Autor Cointelegraph By Max Parasol

Crypto advertising has been plastered across every available sporting surface since the bull run of 2021, from stadium naming deals and team’s playing kits to Formula One racing car liveries. But in the current bearish market conditions, it seems hard to calculate a return on the ubiquitous spending of 2021’s crazy big advertising. In Australia, where I’m based, there was a sharp uptick in crypto firms spending big on ads and sponsorship deals in the Australian Football League in 2021–2022. While it may make sense for a local crypto exchange, why would a global project spend big dollars on a sport that isn’t even the major football code in every state, given some of the bigger states prefer the National Rugby League?Take, for example, the Staples Center in downtown Los Angeles, home of the National Basketball Association’s Lakers and Clippers, the National Hockey League’s Kings and the Women’s National Basketball Association’s Sparks. It got a new name on Christmas Day 2021 — Crypto.com Arena — for a reported $700-million dollar deal. Are crypto projects wasting money on big sports deals?While financial terms of the 20-year deal weren’t publicly announced, it is believed to be the most expensive naming rights deal in sports history. Time will tell if it was money well spent. As the home court where the late Kobe Bryant played basketball, many today will still call it the Staples Center indefinitely, but a younger generation likely will not. Crypto.com wasn’t the only brand spending up big on sports deals.VeChain paid $100 million to plaster its logo throughout the Ultimate Fighting Championship arenas. Will getting the barely recognizable logo in front of kickboxing fans on TV lead to any new customers for its supply chain tracking solutions or onboard new users into the crypto ecosystem?You can’t miss the prominent VeChain branding at the UFC. Source: TwitterIs this all just wasted expenditure born of a bull market or a clever long-term commitment to advertising crypto adoption? It depends on who you ask. There have been a few backhanders from notable crypto figures toward the practice.In June this year, Crypto.com announced a 260-employee lay-off, equating to a 5% cut of its workforce. Binance founder Changpeng “CZ” Zhao tweeted, “It was not easy saying no to Super bowl ads, stadium naming rights, large sponsor deals a few months ago, but we did. Today, we are hiring for 2000 open positions for #Binance.”It was not easy saying no to Super bowl ads, stadium naming rights, large sponsor deals a few months ago, but we did.Today, we are hiring for 2000 open positions for #Binance. pic.twitter.com/n24nrUik8O— CZ ? Binance (@cz_binance) June 15, 2022Not all sports sponsorship deals are of dubious value, however, and marketing experts in the space say crypto marketing spending can be justified depending on crypto market product segmentation and brand authenticity.Wasted expenditureChris Ghent, head of brand strategy at the Near Foundation — a climate-neutral sharded blockchain project — has tipped funds into sports sponsorships but also believes that they can be a huge waste of money if done wrongly. “Historically, crypto projects beyond exchanges have ignored paid media. And without explicit use cases tied to the massive dollars paid for sports marketing sponsorships, the branding only leads to logo exposure.” For these huge sports sponsorship deals, the metrics to determine the returns are unclear. But as exchanges are the gateways to crypto adoption, aren’t they doing everyone else in the industry a favor by spending big to onboard new retail users from the mainstream sports community? Yes, says Ghent, “but sports sponsorship of a significant amount is reckless. Terra sponsoring the Washington Nationals — what good is that doing today?” He’s referring to Terra’s major sponsorship of the baseball franchise in the United States capital. It signed a five-year, $38.15 million deal with the Nationals paid upfront in cash. Then, Terra collapsed. Bad press for all concerned, though, at least the team gets to keep the money. This year there are 10 F1 motorsport teams, and crypto companies sponsor eight of them. It can be argued that is smart marketing. Research by global analytics company Nielsen Sports found that F1 has the potential to reach about 1 billion fans globally, with the 16–35 age group accounting for the biggest share. The market segment sponsorship logic there is apparent though whether that justifies the exorbitant cost is another matter.Some sports sponsorships can be value for moneyGhent argues that carefully chosen sponsorship deals that are deeply integrated partnerships can be value for money if they are designed with authenticity. The Near Foundation has begun sponsoring sporting properties such as SailGP F50 catamaran sailboat racing. The value of that deal is undisclosed.Ghent insists the SailGP spending is not reckless in the way some might argue crypto exchange Bybit sponsoring Red Bull’s F1 Racing Team in a three-year $150-million deal is, for example.8️⃣ out of ? teams on the grid has a Crypto-based company as a sponsor this season ?⁠Here’s a look at which teams have crypto partnerships for 2022 ?⁠#F1 #F12022 #Motorsport pic.twitter.com/hN6UfSIrWC— Motorsport.com (@Motorsport) March 2, 2022Ghent suggests that instead of slapping a logo on something, Near has bought the ability to integrate the protocol into the sport. SailGP is a modern version of the famous America’s Cup with F50 carbon fiber boats. All the boats competing are on a level playing field with consistent design and open-source data sharing via Oracle Cloud. So, races reflect the pure skill of the athletes — unlike F1 racing where only the best-funded teams can realistically win the championship. Through the partnership, SailGP is launching a DAO-owned race team on the Near Protocol. The DAO community members would be able to participate in athlete selection, team management, commercialization options, operations and team strategy. He says, “The best form of marketing is that the superfans become your best advocates. The Near brand is inspiring what happens with the technology.” Logically, fan-based DAO ownership means skin in the game and organic marketing engagement directly with sports fans. Ghent tells Magazine the DAO-managed team is on course to launch this season. Sports-team-owning DAOs are, of course, experiments, but the takeaway is that authentic marketing in crypto means being seen as staying true to crypto culture while finding a wider market segment.WAGMI United raised millions in a few hours with its NFT collection.You could say that’s like the open-source boat designs as opposed to centralized private racing car teams with grossly unequal budgets.Something similar is also being done in the fourth tier of United Kingdom Football by Crawley Town FC, which was purchased by crypto group WAGMI United in April, and is planning to create a DAO-managed team, too.And in July, they signed a new player, midfielder Jayden Davis, after an NFT-powered vote.The small club also sold more than 10,000 NFTs this year in stark contrast to soccer powerhouse Liverpool’s NFT collection, which sold poorly, perhaps to a lack of authenticity, and amounted to a marketing disaster. It seems the mission for Crawley Town to reach higher leagues of English football resonated with NFT buyers.Another sympathetic tie-up between a brand and a sporting event is Animoca Brands gaining the naming rights for the Australian Motorcycle Grand Prix and the Aragon events this year and next. Animoca is developing the official MotoGP blockchain-based game called MotoGP Ignition and no doubt relishes the chance to highlight the game in front of a worldwide audience of 400 million racing fans.Crypto guerilla marketing?In this context, relevance is key to a good marketing campaign for those crypto believers.“Guerrilla marketing in crypto is all about having contextual relevance,” opines Ghent. That is, the marketing is relevant to the nature of the product or protocol.In marketing parlance, guerilla marketing is lauded as a way to drive publicity and brand awareness by promoting the use of unconventional, less expensive methods, such as street art or flash mobs of dancing crowds.DAO-based ownership of intellectual property, such as PleasrDAO or ConstitutionDAO, is perhaps the best guerilla marketing. It’s all based on ownership and “ownership” securing the networks, notes Ghent. Ownership and DAO participation to a degree is the ultimate guerilla marketing. It’s not the token itself — it’s the ability of fans to feel even greater ownership over their favorite team. Marketing relevance in a bear market: EducationGeoff Renaud, chief marketing officer and co-founder of crypto marketing agency Invisible North, thinks the big sporting sponsorships are pretty hollow, with too much being spent for very little return. “With the big sports deals, there’s no real educational element. Early 2021 showed us unseasoned marketers spending too much. We saw so much unchecked spending on partnerships and no real measurement on impact.” He says, “The challenge is that most people speculating on crypto have no idea about the tech they are speculating on.” The questions need to be: Why have you invested in this? What do you believe in? They need to understand the products. The solution for crypto companies is education, especially in a bearish market. For example, how to make onboarding easier — at a marketing spending level. That means, at its most basic, teaching people how to set up a wallet and buy some crypto. Education is also crucial to keeping the community out of despair. “For high conviction in the long-term, education needs to be taken more seriously.” Renaud tells Magazine.“Marketing now is about getting people to stay in the game. The tourists will always leave.”Still, Renaud argues pure brand-building tactics have a place. He cites crypto exchange FTX partnering with Coachella in February to create NFTs as a good example. Ticketing and proof-of-attendance protocol, which are digital mementos of events, are now an accepted use case of NFTs with street cred. In this example, Coachella and FTX partnered to turn NFTs into lifetime passes to the famed music festival. 1) Really excited to be working with @coachella to release NFTs!https://t.co/MvgaqfmHqN pic.twitter.com/0iq0TZn9V3— SBF (@SBF_FTX) February 2, 2022Renaud also thinks that branded NFTs grounded in pop or sports culture have their place. “2021 also showed us that many retail investors needed a known brand to enter the space,” he says, pointing out that “NBA Top Shots was the ‘gateway drug’ for newbies.” But will brands be interested in crypto and NFTs as floor prices plunge and the community tips into despair? “In hype cycles, there is some value in just being there. But is that enough for the brand to stay for the long-term?” he says, adding, “As this is an exploratory phase, some conviction is required.” NBA Top Shots allows fans to own in-game moments.Part Two: Bear marketing for everyone elseFor those projects that have instead decided to focus on the grassroots levels, how do they approach marketing, especially during a bear market?There are segmented market demographics, so the first question is: Who are you marketing to? Crypto is full of cliques. From new adopters to play-arounders to the crypto-tragic degens. The degens will likely figure stuff out without any need for traditional marketing. Then there’s everyone else in-between on that spectrum. That’s why market segmentation is imperative. The next question is: What is your company selling? What are your goals or key performance indicators?Where you fit in crypto land dictates marketing forums and spending. Are you focused on customer acquisition or use case awareness? Are you selling a product or building an ecosystem? Traditional marketing practices are more obvious for crypto exchanges, such as Crypto.com, which compete for retail customers as an on-ramp to sell cryptocurrencies. Exchanges are also the most measurable mediums for marketing. So, the Staples Center deal may not seem that crazy over a 20-year horizon. But marketing layer-1 blockchains, such as Ethereum or Solana, means developer onboarding to that particular blockchain is the clear goal at this stage in development and a quantifiable return on investment marker.Bear marketing can be a real struggle. Source: PexelsDevelopers hate marketingIt must be noted that developers don’t like or need to be told what to think — they just need to know where to find the information. “Developers do their own due diligence. You can’t brainwash them — you need to give them the information they want,” says Austin Federa, head of communications at the Solana Foundation. “Developers hate being marketed to — that’s one thing most people misunderstand in this space. No amount of marketing will make developers build on your platform. They want great tooling, great documentation and a chance to be profitable on your platform.”Every layer-1 blockchain has a foundation, which promotes ecosystem development on that blockchain. Conviction is important, Federa explains. “Multi-year time horizons don’t affect our future. We are not afraid of spending money, but it must be on something that works,” he says.Federa explains that the Solana team operates like any startup with a “lean team, so budgets don’t change much with a bear market.” Spending is targeted. For example, the Solana Foundation runs hacker houses, which are like real-life bootcamps and are “expensive but valuable.”They know Solana’s target audience. “Marketers massively overthink it sometimes. Degens are only part of it. They are important to the crypto ecosystem, and they are committed traders and NFT collectors, but they tend not to be developers.”But what is cost-effective marketing in crypto, and does it work? Parking Lamborghinis outside crypto events in NYC? Again, the answer depends on who you are marketing to. Are you advertising the get-rich-quick dream or the decentralized change-the-world ideology? Federa simply suggests keeping the community informed with product explainers is cheap and effective. Value-added marketing for a layer-1 blockchain means product explainers. Federa tells Magazine that a good example is a two-paragraph new tech feature update in their regular email newsletter.“It sounds boring, but developers don’t care for and don’t need flashy marketing. For developers, we make sure they are aware of the resources that exist, and the message is specific to the tools that are available for their use.” “The best companies building on Solana hardly ever talk to us. Developers who need the constant hand-holding aren’t the ones who will build the next $2-billion DApp,” says Federa.Authentic clear messaging through ecosystem buildingNuanced authentic messaging is crucial, explains Ghent, who joined the Near Foundation in 2021, coming from a traditional media buying background. “Building a crypto brand is the best way to learn about how to help crypto projects to become seen and heard. Building an authentic brand leads to word of mouth — scaling ecosystems organically,” Ghent tells Magazine.Much derided during the ICO boom, when projects announced more partnerships than produced lines of code, Ghent says genuine ecosystem-building partnerships do matter.“For Near, partnerships are focused on product integrations, utility and community building. Cross-chain partnerships, for example, provide more opportunity than seen in traditional marketing.”That again is preaching to the converted, though, and crypto projects have a hard time telling succinct stories to the general public. There’s a lot of insider haughtiness. Part of crypto’s problematic narrative is, of course, that one market segment is literally authority-hating punks. “There are massive communication challenges — most crypto-marketers lean into the hype. It’s way too insider-focused. Organic social media and Twitter are seen as the be-all and end-all,” Ghent bemoans.He also notes that the origin story of many crypto marketers is not marketing. “Their background tends to be overly academic or product-focused, so it’s not natural for many to build a brand and communicate the right case studies in the right context.”Tokenized advertising a way forwardCompanies should focus on product utility, says Ghent, who cites Brave Browser, a private web browser that rewards users for viewing advertising, as a good example. Perhaps tokenization, then, is the best form of crypto guerilla marketing. Near partnered with Brave from alpha to today, so Ghent has seen their success up close. “Brave is founded by former Mozilla leadership, and to date, they have seen significant growth around a good product that relied almost only on organic marketing while naturally onboarding people to crypto.” He says this also points to tokenized advertising schemes having big potential.Solana hackathons advertised on Brave Browser.With Brave, “customer acquisition has less friction, as most users are crypto-curious, and the ad formats are more user-friendly. And since you’re rewarded for your attention, there’s more attention provided by the user to the advertiser.” “Brave is a great example of how to get people using a product in exchange for tokenized value in exchange for ad views.”Reckless sports marketing is a sponsorship, not a strategic integrated partnership, he argues.

A friend of mine who is a seasoned Web2 tech executive joined a Web3 company in June. A switched-on operator, he asked to speak with all 16 staff before deciding to join the firm.This shows that Web3 joiners need to really hone in on the mission when jumping ship from the old tech world.Is the blockchain tech business model really plausible? You almost need to be a seasoned venture capitalist or world-class engineer when considering a new project’s potential to build a new L1 blockchain as promised — and, thus, deliver your token rewards.The risk-reward metrics mean there are opportunities for great success. But with great success come great tax problems…Taking the leap from Web2 to Web3 is not for the fainthearted.“The first thing I see is that everyone in the space has an innovative mindset — early adopters, the change-makers and people not allergic to change. People love telling you how early they adopted,” explains Lucy Lin, founder of Forestlyn, a Web3 marketing agency. She spent ​​“15 years in various corporate roles” before discovering crypto and blockchain in 2017. She says 2022 feels different — it’s more welcoming, for one.“Five years ago, it was infested with ‘crypto bro’ mentality and behavior,” she says. “At the time, it was the Wild West: anything goes, a lack of process, young and inexperienced. I don’t want to discount that, but in those days, that was rampant. There was a severe lack of female representation.”Lucy Lin of Forestyln.“I’m glad to see an increasing amount of diversity and inclusion — more women, ages, sexual orientations, races, etc. — in the space these days.”“Scams are still as pervasive as ever, but the space is maturing, and many more diverse people with a variety of skill sets are entering,” Lin tells Magazine.As the industry grows up, it’s becoming a great career move for many. But it’s a whole new world than the one they’re used to. So, here are some reflections from the leap-takers, investors and founders who’ve jumped from Web2.pic.twitter.com/gdgSxDzhkR— Crypto Bros Taking Ls (@CoinersTakingLs) May 19, 2022The game is played on different fieldsThe jump from Web2 to Web3 is most apparent at the executive level: Google’s former vice president Surojit Chatterjee now serves as Coinbase’s chief product officer. Amazon’s Pravjit Tiwana left his position as general manager of Amazon Web Services’ Edge Services to become the chief technology officer of Gemini. Lyft’s former chief financial officer Brian Roberts joined NFT marketplace OpenSea. The former head of gaming at YouTube now leads Polygon Studios as its CEO, and AirBnB’s former human resources director also joined Polygon in June.To compete, Google is building its own Web3 division.The most demanded job titles in the metaverse and Web3 space include NFT social media and community managers, content writers and editors, blockchain developers, front-end and back-end engineers, media reporters, growth marketing managers, project managers and gamification strategists.Angie Malltezi used to be a tech management consultant at a top global management firm, working with C-suites at Fortune 500s.Angie Malltezi of Shipyard Software. Source: LinkedInIn 2021, she jumped ship to a Web3 exchange group, and now she’s the chief of staff at Shipyard Software.Like many others who’ve made the leap, particularly those coming from the Web2 world, she’s found it something of a culture shock.“In Web3, traditional business etiquette often isn’t followed. People will ghost you last minute or drop deals without any notice,” she says. “People won’t sign NDAs. There’s a lack of long-term thinking and planning and, perhaps, simple immaturity.”She says that on the surface, “Web3 is informal, remote-first and collaborative, and the competition is yourself — and business is done via text messages on Telegram. But the business operator mindset isn’t as strong, and projects err on the side of ‘spend to please’ as a principle of managing finances.”“It’s an experimental mindset of ‘Let’s go innovate and throw whatever money we can at this’ rather than conservative, strategic investments tied to business cases with a clear ROI.”But Malltezi says there are many more similarities than differences between Web2 and Web3. “Both have the desire to innovate, try new things and establish a collaborative culture. And both face similar challenges managing tokenholders or stockholders.”Shipyard Software creates tailor-made solutions for trading cryptocurrencies.But Web3 projects sometimes try to go around problems rather than deal with them.“In Web2, there is the acceptance and understanding of how regulatory and government bodies impact the business’s bottom line; and as such, these institutions factor in business strategy decisions and partnerships.”The recruiter’s pulseWeb3 recruiter Kate Osumi tells Magazine she’s noted a few trends among those who want to make the leap:They are frustrated by the red tape, waiting and ready to build but needing considerable signoffs; They want autonomy to call the shots;They want the flexibility of remote work, to promote a global community of entrepreneurs and product builders; And they are future-forward, believing Millennials and Gen Z should continually question the old system, asking themselves, “But why do we have to do it that way?” This new wave of builders is interested in more opportunities for autonomous economic growth.But isn’t that just every stereotypical lazy career-jumping millennial, I ask?No, she argues. The work ethic can be even stronger in Web3 because they have skin in the game. The incentives are aligned differently in token economies.The teams are generally distributed and remote-first, and everyone is responsible for their own tasks.Osumi’s own journey was from human resources at Facebook from 2018 to December 2021, to experimenting with working with a variety of DAOs in 2021, to finally joining Serotonin — a Web3 marketing firm and product studio with a client recruitment services arm — in January 2022. Joining a bunch of DAOs can be a culture shock for Web2 employees.During her DAO days, Osumi quickly became a core member of Digitalax, a Web3 fashion DAO. This swift trajectory was “just a matter of showing up every day and engaging with the community.” DAOs might be the future of business, but right now, they don’t seem very focused on business. She wasn’t impressed with how they handled the practicalities of paying the bills and rent and didn’t think they operated professionally enough.“The DAOs were fun at first. But the more DAOs I joined, the more founders I spoke to — they hadn’t even worked out tax considerations. The money was flowing, but they are still a dreamland for now.”Web3 is more like Web1: Code fastAlong those lines, Karl Jacob, co-founder and CEO of Bacon Protocol, suggests that “Categorizations of Web3 are pretty false.” He’s been around since before the dot-com boom and even built Springfield.com for the creators of The Simpsons in the mid-1990s.Remember Web1? Source: TwitterHis company Dimension X was acquired by Microsoft in the late 90s, and he was even an adviser at Facebook — though he admits he “didn’t know what social networking was” when he first met Mark Zuckerberg.“Culturally, this period feels more like Web1,” he says. “The Web1 motto was ‘Those who ship code win.’ In Web3, again, it is whoever ships code wins.”“The ethos — building for others to build on top of — reminds me of the Web1 playbook. The ecosystem pays you back for participating.”He noted that in Web1, proposals to change the internet effectively were voted on by the community. But today, DAOs could end up being a better structure for incentivized outputs. On the other hand, we “could remake mistakes, regarding voting structures.”Jacob founded LoanSnap in 2017, which started as a Web2 fintech company. However, the firm realized it could underwrite mortgages faster and more efficiently with blockchain technology and became Bacon Protocol.According to Jacob, blockchain is a honeypot for attracting talent.“Web3 is a shiny new thing — everyone wants to work on it. Real engineering is happening. Crypto security is hard, and people are attracted to working on hard problems.” Product management happens differently in Web3Web3 product development relies less on analytics than Web2. It’s messier and less scientific. In Web3, product development feedback happens during a product build. This sort of feedback is both good and bad, Hedge founder Sebastian Grubb tells Magazine. Grubb spent five years at Google as a product manager, up until October 2021, building products with large teams and was looking to try something new. Playing around with different DeFi protocols, he became really interested in building one himself.“An advantage of Web3 is that you usually get a direct line of contact with users, via social media, that would usually not happen in old tech companies. Some teams do see this as a disadvantage since customers usually only reach out when they have complaints.”Though, “Overall, the space is very welcoming, with everyone trying to help each other out and help solve similar roadblocks,” notes Grubb.One of the reasons Web2 analytics and product metrics are less used in Web3 is that they are less useful, says Malltezi:“Web2 has spent the last 15 years finely defining how to calculate CAC [cost for customer acquisition] and how to measure LTV [customer lifetime value], yet Web3 has misaligned incentives that make inferring user behavior with data unreliable.”So, Web2 folks need to ask questions and look at the business model and ecosystem first before jumping.Yash Patel​, general partner at Telstra Ventures, suggests the tech is key. And as a later-stage startup investor, Patel expects traction. “Due diligence on tokenomics is my North Star. I focus on user acquisition plus tokenomics, yet the data analytics of where the last three clicks came from is much harder in Web3.”“To an extent, airdrops are ‘customer acquisition costs’ renamed,” he says.Yash Patel of Telstra Ventures on CNBC. Source: CNBC.​So, understand the roadmap and tokenomics when you jumpDo your homework before jumping to Web3, and consider the advantages and disadvantages of getting paid in tokens. Ex-Googler-turned-DeFi-man Grubb suggests that “It’s still a bit hard to pay people in crypto in the U.S., though quite a few companies are popping up trying to solve this problem. Also, we’ve still seen people wanting fiat for regular employment, so it’s a mix of more infrastructure needed as well as demand.”“Though this hasn’t stopped some companies from famously paying their staff in crypto.”Getting paid in tokens is not the same as getting equity in a business. “The faster access to liquidity with tokens is both a blessing and a curse since employees are more likely to join but may leave as soon as they get liquidity,” Grubb tells Magazine.“However, I think this is a good thing, as equity/options in previous companies asked employees to take huge risks with little horizon for liquidity unless the company got acquired or went public.”Web3 salaries being paid in tokens also mean they can be volatile. Given that all startups are risky, cashing out a percentage of tokens as soon as possible is always smart.It may be a good idea to ask to see a capitalization table and consider who invested and when those tokens are unlocked and can be dumped.“Web3 operates within a still-questionable regulatory environment with perverse incentives. Founders and employees should want control and to make sure their team doesn’t get dumped on,” cautions Bernstein. Then there are tax issues.Been transferring your crypto between different wallets, and wondering what the potential tax implications of doing so are? ?Wonder no more! We break it down for you in our latest blog: https://t.co/NnbyOsLpT8 pic.twitter.com/58meiRhiHi— CryptoTaxCalculator (@CryptoTaxHQ) July 14, 2022Beware the pitfalls of token taxationFormer Web2 employees need to come to terms with a baffling new array of terminology about tokenomics and vesting and must work out whether being paid in locked tokens is worth the risk of them going to zero and still having to pay a massive tax bill down the line.Shane Brunette, founder of CryptoTaxCalculator, suggests determining one’s income tax liability and converting this amount back to fiat as soon as the tokens are received.“New Web3 participants need to consider the tax implications of being paid in locked tokens, which can be uncertain due to the lack of clear guidelines,” Brunette tells Magazine.“As an example, the employee could initially realize income at a high price, and if the token dropped before the employee sold, this could lead to an inflated tax bill. In the case that the token drops to zero, in some jurisdictions it could even mean that the employee is left with a tax debt.”Potentially shortened timeframes to profitably?It’s just so early still. Web3 joiners may believe in the decentralized ethos, but they may not have the technical knowledge of what is being built. Web3 joiners making a career switch rely on the promises of founding teams.Web3 companies with good business models have the potential to go to market faster, offering a potentially faster path to profitably. These can be powerful incentives to join. But there’s a major conceptual difference between the two spheres that Web3 joiners need to be keenly aware of, according to Sanjay Raghavan, head of Web3 and blockchain initiatives at Roofstock. “Web2 companies have traditionally considered their walled-garden technology stack as their core IP. Web3, on the other hand, is based on open source and decentralization, giving power back to the people. In this new model, code is no longer your IP — rather, it’s about creating a passionate, involved community. That’s your competitive moat.” And “see if something is actionable — what’s real and what’s not real,” says Raghavan.

Traditional venture capital funds drive valuations through multiple funding rounds. Startups aim for initial public offerings or other exits. Then the sharemarket decides upon a more realistic valuation. But in cryptoland, tokens introduce market capitalization while a company is being built.This means there are a lot of competing interests and agendas. Token sales for Web3 startups can be the bastard child of a personality cult leader founder and a bunch of VCs, raised by a group of Discord-dwelling degens manning a DAO, while speculators trade 24/7 and the media circles.So, how do founding teams get the balance right between the needs and wants of the VCs and what’s best for the community? Are the interests of VC funds aligned with the interests of token holders? VC funding is necessary, but are VCs always working in the best interest of the community?Even VCs were LUNAticsLet’s start with LUNA’s collapse. Who did the due diligence? VC funding can have a big impact on whether the community invests or thinks a project is legitimate or not. The stamp of big-name funds carries credibility and traction before retailers can invest.Retail investors got rekt when Terra’s algorithmic stablecoin project and ecosystem collapsed in May. The stories of homes and life savings being lost and suicide hotlines being posted on Reddit were alarming. Memes of Squid Games and Bernie Maddoff’s 150-year prison sentence were mashed up next to Terra founder Do Kwon’s attempt to save the ecosystem with a phoenix-like token called Luna 2.0.Perhaps representative of retail investors in general, one retail investor who lost a substantial amount when the algorithmic stablecoin collapsed told me, he “didn’t really get it but thought it was too big to collapse overnight.” On the other hand, some funds that trade complex financial products for a living made a killing.Who did the due diligence? Who said pegging two related coins via complex math was a good idea? Most were just plain confused.One very senior risk analyst at a crypto VC fund told me he held grave reservations regarding the “algorithm stablecoin.” But his team was assuaged by the cap table having some big names in crypto capital.And he actually read LUNA’s filings from the United States Securities and Exchange Commission.VCs look at cap tables and see who else invested. LUNA was widely considered a “blue chip” by then, leading among crypto analysts and then reputable institutions, such as Three Arrows Capital, Pantera Capital, and Coinbase Ventures. Pantera notably got its LUNA exit timing right, while Three Arrows Capital is in liquidation and has filed for bankruptcy.Three Arrows Capital bought 10.9M locked LUNA for $559.6m – it’s now worth $670.45.Ouch— Crypto Maxi (@cryptoMaxi420) June 14, 2022Everyone wants to be the smartest guy in the room. “With the LUNA example, VC backers must be seeing something you don’t, was the thought,” according to that risk analyst.“It always was a Ponzi, no point mincing words,” he tells Magazine.He argues that “VCs can distort everything, even in who supports what L1 chains. It’s a PR war; VCs turbocharge the machine. I call it the VC hunger games.”This is one high-profile example of the perils of VC funding for crypto communities.What is a crypto VC anyway?There is a difference between VCs and the retail investor community, and Web3 blurs the lines. Traditional VC fund managers often push for large capital deployment, a board seat, rapid growth and expedited exits. But Web3 VCs are often early investors who first engage as active community members, providing liquidity and governance to build out a project.“Community” itself is a vexed concept, as participants can literally “sell out,” and institutions are part of the community too, having been involved from early on. Ethereum had 3,000-odd participants, a mix of individuals and institutions.‘Squid Games’ memes emerged quickly after the LUNA collapse, as its founder Do Kwon is South Korean. Source: TwitterFirst, we need to understand who VCs are and where they come from, which will help us understand the dilemma of building an organic Web3 community.The first crypto native funds emerged from investors who got lucky and made a killing on early crypto projects and were suddenly flush with cash. Many had worked on exchanges in the early days and, consequently, were on first-name terms with every token project that tried to get listed. So, they know pretty much everyone in the ecosystem and usually get the first bite at the early funding rounds of any decent project trying to raise capital.Coinbase, Ethereum, Consensys and others produced some extremely wealthy individuals who went on to become investors in many projects. Some launched their own VC funds or firms, while others have stayed low-key to investing. But they all know each other, so they can get early access to deals. Many exchanges also established incubators or accelerators, such as Binance Labs and Huobi, that incubate super early projects and take a percentage of tokens for funding. They can leverage their network for funding and promises of support, such as listing on their exchanges and social media help. More recently, individuals have pooled capital to become institutional investors — e.g., coordinated capital investing through investment DAOs. Legally pooled funds management and taxation laws generally lead to these conversations around creating a DAO and/or legal investment vehicle structure. So, Web3 VC firms now include a spectrum from 20-something degens who have established their own funds, electricians mining Bitcoin since 2013 to Softbank.  Mark Lurie, a VC turned Web3 founder, says:“What do we even mean by community versus a VC firm? People love a villain and hate the man, but at the end of the day, they are all just people. VC in Web3 is a messy, amorphous concept in Web3. Is a group of 20-year-olds with a website an entity, a VC firm, or is that just a bunch of 20-year-olds? VCs also could just be a few whales.”Yet, there is always a trade-off between an organic community and exit horizons when dealing with tradable liquid tokens. wild chart pic.twitter.com/g0xbkWjgCy— Turner Novak ?? (@TurnerNovak) June 7, 2022Crypto VC firm to a hedge fund is a continuumAs liquidity is a key aspect of crypto investing, exit time preferences constantly vary compared to traditional VC investments. Liquidity refers to the ease with which an asset or security can be converted into cash at market price.One of the clearest ways in which VC interests collide with the community’s is in token lockups.VCs often buy a huge chunk of tokens at an early stage at a very low price, and these tokens are often time-locked, so they can’t be sold for one or two years. When the time is up, VCs face the dilemma of dumping their tokens — which makes them a fortune but tanks the price of the community’s holdings — or hanging on. Typically, VCs are perceived to choose the former.Lurie thinks the crypto community should create VC review systems for better community building. “The community is aware of the quick flip. On-chain vesting is the only thing holding VCs to that vesting schedule,” he says.“I wish they could rank VC firms by whether they engaged in quick flips — so founders are aware if they are really dealing with a VC or more of a hedge fund.” The capital cycle is different in Web3 compared to traditional VC. Bear and bull cycles also mean that cash preservation can distort investor markets. Exits may need to be expedited in a bear market.VCs may face conflicts between their own cash position and helping an invested company. Web3 lock-ups of a year or so, for example, are famously shorter than in the traditional VC realm, of, say, seven years.  a16z has provided VC funding to everyone who is anyone in crypto. Source: a16zStaking (especially in a bull market) may attract VC funding away from riskier seed VC plays. Staking a retail investment once a token lists on a retail exchange can provide better cash returns than a “cheap” seed deal pre-token launch, locked up for 12 months, that tanks when it lists as a token. Crypto VC firms invest at various stages and, at times, act like crypto hedge funds. Venture capital invests in startups to accelerate their growth and generate high returns for investors. Hedge funds traditionally invest in a variety of investments, ranging from stocks, bonds, commodities and currencies using complex structures and leveraging in order to boost returns more rapidly.David Mack, managing director of Koji Capital, tells Magazine, it’s a continuum: “Crypto VCs are effectively hybrids: When teams are raising seed capital to get resourced to deliver a product, our approach is the same as most venture investors. However, when we realize our investment and hold liquid crypto assets, we start to resemble a hedge fund, often using that liquidity to support the early product we invested in.”“This kind of approach is an emergent feature of crypto-focused firms, and founders are really in search of this capability when selecting their investors,” says Mack.If assets are tokenized and liquid, then VCs become hedge funds in the long run. A shift to tokenization, from passive to active assets, is more like hedge fund activities. This can create enduring conflict.When VC bets pay off, they pay off big time.Liquidity vs. long-term community building“There is a massive conflict between VC liquidity and long-term community building,” opines Jonathan Allen, who started his first VC fund out of college. He now runs Mirana Ventures, is a core contributor to BitDAO, zkDAO and eduDAO, and sits on the PleasrDAO board. Liquidity allows VCs to think about short-term profits in conflict with communities building for the long term.“Liquidity raises a bunch of new issues. Quality communities mean people who are there for the long haul. We have barely scratched the surface of a healthy community that incentivises better community members,” argues Allen.Allen was also a U.S. Army Explosive Ordnance Disposal (EOD) Technician (bomb disarmer) who got into crypto after an injury suffered in Afghanistan in 2012. The EOD motto is perhaps suited to being a crypto VC, too: “Initial success or total failure.” He argues that crypto VC has “evolved over cycles — with increasing community exposure and less VC funding now favored.” The alternative is fair distributions of tokens to the most active community members and project users to ensure the most valuable people to the project are motivated by the correct incentives. “We don’t want a lot of VCs to own a lot of tokens. A lot of VC funds are maybe not as helpful as individuals or communities. We often advise our portfolio companies to save 30% for angels. Individuals who we feel need to, and can be, more helpful.”Angels are typically the investors who first write a small cheque in return for equity when the company is at a very early stage and the company’s valuation is still low. While the exit cycles in crypto are a key difference from traditional VC, founders can also determine the lock-ups so good-faith investors cannot dump their profits.Nonetheless, for Allen, community building is key. “With a lot of invested projects, we let the code stand for itself,” he says. “It’s about building authentic community missionaries versus mercenaries — first movers at scale. VC funding in the form of blitzscaling can grow the wrong kind of community.”“Too often, people are free riders — they hold tokens and don’t do anything.”VCs add investor network effects and tokenomics adviceWhile there’s certainly an increasing hostility to VCs in the industry, some founders reject this angst. Josh Tobkin dropped out of a large economics scholarship to play professional poker and “learned to think in probabilities.” By the last crypto winter of 2018, he had founded Unity Chain, a crypto lab in Taiwan. He has some well-known investors, including FTX, United Overseas Bank, Coinbase and Razer.He is now working on a novel blockchain consensus algorithm: the creation of an intralayer that bridges all layer 1s, layer 2s and decentralized apps across all ecosystems. “A more secure infrastructure to prevent instances like the Ronin Bridge hack or the liveness faults of Solana.” His current project, SupraOracles, plans to have a token, with the infrastructure launching soon. He believes a VC lead investor adds great value, as the “complication is taking a check from everyone. VCs make it much easier to close deals both with other investors as well as social proofing for large corporate partners.”Tobkin tells Magazine, “Decentralized retail raises are great, but it helps to find (VC) funds who are passionate about your project when it aids their entire portfolio. Projects need a mixture of both types of funding for their growth whilst balancing decentralization.”“Never go full VC, and never go full retail.”Tobkin says VCs played an important role in SupraOracles: “VCs were necessary to get started. The cap table [table of investors] amounts are very balanced. We didn’t oversell. 1% max for each investor on strict vesting terms.” Vesting refers to when equity can be cashed out.Tobkin also values the Web2 introductions that more traditional VCs can offer. “Crucially, the leads for our rounds have worked for it. They have a massive list of traditional Web2 in need of our exact solution, and they are making introductions. They sell for us — it’s a win-win. Retail generally can’t do that unfortunately.”“With one integration, we’re bridging Web2 to Web3 and vice versa. We have VCs to thank for it.”Are you a traditional VC who wants to enter into Crypto VC? or a founder who wants to study thought patterns of VCs?Here are 14 great threads on Crypto VC that will explain you the whole crypto VC landscape and what daily life looks like as a crypto VC ? ↓+ some alpha..— Meet Barvadiya (@meetbarvadiya) June 19, 2022Wen token sale?Tara Fung is another Web3 founder grateful for VCs. She is a Harvard graduate who “transitioned to tech with finance skills and a general curiosity.” A former chief revenue officer at two “centralized” fintechs, she “wanted to build on the new frontier.” Her startup, Co:Create, seeks to help successful NFT projects scale.Becoming a founder in 2022, she received $25 million in VC funding led by a16z. Her “thinking was that the resources would help us deliver faster, and I could focus on building (as I was) feeling like this would be a rocky year.” A16z closed a $4.5-billion crypto fund in May 2022 despite treacherous market conditions. She met a16z partner Chris Dixon four times before meeting the other partners. She notes there’s “not a ton of diligence at seed. It’s a diverse cap table, and obviously, the fundraising timeline sped up due to a16z’s participation.” She also hand-selected Web3 native angels to be included on the cap table. She highly values that “a16z has an in-house research team that I can go to with a problem, such as best practice for tokenomic design.” That’s a huge value add. Tokenomic design is an emerging, complex and sometimes arbitrary science. This is an important theme. How the companies are structured early on has important ramifications. “What we do now can set us up for success — VCs offer a level of professionalism.” “Token sales too early can be a double-edged sword.” Fung explains that one challenging aspect of building in Web3 is that founders must “build publicly, not behind closed doors.”When and if to form a DAO is now another vexed question alongside “wen” to have a token sale? “DAOs offer great promise, but what does the timeline look like? You have to be thoughtful and create clarity at the start and let the community evolve.” VCs can actually be quite helpful in building a community, too.Investor protectionsLurie, founder of Shipyard Software, agrees that VCs can work hand in hand with decentralized governance and bring major benefits to the community. He argues that in crypto, it’s “necessary to decentralize governance because the community demands it. It is also a necessity to make the VC model work.” VC funding is a competitive and a regulatory necessity to building a viable company, argues Lurie.“To me, a defining characteristic of a VC firm is that it steps up to ensure investor protections and good governance,” says Lurie. Lurie started out at VC Bessemer Venture Partners, and he has seen both sides of the VC spectrum, raising several VC rounds, “some hard, some easy,” for his startups. This includes an early NFT protocol ICO in 2017.“Decentralized governance is a trade-off with nimbleness. It’s tough to start a fully decentralized company from day one. You need to strike a balance. Startups are in a constant battle, and few people make it to the end of that journey.” “One of the best reasons for VC-backing is governance — a partner on a deal will hold founders accountable,” he says. Are faceless DAOs not accountable to investors?We’ve noted how a VC’s interests can work against those of the community, but sometimes, the community can work against the interests of VCs. And communities can vote in a way that totally disregards the law or their obligations. In mid-June, Merit Circle DAO, a gaming DAO, voted to return the investment of a major play-to-earn guild turned early-stage investor Yield Guild Games (YGG) instead of paying out the 30x return it was owed.It’s sort of funny how deeply this whole web3 thing set the hook with VCs.They’re squirming a little bit now — lashing out at skeptics in a way usually reserved for CEOs of fraudulent companies.How did we get here?1/https://t.co/Tj3OtUUl3J— Travis.web1 (@coloradotravis) June 7, 2022What will this mean for VC investing in DAOs in the future if the community can simply overturn a contractual agreement with a vote? Who’d stump up the funds in the first place?As it happened, a reasonable deal was hammered out whereby YGG got a 10x return instantly, with no more vesting or risk of a lowered valuation. But it highlights that there are perils, too, for VC investors with the evolving and sometimes flaky nature of crypto communities. If a DAO successfully renegs on a SAFT, it will embolden other DAOs to do the same resulting in greater levels of politics and a chilling effect on future investments into DAOs.— Galois Capital (@Galois_Capital) May 26, 2022  

Everyone knows the Metaverse is coming, but no one knows what it will be like.At present, people say it’s clunky and difficult to use and are waiting for further development. Are brands just jumping on a PR bandwagon in hyperspeed? Is this the future? Is it a place or a time that is coming? And how soon?So, I packed my virtual bags and took a trip to find out.Most of you have probably entered or seen images of the Metaverse, maybe somewhere like The Sandbox or Decentraland. But unless you’re a gamer or a devotee, visiting it may still be a little underwhelming, at least for now — and especially for gamers.If you’ve seen Second Life (circa 2006) or even Golden Eye 007 from the late 1990s, it’ll be familiar, as the Metaverse’s graphics haven’t advanced that far forward from those pixelated images.Of course, now we have virtual reality headsets to put you right in among those pixelated images.Shared virtual worlds created in part by users already exist elsewhere. Roblox has 43 million daily active users and 202 million monthly active users, half of whom are under 12. You make friends online these days — if you’re 12. So, the investment thesis is clear: These kids will not feel so strange in the Metaverse.And adults still feel the need to escape to different realities. Escapism is ageless. Pokemon Go was a global phenomenon accelerated by a nostalgia that made sense to everyone.Here are two things I learned from my trips to the Metaverse over the past few weeks:First, the Metaverse works well for virtual events.Second, the Metaverse only works well for virtual events.To be honest, visiting the Metaverse is kind of basic right now.Ready Player One I’m not a gamer. I like ocean sports and the outdoors. I’m a believer in decentralized tech and all that it may or may not offer, but I’m not sure the current version of the Metaverse is the place I’d like to hang.My eventual avatar.I enter Decentraland, and I soon face choices: Should I select a cartoonish or realistic avatar?This first part makes sense. Who should I be in Decentraland? People’s images of themselves never correlate with other people’s images of them.I decide to choose a woman. I feel obliged to choose the Sailor Moon Japanese schoolgirl outfit, as that’s the image of Comic-Con seared into my brain.The avatar helps you choose by grunting at the outfit selections, more approvingly for some choices. You can select a bald woman or buy banana “skins” in the gift shop. In the end, my desire to do something different is undercut by impatience, so I click “randomize” to keep the story moving — and get a man dressed in something I might actually wear.Lucky, I didn’t choose a Sailor Moon outfit for the party. Awkward.Loading… Then I jump off a diving board into a wormhole, which I initially thought was a stripper pole.I spawn in “Genesis Plaza,” a bar in a shopping mall plaza for avatars — a bar without alcohol.Me jumping at the same time as another person. Our pixels got stuck and froze, and I had to reload. There are numerous avatars everywhere. Most people look remarkably human, aside from a dogeman (Shiba Inu, not Chewbacca) and a purple octopus woman. We can speak in real time, so I try to strike up a few conversations. “Yo,” I offer, which is met with “Hi.” Good chat. (I thought “Do you come here often?” might come off wrong.)“Do you come here often?”I’m struck by the thought that, maybe, most people do select lifelike avatars? Except for dogeman.Things do get a little interesting. There is one chat discussing crypto market prices and altcoins, and I see the Shiba Inu dogeman avatar strutting around like he owns the place. Is this an omen? Or a paid ad? Shibu Inu dogeman goes walkies.More crypto market conversations happen. Then a cigarette or marijuana sale URL — “Visit [insert name].com” — pops up in the chat. Clever guerilla marketing, I think, though perhaps not at scale, considering there are only three people in the room.New avatars spawn next to me. A young white man morphs graphically into a white-haired black man, and then they split left and right. Weird.Two avatars spawn, blend and split momentarily.I click “escape” to leave the page, and suddenly, I’m in a disorienting fantasy land. I teleport from place to place. I instantly recognize the Twitter and Discord logos on street signs, jolting me from the noise. Brand recognition in the Metaverse distorts my escapism, thanks to every brand trying to be there. Virtual Times Square is coming soon, I think.Press “M” and you teleport to another room. It’s all a bit confusing and disorienting.So, I wander around aimlessly. There are only a few other people around, and I feel like a lost tourist without a Lonely Planet or Google Maps who cannot speak the local language. And there’s no street food online. I give up and decide to hire a tour guide.Trip 2: Reentry with a tour guideThe next time, I get a tour from Adam De Cata, head of partnerships at Decentraland.We enter Vice Media Group’s building, which is not as edgy as I expected for Vice. It has a strange post-modern architecture. I would’ve thought warehouse industrial for that once-grungy mag, perhaps.De Cata explains the ethos of Decentraland as we wander around. The DAO was set up in 2019, and it has sold 90,000 parcels of land, which are community-owned and managed. The experiences are mostly gated, so you need a particular NFT to enter a particular building. So, it’s just like being on a Hollywood bus tour and not being able to see inside the celebrity-owned houses.The “tech has its challenges, but the fundamentals are truly intriguing,” says De Cata. “It’s still in an entrepreneurial testing stage and financially driven by the degens driving it.”He says that “Building in real time is the true challenge, but companies are willing to build experimental case studies.”He invites me back in a few days for Metaverse Fashion Week. “You need to see an event,” he proclaims.Metaverse Fashion Week and other adventuresI return to meet De Cata for Decentraland’s Metaverse Fashion Week, but he ghosts me. To be fair to him, it was not a calendar invite but a tentative virtual meet-up.I’m in. The elevator music suddenly starts randomly as I move around. The music changes from dead silence to up-tempo to heavy guitars as I battle with the keyboard, as to be expected.I try to click on a blackjack competition but end up teleporting outside The Aquarium.Ukraine Art Museum.I then find an empty building telling me that “NFTWeek” has been held. I think. So, I press escape and keep looking for “Metaverse Fashion Week.”I battle with the keys to move around and wonder if I’m uncoordinated cos I ain’t no gamer. I feel a little dizzy.I get lost and find myself running aimlessly, but it’s freeing, like when you go for a jog in a new city as soon as you land and end up finding some cool local fare. You see the architecture differently than if you were riding a bus or taking an Uber.I feel like a Smurf running from Gargamel and his cat. The landscapes change quickly, making me feel like I’m a pioneer before the hotel developers build skyscraper accommodations. I find some “ancient” ruins — broken Greek columns in a garden somewhere.I look at the map and jump to the “Muslim Quarter,” thinking it’s like a Metaverse version of the Old City of Jerusalem. After teleporting there, I realize nothing has been built yet, but the call to prayer rings out as I raise my volume. It truly makes me feel like a tourist somewhere exotic but familiar. However, there is no hummus.You want to pray? but there is no mosque? available ? Visit the “Muslim Quarter Project” in @Decentraland ??! Happy to have built this mosque for Deem ! And many thanks to my 3D-artist @horstremote for his fantastic work ! #mosque #islam #shahda #turnthemusicon #decentraland pic.twitter.com/3a507JrBhc— acl_crypto (@acl_crypto) September 13, 2018 Imagine if all the 90,000 plots of land get filled. How will we navigate the sites?I spy “Jammin’Land” and think I’m heading to Jamaica. The place is deserted, with a frozen bartender image behind the bar. There is no Bob Marley avatar asking me if “I like jammin’ too.” With outdoor markets, out the windows, I still get a sense of how music events in this place could pop.I then teleport to the Ukraine War Protest Gallery. It looks like an art gallery. All the buildings seem to have that smooth virtual concrete aesthetic. The Metaverse doesn’t do rustic well. It also reminds me again that this is not Disneyland. Anyone can build anything quickly — this is decentralized land.I spend two hours wandering around before I decide to actually head to Fashion Week. Somehow, I click on an event taking place live in my time zone. Time is actually a massive problem. Even in the Metaverse, we still live in different time zones. Being based in Australia, I already hate scheduling international meetings for work. It’s colorful and vibrant, and avatars abound. The proof-of-attendance tokens are all gone from the vending machine by the time I get there. I realize that this is avatar fashion week. It’s a little bit like the bar scene in Mos Eisley in Star Wars. Avatars are able to strut remarkably well. They also tend to jump a lot as they enter the runway. The poses are less Blue Steel and more Sonic the Hedgehog. Two things: One, I made it to Fashion Week, finally. Maybe WAGMI is a prophecy? And second, only pictures can do it justice.Metaverse Fashion Week is unusual, but that’s fashion for you.I begin to understand that Metaverse events tourism has already become a thing — if you like events like avatar fashion shows and prerecorded computerized concerts, that is. Milli Vanilli, unfortunately, missed their chance for a comeback show. May Rob Pilatus rest in peace. Sorry, degens, if you’re too young for the reference.Otherwise, the Metaverse is a bit like Adelaide in South Australia. It’s a lovely place without much to do.Fashion week: Hipsters chill with the goths. Just like high school?Next stop: The Museum of Crypto ArtLet’s just say it: For art NFTs, a Metaverse museum makes a lot of sense. It’s just the vibe.The Museum of Crypto Art is not subject to the laws of gravity, physics or modern engineering. Staircases can be majestic, even if not mathematically load-bearing. MoCA: Staircase has an Escher approach to engineering.There’s a lot of art on each wall.The museum uses a token to give its community members a say in the project’s direction as part-owners and co-curators. It declares on its website that its earliest acquisitions will “represent the earliest etchings on the blockchain, and will come to be regarded as the digital cave paintings of our transhumanist narrative.”As an art fan, it’s hard to find a context for art NFTs. There’s no time period or a genre to use as a reference point. Luckily, I’m given a guided tour by its co-founder Colborn Bell. He explains each piece and why he is documenting NFT history.Bell first sought to build a collection in 2017 and is now the largest collector on the NFT sales platform SuperRare. He was an investor in Decentraland’s 2017 ICO, but his gallery was built on Somnium Space, which has “nice light and shadows and is not as cartoony as its competitors Cryptovoxels and Decentraland.” Bell can configure an exhibition in a couple of hours, for free.There’s lots of art on the walls.Having a tour guide in the NFT space right now helps. Bell is a patron documenting crypto history. Without his curation, I would be lost as to why one piece is valued over another.Cryptoland loves a meme, and some works relate to the earliest history in the space, like the Bitcoin volatility clock piece. There are 350 pieces in total, going for an average price of $300, but only 50 pieces are on display.Seeing NFTs on a virtual wall is still strange to me, as art is usually fixed in size and hung on a real wall based on that size. Small paintings are cute in a nook, for example. But as I noted when I tried to value NFT clones, the art is in the code — and the curation of the collection.So, I ask my tour guide, “What is art?”His take is honest and crypto-native.“Out the gate, a lot of NFTs aren’t art. They are really not. I look to the fringe for art, as in the existing art movement and art market already gate-kept. I want that piece by a queer artist in Kenya depicting two women kissing in a field of flowers.” He’s referring to an actual piece in his collection. “I don’t have an investment thesis,” he adds. “I like validating artists.”He says that art NFTs are “familiar but also have elements of the surreal.” Famed project CryptoPunks gave Bell “a terrible first impression,” he says. “Pranksy built the market, and he was a notorious scammer.” (Lawyers, note: Magazine is not suggesting Pranksy really is a scammer, notorious or otherwise.) Bell bought his first Punk relatively late, after Christie’s auctioned Alien Punks in mid-2021. Bell also notes that Pak, another famed NFT artist, “is good at social manipulation, not art.”So, the Museum of Crypto Art is not about the art? Apparently, it’s more about patronage.“If it all [the value of the collection] went to zero tomorrow, I wouldn’t care. I’ve built friends all over the world. What was important to me was the growth of cryptocurrencies and bringing in creatives to the space. We already had devs and programmers.”For me, the gallery is a great tourist destination because it houses NFT artworks. It has digital works exhibited appropriately. I accept the glitches, like the time it takes to load pages, and the distracting ID numbers across my avatar detracting from the art.Events and attractions work well in the MetaverseThere will be a Lonely Planet for the Metaverse. Do not let its current pixelated state fool you. Events and attractions work well in the Metaverse. But for now, it’s like throwing goo against a wall. Some things will stick.Every tennis ball avatar still walking around in Decentraland is a reminder of the success of the 2022 Australian Open’s Metaverse activations. Fans could actually watch real live tennis from the Metaverse. Australian Open 2022 in the Metaverse: Tennis ball image.I’m still hungry, and virtual coffee has no caffeine. Real beers have alcohol. So, I depart for the real world with a final thought: Perhaps the Metaverse is like crypto in 2011: You just have to believe and hodl.

An insider account of the DeSci origins story — a new movement of citizen scientists, open-access scientific research and crowd-sourced peer-review funded by crypto that’s gathering pace in 2022.#At ETHDenver in February, decentralized science became a thing. It was like the good old days of crypto: Like-minded spirits met and then crashed at each other’s rented places. Ideologies and open research were respectfully debated. DeSci panels were well attended with renewed energy for figuring out hard problems. Heated discussions were had. Many committed themselves to decentralized science, whatever that would mean. DeSci is, of course, very new and untested. This could well be the first insider account of the DeSci origin story. Think Peter Parker citizen scientists funded by crypto. Decentralized science?Research is hard and problematically peer-reviewed. Commercializing science and tech is complex and often not profitable. Intellectual property protection is time-consuming. So, scientific research isn’t rife with speculators, rent-seekers and low-hanging fruit like other parts of Cryptoland. The newly coined DeSci is about championing true decentralization, rejecting institutional influence (read big pharma, and the peer review system) and encouraging citizen science in pursuit of truth.COVID-19 has spurred its development. The speed at which multiple COVID-19 vaccines and endless studies were delivered was a pivotal moment. If COVID-19 research could be produced that quickly, why couldn’t decentralized movements do it too?Could crypto, tokenomics and decentralized autonomous organizations play a role in new models of research and commercialization?This is a story of a band of committed activists who want to make that happen, one of whom is Erik Van Winkle who grew up wanting to be a scientist, had a core role at ConstitutionDAO, and has now found his sweet spot as a community organizer for DeSci Labs — a project working on new technologies to improve the accessibility, reliability, transparency, and value sharing of scientific publications, as well as the DeSci Foundation. He says the mission is broadly Can we make science more efficient? and while it won’t happen overnight, it will happen:“DeSci is possible — it just has a long road ahead of it. Blockchain took time; DeFi took time. DeSci will get there.”He adds it’s already attracting some of the best minds.“People are excited to be there; they are excited by the mission. Attracting developers is very hard. This is an area that has a good story behind it.”Building upon existing scienceAccording to a recent article by Sarah Hamburg, co-founder of Web3 advisory Phas3 and blockchain-based biometric data company Lynx, DeSci lies at the intersection of two broader trends. “1) Efforts within the scientific community to change how research is funded and knowledge is shared, and 2) efforts within the crypto-focused movement to shift ownership and value away from industry intermediaries.” DeSci communities are expected to be largely made up of those already involved in both crypto and science. How they interact with the wider scientific community is key.Most DeSci advocates are keen to respect existing research communities while harmoniously building new ones. This reflects an important slogan for the DeSci movement, best summed up by Hamburg in a letter to Nature encouraging scientists across all disciplines to join DeSci. Don’t work against us — join us.The DeSci Foundation is one of the leading organizations in this new sector. Source: DeSci FoundationHippocratic Oath for DeSci?Josh Bate has become a high-profile figure in the burgeoning DeSci space. A community organizer with high visibility, he agrees ETHDenver was a catalyst for DeSci.Bate, “a DeFi guy” who was once the head of community for the Free Julian Assange campaign and began in crypto “by using Bitcoin just for buying things on the dark web.” He’s pretty forthright when he talks. How did he earn his position of visibility in the community? Just “put myself about,” he says. Bate founded and funds DeSci World, a “peer-to-peer research platform, and a DeSci aggregator of info.” It aims to create a dashboard akin to DeFi Pulse for DeSci. He also believes DeFi practices are crucial to DeSci business models, but DeSci needs more than “Web3 tooling to improve on the current state of affairs.” He tells Magazine that he fears a “dark DeSci and a regular DeSci,” so he’s been campaigning for a Hippocratic Oath for DeSci. He made the case at a talk at ETHDenver:“It’s so early, but we can choose a Hippocratic Oath for DeSci now — no institutional finance, just pure science.” He asked the crowd for a show of hands on whether “DeSci should have an explicitly stated ideology” and estimates that maybe 5% voted “no,” 20% “yes,” and the rest were too confused by the many variables and held out to see the outcome.How to peer review as a decentralized public good Let’s jump back a step to consider the complex problems with existing research models.There’s a need to improve: Research funding  Open access to research  Overhaul the academic peer-review process.Of course, there’s no proof that grafting crypto onto this process is the best way to improve it. Is creating a coin around a research project a good way to fund it? What do holders of that token get out of it? Is it more out of altruism than a financial return?LabDAO is an open community of wet and dry labs for citizen science. Founder Niklas Rindtorff tells Magazine that “tokenomics can’t directly change research.”“But tokenomics can generate new mechanism design and incentives. In a time where most academic research is following the same set of incentives, I am hopeful new funding agencies and tokenomics models can help diversify the ways research is being done.” Artists impression of the DeSci Future.1. Crowdsourcing research fundingFunding is the bane of scientists’ existence, and the process does not always reward merit. Scientists waste a lot of time writing grants applications. Hamburg wrote:“Funding is an especially acute pain point for scientists, who spend up to half their time writing grant proposals. Success in getting funding is heavily tied to metrics such as the h-index, which quantifies the impact of a scientist’s published work. The resulting pressure to ‘publish or perish’ incentivizes the pursuit of novel research over work that’s critical but less likely to grab headlines. Ultimately, inadequate and unreliable funding not only reduces the amount of science being done, but also biases which projects scientists choose, contributing to issues such as the replication crisis.”The replication crisis means that the results of perhaps more than 50% of published studies cannot be replicated by other scientists carrying out the same experiments or research.DeSci can help mobilize those most affected and motivated to contribute to research to help improve their lives.DeSci proponents argue that funding gatekeepers hinder scientific progress. Hamburg, a neuroscientist who has researched innovative ways of treating Alzheimer’s by using light known as entrainment, explains to Magazine that “funding bodies are too slow for innovative therapeutics.” She was building a phone app for entrainment treatments but ran out of funding. She still believes the trial would have proved fruitful for treating Alzheimer’s.In addition, traditional funding mechanisms aren’t great for new and different research approaches. “For example, DeSci will unleash the growth of digital therapeutics [wearable biometric devices], which will enable large numbers of people across many different locations to participate in digital-based studies and pool their data,” she argues. DeSci trials could be done with fewer biases and better-pooled data on a blockchain.Like the open-source nature of AI research, Hamburg suggests that “medicine of the future will be algorithms in one way or another. Pooled data will be very important for generating new insights.” That’s the vision. The question is whether the decentralized science movement has the capabilities to better decide what should or shouldn’t be funded. How do you conduct peer-reviewed research and collaborate with the harmoniously scientific community? Will DeSci crowdsource both the funding and the peer review, or does it just fund the research and get out of the way? For now, experimentation may be the only option. SCINET.io co-founder Kaitlin Cauchon believes DeSci’s success is inevitable because the current academic funding model is broken. “How to get scientists on board the DeSci train? Democratize funding. Funding is the biggest centralization of science.”SCINET is an early-stage project that is currently focused on building a decentralized crowdfunding platform for life sciences research. Once done, they will turn their attention to an “electronic lab notebook built on on-chain”, according to Cauchon. Open access and replicability are the problems they seek to solveDeSci events are now highly visible in 2022, and female representation is unusually strong for Cryptoland.2. Open access for citizen scienceInformation access is another big problem for science today, Hamburg noted in her article. “Despite the fact that science is the epitome of a global public good, a lot of scientific knowledge is trapped behind journal paywalls and inside private databases. Making all types of data more accessible is the main objective of the Open Science movement, which emerged over a decade ago.”Peer review is slow and anonymous, and this can lead to “turf wars” as journals are gatekeepers of knowledge. (FYI, see this 2018 review of the peer review system.) Two major players are Clarivate and Elsevier, who are the Web2 equivalents of academic research. Scientific journals are an oligopoly of for-profit companies. Articles are protected by copyright.The two leading business models of journal publication companies are “pay-for-access” and “pay-for-publication.” Even for independent observers, this does seem like a perversion of incentives.In recent years, preprint platforms Arxiv, bioRxiv, medRxiv and SSRN have allowed academics to post early versions of their manuscripts online and have emerged and found favor. However, this is prior to the peer review process, and academics may not divulge key findings at this stageThe problem is clear: paywalled science. And the benefits of fixing the problem are even starker.Citizen scienceHamburg, who has had a chronic pain condition called fibromyalgia since she was 19 and long COVID over the past two years, believes that by making research more available, DeSci can crowdsource ordinary people working together to help solve problems, especially those affected by an illness who are the most motivated.“With many chronic conditions, there’s a strong ‘biohacker’ mentality that emerges, as people are left to track flare-ups and the impact of interventions themselves, with inadequate know-how and tools to do so. There is very little crossover (if any) between these ‘citizen science’ experiments and traditional science and medicine, so insights are missed, and many illnesses remain under-researched despite the millions they impact worldwide.” DeSci Labs plans to store research on ledgers and to “chip away at the reproducibility crisis.”DeSci Labs is working to create a ledger of scientific records that stores and validates manuscripts, data and code in a transparent way that is accessible to everyone. “Making science truly open involves transforming science from solitary PDFs into dynamic research objects. We plan to showcase our first product, DeSci Nodes, at the DeSci Day on April 20 in Amsterdam to demonstrate how a pre-print can be turned into a reproducible research object stored on IPFS containing data, code and video to evidence work and chip away at the reproducibility crisis,” Van Winkle tells Magazine. One innovative approach that might improve open access is being taken by the Smart Contract Research Forum. It’s a community for industry and researchers to share research and peer reviews that is “decoupling review from publication.”Operations leader Eugene Leventhal tells Magazine, “Today, peer review is only available for those vying for those coveted journals and conferences. The majority of the Web3 space, with the exception of the underlying cryptographic primitives, has mostly been built outside of academia, and most researchers publish more on their blogs and Twitter than in traditional venues.”“That’s why we think it’s important to start a series of open peer review experiments supporting independent researchers in the space, and we’re starting to coordinate with meta-science researchers to ensure that we’re not re-inventing the wheel with our experimentation.”They will announce their plans for 2022 at ETHAmsterdam on April 20.So, more open and pooled data is one key to more research from concerned citizens. But should tokenomics mean that reproduction of data sets along with all research data is incentivized? 3. Overhaul the academic peer review processPatrick Joyce worked at a tumor biology lab at the famed Johns Hopkins University. He also dropped out of med school and a Ph.D. program working on molecular biology.He’s far from the only person who tells me that “good science isn’t always super citable. This creates weird perverse incentives driven by money flowing from citations.”He adds, “Higher prestige journals lead to better citations. But paywalls mean the world can’t benefit in real-time.” In 2016, before Joyce discovered crypto, he decided to build a Reddit-like platform for science called Knowledgr. Coinbase founder Brian Armstrong invested in his company, but the project soon sputtered out. Joyce then joined Armstrong’s ResearchHub — a sort-of GitHub for science, with utility behind the paper — in 2020 as chief science officer. ResearchHub is a good example of where DeSci may be heading. ResearchHub has hired 60 editors, he says, people who “are qualified to review scientific papers.” It’s really an economies-of-scale issue, enough editors and support, and the reviews will be almost universally respected. It’s currently on the hunt for preprints or draft research manuscripts to receive peer reviews.ResearchHub isn’t trying to conduct research, but to create a platform for independent science. The editors are paid in ResearchCoin, which “essentially equates to governance rights on the platform.”“Like open source, we hope to tear down the Ivory tower so a barefoot biochemist in Yugoslavia can unlock clever science.”They recently added digital object identifier (DOI) citations to papers to help integrate ResearchHub with existing research models. DOIs aid researchers to find original references. Joyce says the project started as a pure DAO, but that didn’t work out. It “is still kind of a DAO but more CEO-run. It’s hard to organize people. We had to carefully delineate what the DAOs should decide. For example, ‘should we ban a eugenics hub?’ that question goes to the DAO.”But he adds in DeSci, “Now there’s an expectation that you’re a DAO.” Do you see opportunities to improve #PeerReview?SCRF will host an Open Peer Review discussion with Prof. Nihar Shah @mldcmu, @joshuaztan from @metagov_project, and @bbeats1. Join us April 5th at Carnegie Mellon University. pic.twitter.com/MdjjoFCCCm— SCRF (@SCRForum) April 4, 2022DAOs are crucial to DeSci’s momentIn the wake of ETHDenver, new DeSci DAOs have been emerging almost weekly. The fledgling stdDAO’s mission is to fund sexually transmitted disease research in the hopes of finding cures. The founders are crypto people “remaining anonymous, as everyone in the DAO has personally contracted an STD — all of them know someone who has a more serious STD.” Founder CarmenCrypto says they seek to get access to the industry outside of big pharma. They are looking for “cures, and not just another side effect treatment, which are what is only available on the market today.” They plan to first focus on STDs, such as “herpes simplex types 1 (cold sores) and 2 (genital) and to further gene editing and stem cell research.”“We run the business, the DAO; outside specialists will help us with the research. The DAO can be cross-border, can move funds, can cut across projects.” They have in-kind goodwill from lawyers, finance pros and charities all willing to help (and everyone “has crypto skills”). Being an anonymous DAO is well suited to the cause of No one is shamed by saying they have cancer, but, unfortunately, they still are when it comes to STDs.Side-stepping United States clinical trial regulations, they want to fund research “wherever scientists and researchers may be.” They are also looking to capitalize on existing open research. CarmenCrypto says the DAO is “looking for highly knowledgeable professionals, such as doctors, scientists, researchers, philanthropists and entrepreneurs, to help provide insight to our community on innovative medical techniques with a high potential to cure STDs that stdDAO should fund.”It’s very new, and very experimental. Are decentralized clinical trials even possible, or ethical? It’s so early that tokenomics design is still a vague high-level discussion.Ok how about: It’s a DAO. The scientists do science. The DAO owns all the data, algos & IP generated – all tokenised (@oceanprotocol) & tied to a DAO token. Giving the tokens value. Scientists are paid in these tokens. Token value is inherently ⬆️ by teaching & collab. Thoughts? https://t.co/Od21X1f2tf— Sarah Hamburg PhD (@Shamburgularara) April 3, 2022Tokenized science is still evolvingDespite the enthusiasm, the path to tokenizing science may be slow, says DeSci Labs co-founder Professor Philipp Koellinger, adding:“It’s too early for a tokenomics model of science. Most scientists are risk-averse and not familiar with Web3 yet. Tokenomic models for DeSci must be very well thought through and, ideally, developed together with and tested by the scientific community to gain widespread adoption and acceptance. It is glaringly obvious to most scientists that the current incentive system is misaligned with the purpose of science. The possibility for incentive design is one of the most powerful features of Web3 technologies. If done well, it could solve a lot of problems in science. Give it some time.” DeSci Labs believes that a decentralized peer review system can be achieved by “autonomous research communities of the best researchers in every field, who are incentivized and rewarded for providing open, timely, and high-quality peer review and who select the most important contributions to be highlighted in a transparent way.”This would be a dramatic improvement on the current practice of closed-door peer reviews of journals that rely on unpaid time of scientists, which is haunted by collusion, gate-keeping and bias.DeSci’s breakout moment in Amsterdam?Renee Davis is another who was inspired by ETHDenver. She asked Ethereum co-founder Vitalik Buterin at the event what the top five research problems were facing DeSci. “Of the five Buterin stated, four of them are already being worked on by the community,” she says, listing onboarding, governance protocols, token distribution and decentralized identity systems. “I’m so glad I went to ETHDenver,” she says, adding, “My ROI was massive from bonding with the DeSci community.” She quit Deloitte consulting to join BanklessDAO and then founded the Journal of Decentralized Work, an open-source journal for the study of DAOs and delegated tokenomic research and TalentDAO.“TalentDAO is trying to create a new science of DAOs, helping to make sure DAOs don’t fail.” It has partnered with Arweave and Ocean Protocol. At ETHAmsterdam, part of Devconnect Amsterdam, DeSci Day will take place on April 20. It’ll give the community a chance to see how far DeSci has progressed since ETHDenver in February. Davis, for one, thinks it’s progressing in leaps and bounds, and the sky is the limit. “Crypto disrupted finance; NFTs disrupted culture; and DeSCi will disrupt knowledge in the next 12–24 months.”