DEV Community: Jamie V.

Social Tokens - Who, what, why and How?

Jamie V. — Mon, 01 Aug 2022 21:10:14 +0000

The transformative impacts of blockchain technology has disrupted numerous industries and is poised to take over large portions of the transaction economy. The most evident of these in recent times has been digital media.

Content creators such as artists, writers, musicians and social media influencers are the backbone and key drivers of revenue on all digital platforms. Without creators there would be no platform.

The connection between consumer and creator has always been one of limited potential. Previously all interactions had to be processed by an intermediary more commonly known as a third-party or middle-man. Intermediaries take a percentage of revenue for providing the creator with a platform to distribute their content.

The problems with this dependency on an intermediary are that platforms often have high take-rates(fees) cutting into the creator's earning potential as well as censorship for whatever reasons. Platforms limit the level of interaction creators can have with their supporters monetarily and socially.

This is where Social Tokens come in. Social Tokens leverage distributed ledger technology aka blockchain in order to tokenize and subsequently monetize creator output. The key to this being disintermediation. The removal of a middle-man and all of the limiting factors mentioned above.

Social Tokens are digital assets like that of Bitcoin and Ethereum. The difference being their perceived value. Whereas Bitcoin’s value is strictly monetary, a social token's value is tied to the creative influence of the artist, musician, writer, influencer etc. Social Tokens can be fungible or non-fungible meaning they can be readily interchanged such as a currency or they can be individually unique known as NFTs. For more on NFTs - NFTs - Disrupting technology or hype?

By tokenizing their personal brand as a creator this opens up the ability to monetize their fanbase/supporter ecosystem. In doing so creating a new model for monetization and supporter engagement.

A few reasons as to why a creator would want to utilize social tokens:

Current platforms have a monopoly on content, it does not belong to the creators.
Take rates vary but the most popular of platforms take from 15-100% of creator revenue.
Creators have access to a broader audience through decentralized networks. Platforms no longer have a stranglehold on their content.
Organic creation. With the freedom to create without fear of some form of censorship creators can express themselves more than ever before.
Participation is verified through blockchain technology. There is no gray area in token distribution and ownership.

For fans and supporters social tokens open new ways to support and engage with the creators. A few of the ways supporters benefit from a social token ecosystem include.

Exclusivity. Owning a creator's social token can give access to a fanbase community, special events and perks.
Supporters can benefit monetarily through creator success. By holding a social token you own a portion of the creator's output. The more value that the creator provides the more demand for the token. With a limited supply of tokens the value of the token increases. This aligns fans towards the continued success of the creator.
Crypto is agnostic and open to all. There is no gatekeeping to participation. Almost anyone, anywhere in the world can tap into the ecosystem and contribute.
Transparency is a standard. With today's platforms your data and activity is monitored 24/7 and sold off to third parties while the contributors to the ecosystem receive little if any of that revenue. In a social token ecosystem fans directly contribute without going through an extractive intermediary. All activity in a social token ecosystem is publicly visible.

Creators have the tendency to grow to their boundaries and the limits of this new monetization tool have not been realized although a few standards have emerged. Here are a few examples of how social tokens are being experimented with.

$ALEX

Alex M. A 23yr entrepreneur decided it would be an interesting idea to tokenize his life. Initially raising 20,000$ in ETH he states that holders will be able to control certain aspects of his life. This token sale is essentially a form of crowdfunding where the participants see value in Alex’s future endeavors and are taking a stake in it. Full article here

https://www.coindesk.com/markets/2020/06/30/the-man-who-tokenized-himself-gives-holders-power-over-his-life/

$WHALE

A social token focused on developing a community of like minded NFT collectors and backed by rare NFTs. Token holders have access to:

A like minded community
Exclusive NFTs
Digital real estate
Investment consultations
Voting rights for WHALE community decisions

More about $WHALE
https://www.gemini.com/cryptopedia/whale-crypto-nft-market-whale-token-the-vault#section-the-whale-community-benefits-for-whale-token-holders

$FWB

A token gated community where one must hold a minimum of 60 FWB tokens in order to participate. FWB focuses on advancing the crypto cultural space. Providing a community of unique individuals that work together to fundraise for projects aligning with their values.

More on FWB
https://coinmarketcap.com/currencies/friends-with-benefits/

Fictional token

Musician Joe Joey creates a $JOE token. This token is distributed to their fanbase. The money generated from the token sale is held in a publicly visible treasury wallet. Holders of $JOE have access to an exclusive membership group providing tickets and merchandise at discounted prices. Holders with more than 1000 JOE will be able to attend a private concert and a picture with Joe. Holders of 10000 JOE receive a 5% royalty on all sales and streaming income.

As you can imagine the potential for this type of revenue generating model is limitless. The creators have full control over their social engagement as well as their monetization.

The growth of blockchain technology has opened the doors for a next-generation monetization platform and has inspired many to re-imagine the way they engage with their audience. The attention market is widely becoming digitized and new forms of interaction like social tokens are paving the way towards an independent creator and consumer future. As the technology continues to mature expect creators to do what they do best and that is engage, grow and push the limits of their boundaries.
It is an exciting time for creators and supporters. Will you participate?

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

Why crypto isn’t dead and why you should stay

Jamie V. — Wed, 13 Jul 2022 00:11:47 +0000

What is crypto? Crypto is a buzzword used to describe the blockchain industry as a whole. Initially only Bitcoin ruled this space but then there was Ethereum and then Dodgecoin and then 19000 more… From cryptocurrencies to NFTs there has been an explosion of innovation spanning multiple sectors. All leading to the behemoth of an industry that we have today.

Depending on your time frame you may be upset with the current conditions but what a lot of people don’t consider is that we are at the emergence of a new technology. A potentially defining one that will follow the cycles of all previous emergent technologies such as the telephone, television and of course the internet.

If you have been following the space for any length of time you know that crypto has “died” several times. The naysayers will argue over and over that crypto has no use case and is just another fad. The current situation would prove them right, markets are in turmoil and sentiment is in the gutter.

In the last 12 months there has been a sharp decline in the price of some of the largest cryptocurrencies. From a global cryptocurrencies marketcap of almost 3 trillion to under 1 trillion the market has seen a dramatic loss and many people have been shaken out.

2021 All time high - 2.9 trillion USD
2022 All time low - 815 billion USD

Source: https://coinmarketcap.com/charts/

The thing about emerging technologies is that you can’t put a price on its potential, especially when the base layer aka the internet is already interwoven with our everyday lives. This is why price is a poor metric for evaluating whether crypto is “dead” or not. The price may be down, down very badly but not dead. Here are a few metrics and reasons why I believe crypto is not dead:

Number of Users

The number of active users within crypto has seen a consistent increase over the past several years. Currently estimated at around 200 million and expected to 5-10x within the next 10 years. When compared to the adoption trajectory of the internet there are some eerie similarities.

Source: https://www.thecoinrepublic.com/2021/12/23/will-active-crypto-users-reach-1-billion-as-predicted-by-crypto-com/

Investor Inflows

2021 saw the largest amount of investor funding in the history of the industry. With multiple $100 million funding rounds there was no shortage of big capital trying to find the next unicorn. Projects across the board from exchanges, DeFi and NFTs received investors. Without a positive vision of the future in mind why would these companies invest so much capital?

During all of 2020, $5.5 billion of VC funding was put in crypto businesses, but in 2021, there has been about $30 billion of funding in crypto year-to-date, according to data by PitchBook. Crypto capital investments have increased 445.5% year-over-year and 2021 isn’t over, yet. - Jacquelyn Melinek

Source: https://blockworks.co/2021-crypto-vc-funding-tops-30b-market-is-superheated/

Not only Bitcoin Anymore

The early days saw only Bitcoin as an investable asset but from there the space has exploded with innovation. Not only a currency but an entire ecosystem emerged. With Bitcoin alone there is potential for mass adoption and with the advent of NFTs, smart contracts, gameFi, metaverse and DeFi the amount of uses cases for crypto are almost limitless.

Institutions getting involved

Many large companies have gotten involved in crypto in some form or another while others are waiting on the sideline. Institutional involvement means “dead” crypto has value and is worth investing in. A few well known companies hold treasury balances in Bitcoin such as Tesla, Microstrategy and Square.

Regulation is a hot topic

With the collapse of industry giants such as Terra, Voyager and Celsius came the eye of regulation. Although the argument of whether regulation is good or bad for crypto is up for debate it ultimately means that the government sees it as an actual asset class worth regulating. Once the government validates the case for crypto by way of regulation this gives the green light for companies such as hedge funds to allocate on behalf of customers without fear. This could open up the capital flood gates if done in a way that doesn't completely destroy what crypto is.

Runway - Operational capital

2021 saw huge amounts of capital injected into the industry by way of VC funding and token sales. This means many projects have ample cash reserves to keep operations going during the crypto winter. With the recent downturn in the market plenty of projects will get wiped out but those with solid fundamentals, business practices and enough funding to continue building during this cycle will make it out better and stronger than before.

Builders are Building

Crypto has unleashed a wave of technology that has many rabbit holes. Leading this wave is the builders. The people who connect the dots and code in order to create the ecosystems we use. Regardless of market sentiment there will always be builders building. Active developers have been increasing year over year, reaching an estimated 18,500 in January 2021.

Source: https://finbold.com/study-number-of-monthly-active-web3-developers-hit-an-all-time-high-in-2021/

Current Generation

To think that crypto is dead is to think that the current generation will throw away their hard wallets, liquidate their NFTs and abandon the communities they’ve created. The current generation is crypto native and may not even know it. The systems being developed now are becoming more prevalent in the lives of everyday people and the chances of them giving it all up is close to nil.

These are just a few examples of why crypto is here to stay. Perhaps not in its current form but through the cycles new and better products will rise, further pushing adoption.

In conclusion

Crypto is still a nascent industry and as with any new industry will face rough beginnings while it refines its purpose. Like the internet in the early 90s there was uncertainty and doubt around the seemingly at the time useless technology but today its difficult to find somewhere that is not connected. In order to be part of something as defining as crypto, having a longer time horizon is a necessity and the cost of opportunity. Great things take time and for those that are patient enough the potential for exponential rewards awaits.

Crypto may feel like it's dead but really it's just taking a much needed breather. Will you stick around long enough to see?

Of course none of this is financial advice and I am just giving my humble opinion of what I have learned. Do with this advice what you will.

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

Composability - The power of Smart Contracts

Jamie V. — Wed, 06 Jul 2022 00:11:59 +0000

Crypto currencies have gained traction over the past few years. Starting out as a way to transfer digital currency between individuals has morphed into an industry of itself. By utilizing the underlying technology of crypto currencies we can now trustlessly send, receive, create and interact.

The expansion of this technology beyond that of Bitcoins very basic albeit secure programming has led to the development of what is known as smart contracts, most notably utilized on the Ethereum blockchain. A smart contract is a program that automatically executes once the terms of the contract have been met. Using smart contracts reduces the need for intermediaries and trusted third parties which saves users time, energy and money. Think of smart contracts as vending machines. You have certain inputs(money of the proper amount) that are required before the machine executes your desired outcome(getting your snacks)

Based on the public nature of the Ethereum blockchain anyone can verify the smart contracts code and the transactions involved. Add the ability to programmatically interact with other contracts and you have the building blocks of dApps(Decentralized applications).

This is where the word composable comes into play.

Compose: To form by putting parts together, combine, arrange, compound.

What smart contracts allow developers to do is take existing programs and build on top of them. Like bricks of lego these programs can be combined to create new and interesting structures that wouldn’t have existed otherwise.

For this to be possible there needs to be a form of standardization. This came in the form of ERC-20, ERC-1155, ERC-720 etc. These contract standards describe how smart contracts should behave, including functionality, token structure, transfers and limitations. What this means is developers can build upon and support any other smart contract that complies with these standards.

This level of composability offers many benefits to companies and developers. By leveraging this lego approach they can utilize a common standard without having to build their own systems. Instead of building from the ground up developers can piece together smart contracts and build as needed. This can quicken development and provide security in knowing that the software has been proven and tested, something that is of utmost importance when it comes to cryptocurrencies.

Composability opens the doors to a plethora of innovative use cases. By plugging into an open ecosystem like Ethereum, industries that would otherwise never have coexisted can now interact. A few examples of what is being built using the power of composability include:

DeFi

Decentralized finance aims to offer users access to bank-like services without the banks. Services like lending, borrowing and trading without the need for a centralized financial structure. Composability in DeFi stems from the ability to leverage your position in one protocol into another. Without getting too complicated, here is a high level example of what is possible.

Deposit funds into Protocol A to earn interest
Protocol A gives you a receipt token “cToken” that represents your position
cToken is not locked to the protocol and can used elsewhere
Use cToken as collateral to borrow from Protocol B

Gaming & DeFi

The interaction of these two industries hasn’t been possible until now. Separated by use cases they can now be combined to create monetized gaming. By converting in-game items into digital assets it opens up the world of tokenization to the gaming industry. Tokens that can be leveraged through DeFi protocols, traded on a marketplace or sold for cryptocurrencies.

Content Creators & DeFi

Artists and creators have adopted NFTs(Non fungible Tokens) as a media for their creative outlets in order to leverage the possibilities that composability offers. Creators can now increase their visibility 100x with tokenized content. This can be images, music, videos, writings etc. Tokenized content means creators are only limited by their imagination when it comes to distribution. An interesting concept that has been utilized is using your NFTs as collateral for financial loans. Just like IRL users can benefit from holding onto “Art” and taking cryptocurrencies loans against it.

Community & DeFi

Bringing a community together and incentivizing participation is no easy task. That is where combining community and finance can help bootstrap an organization. Whether for-profit or not the idea behind tokenized participation means individuals can receive tokens in return for their contributions. In some cases these tokens have monetary value but they can also be used in a community credit type system where these tokens offer rewards and perks to holders.

DAOs(Decentralized autonomous organization) are a good example of this. Individuals come together to form an organization where no central authority holds the majority of power. DAOs use tokenization to combine NFTs, tokens and Defi into a structure that can run like a brick and mortar business but with no CEO.

The composable nature of smart contracts has only begun to reveal the potential of what can be done. Expect the technology to continue growing to the point where dApps can seamlessly interact with each other using simple code or even no code options, increasing adoption through usability. The compounding effect of this type of technology means as more projects develop more and more potential is created. Creators, builders and thinkers will continue to push the boundaries of composability and only time will tell what innovations come from this experiment. Will you participate?

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

Crypto - Lessons learned in 2022 so far…

Jamie V. — Tue, 28 Jun 2022 22:30:34 +0000

2022 has been a turbulent ride for all crypto investors. What started out as a raging bull quickly turned into a full on bear market. Numerous tokens have dropped over 90% from their all time highs and the largest protocols have had their technology pushed to the limits. Some caved under the pressure causing ripple effects throughout the industry that we haven’t even realized yet, while others silently rugged.

Looking back on the past 6 months there are a few thoughts I wish I had taken the time to ponder. Reading about others' experiences during similar times in the past can save us time and money. For my own sake and yours here are some lessons I’ve learned the hard way and from others.

Doing less is more

We often believe that being busy means progress and this is a simple thing to do in the crypto space. At any given moment there are scams, token drops and Twitter beefs. All of this noise keeps us from focusing on the main reason we’re here. To make money. From an investment standpoint doing less can often mean more. The idea is that rather than have a complex strategy to make a profit you take the simpler route and focus on placing your bets and riding out the waves.

How many times have you realized that if you had just bought and held you would have saved yourself hours watching the charts, worrying about price drops and engaging in meaningless fud. The key is to set a target and wait. If you have done your research and believe the project will succeed, let your thesis play out.

FOMO and meme tokens never lasts

If you have been in this space for any period of time then you have likely been tempted and bought into the latest FOMO meme tokens. It plays out like this, you’re sitting there surfing Reddit, Twitter or wherever you get your crypto news and a new token keeps popping up over and over. Retweets, likes, people making 100% overnight. It's real and it does happen. You sit there wondering what is this? You then search and low and behold you've entered the confirmation bias zone. Reinforcing your belief in this new token and the potential to make “gainz”. At this point it is almost a self fulfilling prophecy. You think to yourself if I just put in $200 and it 1000X’s I’d be set. You place a market order and it gets filled, instantly it drops as is the law of the universe. Waiting there second guessing your decision as you watch the green and red candles flicker on the screen. The next day you get a 125% pump and think yourself a genius, watching the numbers go up, it's glorious. All of a sudden a big sell order comes in, crashing the price 50%, no biggy just a whale getting out, more for me and maybe you double down but then another sell, then another. A cascade of sell orders comes in bringing the price all the way down to where you bought it. You hold and hope for a pump and then you’ll get out. That pump never comes and liquidity dries up, no more orders coming in and the hype goes silent. You just became someone's exit liquidity.

I sure hope I’m not the only one that has experienced this. Likely more than once I have fallen into this trap in the hopes of making it big. Lesson, if you are hearing about it on social media it is already too late. The early birds and founders have loaded their bags and you are more likely than not the target for exit liquidity. Beware!

Take Profits

This one hits home with a lot of investors. If you bought any of the top 100 through the bull cycle of 2020-2021 you likely made a decent profit, on PAPER. The key to profit is that it only really exists if you sell. You must sell in order to realize profit. So many, including myself, watched our portfolios 100, 200, 1000% and didn’t sell. Why? You thought it would and could go up more of course! You let greed creep into your mind and want more. Then you watched your holdings as they went down and hoped they would return to their all time highs once again.

A good rule of thumb is if you get a 100% take the original investment off the table and let the rest ride. With the initial amount taken out you are now essentially investing with free money. Adjust percentages to your liking.

Chances are you had one shot at those types of gains in the current cycle. If your project survives the inevitable bear market then maybe you’ll have another shot at it again. Take profits!

The bigger they are the harder they fall, there is no too big to fail in Crypto

The recent drop in crypto prices put a huge strain on businesses and protocols. Especially those involved in Defi and leverage. What started the bear market is anyone's guess but the fall of UST had a huge impact. A large amount of money was used to trigger a death spiral that led to its inevitable demise. The subsequent forced selling created unstable market conditions causing prices to drop and drop.

This drop in prices led to other large companies exposing what was behind the curtain. No longer could they provide the returns for their customers. Liquidity dried up and they were left holding the bag.

Large custodial services had tons of liquidity and what they did with it has just begun to surface. Behind closed doors they may receive bailouts to prevent severe contagion affecting the broader markets but this goes to show that in crypto no matter how big they appear to be they can still fall.

Lesson, keep an eye on where you store your coins. If the return seems too good to be true it probably is. If you don’t know where the return is coming from it's probably you. And last but not least “Not your keys, not your coins”. These service providers can and have locked users from their funds.

2022 isn’t over yet and the markets still have plenty of time to rebound. Review your plays and get set up for the next run. Remember the money is made when you buy, locking in prices when there is blood in the streets and the fear index is at all time highs.

Of course none of this is financial advice and I am just giving my humble opinion of what I have learned. Do with this advice what you will.

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

Glossary of Crypto - 10 Terms that you should know - Part 2

Jamie V. — Sun, 26 Jun 2022 14:34:24 +0000

DEX

Decentralized Exchange. A marketplace where peer to peer exchanges take place without the need for an intermediary. Transactions are fulfilled using programmed contracts and algorithms.

Digital Asset

Any digital content with a perceived value. This can be images, documents, videos, mp3s and NFTs.

Smart Contract

A computer protocol(set of programmed parameters) that is used to verify, enforce and facilitate a contract on the blockchain. Most notably used by the Ethereum ecosystem. Smart contracts are immutable once written to the blockchain.

CEX

Centralized Exchange. The opposite of a DEX where exchanges between parties are fulfilled using a central authority as a gateway. Assets are limited and only authorized parties can participate.

Arbitrage

Taking advantage of price discrepancy between different marketplaces. Selling the same asset for a higher price on a different market to make a profit.

Fungible

When one asset is interchangeable with another without the loss of value or characteristics. An example of this is the dollar. You can exchange one dollar for any other dollar and it will remain one dollar.

FUD

FEAR, UNCERTAINTY and DOUBT. Typically used in the phrase “spreading FUD” This is when bad and potentially damaging information regarding protocols, individuals, technology etc. is distributed through media platforms. Often causing poor investor sentiment or reputation which can lead to loss.

Fiat

An arbitrary order or decree. In regards to currency it is legal tender backed by a central authority. Examples are the US dollar in the form of cash or electronically represented in a bank.

ELI5

ELI5(Explain it Like I am 5) This term is used to reduce complex topics into words that a 5yr old could understand.

Custodial

A digital asset holding service that has possession of customer funds. Centralized in nature and often involved in crypto finance in order to provide customers with yield.

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

5 Types of NFTs

Jamie V. — Tue, 21 Jun 2022 00:07:47 +0000

NFTs have taken the digital space by storm. Reaching mainstream attention through social media and word of mouth. What started out as a way to prove ownership on the blockchain turned into a jpeg speculation mania like nothing we’ve ever seen.

Billions and billions of dollars have been transacted between individuals buying, selling and trading these digital assets. In 2020 the total value of the NFT market was $88 million. Fast forward to 2021 and that has almost 200x to $17 billion.

A quick summary of what an NFT is. An NFT(Non-fungible token) can be described as a unique digital asset representing real world assets like a painting, ticket or collectible, although any type of digital content can be created as an NFT. By utilizing blockchain technology NFTs are verifiable, transparent and secure. For an in depth look at NFTs read more here NFTs Disrupting technology or hype?

Although the spotlight has mostly been on PFP(Profile picture) style NFTs there is much more to this technology than just images of animals and rocks. NFTs can potentially be used in every digital industry. Here are 5 examples of the different types of NFTs currently being developed.

Profile Pictures(PFP)

The most well known and popular form of NFT. An image of a character that is meant to represent an online identity on social media. This type of NFT is where the adoption really accelerated. People began to use these profile pictures as a form of brand identity and ultimately a status symbol of sorts, showing that you belong to a certain community by owning one of their NFTs. Internet platforms like Twitter have integrated native support for PFP NFTs as well as a few other notable companies with NFT support in the works.

Popular PFP projects and their floor prices(lowest priced)

Bored Ape Yacht Club - 87ETH($93137)
Clone X - 9.5ETH($10000)
CryptoPunks - 55ETH($59005)

Art & Music

The art and music industry hasn’t had much change in the past few decades until NFTs came along and started a wave of innovation in the space. The idea of Art & Music being converted into a digital format is nothing new but the resulting benefits of converting them into blockchain digital assets are numerous.

Creators are often their own managers or signed onto a contract with questionable terms. What NFTs do for creators is that it allows them to be the sole owners of their creative content. Through blockchain technology you can now without a doubt verify ownership of a digital asset, be it a work of art or a hit new song. This creates a transparent environment for both sellers and collectors of art & music.

The power of NFTs enables creators to monetize their content in ways never seen before. Through the underlying code it is possible to program ownership. This means terms of sale, royalties and transfers can all be controlled by the creators. An example of this could be a piece of artwork that pays a royalty to the original creator forever whenever it is sold. For music, an artist could sell an NFT that allows fans ownership of their album and therefore a share of streaming royalties.

This creates a more favorable environment for creators to share their content and be compensated rather than relying on third parties that can be exploitive. Through NFTs creators can connect with their community and fans in whole new ways and also reward and incentivize them.

A few platforms building in the space

Digital art
OpenSea - https://opensea.io/
Magic Eden - https://magiceden.io/

Music NFTs
SoundMint - https://www.soundmint.xyz/
Opulous - https://opulous.org/

Gaming

The gaming industry is ripe for the adoption of NFTs. Already being a digital-first media means the integration of NFTs can be seamless and even unnoticeable. In game digital assets are popular among players, from skins to weapons and tools. This is where NFTs come in. By creating these in-game items as NFTs, players finally receive value for their time and energy through owning their digital assets and having full control over how they interact with them. Opening up the possibility of market places where players can buy, sell and trade their assets. These digital assets exist outside of the game environment and no longer need to be tied to a certain platform making it possible to transfer them between games.

Players in the space

Gods Unchained - https://godsunchained.com/
Illuvium - https://www.illuvium.io/
Gala Games - https://app.gala.games/

Utility

The use cases for NFTs goes beyond that of JPEGs and mp3s. There is real world potential where NFTs can replace existing systems. A digital asset with programmable terms of ownership. This type of utility lends itself well to industries like ticketing and membership services. The concept of digital ticketing is nothing new but imagine a ticket as an NFT that not only gives you access to events but perks such as discounts on merchandise, loyalty points and special access permissions. All of this from the comfort of your mobile device through QR code verification.

Documents related to legal, real estate and banking that require a third party for authentication can also utilize NFT technology to improve the process. By having these documents in the form of NFTs it opens up the possibility of removing these intermediaries from the equation by having the terms of use, sale and services programmatically defined, meaning the transaction cannot proceed until all conditions are met. Transactions are transparent, authentic and verifiable. Some scenarios remain gray and may require intermediary involvement but NFTs can reduce the footprint of third parties.

Example 1:
Sports team A sells tickets in the form of NFTs with only 10000 being special editions. This special edition ticket allows for priority seating, first access and a free signing with the players. These tickets are authentic, verifiable and easily transferable.

Example 2:
Buyer A purchases a home from Seller B. Typically you would require a lawyer, real estate agent and bank to be involved, all taking a percentage of the sale. With the home ownership in the form of an NFT, it can be transferred instantly with both payment and transfer verified on the blockchain. Removing the intermediaries reduces the time and costs involved in the transaction.

Virtual Worlds

The introduction of the metaverse made a huge splash in 2021. Companies like Facebook changed their name to Meta and crypto native platforms like Decentraland and Sandbox attracted millions in funding. The metaverse is shaping up to become its own fully digital economy based on digital assets. Owning a piece of the metaverse means purchasing NFTs that represent IRL(in real life) items such as land, property, merchandise, goods and services.

IRL companies have already begun to mark their territory in several metaverses. Companies like Nike and Louis Vuitton have purchased property in order to increase their exposure to an increasingly digitally native audience.

The metaverse could potentially be the next wave of social media. NFTs are at the core of this new economy by allowing brands and individuals to connect, play and exchange in a fully immersive digital world.

Brand Investments

Facebook's “Meta” - $10 billion for initial development
Samsung - Land ownership in Decentraland
Nike - Metaverse stores to display and sell merchandise

As the digital economy grows through concepts like the metaverse, NFTs play a key role in digital asset transfer. With the potential to become the de facto means of transaction of all forms of digital content. Creators and builders will continue to stretch the boundaries of this technology inventing novel use cases that will expand the utility of NFTs as well as increase their adoption. This technology is here to stay and where it goes from here no one knows but now is a great time to get involved. Build, create, learn and share.

How will you participate?

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

Sources:
https://a16zcrypto.com/state-of-crypto-report-a16z-2022/

Ownership in Web3

Jamie V. — Sat, 11 Jun 2022 00:27:06 +0000

The internet has been a place of innovation and experimentation since it began in the early 60s. Since then there have been several iterations of what we call the world wide web. Beginning with simple text only websites to a technology that has weaved its way into our everyday lives, offering communication, entertainment, education and more.

As much as it has become a part of our lives many of us haven’t stopped to think about how the economy of the internet operates and what role we play in it. What started out as a world wide web, open to all and a way to democratize information has become a space where a handful of companies control a majority of the attention and revenue generation. The largest internet platforms manipulate and exploit their most valuable contributors: you the user.

The top 3 websites by monthly visits outpace the next 47 websites combined.

Google: 92.5 billion
Youtube: 34.6 billion
Facebook: 25.5 billion

Source: https://www.visualcapitalist.com/the-50-most-visited-websites-in-the-world/

This misaligned connection between the user and platform means users have no voice in the services they contribute to, content created is not owned by the creators and contributors receive no share of revenue generated.

As more individuals begin to question the operation and decisions of large internet platforms, a shift in behavior and advancement in technology has opened up a new model of operation between platforms and users. Known as web3, where users become owners. An ownership economy.

What is an ownership economy?

Through leveraging blockchain technology the next iteration of the internet is coming to light, where products and services turn users into owners. The transformation of an internet owned by large institutions into an open network where participants have a stake in the platforms and are rewarded for doing so.

Ownership can take many forms including NFTs, HODLing tokens and governance tokens. Each a unique way to participate in the ownership economy.

NFTs

Non-fungible tokens are at the core of the ownership economy. Digital assets that can take the form of any digital media. The invention of NFTs has allowed creators to own the content they produce fully and outright. Making it possible to monetize, connect and distribute in whole new ways. For a more in depth look at NFTs Read more here - NFTs - disrupting technology or hype?.

HODLing

A passive way of ownership. HODLing(holding tokens) means you are contributing to the operation of the network. Some blockchains utilize token mechanisms that incentivize behavior. By holding tokens you become a part owner of the network and receive compensation through token price appreciation or rewards for securing the network.

Governance Tokens

Tokens that give you the ability to vote and take part in the operations of the platform. As a governance token holder you can vote on decisions that influence the network.

DAOs

Decentralized Autonomous Organization(DAO) operate similar to how a normal brick and mortar business would except the business decisions and operations are governed through a shared set of rules enforced by blockchain based smart contracts. This offers global accessibility, transparency and a lower barrier to entry. Being part of a DAO permits access to the organization often through a form of governance token.

Through each of these methods individuals have a way to economically and ideologically align with the products and services that they use. Creating a new dynamic where the users have a stake in the ongoing success of the platform.

Effects of the ownership economy

While still in the early stages of what could be a transformative shift in power. There have already been several cases where the ownership economy has impacted how platforms operate.

Increased user Loyalty

User retention is key when it comes to a growing platform. There needs to be a reason why people stay and participate. When users become owners they are more inclined to continue using the product. Through token distribution mechanisms users can be incentivized to remain in the network. Some examples of this are veTokens, game-fi and DeFi yields.

veTokens - Lock up tokens for a certain period of time in order to receive network incentives. Those that lock-up tokens believe in the future success of the platform and therefore are rewarded.

More on veTokens https://bowtiedisland.com/vote-escrowed-tokens-vetoken-the-good-the-bad-the-ugly/

Game-Fi - Platforms like Axie https://axieinfinity.com/ take the digital collectables approach to retain users. A game created where you use your digital assets to battle others. Users are rewarded with tokens and experience perks in a video game environment.

DeFi - Multiple DeFi platforms offer high-yields to attract users to their platforms. By having stable and market leading rates users are more inclined to stay with your product as well as provide liquidity.

Enhanced Ecosystems

What happens when you have a low barrier to entry and distributed ownership? A shared interest in the success of the platform creates a community of users and developers aligned towards growth and adoption. Take Ethereum for example which has a massive contributor base who are all incentivized by the value of their stake in Ethereum, their Ether. This incentive magnifies the network effects which has created an ecosystem spanning marketplaces, DeFi, social, game-fi and more. As the ecosystem gets bigger this reinforces the disincentive to leave or switch platforms.

Ethereum
2021
Total Address: 198.1 million

dApps(decentralized applications): 2000+

Bootstrap Funding

As an alternative to venture capital funding, networks are giving shared ownership in the form of tokens. This way of funding means platforms can bootstrap initial adoption and get off the ground quicker than traditional ways. Having a user base right from the beginning also fosters a community with incentive to participate in the new platform of which they own a part of.

Not perfect by any means and there are potential pitfalls that need to be worked out. Simply because you distribute ownership doesn't mean automatic success. There needs to be a product worth using as well as a team capable of delivering.

In Conclusion

The ownership economy opens up novel ways of interaction between individuals and the services they use. Giving equity to participants where you are being compensated for your contributions, and not the platform. A web that incentivizes participation and aligns users with the success of the platform creates a positive environment for both sides.

Although this is a new development in the internet space there is potential for its mass adoption. Who knows perhaps this is the way future internet giants could operate.

Thanks for reading!

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

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Glossary of Crypto - 10 Terms that you should know - Part 1

Jamie V. — Sat, 04 Jun 2022 14:34:13 +0000

The word “crypto” is an umbrella term used to describe the industry as a whole but there may be some industry specific lingo that you’re not familiar with. This ongoing series will break down some of the other key terms used in this space.

Blockchain

A distributed accounting system consisting of “blocks” of digital information. Blocks are created sequentially with the prior block being incorporated into the next, effectively “chaining” them together.

Decentralized

The opposite of centralized. The property of having a system structured in a way where there is no single point of control.

Cryptocurrency

Digitally native currency using cryptographic technology that allows transactions to take place securely without an intermediary.

Bitcoin

The first widely adopted cryptocurrency. A decentralized digital currency used for peer to peer transactions on the bitcoin blockchain. Invented by an unknown individual named Satoshi Nakamoto in 2008.

Ethereum

An open-sourced decentralized blockchain network with expanded functionality. Using smart contracts which allow for programmable cryptocurrencies. Developed in 2013 by Vitalik Buterin and Gavin Wood

Wallet

A place where digital assets are stored, sent and received. Wallets can come in the form of a device or application.

Altcoin

Bitcoin was the first iteration of cryptocurrencies but since then there have been 1000s of duplicates which have now been labeled as “altcoins” as in “alternative coins”.

dApp

Decentralized applications(dApp) are blockchain native applications. Adding the functionality of blockchain systems to regular applications allows for security, transparency and censorship resistance.

NFT

Non-fungible token(NFT) A digital asset represented by a unique signature on the blockchain. Uses blockchain technology that allows for digital authenticity as well verification of ownership. Currently the most popular forms of NFTs are images, audio files and documents.

DeFi

Decentralized Finance(DeFi) a system developed as an alternative to centralized forms of financial services. Offering similar banking services such as earning interest, borrowing, lending and trading but using blockchain technology to remove intermediaries.

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

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Web 3.0 > Web 2.0?

Jamie V. — Wed, 01 Jun 2022 00:51:11 +0000

Intro

The internet has become an enormous part of our lives, from how we communicate to how we consume information. Web3 aims to change the way we value and view content by shifting towards an internet that is owned and operated by its users, the people.

With the introduction of the web our way of life changed, affecting our lives in untold ways. What started out as a way to democratize information turned into a small group of extractive, centralized institutions controlling what we view and consume. Everyday we unknowingly feed these companies our data and in return are manipulated by it. Your search inputs, time on screen and even shopping habits, all of it has been commoditized. These institutions make billions by using your data while you receive little if any of it. What if there was a way to take back control of your data?

What does web3 mean?

From a user's standpoint the internet hasn’t changed much over the decades. Essentially it has been a way to view and consume information. To understand the benefits of web3 we need to take a look at what came before it.

Web 1.0 Static Web
Also considered the “Read-only” web. The first iteration of the web consisted mostly of written and image based content. There was little to no way of interaction. Click, scroll and look only.

Web 2.0 Today's Internet
Currently in use today and what we are all accustomed to. Through the advancement of programming and technologies the “dynamic web” enabled users to not only read but write and participate. Web 2 has allowed users en masse to become creators of content using platforms such as Youtube, Facebook and Tiktok.

You may be saying to yourself “well this web is amazing, I love it. Why would I want to change anything?” and this is a perfectly reasonable question. Web 2 has created a new age of prosperity and creativity for countless people. Unfortunately problems do exist and it doesn’t take much to expose some of the pitfalls that need to be addressed.

The Identity Theft Research Center(ITRC) reported a 17% increase in data breaches during 2021 in comparison to 2020. Due to lack of transparency surrounding these types of incidents the number is likely higher. Having information stored in a centralized manner gives hackers a prime target.

Ownership of one's data is a concept that many of us are familiar with. That is in the context of having it stored in a central manner with little to no control over how it is distributed. To better connect the dots Facebook generates 98%($20 billion in 2019) of its revenue from advertising. Advertising that is selectively catered to you and its users by utilizing the data acquired from its platform. When described in this way you begin to understand the value of information.

This leans into the ongoing distrust in centralized organizations worldwide. The lack of data transparency has created an environment where the centralized organizations prefer to hide behind closed doors rather than have their questionable decisions displayed to the public. Imagine a digital space where you are able to track your data and how it is being used.

Web 3.0 - Open Web
The web3 thesis is about creating a new open web through integration and restructuring existing internet services. A user focused internet where data privacy and control are respected rather than sidestepped and abused by elite technology companies searching for profit. What could this look like? Here are a few key pillars driving the advancement of web3.

Decentralized
The key to web3 revolves around blockchain technology and the idea of decentralization. Blockchain technology is a network that enables transparent and immutable information that is open to everyone but owned by none. Open-source protocols offer their code and inner workings to the public which anyone can read, scrutinize and republish.

Tokenization
A digital first world needs a way for ownership in a decentralized way. Again blockchain technology offers the base layer of security and data transparency. Next comes the tokenization of digital content. Tokenization means any digital media can become a unique transferable asset with the ability to verify its origins and exchange in a trustless way. These have become known as NFTs or non-fungible tokens. NFTs have opened the door for content creators to monetize their work in whole new ways never before imagined.

For a breakdown of what NFTs are and how they have been utilized thus far check out this article NFTs - Disrupting technology or hype?

Incentivized Participation
Blockchain technology creates security in the network through incentivizing behavior using tokens. Tokens are essentially the currency of the network. Think of it as an internet native currency. Users are rewarded for contributing and participating in the network. This can be through governance, security and content creation. The possibilities for compensation are endless.

P2P transactions
Web3 architecture through tokenization allows users to transact in a trustless manner without the need of an intermediary. P2P(person to person) transactions are completely verifiable and executed only when both parties have agreed to the terms. Think of current payment rails that take large fees in order for you to transfer money. Web3 has the ability to cut out the middle-man while still retaining security.

Data Transparency
The ability to view and examine the path of information without the need for a central party especially when it comes to financials and politics. This can mean knowing exactly where your tax dollars are going and how they are being spent or a publicly verifiable voting system whose results cannot be refuted due to the nature of the system.

Security
Information that exists on a public blockchain cannot be edited once it has been written and passed through the network. Data access is cryptographically secured by the blockchain. Without the proper keys, access to data, funds and tokens is impossible.

These are just a few of the technologies moving the space forward, as it matures expect new novel applications to develop through the information architecture that this space creates.

Conclusion

Web3 is still in the early days of development with many unknowns as with all new advancements in technology but never before has there been the opportunity for people to participate on such a large scale towards the development of a new system. Web3 is human centric and combines technology with social dynamics. This creates a multitude of questions and moral dilemmas that will need to be addressed but web3’s "open web" means there is a space where these issues can be discussed and communicated. Participation is voluntary and what you choose to do with your time and data remains in your control.

Only time will tell what becomes of this experiment called web3. The amount of people using the internet grows by the day and when the infrastructure works with users rather than exploiting them we can expect new fascinating ways of business, creativity and community to arise. Interesting times await for the future of the web, how will you participate?

To learn more about web3 and how to get involved here are a few sources to get you started:

https://www.useweb3.xyz/
https://www.learnweb3.io/about
https://rabbithole.gg/
https://messari.io/article/web3-eli5-what-is-web3?utm_source=MasonNystrom&utm_medium=ledetweet&utm_campaign=eli5web3
https://hbr.org/2022/05/web3-is-our-chance-to-make-a-better-internet

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures

Sources:
https://www.zdnet.com/article/the-biggest-data-breaches-of-2021/
https://stockanalysis.com/how-facebook-makes-money/
https://www.statista.com/statistics/273550/data-breaches-recorded-in-the-united-states-by-number-of-breaches-and-records-exposed/

NFTs - Disrupting technology or hype?

Jamie V. — Tue, 24 May 2022 15:09:16 +0000

Crypto has opened up millions to the idea of digital assets. A stream of 1s and 0s representing what most people are familiar with as crypto currencies such as Bitcoin. This has laid the framework for industry disrupting technologies such as NFTs.

In 2021 we saw the meteoric rise in popularity of NFTs. From celebrities to large multinational companies were getting involved. Brands such as Nike even created internal divisions dedicated to NFT development. In terms of sales volume in comparison to 2020 the market went from $88 million to a whopping $17 billion in 2021. Considering these numbers were produced while a majority of the population had no idea that it was happening and that the most valuable of NFTs are images of illustrated apes, the potential for this space is enormous.

NFTs - What are they?

NFTs(Non-fungible tokens) utilize blockchain technology like that of Ethereum to create digital scarcity. A blockchain is a publicly visible, globally distributed, immutable ledger. A ledger of transactions made visible to the public creates a trustless system of verification. NFTs are basically a digital signature that is recorded on the ledger. This gives them their unique identity. Currently the most notable of NFTs are images(JPEG) but any digital content can be turned into an NFT, more on this in the next few paragraphs.

Non-fungible

The term fungible used in the context of NFTs refers to interchangeability. When one item's value can be exchanged with another for equal value, the item is fungible. A good example is currencies. If you had $1 and exchanged it with someone else for a different $1 you would still have $1. Opposite to that would be non-fungible. Trading cards for example. Each card is unique in its characteristics and has a different perceived value, therefore exchanging for an equal value is impossible.

How is authenticity achieved?

In order to create an NFT you must have access to a blockchain address. This is typically known as a wallet. This wallet address is your unique identifier on the blockchain. Specific to you and cryptographically secured. When you create/buy an NFT the interaction between your address and the NFT are recorded on the blockchain ledger. Since the ledger is public, anyone can verify that your address is the owner of said NFT.

Real World use case

The internet brought us digital content but there has always been an ongoing struggle for ownership. With the ability to right click “save as.” In the digital world how do we prove ownership? Numerous industries stand to benefit from verifiable authenticity when it comes to digital content. Here are a few examples of how users, companies and innovators are utilizing this technology.

Terms

Smart contract - A digital contract that executes when certain conditions are met. Terms of the agreement are written in code. Execution and transactions exist irreversibly on the blockchain ledger.

Minting - The process of creating an NFT of a digital asset.

Take-rate - Fees charged by a marketplace on transactions.

Music

The music industry has a reputation for being unfriendly to musicians. Often taking large percentages of their sales volume and leaving them with little in the way of post production revenue. NFTs have the power to change this. With the ability to retain 100% ownership, musicians have full control over their creative works. By minting their music as NFTs and using the power of smart contracts it is possible to program distribution as well as royalties. Selling their music directly to fans and even sharing revenue with them in perpetuity is now feasible.

Projects working with music NFTs
Soundmint - https://www.soundmint.xyz/
Audius - https://audius.co/
Royal - https://royal.io/
Opulous - https://opulous.org/

Art

Currently the most recognized use case for NFTs is images. The digital image landscape is fraught with copies and theft. As artists it is difficult to prove authenticity. NFTs give artists a method of verifying that they are the creator. In the physical world artists can only show their work in galleries but in the digital world a piece of work can be displayed anywhere at anytime effectively increasing their exposure 100x or more.

Using the same smart contract technology artists can program the terms of sale. Imagine an artist minting a 100 piece collection and receiving a 10% royalty on every secondary sale forever or automatically donating 5% of every sale to charity. Artists can connect with their fan base in new ways and control how revenue is distributed to align with their ideas.

Marketplaces and galleries
OpenSea - https://opensea.io/
Looks Rare - https://looksrare.org/
Magic Eden - https://magiceden.io/

Gaming

NFTs are set to disrupt the gaming industry in a big way. With billions of dollars being spent on in-game digital goods. For example, the popular online game “Fortnite” boasted $1.5 billion in sales for 2019 with little to none being distributed to the players. NFTs offer a way for players to own their digital assets outside of the game environment. A player can potentially transfer this NFT between games or trade and sell for real world currency.

Players in the space
Gods Unchained - https://godsunchained.com/
Illuvium - https://www.illuvium.io/
Gala Games - https://app.gala.games/

Events and Ticketing

The world is moving towards mobile first retail. This means everyone has a smartphone and can use it to transact. Displaying tickets for entry using your device is nothing new but forgeries, fakes and scalpers are a real struggle facing the industry. What if your ticket was an NFT with fully transparent ownership or what if owning an NFT meant you had access to a certain event? A ticket is not only a means of entry now but a collectible, potential revenue stream and perks for supporters.

Fundraising and Charity

Supporting a cause through donations and fundraising has never been easier thanks to websites like GoFundme and Kickstarter but like other centralized points of infrastructure the take-rates can be exploitive. A novel use case for NFTs means individuals can bootstrap funding in a more grassroots way.

For example say you wanted to start a community garden but didn’t have the money for supplies and equipment. By creating an NFT that people can purchase and therefore contribute to the cause, capital can be sourced not only locally but internationally. Supporters may be incentivized to participate by offering physical goods, a share of revenues and more.

These are just a few ways that NFTs are changing the way we interact with digital content. Programmable ownership empowers creators and businesses by offering them a whole new way to monetize their content. Connecting fans and users directly rather than through intermediaries. Centralized parties have take-rates ranging from 5-100% while NFTs make it possible for content creators to retain 100% of sale revenue. With these favorable conditions expect individuals and companies to make the move towards tokenizing their content which incentivizes both creators and supporters to participate.

Conclusion

NFTs have made it possible for us to verify digital authenticity. Never before could you prove ownership of a digital asset. This breakthrough in adoption and technology paves the way for new innovative use cases for digital property. As the world continues to go digital NFTs have the potential to disrupt every industry on the planet, whatever can be tokenized will be tokenized. Present use cases are only the tip of the iceberg. Expect this space to grow beyond that of crypto currencies as it works its way into our everyday lives.

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

Sources:
https://a16zcrypto.com/state-of-crypto-report-a16z-2022/

The Power of Dabbling

Jamie V. — Thu, 19 May 2022 00:45:07 +0000

The world is full of unexplored opportunities. As someone who can’t help but be driven by their insatiable curiosity I have been a “Dabbler” my whole life. What is this fleeting motivation and how can we turn this often seen as a negative habit into a benefit.

Dabble - To undertake something superficially or without serious intent.

The negativity comes from the idea that as a dabbler you are unable to truly grasp a subject, topic or skill because you don’t have the conviction to continue. Proficiency is never achieved

The internet has become the ultimate enabler for the dabbler. Technology advances rapidly, always creating new opportunities to chase. With almost infinite information and access. Within such an environment no matter how deep you want to go into a topic you will find a source.

Motivation can come from several sources, a friend, co-worker or flashing lights. The Dabbler rarely lacks motivation to start, it’s when things become difficult or interest wanes that progress halts.

We are only humans with limited attention spans who tend to spend our time in search of something interesting to focus on. We then create our own little rabbit holes to go down and often become infatuated with it. Building an interest in a topic takes time and effort and eventually for the dabbler this effort becomes too much and we stop, not growing or learning anymore in our topic of choice. This habit runs deep within our monkey brains. The novelty and dopamine we receive from new and exciting things is addicting but eventually wears off.

How can we make use of this and why can it be a good thing? As a dabbler you will likely have many interests and hobbies. You have scratched many curiosities and followed plenty of tutorials. How does this benefit you? First it gives you a massive knowledge base to work with in all aspects of your life. You have learned small or large portions of many topics.

Having a large knowledge base allows you to create a different picture than others who have chosen to focus and hone. You may see things that others are unable to put together. Connecting information in novel ways is a skill in itself. The interesting part of this is that there is no limit to what types of information you can connect. Interesting things happen when a person has knowledge in both computer engineering as well as graphic design. Another example could be perhaps someone has learned about biology, psychology and machine learning. The thoughts and dots being linked could potentially create fascinating results. When it comes to problem solving, having a unique perspective can give you an edge.

As a dabbler you have learned many things many times. Being able to learn and apply is a key skill in today's workforce. Because dabblers don’t have the intent or motivation to seriously pursue. They are free to wander through the learning process and when need be focus on certain holes in their understanding to suit their roles.

Have you heard of the phrase “Jack of all trades, master of none”? This describes the dabbler. More and more the world is advancing and skills begin to overlap. Someone with even a hint of understanding in multiple subjects becomes an important asset to a small company or startup where one individual may have to fill many roles.

Embracing your curiosity is not so much a burden but a skill. One that can be worked on and refined. Having multiple interests means you have invested enough time into something to a point that is meaningful to you. Oftentimes forcing yourself to continue leads to worse results. Learning to use these sparks of motivation can help you gain more than what you would have through focus alone. Keep these thoughts in mind the next time you find yourself going down that rabbit hole again.

Thank you for reading!

Stablecoins? How $USN on NEAR aims to be different

Jamie V. — Sun, 15 May 2022 15:49:22 +0000

What are stablecoins?

Stable coins are tokens that are pegged to a specific currency. The most common and utilized are USDT, USDC and BUSD which are tied to the US Dollar. Developed in response to the price fluctuations of cryptocurrencies such as Bitcoin, Ethereum, and Solana. Stablecoins offer stability when it comes to market volatility.

The underlying assets backing the stablecoin serves as collateral. Meaning for every stablecoin issued there is a reserve asset behind it. These reserves come in different forms including fiat, algorithms, precious metals and crypto as well as a mixture of each.

Examples include:

Fiat-backed stablecoins - BUSD Reserves are stored in traditional currencies such as the US dollar.

Algorithmic stablecoins - UST No asset backing. Peg is maintained by smart contracts that adjust the supply based on market conditions.

Precious Metals-backed stablecoins - PAX Gold is backed by physical precious metals stored in vaults around the world.

Crypto-backed stablecoins - DAI Typically overcollateralized due to the fluctuations in crypto currencies. DAI is backed by ether.

With a multitude of stablecoins to choose from, how do you decide which to use and why? Simply put, adoption and circulating supply are key metrics. A well established and widely accepted stablecoin with deep liquidity gives you the ability to participate in broader markets.

USN

Introducing USN a native stablecoin of the NEAR Protocol. Developed by the Decentral Bank DAO USN combines the best practices of several stablecoins already in circulation. USN has been designed as a semi-algorithmic stablecoin that is resilient in turbulent markets.

USN is minted by depositing NEAR tokens into a reserve fund and receiving an equal amount in USN. USN can alternatively be redeemed for an equal value of NEAR tokens.

Key factors that make USN different

USN is overcollateralized Initially USN is collateralized with NEAR and USDT with potential to diversify collateral assets in the future.

USN is 100% backed by USDT with NEAR as double collateral. If the price of NEAR crashed USN would still be backed

Holds and stakes NEAR instead of burning it. Rather than burn NEAR tokens to mint USN, NEAR tokens are held in a reserve.

Ease of access. USN can be directly minted through the web wallets using $NEAR.

Holders of USN will receive a base yield of 11% APY. In addition lending protocols like Burrow, Bastion and Aurigami will offer incentive rewards based on borrow demand.

Yield distribution to more than one source. Multiple protocols which integrate USN receive staking yields from the NEAR reserve. In comparison, 80% of UST is simply being farmed on Anchor. For USN, spreading yield increases demand as well as motivates participation.

How is the peg maintained?

With the latest events in the crypto world you might be wondering how USN maintains its peg. NEAR has implemented multiple mechanisms to maintain peg stability.

Onchain arbitrage - Swap USN for NEAR and vice versa. Due to minor price fluctuations and differences in the market, users can take advantage of this arbitrage opportunity causing minting and burning of USN when the price rises or falls below 1$

USN Reserve - The Reserve fund is initially double collateralized with 100% of issued USN in NEAR Tokens as well as 100% in other stablecoins. Everytime USN is minted NEAR is added to the reserve fund.

Currency Board - This entity's purpose is to maintain a fixed exchange rate between USN and NEAR. Stabilizing rates using NEAR and the stablecoin reserve as liquidity during certain market conditions.

Stableswap - A liquidity pool of stablecoins optimized for swapping between stablecoins. With the USN-USDT pair USN is minted and burned by the system automatically depending on the demand. USDT is added to the pool whenever USN is minted to maintain the balance of the pool at a 1:1 ratio.

Roadmap

Looking forward, the team at Decentral Bank DAO has laid out a phased approach to the roll out of USN.

Phase 0 - Bootstrap initial liquidity through grants and enable USN - NEAR swapping on the web wallet as well as USN - USDT pair on Ref Finance.
Phase 1 - USN integration on multiple NEAR ecosystem protocols
Phase 2 - USN integration on central exchanges
Phase 3 - Expand to multiple chains
Phase 4 - Core level integration as a native asset on the NEAR protocol with the ability to be used as gas and storage fees.

In Conclusion

USN might be the new kid on the block when it comes to stablescoins but the idea and capital behind it are not. With a well thought out system USN aims not only to attract capital from other markets but to give the NEAR ecosystems 10,000,000 accounts a new layer of utility for the NEAR token. Only time will tell how USN will hold up in these wild west stablecoin times but you can be sure that USN is set up to withstand the volatility.

To dive deeper into the potential of USN and its second order effects here are a couple of articles definitely worth reading.

https://bastionprotocol.medium.com/behold-the-usn-wars-1028ca9ab82e

https://medium.com/nearprotocol/usn-alpha-of-near-e04832add4f

https://medium.com/nearprotocol/decentral-bank-launches-usn-a-near-native-stablecoin-cafe1ec0c5af

If you got something out of this and want to learn more about cryptocurrency, web3 & finance:

Follow me @jamiesventures for more articles like this. Thanks for reading!

*I am not affiliated with the NEAR Protocol in any way nor is this financial advice. I found the project to be interesting and want to share my thoughts.