DeFi: NounsDAO fork splits the community; Web3 orchestrator Bastion raises $25MM
The broader NFT market has continued to slump and Bastion is competing against MetaMask, Coinbase and Fireblocks
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Gm Fintech Futurists —
Today we highlight the following:
DAOs: Nouns Fork: Disgruntled NFT Holders Exit With $27 Million From Treasury (link here)
DEFI: Former a16z Execs Raise $25MM For Bastion Web3 Startup (link here)
CURATED UPDATES
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DAOs: Nouns Fork — Disgruntled NFT Holders Exit With $27 Million From Treasury (link here)
Big changes are happening at NounsDAO, as a fork splits the community and treasury in two. NounsDAO is a decentralized autonomous organisation (DAO) governed by the holders of Noun NFTs. Nouns, which are pixel artwork NFTs not unlike Crypto Punks, are sold in a daily auction with all proceeds going to the DAO treasury. Every tenth Noun created is not sold, but reserved for the project’s founding team as compensation.
The treasury is governed by “Nouners” — Noun holders — who have a proportional voting power over the treasury dependent on the number f Nouns they hold. The Nouns NFT collective has branched out to create projects built around the Noun artwork.
Late last Friday, over half of the Noun holders (472 out of 846) opted to leave the DAO via governance, collectively withdrawing more than $27MM in ETH from the DAO’s $49MM treasury. The result will be two separate DAOs with their own respective governance processes. Those leaving the DAO will return their original NFT and receive a replacement NFT with identical artwork to be used for voting in the new DAO. The new NFT will also feature the ability to “ragequit” and withdraw the corresponding share of the treasury in return for burning their Noun NFT. Those choosing not to go with the fork will continue as normal, while the returned NFTs will go to the treasury and may be redistributed to incentivise growth of the Nouns brand.
Note that the fork was only possible due to a change to the protocol this year, which enabled NFT holders to propose a fork and reclaim a share of the treasury if over 20% of holders backed the decision.
Since their first auction in August 2021, Nouns has been one of the most financially successful NFT projects, particularly due to the innovative financial mechanics behind the project and, more recently, its marketing. Already, Nouns have inspired 3D-printed clothing and produced a movie called Rise of Blus. Other efforts have included a parade float at the 2023 Rose Parade, a comic book series, esports team, and a cameo in Bud Light’s Super Bowl commercial.
The broader NFT market has continued to slump — secondary market Noun prices are down from highs of $267k to $58k today. NFT sales are at a two-year low while still trading about $100MM a week in volume on Ethereum.
Co-founder Seneca summed it up like this: “One of the lessons from the fork is that in the game of Nouns, if you don’t use the treasury, it will inevitably get captured.” This sounds to us like the doctrine of subsidiarity may be at play — the responsibility that you refuse to take on behalf of yourself will be taken up by tyrants and used against you.
Were those who initiated the fork perhaps acting against the “tyranny” of trapped capital in the Noun DAO’s treasury? Or were they activist raiders seizing financial opportunity?
The fork also exemplifies the ethos of Web3 and the ability to equitably part ways through DAO governance, splitting the treasury proportionally amongst the remainers and the leavers. While a signal against the direction of NounsDAO, we see this as a small victory for DAO governance working the way it should.
👑 Related Coverage 👑
DEFI: Former a16z Execs Raise $25MM For Bastion Web3 Startup (link here)
Bastion, a Web3 orchestration startup founded by former a16z executives Riyaz Faizullabhoy and Nassim Eddequiouaq, emerged from stealth mode following a $25MM seed funding round. Leading the round was a16z crypto, with participation from Nomura's Laser Digital Ventures, Alchemy Ventures, Aptos Foundation, Isos7 Venture Fund, Not Boring Capital, Robot Ventures, Sancus Ventures, and the NFT platform Autograph.
Bastion functions as a Web3 orchestrator, integrating blockchain infrastructure tailored for institutions. The platform offers (1) a blockchain wallet API with custodial features, enabling subscriptions, loyalty programs, and gaming experiences; (2) a "Smart Transaction Routing" system that selects when to leverage a blockchain, optimizing interactions for efficiency and cost-effectiveness; and (3) user analytics that capture data from both on-chain and off-chain activities. We found the following quote instructive:
Bastion maintains the wallets private keys, allowing for on-chain transfers while also making password recovery simple for end-users. Rather than entering a 12 or 24-word seed phrase, users seamlessly log in to their accounts using their web2 credentials without ever realizing Bastion and blockchain technology are working on the back end.
Bastion's platform is somewhat analogous to MetaMask Institutional, which provides digital asset custody integrations and monitoring/reporting tools within a portfolio dashboard. Other notable competitors include Fireblocks, a custody solution provider that has partnered with BNY Mellon, HSBC, and Nubank. Coinbase Institutional, which BlackRock and a16z use, also offers trading, custody, financing, platform development, and liquidity provision.
The chunky $25MM investment comes at a time of substantial digital asset outflows, which reached $54MM last week, the fifth consecutive week of outflows, with 77% originating from the US. Moreover, crypto venture funding has declined this year, with only $283MM raised in August; a stark contrast to the monthly average of $1.8B+ in funding throughout 2022.
Despite these trends, Bastion's focus on serving institutional clients is unsurprising when considering Coinbase's financials. The exchange's quarterly report reveals that a relatively small group of institutional market makers significantly contributes to the trading volume on Coinbase's platform. During the six months ending June 30, 2023, institutions accounted for $202B in trading volume compared to $35B from consumers. Nevertheless, the net revenue generated from consumer transactions in the same period surpassed that of institutions by 17x. This suggests that Coinbase has potentially conquered the retail market, leaving the institutional space as the final battleground.
As for Bastion specifically, the company benefits from not needing to spend $14MM on a Superbowl ad to attract customers, despite the lower transaction revenue from institutions. Additionally, as institutions like Standard Chartered, Citi, Deutsche Bank, and BNY Mellon roll out their staking or tokenization services, these could be Bastion's subsequent offerings. Still, given the negative experiences with custodial services, we are not sure the shortcut is worth it.
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Curated Updates
Here are the rest of the updates hitting our radar.
Financial Institutions and Adoption
⭐ Crypto VC Blockchain Capital Scores $580MM For Two New Funds - The Block
⭐ Sino Global, Coinbase And Libra Alums Start $60MM Web3 Fund - CoinDesk
Nomura's Laser Digital Starts 'Bitcoin Adoption Fund' For Institutional Investors - CoinDesk
Citigroup Unveils Token Services For Institutional Clients - CoinDesk
Crypto Arm of Standard Chartered Is Launching A Staking Service - Decrypt
Deutsche Bank To Delve Into Crypto Custody, Tokenization With Taurus - CoinDesk
U.S. SEC’s Crypto Enforcement Chief Warns More Charges Coming To Exchanges, DeFi - CoinDesk
Sony Unveils Plans To Develop Blockchain - The Defiant
DeFi and Digital Assets
Native USDC Rolls Out Across Polkadot Ecosystem - The Defiant
LayerZero Taps Google Cloud Oracle For Message Verification - The Defiant
German Finance Heavyweights Develop Fully-Insured Crypto Staking Offering, Plan 2024 Release - CoinDesk
Lido’s Staked Ether Tokens Can Soon Be Used on Cosmos, IBC Blockchains - CoinDesk
BitGo, Swan To Form Bitcoin-Only Trust Company - CoinDesk
Blockchain Protocols
⭐ A Year After Ethereum Merge, Net Supply Down Nearly 300K Ether - CoinDesk
Polygon Targets Q4 For MATIC Token Migration - The Defiant
NFTs, DAOs and the Metaverse
⭐ Magic Eden Introduces ‘Compressed NFTs’ to Slash Minting Fees - nft now
Bitcoin Metaverse Token Coming From Animoca Game Studio - Decrypt
Mila Kunis' Stoner Cats Banned From NFT Marketplaces After SEC Charges - Decrypt
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