (LSTs) and earn yields on multiple dapps of the Polkadot ecosystem, depending on the level of risk that they are willing to take.
Before LSTs are minted, the Liquid Staking Protocol needs to have determined and chosen a set of validators and a nomination pool to maximise the "base yields". Once LSTs are issued, minters can use them on different platforms and for different purposes, such as:
governance operations on OpenGov
leverage staking
liquidity provision on DEXes
collateral for loans
collateral for minting stablecoins
collateral for providing security on decentralised bridges
To align with multi-chain developments observed in DeFi, Bifrost has developed two different protocols for liquid staking: Staking Liquidity Protocol (SLP) whose core features strictly belong to the Bifrost parachain, and Multi-chain staking (SLPx) which has cross-chain capabilities.
Bifrost uses third-party bridging infrastructure to support liquid staking for assets that are held on Ethereum and Filecoin. However, given that most of the current offerings for bridges rely on multisigs, the team recognises that more trustless and decentralised solutions are needed to prevent multi-chain liquidity from being compromised by hackers.
Aside empowering users to freely move assets between existing ecosystems, comprehensive solutions are needed to standardise interoperability in the blockchain industry. Polytope Labs is developing Hyperbridge as a secure bridging infrastructure with:
cryptographic verifications to authenticate cross-chain requests
a decentralized set of relayers for multi-chain transaction executions
a fee-earning model for services
integration of all major Ethereum L2s and BNB chains
Optimisations for Hyperbridge's cryptography are ongoing to align with the latest developments in ZKPs. These are also necessary to improve the cost of verifications on Ethereum and allow the bridge to integrate Ethereum network, just like Snowbridge.
Liquid staking is the new frontier of DeFi because it drives traditionally isolated protocols to push the boundaries of their native ecosystems and become multi-chain platforms. In this quest for censorship-resistant interoperability, decentralised bridges will serve as a major avenue for both portfolio managers and infrastructure builders to effectively grow and secure their revenue streams over time.
6th May 2024 | A report by Amed K.
Host: Boring Security
A recurring trend in blockchain consists of adding new functionalities to crypto products before finding ways to secure these, which exposes first-time users of the technology to vulnerabilities and serious threats.
This report summarises key observations shared by a discussion panel with FΞLD (contributor at Boring Security), NFT_Dreww (ambassador at Wallet Guard), and Toven (contributor at Server Forge) on the implementation of Account abstraction and its implications for security best practices.
Account abstraction is a generic blockchain concept and technology that underpins a new way for user to interact with EVM networks and ecosystems. Under this approach, users' assets can be stored in the form of Smart contracts (ERC-4337) rather than traditional Externally-owned accounts (EOAs).
This technology aims to solve long-standing UX problems such as the complexity of private key management and the lack of functionalities around transaction customisation. Account abstraction introduces new solutions for batching and/or automating transactions as part of subscription-based payments, including spending limits and a lot more features.
In principle, account abstraction allows developers to reduce the number of layers and micro-services between users and on-chain transactions. But, in practice, this also brings some security risks:
Signatures:
When using a traditional wallet, signing a transaction such as a coin swap on an AMM requires two different types of signatures. First, to approve the Smart contract interaction for the given token, and second, to confirm the amount of tokens to be swapped. With account abstraction, these steps are bundled into one with a single signature. Therefore, there is an increased risk of interaction with erroneous addresses, and there are also fewer steps for potential drainers to rob people of their assets.
Delegations:
When managing assets under the account abstraction paradigm, users have the option to delegate their entire wallet to multiple Smart contracts through an access policy. Unlike Polkadot SDK's multi-level account abstraction functionalities, this is a persistent type of access by which the other Smart contracts can act on behalf of users to sign anything prescribed within the access policy. However, in this context, authorising a malicious contract as a delegate would be equivalent to getting one's private keys stolen.
Account abstraction has a lot room for evolution, but some suggestions can already be made to improve its implementation.
An important recommendation for all major wallet builders is to make Smart contract wallets an opt-in instead of the default choice. Users could then be given some help to navigate upcoming changes through disclaimers, pop-ups, and articles discussing new features. Before opting for either the traditional or the Smart contract wallet, it will be important for newcomers to know what the basics of the technology are.
And the technology itself needs refining, as delegations on smart wallets do not currently support cross-chain operations. Additionally, signatures come with some nuances that affect the ordering and execution of individual transactions. This can make it difficult for users to submit multiple transactions asynchronously without some of them being automatically revoked.
Despite its rising popularity and adoption, Account abstraction is still a proof-of-concept technology that comes with noted drawbacks that users must be aware of. This is why up-to-date tutorials and learning resources will be needed to walk new users through its low-level technicalities and future use cases.
13th April 2024 | A report by Amed K.
Host: Osmosis
In the blockchain industry, established use cases such as DeFi and NFTs are becoming the playgrounds of choice for technologists, researchers, and economists. New projects have to be radically innovative to capture the attention of users and build their communities.
In this report, we recap the discussion led by Aaron Kong (Growth & strategy lead at Osmosis Labs) and Sunny Aggarwal (founder of Osmosis Labs) with Zerk and Cudo (co-founders of Mad Scientists), in partnership with JGnft (founder of Backbone Labs), during which they expanded on the collaborative efforts behind the launch of their first NFT collection.
Osmosis is a long standing DeFi hub that aims to simplify access to liquidity and markets in the Cosmos ecosystem. Meanwhile, Backbone Labs is a launchpad that is incubating Mad Scientists as a proof-of-concept NFT collection. These project teams have been using existing ecosystem dapps for the fair launch and the trade of $LAB tokens (Stream swap, OsmosisDEX, etc.) which will be burnt to mint NFTs at a later date. They are also tapping into popular community platforms for airdrops (OmniFlix) and NFT trading (Stargaze) for future growth prospects.
More than an NFT marketplace, Backbone Labs is building a protocol halfway between DeFi and NFT on which creators, builders, and founders can freely experiment. Examples of new propositions include allowing NFT communities to manage and share revenues through Liquid Staking Tokens (LST) protocols, but also creating NFT-centric dApps that can work seamlessly across the ecosystem.
The joint venture between Backbone Labs and Mad Scientists aims to bring in a new tinkering culture and more freedom to transact in the decentralised space. This also means making new social, financial, and technological experiments. At a basic level, their plan is to start sponsoring collaborative spaces to activate new contributors and give back to the community.
In this context, hackathons are seen as a funnel for creativity to translate into new applications that can then be integrated on Osmosis to push the NFTfi space forward. Rethinking schemes such as 0% staking commissions and token buybacks are also viable options for making the most of the underlying technologies to provide engaging and fun experiences.
Minting NFTs is envisioned as the first step towards building a DAO, because the initial spread of stake and ownership is still concentrated. This does not reflect the degree of decentralisation needed by DAOs to make an impact. And so, the teams will offer incentives such as royalties rights on secondary sales and timely airdrops to bring in more active participants.
With over a decade of developments, blockchain technologies have reached a stage where they can deliver standardised services and innovative solutions to all stakeholders. This requires a cultural shift in the way project teams capture and distribute value while growing their communities.
8th March 2024 | A report by Amed K.
Host: Polygon
The idea of tokenisation is as old as blockchain technology itself. It is a process that plays a crucial role in the advancement of the industry by enabling the representation of real-world assets or utilities as digital tokens on a blockchain.
In this report, we summarise insights from a discussion led by Colin Butler (Global Head of Institutional Capital at Polygon), alongside Franklin Templeton Digital Assets and various Polygon ecosystem contributors, which focused on how tokenisation is inspiring a range of innovative solutions to real-world problems.
In traditional finance (TradFi), contracts that govern assets are kept separately from the assets themselves. Consequently, most of the workforce in the TradFi industry is tasked with handling assets, negotiating contracts, and then resolving asset-related transactions. Because these operations are mainly conducted offline and involve multiple participants, accountability and transparency are often lacking across the board.
One of the unique properties of cryptographic tokens as an asset class is that they can embed the contract that governs an asset within the asset itself. Since all assets and contracts are created and tracked on a public ledger built on a Digital Ledger Technology, all their terms, and conditions can be cross-checked at any time. Furthermore, contracts can be programmed to execute specific transactions once certain requirements are fulfilled, which illustrates why tokenisation has the potential to save financial institutions billions in operational costs.
While digital assets can represent an opportunity for investment portfolio diversification, they are not easily tradable for many reasons. This is the case for royalties on digital art pieces traded on NFT marketplaces. Even though is possible for institutional investors to acquire royalties, difficulties remain in scaling the administration of royalty pools to, not just a handful, but millions of participants.
Tokenisation allows a wider range of asset classes to be issued both digitally and physically, including collectibles, financial contracts, and real estate deals. In this context, physical assets are kept in an accredited storage of facility and their related data is embedded digitally into a token to provide the purchaser with custom rights (intellectual, property, custody, trading, etc.). This process can also help address pervasive problems such as bureaucracy, forgery, and fraud.
One added advantage of tokenisation as a technology is that it can enable access to international capital for businesses and enterprises from around the world. This would result in increased access to global markets and greater circulation of funds, which can help optimise hedging strategies for institutional players.
For everyday users and consumers, tokenisation can democratise trading, peer-to-peer borrowing, and liquidity pooling, with revenue generated through market-making fees and interest rates. It becomes possible for a project to create real world value and then issue custom-made financial instruments to fund its growth, with minimal intervention from external parties.
The necessity to embrace tokenisation arises from the imperative to build portfolios that offer much more than equities or bonds to traditional investors. Unlike utility tokens that are exclusively designed for blockchain operations, tokenised securities could work to bridge the divide between new digital solutions and existing financial practices to redefine markets on a global scale.
9th February 2024 | A report by Amed K.
Host: Tanssi Network
Decentralisation is the principle that underpins the evolution and resilience of blockchain networks. By definition, it seeks to overcome the shortcomings of centralised entities and pave the way for a more equitable, transparent, and dynamic approach to innovation.
This report explores the perspectives shared by Bruno Maia (contributor at Cartesi), Hang Yin (co-founder of Phala), Kasper Jørgensen (co-founder of Polimec), and Francisco Agosti (co-founder of Tanssi) on decentralisation as a mean to achieve trustlessness.
Blockchain technologies revolve around building decentralised systems, but the blockchain industry itself stands to benefit from decentralisation, with positive outcomes anticipated in the following areas:
Privacy: Decentralised systems emphasise data preservation and privacy at different levels, including KYC. Personal data is primarily controlled by users themselves through various encryption mechanisms.
Global access: Individuals from diverse socio-economic backgrounds can leverage financial services without experiencing the social and monetary restrictions brought about by centralised entities.
Governance: Digital communities are empowered through on-chain governance with self-executing functionalities. Members have a direct influence on protocols and their trajectories.
Community-based economies: Decentralised organisations define the impact that they want to have within networks and become tools for value creation and value sharing among communities.
The concept of decentralisation still suffers from misconceptions because projects that are hyped for being built on blockchains aren't necessarily decentralised. But there are qualities to look out for when evaluating blockchain projects that claim to be fully decentralised:
The barriers to entry for participation in terms of financials and computational capacities are minimal. This is because the easier it is for a diversity of node operators to participate in consensus, the more decentralised the network will be.
Single points of failure whereby an issue in parts of the network lead to the whole network halting or crashing are rare. Networks with an architecture that provides contingencies for self-preservation are better primed for decentralisation.
The presence of on-chain governance with enforceable and irrefutable outcomes ensures that agents or select groups can't reverse decisions independently or through secret backdoors. This also means that there is little room for unilateral decision-making.
An equitable token distribution among VC investors, core stakeholders, ecosystem builders, and community members implies that control does not initially fall into the hands of a select few during on-chain voting.
The path to decentralisation is chaotic, filled with disagreements, before a common goal is reached between contributors and participants. Real decentralisation usually emerges as the result of an evolution: from semi-decentralised systems to fully decentralised networks. And this is only possible to achieve for projects with viable road maps that meet their targets over time.
22nd January 2024 | A report by Amed K.
Host: Validatrium
Cross-chain interoperability has become a major driving force in the blockchain industry, with a focus on harnessing the best that all networks have to offer. By pivoting to seamless communication and collaboration, blockchain ecosystems attempt to improve the security, liquidity, and accessibility of their user-facing products.
In this report, we summarise the discussion led by Sergey Gorbunov (co-founder of Axelar Network) on the key role that the protocol wants to play in enhancing the standards for cross-chain interoperability.
Axelar network is a decentralised Proof-of-Stake protocol with an open and secure blockchain-based economy. As a layer 1, it provides easy onboarding for validators and a deployment-ready environment for dapp builders.
Axelar distinguishes itself with a Programmable Interoperability stack which makes it possible to host application logic on the network and automate smart contract processes such as initiating connections to other blockchain networks.
This universal tech stack allows developers to overcome the barriers imposed by each individual blockchain's infrastructure. It creates a simple and frictionless process for growing existing and future ecosystems and empowers builders to write their codebase once and run it anywhere.
General Message Passing (GMP) is the main feature of Axelar's interoperability stack. It relies on the Axelar Gateway contract to relay cross-chain transactions. It also comes with a set of tools for testing and running smart contracts calls that will later be finalised on the destination chain. One added advantage of GMP is that it simplifies and standardises dapp development, which can help speed the onboarding of new contributors to blockchain ecosystems.
Developers who leverage GMP can grow a userbase for their dapps across multiple chains at minimal cost, because the performance of cross-chain dapps is comparable to native dapps'. Users are no longer required to manually bridge their tokens and sign multiple individual transactions because these actions are automated.
As a core player of interoperability, Axelar network is regularly adding new chains and their related technologies to its ecosystem. This brings the need for best practices in terms of security at many levels.
Apart from decentralising the base layer with a diversity of validators, network engineers and contributors monitor that protocols and products have undergone rigorous tests and audits. Ongoing bug bounties are offered to identify and fix outstanding and emerging security issues on the network.
Additionally, there are limits set on the quantity of individual assets that can be transferred within a certain time frame through Gateway contracts. These caps are designed to anticipate and prevent congestion on the network, which is relevant for smart contracts that route popular and highly-liquid assets such as stablecoins.
The future of blockchain technology as envisioned by Axelar Network is one where the conversation will no longer be about individual chains or ecosystems. Instead, the focus will be shifted to dapps and the value that they provide to all industry participants. For this to happen, it is necessary to build a chain-agnostic environment where cross-chain interoperability is integrated as a backend feature.
25th December 2023 | A report by Amed K.
Host: DIA Community Hub
As the first decentralized digital currency, Bitcoin is the main point of reference for blockchain projects and their associated cryptocurrencies. It has been exemplary as a store of value, a unit of payment, a censorship resistant protocol; but is now lagging behind in other departments.
This report looks into a conversation with Alexei Zamyatin (co-founder of Build on Bitcoin), as he presents the role of the platform in bringing new use cases for Bitcoin that will help secure a sustainable future for the crypto industry.
Build on Bitcoin (also called BOB) is a set of tooling that encourage building on the Bitcoin network and aim to enable $BTC to support real-world use cases.
BOB has developed the first economically trustless $BTC bridge as a solution to securely transact in and out of Layer-2 chains (also called L2s). This novel technology replaces the old centralised model of multisig and single bridge operators with a decentralised and permisionless approach.
Under this design, anybody can become a bridge operator by depositing the required collaterals on their target chains, which guarantees that users' funds can be reimbursed in case of thefts or attacks. As part of this system, a cross-chain Bitcoin-like client also monitors bridge operators' transactions to detect unusual activities.
Ethereum is built specifically for Smart Contracts and relies on L2s to improve its computational capabilities. By contrast, Bitcoin has no smart contracts and needs an L2 ecosystem to extend its functionalities natively; without interfering with the base layer of security, storage, and settlement.
Bitcoin currently has over 300 million users, and over 90% of the people onboarding the crypto industry start their journey with BTC. Deploying L2s specialised in DeFi, NFTs, and other user-focused products would benefit the Bitcoin network by bringing in more activity, diversification, and innovation. In the absence of these, it is possible that many users end up leaving the network and eroding the value proposition of the industry.
BOB tooling aims to enhance Bitcoin's utility in real-world scenarios and optimise its developments through various strategies:
Enhance faster Bitcoin payment validation.
Create user-friendly interfaces for Bitcoin.
Introduce intuitive Smart Contracts for Bitcoin DeFi.
Facilitate interoperability across diverse Bitcoin applications.
Ultimately, BOB's vision is that of Ethereum's versatility complementing Bitcoin's robust security. This serves as a catalyst for existing and future project teams to start developing sophisticated decentralized applications tapping into Bitcoin’s network effects.
Build on Bitcoin is laying the foundations for protocols that will reduce the trade-offs and limitations of Bitcoin, so that people can have more practical reasons to access, hold, and use $BTC. With stronger real-world use cases and a wider user base for the network, Bitcoin can turn into a positive sum game for its stakeholders on longer time frames, without relying exclusively on speculative bubbles to attract new participants.
27th November 2023 | A report by Amed K.
Host: Thank ARB
Decentralized Autonomous Organisations (DAOs) are evolving to become the preferred model for Web3 governance because they facilitate consensus and level the playing field for individuals who want to get involved in the decision-making.
Today we report on an enlightening conversation between major contributors to the ArbitrumDAO; namely Carl Cervone, Devansh Mehta, Mahesh Murthy, DisruptionJoe, Razvan-ZER8; and also recap on the various tooling they propose for shaping the Arbitrum ecosystem.
Plurality Labs is an entity that is solely focused on refining the Arbitrum Grants Program, as they lay down the principles and key metrics that sustain the DAO structure. The North Star includes the following objectives:
Scale the amount of funds the DAO can safely allocate. This will maximise the value handed out to bring more valuable outcomes for the ecosystem.
Provide a real-world correlation or alignment for the DAO. These logical narratives will unlock complementarity between the tasks completed and allow all actors to benefit from economies of scale.
Engage in on-chain experiments with governance frameworks. Evaluations of grantors and grantees' success will support upward mobility by bringing in more participants and decreasing voter apathy.
ArbitrumDAO operates with a novel RFP (Request For Proposals) process that is similar to governments' tenders for a bid, with individuals or projects applying in their areas of interests or needs.
The Treasury and Sustainability Working Group is responsible for maintaining the RFP lifecycle, encouraging community participation while preventing excessive lobbying. The group also drafts frameworks for RWA (Real World Assets) providers to procure and deploy loans, earn yields, and then repay the loans within a pre-agreed time frame.
The GAP (Grantee Accountability Protocol) is an on-chain protocol designed to ensure that all grantees are held accountable and work to deliver on their stated objectives. It seeks to provide answers to basic queries such as: How we know if the grantees are executing on their funded projects? What is the status of the funded projects? How are funded projects performing with respect to their milestones?
The Karma GAP protocol primarily wants to have a net positive effect, making that sure a grantee executes its project successfully to build a reputation. It also assists with impact measurement of grants in the ecosystem, which involves community sentiments on executed projects, identifying positive signalling for future and additional funding, and gauging past successes. All this data is streamlined to help the DAO make better decisions regarding the allocation of its capital.
The ArbitrumDAO is made of $ARB token holders and the 12-seat Arbitrum Security Council, with DAO proposals (including grants) being voted upon by members using $ARB. The weight of a member's vote is directly proportional to the amount of $ARBs s/he holds, a parameter that contrasts with the conviction voting implemented in Polkadot OpenGov.
The ArbitrumDAO tends to approve grants for projects that are working towards well thought-out objectives, however, application timelines vary, since projects working on ecosystem Dapps, infrastructure, and tooling are currently being considered for grants. A noteworthy point is that most of the funding is milestone-gated, with payments released upon completion of specific deliverables.
The ArbitrumDAO looks to make a positive impact in its nascent ecosystem by building upon a set of established tooling and experimenting with existing governance models for coordination and value creation. Regardless, the growth of the ArbitrumDAO will depend on its ability to monitor grants processes, mobilise high-value participants, and provide fast responses to community feedback.
20th October 2023 | A report by Onyinye M.
Host: Bankless Africa
Co-host: Canza Finance
African economies have been on a consistent path of growth and development in recent years, with an increasing number of businesses engaging in international trade. However, one significant issue faced by African businesses is navigating Foreign Exchange, because existing solutions do not address the unique challenges of poorly performing currencies and the specific risks associated with these markets.
In this report, we summarise the observations made during an AMA held by @Banklessafrica and @Canzafinance, breaking down the complex landscape surrounding African currencies in contrast to new fintech developments available for African businesses looking to go global.
African vendors routinely have to grapple with critical problems linked to missing financial infrastructure, inadequate national policies, and insufficient opportunities for growth.
Most consumer goods are imported via international markets and this type of trade requires access to foreign currencies. For many businesses, restrictive regulations at the national level create a lot of friction and obstacles.
Banks often use official exchange rates which are not always advantageous to African traders. They end up being less competitive than those available in the parallel market. This is a problem for African businesses using traditional banking because they might indirectly cut themselves from operating on the global stage.
Within the broad category of Emerging Markets, African currencies are most vulnerable to devaluations compared to their Asian counterparts. This poses a risk to businesses engaged in international trade, as it can erode their profit margins and make it challenging to plan for future developments.
African businesses have to contend with fluctuating exchange rates that interfere with forecasting costs, revenues, and profits. This volatility can stem from political instability, economic uncertainty, and external factors, leading to substantial risks for internationally-trading companies.
In the context of globalisation that pushes emerging markets to align with developed economies, African countries have always faced inflationary pressures. As a result, national businesses need to find hedges against inflation to protect their purchasing power and maintain their profitability.
To address the above challenges, a number of fintech products are being developed to offer innovations tailored to the African market. These solutions aim to level the playing field for African businesses and give certain advantages to African traders.
FX and Currency-focused products:
Fintech solutions can help streamline access to Foreign Exchange, providing businesses with a convenient and cheap way to obtain the currencies they need for their international transactions. Given the recurring issues of inflation and devaluation, it is also possible to develop custom pegging solutions to maintain business balance sheets in a neutral position during times of instability.
Blockchain-based solutions:
For many developers and technologists, deploying the equivalent of African currencies on top of blockchain protocols has numerous advantages. It can enhance transparency, reduce the risk of fraud, and provide a more secure way to transact with foreign currencies. However, the holy grail for African businesses and DeFi traders alike remains the provision of resilient stablecoins within fintech products. But beyond these individual experiments, there are established Money market players in Africa that are looking to leverage DLT tools to enhance their strategies for risk management and investment portfolio diversification.
African businesses are poised for growth on the international stage, but they face a lot of hurdles inherited from redundant banking products and poor FX onramp infrastructure. By embracing a range of new digital solutions built locally by an emerging workforce, African businesses can grow their capabilities, attract international funding, and begin to position themselves in the global marketplace.
15th September 2023 | A report by Onyinye M.
Host: DAOChemist
Co-hosts: LandX and Kmens
Censorship resistance is an important aspect of DeFi, as it guarantees the freedom to transact for users and the integrity of transactions for blockchain networks. To expand on this important topic, the "Farmers market" livecast staged an interactive 2-hour session with prominent guests Angle Protocol, Defi Africa, PWN, Polytope Labs, Erable and Adriano Feria. The discussion focused on censorship resistance within the Decentralized Finance (DeFi) industry and its impact on the adoption of cryptocurrencies.
Today, we report on the observations made throughout this conversation, from the significance of censorship resistance to its associated challenges, explaining the role that both individuals and governments play in practice.
In the context of blockchain technologies, censorship resistance relies on three major principles: Freedom to transact, Freedom from confiscation, and Immutability of transactions.
1. Freedom to Transact:
The ultimate goal of censorship resistance is to shield users from undue control and give them the ability to access, transmit, and execute transactions without interference from external entities.
This positions censorship resistance as a safeguard against oppression, by ensuring that users' assets cannot be obtained by third-party entities at will.
Censorship resistance exists whenever there is evidence that no single entity can reverse a transaction, blacklist a wallet or address, or manipulate transactions for personal gains.
In practice, censorship manifests itself under two primary forms:
On-chain censorship which takes place at the networking layer and involves blockchain participants and stakeholders.
Off-Chain / Social censorship which pertains to human interactions between the crypto ecosystem and the broader society and can be translated into governments/centralized authorities' interference.
Resisting on-chain censorship can be achieved through node decentralisation, Smart contracts security, and active engagement within governance. Diversifying interoperability protocols and implementing privacy-preserving solutions can also contribute to more censorship resistant networks.
At the social layer, censorship resistance begins in the minds of the individuals: ‘The people have to be stronger than the entities’. It is important to establish grassroots educational initiatives for every protocol that aim to empower users with the knowledge and the awareness that they need to assert their rights.
Large corporations often lack plans to mitigate the risk of censorship, and this makes them vulnerable to government pressure. At the same time, censorship resistance is meant to be a built-in system for pushing back against encroachment by strong entities, but if users rely heavily on these monopolies, then resisting becomes difficult.
There are also constraints to censorship resistance for both Proof-of-Stake and Proof-of-Work networks. Depending on their geographical locations, some startups can experience heavy crypto bans that freeze their projects and users can be flagged by banks for their fiat on-ramp transactions. For mining consortia, it is not always possible to run and maintain operations in certain cities. Building mining facilities and transporting mining rigs require access to natural resources and infrastructure that are controlled by local authorities.
Censorship resistance is critical for the crypto space, because it represents both a concept and a tool needed to preserve freedom and prevent stifling. And so, DeFi builders and users looking to make the most of new digital finance opportunities should pro-actively care about censorship resistance, not just show concern when one is directly affected.
17th August 2023 | A report by Onyinye M.
Host: Optimism Foundation
Co-hosts: Friends With Benefits and binji
Real-life events in the crypto industry offer a holistic view of blockchain, extending beyond DeFi or NFTs and enabling meaningful connections between individuals across various sectors. Optimism recently hosted an enlightening session during which they dived into the successful FEST event and discussed on-chain culture, L2 NFTs, and the fusion of on-chain with real life.
This report highlights the role of Optimism in supporting Public Goods and the pivotal insights noted on creating an all-inclusive, educational, and fun event.
Optimism's involvement with FEST stems from its commitment to building an economy for people and recognising projects making a positive impact to the Optimism collective. The RetroPGF rewards Public Goods projects of all kinds as well as individuals such as artists and educators through retroactive funding. It acts as an enabler for contributors' ideas to come to life and create value.
The importance of on-chain community-building cannot be overstated. In the crypto industry, having solid online communities enhances real-life events, and prior familiarisation between community members helps foster deeper connections.
While developers and tech developments facilitate onboarding, the true growth of a project stems from community engagement. And since on-chain actions can influence real-life engagement, having a strong digital presence is critical.
Creating an all-inclusive atmosphere means that everyone in the community should feel relevant, from the crypto-curious novices to the seasoned experts. Behind NFT pfps, there are real people who want to be seen, heard, and who want to connect. IRL events would also benefit from being structured in a way that facilitates involvement in practice.
Generally, events that cater to a wide range of audiences rather than targeting specific niches will add value to the collective. But it is also recommended to strike a balance between networking, education, and relaxation, which makes events both enriching and enjoyable. Blockchain-related initiatives don't have to be geared towards on-chain value creation: some could also aim for connection and fun - just like FEST!
Researching the significance of a location before hosting an event can help find unique ways to merge the distinct culture of crypto with the local culture. This is also a factor for success because maintaining authenticity adds resonance.
Bigger doesn't always mean better. Organising IRL events should focus on quality and not quantity. In fact, having a small number of participants can bring a sense of togetherness to an event and promote connecting on a personal level for attendees.
Conducting successful IRL events depends on the vitality of the on-chain community. There is no doubt that high-profile speakers and projects can contribute greatly to the success of an event and that intentional collaboration remains an important piece of community-building. However, adopting an all-inclusive approach and maintaining authenticity stand as guiding principles for building thriving crypto-based communities in the real world.
14th July 2023 | A report by Onyinye M.
Host: Gitcoin Grants Stack
Co-hosts: Hypercerts and Gitcoinreviews
In the realm of cryptocurrency funding, the importance of measuring impact cannot be overstated. Impact measurement provides valuable data to substantiate the relevance and effectiveness of crypto funding initiatives, such as the Gitcoin Grants Programme. This data is crucial in demonstrating why web3 funding surpasses traditional methods. Various methodologies can be employed to gauge impact, ranging from the conventional approach of evaluating project proposals to a retrospective analysis of actual performance.
This article delves into the significance of impact measurement and highlights the potential of decentralized standards, while addressing questions raised during an interactive space hosted by Gitcoin.
Impact measurement serves as a means to validate the value of crypto funding. By assessing the outcomes and accomplishments of funded projects, impact measurement offers tangible evidence of the positive change enabled by crypto grants. This empirical data aids in substantiating the superiority of web3 funding over traditional models, encouraging broader adoption and support.
The traditional approach involves evaluating projects based on their stated objectives and proposed scope of work. By comparing the actual outcomes with the initial expectations, impact can be assessed. However, this method may fall short in the crypto space, as it is a fast-evolving space where projects may not always strictly adhere to their original plans and market conditions can cause rapid changes.
In the crypto realm, a retrospective approach is more suitable for impact measurement. This approach entails reviewing a project's past performance and evaluating its actual achievements. Rather than relying solely on promises, this method analyses what has been accomplished, enabling a more accurate assessment of impact.
Beyond securing funding, funded projects can also monetize their impact. Instead of solely relying on continuous funding, projects can leverage their demonstrated impact to attract more investments. Investors are increasingly interested in supporting projects with tangible and visible impact, allowing projects to sustain themselves and reduce their reliance on continuous grants.
One of the challenges with quadratic funding is the potential for it to become a popularity contest. The discussion highlighted the importance of decentralized measurement standards. Implementing a decentralized system for measuring impact would enhance transparency, trust, and credibility, ensuring fair evaluation of projects and a fair chance for projects to attract funding. By establishing a neutral and widely accepted standard, the decentralized approach would foster a more accurate assessment of projects' impact.
During the discussion, several questions were posed to the host regarding Gitcoin's funding system and impact measurement. Here are some responses provided:
1. Are there any stats on grantees reapplying for Gitcoin grants over time?
Yes, Gitcoin does have statistics on grantees reapplying for grants. However, Gitcoin is actively working on making these external resources available to the public to enhance transparency. The host of the discussion committed to following up on this question to provide more detailed information.
2. How can we keep track of the history of projects, considering some use a unique address for each round?
While some projects may use unique addresses for each funding round, it is possible to monitor their activities by tracking their social media presence, websites, and other online platforms. These channels can provide insights into the project's progress and activities, even if they use different addresses for identification purposes.
3. Does participating in successive rounds help projects drive engagements beyond one-time donations?
Yes, participating in successive funding rounds can indeed help projects drive ongoing engagement beyond one-time donations. However, projects are encouraged to explore more sustainable avenues beyond repetitive participation
Impact measurement is important for both funding platforms like Gitcoin and funded projects. It helps platforms examine the value they are providing while assisting funded projects in realising and monetising their impact. Decentralised measurement standards on the other hand further contributes to the credibility and sustainability of crypto-funded projects.
