#40 DAOs Are Unlocking Impact Work. The Improbable Otherside.
Disclaimer: Everything we write in "The Crypto Insider Report" is an x-ray of the industry as we see it, through the lens of publicly available information. We are not financial advisors.
DAOs Are Unlocking Impact Work
I’m sure you heard (or thought) at least once - “why is all this money going into research for suggesting cat GIFs you’ll like while there are people without access to water in the world?!”. While I won’t dive into the arguments one way or another, I think it’s safe to say that individuals at large did not really have real opportunities so far to get behind and fund specific do-good research and actions. Probably the closest we got to something specific was the Folding@Home project - my first foray into “mining” (PS3 memories), but other than that usually people donate to broad efforts through charitable foundations about most of which you can find controversial stories.
Gitcoin’s co-founder, Scott Moore, writes in CoinDesk about how Impact DAOs can unlock this dual challenge of 1. Funding transparent efforts you believe in (for donors) and 2. Working on projects that motivate you (for people looking for work). Gitcoin is a bounty platform that has been around for a while, acting as a marketplace between open source projects and developers, so they know a thing or two about the field. Check out Matei’s piece to learn about GitcoinDAO’s Year in Review.
Just as people got together to buy Wu-Tang’s album or to try and buy a copy of the US Constitution, Moore argues that Impact DAOs are a great way to advance research in crucial fields such as health and infrastructure due to their accessibility (anybody can be a part) and transparency (all transactions are traceable). Make sure to read the piece for more insights and who knows, maybe something will spark your interest and make you take action.
Mihnea
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A deeper-dive into the lending agreements of two miners
Current market conditions have put a strain on miners’ balance sheet health. Due to lack of funding coming from traditional finance, the financing gap for miners operations was filled partially by equity and debt capital markets, but also by companies like NYDIG, Foundry Networks, BlockFi, Galaxy Digital or Babel Finance. Generally, there are two types of collateral backing these loan agreements: BTC (crypto assets) and mining equipment. Ethan Vera, co-founder of Luxor Technologies, estimated that $4bn of credit backed by mining equipment is at risk in the current environment given the plunge in mining equipment values (some more than 50%).
Two miners have taken center stage in the past week: Core Scientific, which sold over 7k BTC for about $167 million, and Hut 8, which is continuing to HODL its BTC production. We are going to briefly look into their financial position and loan agreements to provide an overview of their commitments.
Below we have a snapshot of the major financing agreements for Core Scientific (left) and all liabilities of Hut 8 (right), expressed in $’000s. One of the key ratios to judge its financial stability, Net Debt (the portion of interest-bearing liabilities less cash and cash equivalents) / EBITDA (a proxy of its cash from operating activities), is significantly higher than Hut 8’s.
Its master loan agreements paint the following picture: Genesis loan (28% effective interest rate), NYDIG (11-16%), Trinity loan (11%), BlockFi (13.1%), Anchorage (12.5%) or MassMutual Barings (9.8%). All these loans are backed by liens on the purchased blockchain mining equipment, denoting the funding commitments it has taken to grow its operations. On the other hand, Hut 8 has two outstanding loans payable with Foundry Digital (16.5%) and Trinity Capital (9.5%). Interestingly, Hut 8 also put some of its BTC to work by lending it to specialized players in the space. As of December 31, 2022 Hut 8 had lending arrangements with Genesis (1,000 BTC) and Galaxy Digital (1,000 BTC) with annual borrow fee of 2.00-2.50%.
While some miners have over-extended their borrowing capabilities and are now looking to deleverage and paydown some of the financing, it is expected that we will see consolidation in the space in the following period.
Razvan
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The Improbable Otherside
Yuga Labs started testing their metaverse a few days back in something that was called: the New Yorker experience:
Joke aside, the servers were stress-tested and more than 2500 users got in at the same time, according to the owner of the "nathanhead.eth" Twitter account. This illustrates how well-liked the project is.
The company stated: “The purpose of these load tests is to push the Otherside platform to its limits with the Improbable team. This will help inform exactly where the breaking points might be before the First Trip on 7/16, in order to create the best experience possible for the tech demo.”
In partnership with the Improbable team, Yuga is using their MSquared.io or M² project, which is a network of interoperable metaverses spanning games, art, and culture. And it might also be cooler than it sounds because they are starting with the end in mind, given the fact that interoperability is one of the ultimate goals when it comes to a real Metaverse.
And if you look at the video below, you cannot see that they actually know what they’re doing:
For the people wondering where is the graphics on the Otherside Metaverse Stress Test, keep in mind it was a stress test, meaning that the capabilities of the server to hold thousands of users in the same time, interacting with each other was the goal on this initial phase. And it went well. We’ll see the second one that will happen tomorrow.
The NFT enthusiast Adam Hollander thought to himself, "Extremely impressed by this resistance test. He was grateful for the number of active participants who came to enjoy the adventure as well as the smoothness of the 3D navigation, which would have occurred without any pauses.
Given the fact that you had to own one of the Otherdeeds NFTs to be able to participate, nice growth in the average buying price was seen on Opensea, from an average of 3.6ETH per land to 5.9 (also with a floor price growth from 2.6ETH to 2.9).
All in all, we are looking forward to the first official trip to the Otherside Metaverse on July 16th. We’ll keep you posted.
Enjoy the ride.
Cosmin
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GitcoinDAO’s Year in Review
GitcoinDAO is spun out of Gitcoin which Mihnea mentioned above, which has at its core the mission of building and funding digital public goods, much needed in general and in crypto as well. They base their mission on the value of Open Source Software and the lack of (enough) rewards for the creators.
The DAO offered tens of millions of dollars to thousands of projects using their quadratic funding scheme, helping creators see their projects catch life. There are many other things that GitcoinDAO does (well!) but for the purpose of this piece, i am going to focus on their Year in Review.
GitcoinDAO is governed using the GTC token and since May 2021, when it was launched, it has amassed 19.5k holders with 6.5k delegators. These numbers are impressive in themselves, especially because we know how bad voter apathy is among DAO token holders and point out that a healthy delegation system can incentivize 33.33% of otherwise inactive holders to put their voting power to use. Of course, the number of delegatees tends to be smaller compared to the number of traditional political party members since you’re usually voting for an individual - and this can be clearly seen in the number of voters: 455.
The report also mentions their steward council, a pillar in the delegation system they put in place. The council’s purpose is to create a more active, more engaged group of stewards, highly involved members and people you choose to give your voting power.
Lastly, the last page deals with the growth of the DAO as well as Gitcoin itself. In little more than a year, they’ve had 61 off-chain proposals and 29 on-chain, as well as 6.6k Discourse users from all over the world.
It’s easy to overlook important things such as OSS, but it looks like GitcoinDAO’s mission is not only ambitious but successful. Their growth is organic and well-intentioned, while seeing such a high number of active, unique voters gives me confidence in future funding rounds and the fate of the industry.
Matei
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For more educational crypto content, check out the links below:
The Stakeborg DAO Talks on YouTube: https://www.youtube.com/playlist?list=PLOrFZZifNn4Nx4nSQL3WS52ALPXgrTSVG
Discord channel: https://discord.com/channels/901898461568442458/903006233584341052
StakeborgDAO Quarterly Reports: https://docs.stakeborgdao.com/reports/dao-quarterly-reports
Stakeborg Academy: https://academy.stakeborg.com/
Thank you👍🦾👷🏼♂️🧱📝