▹ Week's Top Signal
▹ Terminal.co is live
▹ Bear Market, Layoffs and Build Season
▹ Bitcoin Resilience by Mariam Humayun
▹ Solend Controversial Governance
▹ Nouns x VectorDAO Collab
▹ ... much more
Plus: Market Pill, What else is Poppin'
Let’s get into it.
There is Strength in Numbers... Forefront is building a full suite of tools to support tokenized communities. This week, we launched Terminal – the ultimate dashboard for communities to build strength with numbers.
Tokenized communities require two different types of fuel: context and collaboration. Terminal focuses on metrics, both on- and off-chain, aimed at equipping community members with the baseline context necessary for more effective coordination and communal decision making.
We believe that putting this information in the hands of community members, and allowing them to compare their metrics to similar communities, will enable communities to allocate resources in a way that achieves their goals while improving member involvement.
We’ve been overwhelmed with positive feedback and outreach and are excited to continue improving upon Terminal and adding more communities to the fold.
If you’re looking to get your community on Terminal.co or build a custom terminal of your own, reach out to our team! We’re excited to work with the best communities in the space and revolutionize the way people get work done together.
The Crypto Party is Over…or is it? Into the Build Season! The crypto market has taken an absolute beating over the last few weeks. ETH and BTC are down over 70% from ATHs, and the bottom doesn’t seem to be in quite yet. Macro conditions are looking their worst in at least a decade. And layoffs – large companies across the space, most notably Coinbase, are laying off significant portions of their workforce. But it’s not all doom and gloom. DeFi has held up well relative to the overall volatility of the ecosystem. Folks are still building. DAOs are hunkering down and focusing on sustainability, both economic and social. The people sticking around will be the people who are at the frontier of the next cycle.
After Crypto. As mentioned above, it’s more important than ever to remind ourselves why we are building in this space. Yancey Strickler, co-founder of Metalabel, helps us with a reminder of his own: that hyper-financialization is just one application of the blockchain. In this essay for FWB’s Work in Progress, Yancey highlights three use-cases that have caught his imagination since beginning to learn about web3: declining platform lock-in, distributing ownership outside of organizations, and permanent agnostic archiving. These three areas are big and exciting enough to warrant the immense interest and talent flooding into the ecosystem, and sometimes it takes a quick reminder. Great stuff as always from Yancey.
Strategies for Delegated Voting in DAOs. Samantha Marin begins this essay with a simple observation: voter delegation has been a means of combating voter apathy since the dawn of democracy, but it’s not without its flaws. DAOs are not different. For example, once someone is a delegate it is extremely hard to remove them from that position despite potentially low approval ratings. Samantha makes a series of proposals – term limits, delegation limits, and forced participation – that could help combat this issue. She also explores ways to prevent parties and factions in DAO governance, a problem that has plagued democracies for centuries as well. All in all, Samantha views DAOs as fertile ground for governance experimentation, and we should use them as such.
The Bull Case for Pods. The Orca team is all about Pods. Their core thesis is that the atomic unit of a DAO isn’t people or projects, but small working groups. Their entire protocol is built around this thesis and the “pod” primitive. The team lays out for core benefits of using pods in your DAO: giving autonomy to the right people, creating on-chain structures, making your DAO consumable by people and tools, and creating object permanence for your DAO’s working groups. It has become clear very quickly that DAOs will need to adopt smaller working groups and explore creative methods of responsibility delegation if they wish to get real work done. Pods could be one way to make that happen.
Changing the Game With Variable Compensation. Jake and Stake of BanklessDAO explores how variable compensation can be used to better align incentives in DAOs. Variable compensation can be implemented in a variety of forms: commission, profit-sharing, bonuses, and stock options. One of the biggest challenges to implementing these sorts of compensation mechanisms in DAOs is setting bad goals. Without solid metrics and goals, variable compensation can become extremely lopsided in favor of either party involved. Additionally, most DAOs have failed to generate sustainable revenue in a way that makes commissions or profit-sharing feasible. Nonetheless, creative compensation methods will be necessary to align incentives as DAOs mature and contributors become more savvy.
The Future of Permissionless Creation & Brand Collab. Nouns and Vector DAO are collaborating on a series titled “Independent, Together”, a collection of 8 artworks remixing Nouns artifacts to be displayed around the city during NFT NYC. Each poster will have a QR code, allowing viewers to mint limited edition NFTs of each artwork. Meanwhile, Meta is launching a virtual fashion marketplace featuring collaborations with brands like Balenciaga. Each experiment highlights a different angle on creativity in the metaverse and what the future of brand collaborations might look like. With the Nouns x Vector collab, we see DAO2DAO collaboration at its finest, in the spirit of permissionless building and positive-sum games. With Meta x Balenciaga, the old world rears its head.
Understanding Bitcoin’s Resilience. This paper begins: “Drawing on ecological resilience framework, we examine how Bitcoin’s hive mind has evolved thanks to a combination of stabilizing and destabilizing forces.” Ultimately, the paper concludes that Bitcoin is stronger because it is a decentralized brand. The narrative, or hive mind, is solidified during times of crisis, which forces the broader community to rally around a specific subset of “winning” ideas. These sorts of moments make the brand more resilient over time, as the idea of Bitcoin becomes resilient to rapid change in market dynamics and consumer sentiment. This is a fascinating paper exploring not just Bitcoin, but decentralized brand building more broadly.
Solend Controversial Proposal. This week, "users" of Solend, a decentralized protocol for lending and borrowing on Solana, voted in favor of a proposal aimed at mitigating risk imposed by a specific user with a big margin position on Solend. The proposal to “mitigate risk from the whale” noted that the user in question had 95% of SOL deposits in the protocol’s main pool and had not been heard from in 12 days. A yes vote meant the following: “Enact special margin requirements for large whales that represent over 20% of borrows and grant emergency power to Solend Labs to temporarily take over the whale’s account so the liquidation can be executed OTC.” Most recently, the proposal has been invalidated, striking the yes vote. This is fairly indicative of the way most “DAO governance” has unfolded: the most powerful group getting their way in the end, regardless of initial voting outcomes.
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Market data on the last 7 days. Last updated June 20, 2022
Updates from the DAO
— Web3 Creator Residency kicks off this week! Stay tuned for community events and updates from our creators.
— The proposal to onboard @CPTNskeletor as a Part-Time Contributor leading FF Labs is LIVE. Go vote!
The information in this newsletter is not intended to constitute legal, financial or investment advice and should not be construed or relied upon as such. Any opinions reflected are the opinion of the author(s) of the newsletter only and not necessarily of Forefront. Please DYOR.