Author: Phoenix Capital Management

Translator: BlockEden.xyz Team and Payton Chat

📌 A deep dive into the regulatory disputes and legal issues the crypto industry faces in the past, now, and predictably in the future.

TL;DR

• In the Ripple case, a partial victory was achieved in the programmatic sales, avoiding being recognized as securities sales. We have carefully analyzed the court's ruling logic and believe that there may be quite obvious errors in fact recognition, which has a high possibility of being overturned later.
• We've examined the historical origins and basic connotations of securities law, and believe that tokens narrated as "the project team is doing their job" are close to the securities law definition. Thus, a reasonably high proportion of tokens may be recognized as securities in the future. However, the current SEC's regulatory demands further exceed the reasonable scope of securities law.
• Staking/yield farming is more likely to be considered securities than token sales.
• Compared to the regulation of CeFi, the regulation of DeFi is at an earlier stage. In addition to securities law, more uncontroversial regulatory issues like KYC/AML are yet to be resolved.
• Even if a large number of altcoins are identified as securities, it would not signify the end of the industry. High market cap tokens are fully capable of seeking compliance in the form of securities; lower market cap tokens may exist in non-compliant markets for a long time but can still indirectly gain liquidity from compliant markets. As long as there is a clear regulatory framework, regardless of its nature, the industry can find new paths and models for long-term development.

Table of Contents​

• Long-Awaited (Temporary) Victory - An Interpretation of the Ripple Case
• Howey Test, Orange Groves, and Cryptocurrency
• Why Securities Law Exists
• Project team is doing their job = Securities?
• Recap of SEC vs Ripple Labs
• A token is just a token. A token is NEVER a security
• Looking forward - Where are the risks and opportunities?
• Securities law is not the only concern
• What if crypto loses? - Securities law won't kill altcoins
• Peace is More Important Than Victory

Long-Awaited (Temporary) Victory - An Interpretation of the Ripple Case​

On July 13, 2023, Ripple Labs received a partial favorable ruling from the New York District Court, causing a significant surge in the crypto market. In addition to XRP itself, a series of tokens previously identified as securities by the SEC also experienced a substantial increase.

As we will discuss later, we are still far from the era when the crypto industry truly embraces clear regulation. However, without a doubt, this partial victory of Ripple Labs remains one of the most important events in the crypto industry in 2023.

Below are some of the major disputes between U.S. regulators and the crypto industry before the SEC vs. Ripple Labs case.

It's not hard to see that nearly all the major disputes so far have ended in failure or compromise by crypto companies.

We still want to say, this represents the first meaningful victory for the crypto industry in its battles against U.S. regulators, even if it is only a partial victory.

There have been many detailed interpretations of the court's judgment, so we won't elaborate here. Those who are interested can read the long Twitter thread by Justin Slaughter, Paradigm Policy Director:

Justin Slaughter on Twitter:

Ok, having gone through the Ripple decision, here’s my takeaway:

Big loss for the SEC’s approach to crypto via focusing solely on enforcement, and this measurably increases the odds of crypto legislation passing this year.

Thread https://t.co/c4wOVPORVb

— Justin Slaughter (@JBSDC)

July 13, 2023

You can also read the original text of the court's ruling in your leisure time:

Plaintiff vs. Ripple Labs, Inc.

Before further interpreting this ruling, let's briefly introduce the core standard for the definition of securities in the U.S. legal system that you often hear about, the Howey Test.

Howey Test, Orange Groves, and Cryptocurrency​

To understand the disputes surrounding all cryptocurrency regulations today, we must go back to sunny Florida in 1946, to the cornerstone case for today's securities law judgment, SEC vs. Howey.

(The following story outline was mainly written with the help of GPT-4)

📌 After World War II, in 1946, the company W.J. Howey owned a fertile orange grove in picturesque Florida.

To raise more investment, the Howey company launched an innovative plan that allowed investors to purchase land in the orange grove and lease it to the Howey company for management, from which investors could earn a portion of the profits. In that era, this proposition was undoubtedly very attractive to investors. After all, owning your own land was such a tempting thing.

However, the SEC did not agree. The SEC believed that the plan offered by Howey Company was essentially a security, but Howey Company had not registered with the SEC, which clearly violated the Securities Act of 1933. Therefore, the SEC decided to sue the Howey Company.

This lawsuit eventually ended up in the Supreme Court. In 1946, the Supreme Court made a historic judgment in the lawsuit of SEC vs. Howey. The court supported the SEC's stance, ruling that Howey Company's investment plan met the definition of securities, and therefore needed to be registered with the SEC.

The U.S. Supreme Court's judgment on Howey Company's investment plan was based on the four basic elements of the so-called "Howey Test". These four elements are: investment of money, expectation of profits, common enterprise, and the profits come from the efforts of the promoter or a third party. Howey Company's investment plan met these four elements, so the Supreme Court determined it was a security.

1. First, investors invested money to purchase land in the orange grove, which met the first element of the "Howey Test"—investment of money.

2. Secondly, the purpose of investors buying land and leasing it to the Howey Company was obviously to expect profits, which met the second element of the "Howey Test"—expectation of profits.

3. Third, the relationship between investors and the Howey Company constituted a common enterprise. Investors invested, and the Howey Company operated the orange grove, both working towards earning profits. This met the third element of the "Howey Test"—common enterprise.

4. Lastly, the profits in this investment plan mainly came from the efforts of the Howey Company. Investors only needed to invest money and could reap the benefits, which met the fourth element of the "Howey Test"—the profits come from the efforts of the promoter or a third party.

Therefore, according to these four elements, the Supreme Court judged that Howey Company's investment plan constituted a security and needed to be registered with the SEC.

This judgment had profound implications and formed the widely cited "Howey Test", defining the four basic elements of so-called "investment contracts": investment of money, expectation of profits, common enterprise, and profits come from the efforts of the promoter or a third party. These four elements are still used by the SEC to determine whether a financial product constitutes a security.

For purposes of the Securities Act, an investment contract (undefined by the Act) means a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise.

The above is an accurate interpretation of securities from the 1946 Supreme Court opinion, which can be broken down into the following commonly used criteria:

1. An investment of money
2. in a common enterprise
3. to expect profits
4. solely from the efforts of the promoter or a third party

The charm of law is truly remarkable. It often employs abstract yet straightforward principles to guide the ever-changing specificities in real-life scenarios, no matter it is a citrus grove or cryptocurrency.

Why Securities Law Exists​

In fact, how securities are defined is not important. Labeling something as a security or not doesn't make any substantive difference. The key is to understand what legal responsibilities stem from the economic nature of securities, in other words, why something possessing the four attributes of the Howey Test needs a separate legal framework for supervision.

The Securities Act of 1933, which predates the Howey Test by over a decade, explicitly answers the question of why securities laws are needed.

Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives:

1) require that investors receive financial and other significant information concerning securities being offered for public sale; and

2) prohibit deceit, misrepresentations, and other fraud in the sale of securities.

"The fundamental starting point of securities law is simple - it's all about ensuring that investors have enough information about the securities they are investing in and are protected from deception. Conversely, the responsibilities imposed on the issuers of securities are straightforward, the essence of which is disclosure - they must provide complete, timely, and accurate disclosure of important information related to the securities.

The reason for such a goal of securities law is because securities, by their nature, rely on the efforts of third parties (active participants) for returns, which gives these third parties an asymmetric advantage over investors in terms of access to information and influence on securities prices. Therefore, there's a requirement for them to fulfill the duty of disclosure, to ensure that this asymmetry does not harm the investors.

There's no similar regulatory requirement in commodities markets because there are no such third parties, or in the crypto context, 'project teams'. Gold, oil, and sugar, for example, have no 'project teams'. The crypto market generally has a preference for the Commodity Futures Trading Commission (CFTC) over the Securities and Exchange Commission (SEC), but this is not due to personal preferences of the regulators that lead to differing attitudes towards crypto. The distinction between regulating commodities and regulating securities is based on the intrinsic differences between the two types of financial products. Because there are no 'project teams' with an asymmetric advantage, the regulatory framework for commodity law naturally tends to be more relaxed.

💡 The existence of a third party or 'Project Team' with an information and influence advantage is the fundamental reason for the existence of securities law; to curb the infringement of investors' interests by the third party/'Project Team' is the fundamental purpose of securities law; and requiring the 'Project Team' to provide complete, timely, accurate information disclosure is the main means of implementing securities law."

Project team is doing their job = Securities?​

During my study of the history of U.S. securities law, a phrase often heard in the crypto industry led me to a simple and effective standard to determine whether a token is a security - that is, whether the investor cares whether the Project Team is active or not.

If the "the project team is doing their job" matters to investors, it implies that the return on this investment is influenced by the actions of the Project Team, which clearly meets the four criteria of the Howey Test. From this perspective, it's easy to understand why BTC is not a security, as there is no Project Team involved with BTC. The same applies to meme coins, they are merely digits in the ledger under the ERC-20 protocol, with no active Project Team behind them, and therefore are not securities.

If a Project Team is active and whether they perform well or poorly, or act at all, - whether it's in terms of technical upgrades, product iterations, marketing, ecosystem partnerships - has an impact on the token price, then the definition of a security is met. Given the existence of a Project Team, they possess information unknown to other investors and have greater influence on the token price, hence the need for regulatory oversight to ensure that they do not commit acts that harm the interests of investors. The logic of "the actions of the Project Team matter" → "the Project Team can reap the benefits"→ "the Project Team needs to be regulated by securities law" is a simple legal inference.

If you accept this logic, you can judge for yourself which tokens in the crypto space are reasonably classified as securities.

top search result of "项目方在做事" on Twitter

💡 In our view, if there is an expectation or concern among investors about the "the project team is doing their job," this token highly aligns with the definition of a security. From this perspective, it seems quite logical that a high proportion of tokens are classified as securities.

The current SEC wants more than just the basic regulations. As seen from Gary's public statements, he only recognizes that Bitcoin is not a security. For most other tokens, he firmly believes they should be classified as securities. The stance on a few tokens, like ETH, is relatively ambiguous. The CEO of Coinbase also recently mentioned in an interview that before the SEC sued Coinbase, it had demanded that Coinbase cease trading all tokens except for Bitcoin, a request that Coinbase refused.

We think it's unreasonable to classify pure meme coins without an operational project team or decentralized payment tokens as securities. The SEC's demands have exceeded the reasonable scope of securities laws, which has made it harder for the conflict between the industry and the SEC to be resolved simply.

You can read more on the topic in this article: SEC asked Coinbase to halt trading in everything except bitcoin, CEO says."

Recap of SEC vs Ripple Labs​

• Let's briefly highlight a few key points:
  • XRP itself is not a security, but we need to analyze the specific circumstances of XRP sales (such as the process, method, and channels of sale, etc.) to determine whether it constitutes a securities sale. We will elaborate on this point later: A token is just a token. A token is NEVER a security.
  • The court analyzed three forms of XRP sales separately: institutional sales, programmatic sales, and others. In the end, the first type, institutional sales, was considered as securities, while the other two were not.
  • The reasons for judging institutional sales as securities sales are:

• The reasons for judging programmatic sales as not constituting securities sales are:

  1. In this case, investors are not sure whether they are buying from Ripple Labs or other XRP sellers. Most XRP trading volume does not come from sales by Ripple Labs, so most XRP buyers have not directly invested their funds into Ripple Labs.

  2. XRP buyers did not expect to profit from Ripple Labs' efforts, because:

     • Ripple Labs did not make any direct promises to these investors, and there is no evidence that Ripple Labs' promotional materials were widely disseminated among these investors.

     • These investors are less sophisticated, and it cannot be proven that they have a full understanding of the impact of Ripple Labs' actions on the price of XRP.

• It's not hard to see that the court's judgement on programmatic sales is primarily based on the fourth item of the Howey Test, which is that these investors did not expect to profit from Ripple Labs' efforts.

• The judgement of this district court does not have final binding force; it can almost be certain that the SEC will appeal. However, due to the lengthy legal process, it might take several months or even years before we see the results of a new appeal judgement. During this time, the judgement of this court will essentially form important guidance for the development of the industry.

Putting aside our position as cryptocurrency investors, and solely from the standpoint of legal logic, we believe that the court's logic in determining programmatic sales as not being securities is not very convincing.

📕 Here are two articles by seasoned legal professionals with similar opposing views. I recommend reading them if you have time, as our analysis also draws on some of their viewpoints.

• Is The Ripple Decision a Cause For Crypto-Celebration? Momentarily at Best.
• Ripple Labs Ruling Throws U.S. Crypto-Token Regulation into Disarray

First, we need to note the original text of the Howey Test: '...expect profits solely from the efforts of the promoter or a third party...', which clearly points out that the source of profits can be the promoter or a third party, that is, it does not matter who the seller is. Or to say, it is not necessary for the source of the efforts to be the seller or promoter, as long as there is such a third party. Therefore, it does not matter who the investor buys from or whether the seller is the source of the returns. What matters is whether the investor realizes that the appreciation of the asset comes from the efforts of a third party. Therefore, the court's mention of blind buy/sell and the fact that buyers do not know whether they bought XRP from Ripple Labs or someone else is irrelevant to the Howey Test.

The real issue is whether investors in programmatic sales realize that the rise in the price of the XRP token they bought is related to the efforts of Ripple Labs. The court's main argument is that

1. Ripple Labs has not directly promoted to retail, nor is there evidence that their materials (white papers, etc.) have been widely disseminated among retail,
2. Retail does not have the cognitive abilities of institutional investors to recognize that the XRP token is related to the work Ripple Labs does in technology, product, and marketing.

First of all, this is a factual issue, not a logical one, which we can't demonstrate here. XRP is an old project, and we don't have a clear sense of what the retail investors were like at that time.

But from our limited experience, the vast majority of tokens with a project team are able to realize that the team's technical upgrades, early mainnet launch, better product, increase in TVL, ecosystem partnerships, KOL promotions, and other efforts have an impact on the price of the token they hold.

In the world of crypto, KOLs, Twitter, and Telegram groups large and small serve as the bridge between most project teams and users, the territory for outreach to retail investors. In projects big and small, we often hear discussions about how the 'community' is doing. Most project teams will have a token marketing/community team responsible for contacting exchanges around the world, hiring KOLs, and helping to disseminate project progress and important events.

💡We believe there is a bias in the court's fact-finding on programmatic sales in this ruling; we also agree with many legal professionals that there is a high likelihood that this part of the judgment will be overturned in the future.

(Just a week after writing this article, on the very day it was about to be published, we happened to see that the new judge in the SEC vs Terraform Labs case refused to adopt the judgment logic in the SEC vs Ripple Labs case - the logic being that no matter where the investor buys the token, it does not affect the investor's expectation that the efforts of the project team will influence the token's price.)

"Whatever expectation of profit they had could not, according to that court, be ascribed to defendants’ efforts," he wrote. "But Howey makes no such distinction between purchasers*. And it makes good sense that it did not. That a purchaser bought the coins directly from the defendants or, instead, in a secondary resale transaction* has no impact on whether a reasonable individual would objectively view the defendants’ actions and statements as evincing a promise of profits based on their efforts.**"

— Judge Rejects Ripple Ruling Precedent in Denying Terraform Labs' Motion to Dismiss SEC Lawsuit

☕️ By the way - Airdrops that don't require payment can also be considered securities sales.

This comes from an article by John Reed Stark. In the Internet bubble of the late 90s, several companies distributed free stocks to users via the internet. In subsequent legislation and trials, these actions were deemed securities sales. The reason is that although users did not pay money in exchange for these stocks, they gave up other values - including their personal information (required to fill in when registering for stocks) and increased attention for the companies distributing the stocks, which constituted a substantial exchange of value.

SEC Enforcement Director Richard H. Walker said at the time, "Free stock is really a misnomer in these cases. While cash did not change hands, the companies that issued the stock received valuable benefits*. Under these circumstances, the securities laws entitle investors to full and fair disclosure, which they did not receive in these cases.”*

A token is just a token. A token is NEVER a security​

Don’t be misled that Judge Torres ruled that sometimes XRP is a security and sometimes it isn’t. That’s exactly the opposite of what she ruled: XRP itself is NEVER a security. “ Page 15: "XRP, as a digital token, is not in and of itself a ‘contract, transaction[,] or scheme’…

— paulgrewal.eth (@iampaulgrewal)

July 14, 2023

As pointed out by Coinbase CLO Paul, this is the most important sentence in the entire judgement that people have not fully understood.

XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract*. Rather, the Court examines the* totality of circumstances surrounding Defendants’ different transactions and schemes involving the sale and distribution of XRP.

Both of these judgments consistently express an important point of view:

A token is just a token - it's not like many people mistakenly believe that the court sometimes thinks XRP is a security and sometimes not - a token itself can never be a security.

What might constitute a security is the whole set of behaviors of selling and distributing tokens ('scheme'), there is no question of whether a token is a security or not, only whether a specific token sale behavior is a security or not. We can never come to the conclusion of whether it is a security or not just by analyzing a certain token, we must analyze the overall situation of this sales behavior ('entirety of …', 'totality of circumstances').

Both judges, whose opinions have significant conflicts, have insisted that it must be based on sales conditions rather than the attributes of the token itself to determine whether it is a security - this consistency also means that the possibility of this legal logic being adopted in the future is significantly higher than the judgment for programmatic sales, and we also believe that this judgment indeed has stronger logical reasonableness.

A token is just a token. A token is NEVER a security.

Digital tokens and stocks are fundamentally different. Stocks themselves are a contract signed by investors and companies. Their trading in the secondary market itself represents the trading and transfer of this contractual relationship. As the judge said in the Telegram case, digital tokens are nothing more than an 'alphanumeric cryptographic sequence', and they cannot possibly constitute a contract by themselves. They can only have the economic substance of a contract in specific sales situations.

If this legal point of view is accepted by all subsequent courts, then the future burden of proof on the SEC in the litigation process will be significantly increased. The SEC cannot obtain the regulatory power over all the issuance, trading, and other behaviors of a certain token by proving that it is a security. It needs to prove one by one that the overall situation of each token transaction constitutes a securities transaction.

The Court does not address whether secondary market sales of XRP constitute offers and sales of investment contracts because that question is not properly before the Court. Whether a secondary market sale constitutes an offer or sale of an investment contract would depend on the totality of circumstances and the economic reality of that specific contract, transaction, or scheme. See Marine Bank, 455 U.S. at 560 n.11; Telegram, 448 F. Supp. 3d at 379; see also ECF No. 105 at 34:14-16, LBRY, No. 21 Civ. 260 (D.N.H. Jan. 30, 2023)*

The Ripple case also explicitly pointed out that the court cannot determine whether the secondary sale of XRP constitutes a securities transaction. They need to assess the specific situation of each trading behavior to make a judgment. This greatly complicates the SEC's regulation of secondary transactions, and in some ways it may not be possible to complete; this essentially gives the green light to the secondary trading of tokens. Based on this, Coinbase and Binance.US quickly relisted XRP after the verdict was announced.

📕 There are some interesting discussions related to this in the Bankless podcast:

Bankless: How Ripple's Win Reshapes Crypto with Paul Grewal & Mike Selig

Again, it is still too early to consider this judgment as a definitive legal rule based solely on this case; but the legal logic of "A token is just a token" will indeed significantly increase the legal obstacles the SEC will face in regulating transactions of the secondary market in the future.

Looking forward - Where are the risks and opportunities?​

The Sword of Damocles Over Staking​

Sword of Damocles, 1812, Richard Westall

ETH staking has been one of the strongest tracks in the entire industry since 2023; however, the regulatory risks of staking services are still a Sword of Damocles over this super track.

In February 2023, Kraken agreed to a settlement with the SEC and shut down its staking service in the US. Coinbase, which was also sued for its staking service, chose to continue fighting.

Returning to the framework of the Howey Test, objectively speaking, there are indeed sufficient reasons for staking services to be considered securities.

Kraken chose to settle. So, what are Coinbase's reasons for insisting that staking services are not securities?

Coinbase: Why we stand by staking:

At its most basic level, staking is the process by which users can contribute to the network by staking their token to secure the blockchain, facilitate the creation of blocks, and help process transactions. Users are not investing. Rather, users are compensated for fulfilling this important role through transaction fees and consensus rewards paid by the blockchain itself.

Coinbase makes an interesting statement, suggesting that "users who stake are not investing, but rather being compensated for the contribution they make to the blockchain network."

This statement is valid for individual stakers. However, as delegated stakers, they do not directly undertake the task of validating transactions or ensuring network security. Instead, they delegate their tokens to other node operators who use their tokens to complete these tasks. Stakers are not the direct laborers. In fact, they resemble the buyers of orange farm in the Howey case, owning land/capital (ETH), delegating others to cultivate (node operation), and obtaining returns.

Paying out capital is not labor, because the return from capital investment is a capital gain, not compensation.

Decentralized staking services are a bit more complex, and different types of decentralized staking might eventually receive different legal judgments.

The four criteria of the Howey Test are mostly similar in centralized staking and decentralized staking. The difference might lie in whether a common enterprise can exist. So, the staking model where all users' ETH is put into the same pool, even if it's decentralized, clearly also meets the four criteria of the Howey Test.

The argument in SEC vs Ripple Labs that allowed Ripple to win the Programatic Sales point (the buyer and seller don't know each other and there is no direct selling introduction), doesn't seem to protect staking services here neither.

Because apart from directly buying cbETH/stETH on the secondary market, in the case where stakers pledge their ETH to Coinbase/Lido and receive cbETH/stETH in return, it's clear that 1) the buyer knows who the issuer is, and the issuer also knows who the buyer is, and 2) the issuer clearly communicates to the buyer about the potential returns and explains the source of these returns.

Similarly, in addition to staking on PoS chains, many DeFi products that allow staking/locking tokens to earn yield are likely to meet the definition of securities. If it is somewhat challenging to establish a connection between the price of pure governance tokens and the efforts of the project team, the logic in the context of staking to earn yield is very straightforward and simple. Additionally, the reasoning in the Ripple case that made programmatic sales not considered securities also hardly stands here:

1) Users hand over tokens to staking contracts developed by the project team. The staking contract gives returns to users, and these returns are derived from the revenues generated by the project contracts that the project team opened.

2) During the interaction process between users and the staking contract, the contract also promotes and explains the returns to users, which makes it difficult to get away with the reasoning from XRP's programmatic sales.

💡 In summary, projects that offer staking services (in PoS chains, in DeFi projects) have a higher likelihood of being classified as securities due to

1. clear profit distribution, and
2. direct promotion and interaction with users.

This makes them more likely to be considered securities than projects that are generally "doing their job" by the project team.

Securities law is not the only concern​

Securities law is the main focus of this article, but it's important to remind everyone that securities law is only a small part of the overall regulatory framework for crypto — of course, it's worth special attention because it is one of the stricter aspects. Whether a token is ultimately regarded as a security, commodity, or something else, some more fundamental legal responsibilities are common, and many regulatory agencies outside of the SEC and CFTC will get involved. The content involved here is worthy of another long article, we will just briefly give an example here for reference.

This is the responsibility related to Know Your Customer (KYC) centered on anti-money laundering (AML) and counter-terrorist financing (CTF). Any financial transaction must not be used for financial crimes such as money laundering and terrorist financing, and any financial institution has the responsibility to ensure that the financial services it provides will not be used for these financial crimes. To achieve this goal, all financial institutions must take a series of measures, including but not limited to KYC, transaction monitoring, reporting suspicious activities to regulators, maintaining accurate records of historical transactions, etc.

This is one of the most fundamental, undisputed basic laws in financial regulation, and it is a field jointly supervised by multiple law enforcement departments, including the Department of Justice, Treasury/OFAC, FBI, SEC, etc. Currently, all centralized crypto institutions are also complying with this law to perform necessary KYC on all customers.

The main potential risk in the future lies in DeFi, whether it is necessary and possible to make DeFi comply with similar regulations as CeFi, requiring KYC/AML/CTF; and whether this regulatory model might harm the foundation of blockchain value, permissionlessness.

From a basic principle point of view, financial transactions are generated in DeFi, so these financial transactions need to ensure that they are not used for money laundering and other financial crimes, so the necessity of regulatory law is undoubted.

The challenge mainly lies in the difficulty in defining the regulatory object, essentially these financial transactions are based on the services provided by a string of code on Ethereum, so is it the Ethereum nodes running this code, or the project parties/developers who wrote this string of code, who should be the regulatory object? (That's why there are controversial cases caused by the arrest of Tornado Cash developers.) In addition, the decentralization of nodes and the anonymization of developers make this oversight thinking even more difficult to implement — this is a problem that legislators and law enforcers must solve, it is questionable how they will solve these problems; but what is unquestionable is that no regulator will allow money laundering, arms trading and other activities on an anonymous blockchain, even if these transactions account for less than one ten-thousandth of the blockchain transactions.

Actually, just on the 19th of this month, four senators from the U.S. Senate (two Republicans and two Democrats, so it's a bipartisan bill) have proposed a legislation for DeFi, the Crypto-Asset National Security Enhancement and Enforcement (CANSEE) Act. The core is to require DeFi to comply with the same legal responsibilities as CeFi:

In an effort to prevent money laundering and stop crypto-facilitated crime and sanctions violations, a leading group of U.S. Senators is introducing new, bipartisan legislation requiring decentralized finance (DeFi) services to meet the same anti-money laundering (AML) and economic sanctions compliance obligations as other financial companies*, including centralized crypto trading platforms, casinos, and even pawn shops. The legislation also modernizes key Treasury Department anti-money laundering authorities, and sets new requirements to* ensure that “crypto kiosks” don’t become a vector for laundering the proceeds of illicit activities.

— Bipartisan U.S. Senators Unveil Crypto Anti-Money Laundering Bill to Stop Illicit Transfers

Ensuring Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) in DeFi transactions is a key regulatory challenge beyond securities laws. Regardless of whether a token is classified as a security or commodity, there are strict rules against market manipulation. Resolving these issues in crypto is a future challenge for the industry.

Below are some typical forms of market manipulation. Anyone involved in crypto trading will likely recognize them.

Here are some common forms of market manipulation:

1. Pump and Dump: This involves buying a security at a low price, artificially inflating its price through false and misleading positive statements, and then selling the security at the higher price. Once the manipulator sells their shares, the price typically falls, leaving other investors at a loss.
2. Spoofing: This involves placing large buy or sell orders with no intention of executing them, to create a false appearance of market interest in a particular security or commodity. The orders are then canceled before execution.
3. Wash Trading: This involves an investor simultaneously buying and selling the same financial instruments to create misleading, artificial activity in the marketplace.
4. Churning: This occurs when a trader places both buy and sell orders at the same price. The orders are matched, leaving the impression of high trading volumes, but no net change in ownership.
5. Cornering the Market: This involves acquiring enough of a particular asset to gain control and set the price on it.
6. Front Running: This occurs when a broker or other entity enters into a trade because they have foreknowledge of a big non-publicized transaction that will influence the price of the asset, thereby benefiting from the price movement.

What if crypto loses? - Securities law won't kill altcoins​

We lack sufficient legal and political knowledge to predict the outcomes of these legal disputes, but objective analysis leads us to acknowledge that the logic of U.S. securities law supports classifying most tokens as securities. So we must deduce or imagine what the crypto industry might look like if most tokens are considered securities.

Some tokens may choose to comply as securities​

Firstly, purely from an economic perspective, the compliance cost of being publicly listed isn't as daunting as it might seem. For large-cap tokens with a FDV of over 1 billion, they are likely able to bear the cost.

A simple market value comparison reveals that many tokens have comparable market values to listed companies, especially those with a 1bn+ FDV. It's entirely reasonable to believe that they can handle the compliance costs of a listed company.

• The U.S. stock market has about 2000 companies with a market value of 100mn-1bn and about 1000 companies with a market value of 1bn-5bn.
• In the current bear market environment for altcoins, crypto has about 40-50 tokens with a FDV>1bn, and about 200 tokens with a FDV of 100mn-1bn. It's expected that more tokens will join the 100mn+/1bn+ value rank during a bull market.

We can also refer to some research on the compliance cost for listed companies. One relatively reliable source is the SEC's estimation of the listing compliance costs for small and medium-sized companies:

Their research shows that the average cost of achieving regulatory compliance to enter the marketplace as an IPO is about $2.5 million. Once they are established, small-cap companies can expect to pay about $1.5 million in ongoing compliance costs every year.

The conclusion is that there is a ~2.5mn listing cost, and a ~1.5mn ongoing annual cost. Considering inflation over the years, 3-4mn for an IPO and 2-3mn for annual recurring costs seem reasonable estimates. Additionally, these numbers positively correlate with the size of the company, and the costs for microcap companies worth hundreds of millions of dollars should be below these averages. Although it's not a small amount, for large project teams with hundreds of members, it's not an unacceptable cost."

"What's more uncertain is how to resolve these projects' historical compliance issues.

Listing a stock requires an audit of the company's financial history. Tokens, unlike equity, would need to disclose different content for listing, thus requiring a new regulatory framework for clear delineation. However, as long as there are clear rules, there are ways to adjust and deal with them. Companies with historical financial problems can also get the chance to go public by restating their historical statements.

While the cost of compliance is acceptable, it is also quite high; so, are project parties incentivized to do so? There's no simple answer to this question.

Firstly, compliance will indeed impose many burdens on many project parties and limit their operational flexibility. They cannot engage in "market value management," insider trading, false advertising, and coin selling announcements, etc. These restrictions affect the fundamentals of many business models.

However, for projects with particularly large market values, gaining greater market liquidity, accessing more deep-pocketed investors, and obtaining comprehensive regulatory approval are essential conditions for them to move to the next level, whether from the perspective of market value growth or project development.

"'Illegal harvesting' can be fierce, but the 'leek field' is small; 'legal harvesting' must be restrained, but the 'leek field' is large."

As the project scale increases, the balance between the potential benefits of non-compliance and the opportunities brought by the vast market and capital access post-compliance increasingly tips towards the latter. We believe that leading public chains/layer2s and blue-chip DeFis will take this step towards a completely compliant operational model.

Long-term coexistence and interdependence of compliant and non-compliant ecosystems​

Of course, most project parties won't be able to embark on the road to securities compliance; the future crypto world will consist of both compliant and non-compliant parts, each with clear boundaries but also closely interconnected."

Such a coexistence pattern already exists today, but the influence of the compliant ecosystem in the crypto world is still relatively small. As the regulatory framework becomes clearer, the influence and importance of the compliant ecosystem will become increasingly significant. The development of the compliant ecosystem will not only significantly increase the total scale of the entire crypto industry, but also "transfuse" a large amount of liquidity to the non-compliant ecosystem through the rise in prices of mainstream assets and resulting liquidity overflow.

💡 Large projects will become compliant, while smaller projects can remain in the non-compliant market and still enjoy the overflow of liquidity from the compliant market. The two markets will complement each other ecologically, proving that securities laws will not be the end of crypto.

Peace is More Important Than Victory​

On the judicial side, the SEC vs Ripple case has yet to be settled, and the SEC vs Coinbase/Binance cases have just begun - the settling of these cases could take several years.

On the legislative side, since July, several crypto regulation bills have been submitted to both houses, including the Financial Innovation and Technology for the 21st Century Act, Responsible Financial Innovation Act, Crypto-Asset National Security Enhancement and Enforcement —— Historically, more than 50 crypto-related regulatory bills have been submitted to both houses, but we are still far from a clear legal framework.

Statistics on the passing rate of bills in the US House of Representatives throughout history. On average, Congress receives about 7,000 bill submissions each year, with about 400 being enacted. https://www.govtrack.us/congress/bills/statistics

The worst outcome for the crypto industry is not that most tokens will eventually be classified as securities, but the loss of time and space for the industry to grow, and the waste of resources and opportunities, due to the long-term lack of a clear regulatory framework.

The escalation and intensification of conflicts between regulators and the crypto industry is good news, as it means that resolution is nearing.

The verdict for Ripple Labs was announced on July 13, and the next day, July 14, is the anniversary of the French Revolution. This reminds me of the unrest in France after the revolution; but it was also during that chaotic time that the foundation of modern law - the French Civil Code - was born. I hope that we can see that, although the crypto industry is currently experiencing chaos and turmoil, it will eventually find its direction and way out, establishing a set of norms and codes that can coexist harmoniously with the outside world.

Code civil des Français

📎 Phoenix Capital Management is a fundamental-driven cryptocurrency hedge fund. The founding team has held key positions in several multi-billion dollar hedge funds. We strive to use a rigorous and scientific methodology, combining top-down macro research with bottom-up industry insights, to capture structural investment opportunities in the cryptocurrency industry and create long-term returns that transcend bull and bear cycles.

You can find all our writings here: Writings .

🤩 Hiring! We are actively searching for crypto researchers to join our team. If you are interested, please send your resume to info@phoenixfund.xyz. Details can be found here.

Disclaimer:

This content is for informational use only and is not intended as financial or legal advice.

Any mistakes or delays in this information, and any resulting damages, are not the responsibility of the author. Please be aware that this information may be updated without notice.

This content does not promote or recommend the purchase or sale of any financial instruments or securities discussed.

The author may hold positions in the securities or tokens discussed in this content.

Introduction​

The rise of web3 has seen a proliferation of decentralized applications (DApps) platforms, all vying for supremacy. Amid this scene enters BlockEden.xyz, a new player with a unique proposition. This web3 native company has now adopted blockchain technology to better measure the computational expense associated with an API invocation, by introducing the Compute Unit Credit (CUC). But how exactly does this work, and what impact will it have on the API market? Let's break it down.

BlockEden.xyz: Stepping Into The API Market​

BlockEden.xyz has made its entry into the API marketplace, providing services across different platforms such as Sui, Aptos, Solana, and 12 EVM blockchains. But there's something that sets this company apart - it's the way they leverage blockchain technology to quantify Compute Unit Credit, paving the way for a more standardized and comparable API cost structure.

Understanding Compute Unit Credit​

The Compute Unit Credit (CUC) serves as a consistent metric that measures the computational costs tied to an API invocation. This strategy addresses the variations in machine costs for each service, offering a standard way to communicate the price of API invocation and ensuring comparability.

By applying blockchain technology, BlockEden.xyz has created a secure and transparent system where the cost of API services can be fairly compared, enabling developers to make more informed decisions.

BlockEden.xyz: Empowered by Blockchain​

BlockEden.xyz, as a web3 native company, has fully integrated blockchain technology into its core operations. With the robust security features of blockchain and the principles of decentralization that web3 espouses, the company has established a platform that marries efficiency, security, and transparency.

A More Transparent API Market​

By using the Compute Unit Credit, BlockEden.xyz aims to build a more transparent and fair API market. Developers can now compare prices easily, and services are priced fairly and transparently.

FAQs​

1. What is BlockEden.xyz?

BlockEden.xyz is an API marketplace that provides a variety of services for DApp platforms like Sui, Aptos, Solana, and 12 EVM blockchains.

2. How does BlockEden.xyz use blockchain technology?

BlockEden.xyz uses blockchain technology to measure the Compute Unit Credit (CUC), a metric representing the computational expense associated with an API invocation.

3. What is a Compute Unit Credit (CUC)?

A Compute Unit Credit (CUC) is a standard measure developed by BlockEden.xyz to calculate the cost of API invocation, enabling fair pricing and easy comparison across different services.

4. How is BlockEden.xyz a web3 native company?

BlockEden.xyz is a web3 native company because it uses principles of web3, such as decentralization, while leveraging the security and immutability of blockchain technology.

5. What is BlockEden.xyz's vision?

BlockEden.xyz's vision is to create a fair and transparent API market where developers can easily compare API invocation prices, and services are priced using the standard measure - the Compute Unit Credit (CUC).

Conclusion​

As a new entrant in the API market, BlockEden.xyz is taking a fresh approach by utilizing blockchain technology to measure the Compute Unit Credit (CUC). This innovative measure, coupled with the company's focus on transparency and fair pricing, sets BlockEden.xyz apart and positions it to make a significant impact in the API marketplace. While it's early days yet, it's worth keeping an eye on how this web3 native company will continue to evolve and shape the future of the API market.

The unveiling of BlockEden.xyz marks the beginning of an exciting journey in the API marketplace. This venture, armed with the Compute Unit Credit and the power of blockchain, is set to redefine how developers interact with API services. To keep yourself updated with their latest advancements and join the conversation with like-minded individuals, don't miss out on connecting with us on our Discord channel at https://discord.gg/4Yfvs2HWey. It's not just about being part of a community; it's about staying informed, sharing ideas, and influencing the future of the API market. So, hop on over to our Discord - we can't wait to hear from you!

• Twitter: https://twitter.com/BlockEdenHQ
• Discord: https://discord.gg/4Yfvs2HWey
• Source Link: https://blockeden.xyz/blog/2023/07/27/blockeden-utilizes-blockchain-measure-compute-unit-credit/

We are glad to announce that BlockEden.xyz, web3 developers' go-to platform for API marketplace, has added a new, powerful capability – OpenAI API. Yes, you heard it right! Developers, tech enthusiasts, and AI pioneers can now leverage the cutting-edge machine learning models offered by OpenAI, directly through BlockEden's API Marketplace.

Before we dive into the how-to guide, let's understand what OpenAI API brings to the table. OpenAI API is a gateway to AI models developed by OpenAI, such as the industry-renowned GPT-3, the state-of-the-art transformer-based language model known for its remarkable ability to understand and generate human-like text. The API enables developers to use this advanced technology for a variety of applications, including drafting emails, writing code, answering questions, creating written content, tutoring, language translation, and much more.

Now, let's see how you can incorporate the power of OpenAI API into your applications using BlockEden.xyz. You can do it in three ways: using Python, using JavaScript (Node.js), or using curl directly from the command line. In this blog, we're going to provide the basic setup for each method, using a simple "Hello, World!" example.

The API key below is public and subject to change and rate limit. Get your own BLOCKEDEN_API_KEY from https://blockeden.xyz/dash instead.

Python:

Using Python, you can use the OpenAI API as shown in the following snippet:

import openai

BLOCKEDEN_API_KEY = "8UuXzatAZYDBJC6YZTKD"
openai.api_key = ""
openai.api_base = "https://api.blockeden.xyz/openai/" + BLOCKEDEN_API_KEY + "/v1"

response = openai.ChatCompletion.create(
  model="gpt-3.5-turbo-16k",
  messages=[{"role": "user", "content": "hello, world!"}],
  temperature=0,
  max_tokens=2048,
  top_p=1,
  frequency_penalty=0,
  presence_penalty=0
)

print(response["choices"])

JavaScript (Node.js):

You can also utilize the OpenAI API with JavaScript. Here's how you can do it:

const { Configuration, OpenAIApi } = require("openai");

const BLOCKEDEN_API_KEY = "8UuXzatAZYDBJC6YZTKD";
const configuration = new Configuration({
  basePath: "https://api.blockeden.xyz/openai/" + BLOCKEDEN_API_KEY + "/v1"
});
const openai = new OpenAIApi(configuration);

(async () => {
  const response = await openai.createChatCompletion({
    model: "gpt-3.5-turbo-16k",
    messages: [{role: "user", content: "hello, world!"}],
    temperature: 0,
    max_tokens: 2048,
    top_p: 1,
    frequency_penalty: 0,
    presence_penalty: 0,
  });

  console.log(JSON.stringify(response.data.choices, null, 2));
})()

cURL:

Last but not least, you can call the OpenAI API using curl directly from your terminal:

curl https://api.blockeden.xyz/openai/8UuXzatAZYDBJC6YZTKD/v1/chat/completions \
  -H "Content-Type: application/json" \
  -d '{
  "model": "gpt-3.5-turbo-16k",
  "messages": [{"role": "user", "content": "hello, world!"}],
  "temperature": 0,
  "max_tokens": 2048,
  "top_p": 1,
  "frequency_penalty": 0,
  "presence_penalty": 0
}'

So, what's next? Dive in, experiment, and discover how you can leverage the power of OpenAI API for your projects, be it for chatbots, content generation, or any other NLP-based application. The possibilities are as vast as your imagination. With BlockEden.xyz's seamless integration with OpenAI, let's redefine the boundaries of what's possible.

For more information on OpenAI's capabilities, models, and usage, visit the official OpenAI documentation.

Happy Coding!

What is BlockEden.xyz​

BlockEden.xyz is an API marketplace powering DApps of all sizes for Sui, Aptos, Solana, and 12 EVM blockchains. Why do our customers choose us?

1. High availability. We maintain 99.9% uptime since our first API - Aptos main net launch.
2. Inclusive API offerings and community. Our services have expanded to include Sui, Ethereum, IoTeX, Solana, Polygon, Polygon zkEVM, Filecoin, Harmony, BSC, Arbitrum, Optimism, Gnosis, Arbitrum Nova & EthStorage Galileo. Our community 10x.pub has 4000+ web3 innovators from Silicon Valley, Seattle, and NYC.
3. Security. With over $45 million worth of tokens staked with us, our clients trust us to provide reliable and secure solutions for their web3 and blockchain needs.

We provide a comprehensive suite of services designed to empower every participant in the blockchain space, focusing on three key areas:

• For blockchain protocol builders, we ensure robust security and decentralization by operating nodes and making long-term ecosystem contributions.
• For DApp developers, we build user-friendly APIs to streamline development and unleash the full potential of decentralized applications.
• For token holders, we offer a reliable staking service to maximize rewards and optimize asset management.

• Twitter: https://twitter.com/BlockEdenHQ
• Discord: https://discord.gg/4Yfvs2HWey
• Source Link: https://blockeden.xyz/blog/2023/07/19/unveiling-integration-openai-api-blockeden-api-marketplace/

The surge in popularity of cryptocurrencies and blockchain technology have brought along significant scalability challenges. Blockchains like Bitcoin and Ethereum face heightened demand as the interest in decentralized applications (DApps) and non-fungible tokens (NFTs) increase. This has led to platforms like BlockEden.xyz, a software powerhouse based in San Francisco, to seek scalable solutions. Enter NEAR Protocol, an open-source platform launched in 2020 as a decentralized cloud infrastructure to host DApps.

A Brief Overview of NEAR Protocol​

NEAR Protocol is a layer-1 blockchain that uses Nightshade, a unique sharding technology, to achieve scalability. It offers cross-chain interoperability through the Rainbow Bridge and a layer-2 solution called Aurora. Users can bridge ERC-20 tokens and assets from the Ethereum blockchain to the NEAR Protocol network, enabling access to higher throughput and lower transaction fees. The native token of the NEAR Protocol, NEAR, is used for paying transaction and data storage fees. NEAR token holders can also stake their tokens on the NEAR wallet to receive rewards or use them to vote for governance proposals.

The team behind NEAR Protocol is on a mission to address scalability limitations through sharding. Co-founded by Alex Skidanov and Illia Polosukhin in 2020, NEAR Protocol features a wide range of programming tools and languages, along with smart contracts with cross-chain functionality. These tools and features, coupled with a simplified onboarding process and human-readable account names, make NEAR Protocol a developer-friendly platform.

Integration of NEAR Protocol into BlockEden.xyz​

The integration of NEAR Protocol into BlockEden.xyz's API marketplace offers developers a scalable, secure, and efficient platform for creating groundbreaking decentralized applications. BlockEden.xyz, already known for its robust security and impressive uptime record, has enhanced its offerings by introducing NEAR Protocol.

Understanding NEAR's Core Technology: Nightshade Sharding​

Nightshade is the innovative sharding technology that forms the backbone of the NEAR Protocol. It enables the efficient processing of data by distributing the workload across multiple validator nodes. Each node handles only a fraction of the network’s transactions, allowing for a higher number of transactions per second. The dynamic adjustment of nodes based on network traffic ensures overall efficiency and low transaction fees.

Bridging Networks with Rainbow Bridge​

Rainbow Bridge, an application on NEAR Protocol, enables the transfer of ERC-20 tokens, stablecoins, wrapped tokens, and even NFTs between Ethereum and NEAR blockchains. This allows users to benefit from the higher throughput and lower fees on the NEAR Protocol. The Rainbow Bridge operates in a fully permissionless and decentralized manner, locking tokens on Ethereum and creating corresponding tokens on NEAR to maintain a constant circulating supply.

Unleashing Efficiency with Aurora​

Aurora, a layer-2 solution on the NEAR Protocol blockchain, is designed to host thousands of transactions per second with an approximate block confirmation time of 2 seconds. Comprising the Aurora Engine and the Aurora Bridge, it offers compatibility with Ethereum and supports all tools available in the Ethereum ecosystem, making it easy for developers to transition to NEAR.

Staking and Governance with NEAR Token​

NEAR, the native token of the NEAR ecosystem, serves as the medium for transaction and storage fees. Token holders can stake their NEAR to run validating nodes, participate in governance by voting on platform decisions, and submit proposals.

Conclusion​

The blockchain space continues to evolve, and platforms offering lower transaction costs and increased throughput are likely to drive mainstream adoption. The integration of NEAR Protocol into BlockEden.xyz's API marketplace is not just a mere upgrade; it's a significant step towards that future. With scalable solutions like sharding and cross-chain bridges, NEAR Protocol provides the ideal environment for developers to build efficient DApps and DeFi products. Together with BlockEden.xyz, NEAR Protocol is set to redefine the boundaries of blockchain technology.

• Twitter: https://twitter.com/BlockEdenHQ
• Discord: https://discord.gg/4Yfvs2HWey
• Source Link: https://blockeden.xyz/blog/2023/07/14/beyond-boundaries-the-integration-of-near-protocol-into-blockedenxyzs-api-marketplace/

In the bustling world of blockchain and decentralized applications, QuickNode has established itself as a formidable force. This doc will explore a comprehensive exploration of QuickNode's business model, competitive landscape, potential drawbacks, and key tactics to go head-to-head with this blockchain player.

QuickNode’s Business Model - The Success Recipe​

QuickNode offers an exemplary performance, with its speed being 2.5 times faster than competitors. This speed isn't just a claim; it's backed by actual performance metrics, which you can check out on their comparative page.

With the flexibility to handle 15+ chains and a mind-boggling 99.99% availability - SLA guaranteed no less - QuickNode offers unparalleled reliability in the space. Furthermore, they've successfully onboarded some big guns like Google, Visa, Adidas, and Coinbase. They've also courted long-term internet investors, including 776 Ventures, Tiger Global, Softbank, and more.

The Four Pillars of Revenue​

Node Management

QuickNode's Node Management Platform is the company's flagship product and primary source of revenue. With a dual-tiered model, it offers self-service options for developers and businesses who want hands-on access, as well as enterprise-grade solutions for larger corporations. This approach covers a wide range of customer needs, from small startups to industry juggernauts.

• Self-service Options: This is ideal for developers or small-scale organizations that require on-demand access to blockchain networks. It offers flexibility and control, allowing them to deploy nodes and manage their applications as needed.

• Enterprise-grade Solutions: For larger corporations with more complex needs, QuickNode offers a custom-tailored solution. This package includes advanced analytics, priority support, and guaranteed uptime. The personalized nature of this solution means businesses can focus on building their products rather than worrying about node management.

Icy Tools - NFT Development

Icy Tools, QuickNode's next pillar, offers unique utilities for NFT development. As the NFT market has exploded, the demand for tools to streamline the creation, management, and trading of NFTs has grown exponentially. QuickNode's Icy Tools provide developers with an efficient and intuitive way to tap into this burgeoning market, thereby driving significant revenue for the company.

App Marketplace

QuickNode's App Marketplace is another key revenue stream. It hosts a wide range of applications built on QuickNode's infrastructure, providing a platform for other businesses and developers to sell their products. QuickNode, in turn, earns revenue through commissions and listing fees. This marketplace not only adds a vibrant ecosystem to QuickNode's offering but also acts as a value-added service for their node management customers.

Network Integration Fees

Lastly, QuickNode also derives revenue from Network Integration fees. Given the ever-expanding landscape of blockchain protocols, integrating new networks is a continuous process. QuickNode charges businesses and developers a fee for this service, providing them with seamless access to emerging protocols.

Each of these pillars plays a crucial role in QuickNode's revenue model, leveraging different aspects of the blockchain landscape to ensure the company's sustained financial health. Their diversified income sources have helped them remain resilient and adaptable, ready to face the dynamic challenges of the industry.

High-speed growth of the business​

QuickNode has shown robust growth metrics that underscore its escalating position in the market. In 2022 alone, the firm witnessed a more than 40% quarterly uptick in enterprise revenue, demonstrating a sustained demand for its offerings.

Platform usage, a key indicator of product adoption, scaled 550% times over the past year. Reflecting a strong bottom line, gross revenue also spiked, showcasing a 370% YoY growth.

Further indicating QuickNode's expanding user base, new account registrations jumped by 177% YoY. Additionally, there was a massive 264% YoY surge in endpoints deployment, proving the company's increasing operational scale and efficiency.

The Competitive Landscape - Where the Rubber Meets the Road​

Now, let's delve into the crux of the matter. While QuickNode leads the pack in the node creation/connection market, it’s not without competition. Rivals like Amazon, Microsoft's Azure, and IBM are eyeing the space, posing potential threats to QuickNode's dominance. However, QuickNode has managed to hold its ground, primarily due to its industry-leading speed and flexibility, earning it rave reviews from customers. But is that enough to keep it ahead in this high-stakes game?

The Alchemy Conundrum

Alchemy, with its Silicon Valley roots and robust investor backing, is an intriguing contender. While it brings a lot to the table, it's not quite up to par with QuickNode when it comes to speed and offering. Yet, Alchemy's Silicon Valley connection and buzz could play a role in the ongoing battle of the nodes. It raised at 10.2B valuation on the market top reflected in their valuation and revenue multiple, which is rumored to be 120x - 200x.

Infura - The Fallen Star

Infura entered the arena as a trailblazer, focusing on Ethereum node RPC. However, post-acquisition by ConsenSys, it seems to have lost momentum. Although Infura supports six chains, its speed is trailing behind QuickNode's.

Coinbase Cloud - The Fake Dark Horse

Acquiring Bison Trails puts Coinbase Cloud on the map, but rumors suggest Coinbase is dissatisfied with the outcome and has cut off the business. Although the product relaunched with support for 25 chains, only Ethereum is in general availability. Moreover, its lack of public speed data keeps it shrouded in mystery.

BlockDaemon - A Specialized Contender

BlockDaemon distinguishes itself by specializing in an area - institutional-grade staking - that's rather different from QuickNode's primary focus, and hence it's not seen as developer friendly.

Is QuickNode falling short?​

Not exactly. It's more about the vast ocean of opportunities that its competitors might venture into. It's like saying that no team can win every time, even if they have the best players. This field is big enough for many players to participate, and each player has their unique strategies. Let's not forget - blockchain is about dispersing power, not centralizing it. So, no player can dominate this field.

Furthermore, QuickNode's influence is concentrated on certain blockchains, with a maximum of 25 chains. In the real world, there are at least five to six hundred blockchains, and with the rise of AppChain, more players will enter the market. This will undoubtedly give new entrants new opportunities.

Lastly, QuickNode focuses on large enterprise users, and its pricing has risen accordingly, making it unsuitable for small and medium enterprises and independent developers.

The Team Behind QuickNode - The Brains of the Operation​

The QuickNode team, with its previous experience in managing hosting and CDN scaling businesses, brings a wealth of relevant skill sets to the table. Yet, we can't dismiss the fact that their competitors also come with their unique strengths, networks, and experiences.

BlockEden.xyz vs. QuickNode​

BlockEden.xyz follows the strategies below to effectively compete with QuickNode.

1. Differentiate on Unique Services: First, BlockEden.xyz can offer unique APIs or blockchain services that QuickNode does not provide, like Aptos and its indexer, Sui and its indexer. By identifying gaps in QuickNode's offerings and stepping in to fill those gaps, BlockEden.xyz presents itself as a unique, comprehensive solution.
2. Competitive Pricing: Another way to compete is through pricing. BlockEden.xyz offers more competitive pricing models that are more affordable for smaller businesses or developers. A flexible, scalable pricing model can attract a wider range of customers, from startups to enterprise-level organizations.
3. Superior Customer Service: Providing superior customer service and technical support is another great way to compete. Quick response times, helpful resources, and knowledgeable support staff make all the difference when it comes to customer satisfaction and loyalty.
4. Partnerships and Integrations: BlockEden.xyz seeks partnerships with other blockchain platforms or services, creating integrations that make it more appealing to customers. These partnerships can expand BlockEden's reach and functionality.
5. Community Engagement and Developer Support: QuickNode has a strong developer community. BlockEden.xyz could compete by fostering a similar community and a developer DAO 10x.pub, providing strong support, and cultivating an ecosystem of developers and users who can contribute to and improve the platform.

Our key to successful competition is not necessarily to beat QuickNode at its own game, but to provide unique value that QuickNode does not. We are finding the niche where BlockEden.xyz can excel, and focus on serving that market exceptionally well.

• Twitter: https://twitter.com/BlockEdenHQ
• Discord: https://discord.gg/4Yfvs2HWey
• Source Link: https://blockeden.xyz/blog/2023/07/09/quicknode/

Note: This is a comprehensive analysis of QuickNode and its competitive landscape. It doesn't represent an endorsement or criticism of the company but aims to offer an unbiased overview. Always conduct your research when considering investments or partnerships.

In today's digital era, blockchain technology has become a crucial part of online transactions and data sharing. As the use of blockchain expands, so does the need for an efficient and transparent way to navigate its ecosystem. Enter Blockroma, an open-source, EVM-compatible blockchain explorer, fulfilling this necessity effectively and efficiently.

What is Blockroma?​

A blockchain explorer like Blockroma is a web tool that allows users to interact with the blockchain network, providing real-time data, transaction history, and network status. It aids users in understanding individual transactions - including sender, receiver, amount, and transaction time - and provides insights into the blockchain network's current state.

The Tech Stack​

Blockroma utilizes a modern technology stack - TypeScript, React, and PostgreSQL - that ensures scalability and easy maintainability. It empowers you with its quick and straightforward deployment process, contributing to a seamless user experience.

Advanced Features​

Blockroma steps beyond traditional blockchain explorers, offering advanced features such as searching for specific transactions or addresses, facilitating the creation and viewing of smart contracts, and exploring the history of particular blocks. These features allow users from all backgrounds - developers, traders, investors, or everyday users - to comprehend the blockchain network better and leverage its full potential.

Why Choose Blockroma?​

• Transparency: Blockroma simplifies the process of accessing blockchain data, enabling users to verify transactions, addresses, and other data effortlessly.
• Real-time data: It provides real-time data on transaction confirmations, network status, and mining difficulty, which are essential for those needing to monitor the blockchain's health and performance.
• Searchability: Blockroma's advanced search feature improves the tracking and analysis of blockchain activities by allowing users to search for specific transactions, addresses, or blocks.
• Security: Enhancing security on the blockchain, Blockroma helps users verify the authenticity of transactions and the identities of the parties involved, providing an added layer of assurance for businesses.

Additional Benefits​

Apart from these features, Blockroma also provides custom themes, premium support, and priority updates for managed hosting on Blockroma.com. Moreover, it allows a worry-free experience with zero operation costs.

Conclusion​

In a nutshell, Blockroma makes blockchain navigation easier, efficient, and secure for individuals and businesses. With its advanced features and user-friendly interface, Blockroma stands as a robust solution for exploring and interacting with the blockchain. Embrace the future of blockchain interaction with Blockroma.

Andreesen Horowitz, more commonly known as a16z, is a name that reverberates through the halls of venture capital with an aura of visionary innovation. An essential branch of their investment activities, a16z crypto, focuses explicitly on the burgeoning field of crypto and web3 startups, an area that is quickly redefining how we view digital commerce, privacy, and online interaction. Their venture into this domain is more than merely a business move—it is a commitment to shaping the contours of the rapidly evolving Web3 landscape.

The a16z Crypto Startup School, a twelve-week accelerator program, is designed around the specific needs of web3 startups, imparting crucial knowledge, resources, and support. Recently, this initiative showcased an intriguing array of 11 ambitious projects, each aiming to disrupt various sectors through blockchain and Web3 technologies. For the curious, every bit of detail is available on the a16z crypto startup school page.

Demo Projects​

These projects not only provide a glimpse into the future of various industries but also offer valuable insights from both a builder's and investor's perspective. They represent practical use cases of blockchain technology and the ways it can innovate systems and processes. Here is a brief overview:

1. Blockus: With the intent of revolutionizing the gaming economy, Blockus is developing a comprehensive solution for game studios to focus on gameplay more effectively.

2. ChainPatrol.io: This project aims to bolster Web3 security, offering real-time protection for Web3 communities and raising the bar for digital asset security.

3. mbd.xyz: This ambitious endeavor seeks to democratize AI recommendation systems, pioneering the concept of the 'Curation Economy', potentially reshaping online content consumption.

4. Web3Analytic: In an era of data-driven decisions, Web3Analytic provides no-code user analytics solutions that can enhance product performance and user experience.

5. KIKI world: This innovative project is set to disrupt the beauty industry, promoting a model of co-creation and co-ownership of beauty products with enthusiasts.

6. formless: Formless proposes a transformation of the media distribution ecosystem by monetizing intellectual property through smart contracts, offering a potentially game-changing method for content creators to benefit from their work.

7. Fuul.xyz: Addressing the need for streamlined affiliate marketing in the Web3 space, Fuul.xyz aspires to build a bridge between content creators and Web3 projects.

8. frens: This communications super app aims to foster transactions with friends, protocols, and smart contracts within the conversation, representing an innovative blend of social networking and Web3.

9. Discove: Discove is exploring a unique protocol for composable mini-apps, presenting a novel approach to Web3 applications that could enhance their utility and ease of use.

10. Stackr Labs: By offering a unique modular rollup SDK, Stackr Labs allows developers to focus on state machine building, streamlining the development process in the Web3 space.

11. Sky Lab: Sky Lab envisions an autonomous world, focusing on building games on top of initial world primitives. This could redefine the interactive experience in gaming and beyond.

Categorization​

Given the diverse array of projects presented at the a16z Crypto Startup School, they can be categorized based on the industry or sector they primarily target. Here's a possible categorization:

1. Gaming and Entertainment: This category includes projects that are focused on innovating within the gaming industry, leveraging blockchain and Web3 technologies to enhance user experience, game design, and monetization. Project included: Blockus, Sky Lab.

2. Security and Infrastructure: Projects that primarily aim to enhance the security and infrastructure of the Web3 space. This includes everything from data protection to the development of key tools and software that can be used by other Web3 services. Projects included: ChainPatrol.io, Stackr Labs.

3. Data Analytics and AI: These projects focus on leveraging data and AI for various purposes like enhancing product performance and user experience, as well as democratizing AI recommendation systems. Projects included: Web3Analytic, mbd.xyz.

4. Content Creation and Media Distribution: These projects look at the ways in which content is created and distributed, particularly in terms of intellectual property and how creators are compensated for their work. Project included: formless, KIKI world.

5. Marketing and Communication: Projects focusing on improving communication within the Web3 space, fostering transactions, and enhancing affiliate marketing for Web3 projects. Projects included: Fuul.xyz, frens.

6. Web3 Applications and Platforms: Projects that are working on novel applications and platforms within the Web3 space, particularly in terms of their design and user interface. Project included: Discove.

Each of these categories represents a unique approach to the utilization of blockchain and Web3 technology, providing insights into the diverse range of applications these technologies can offer across different sectors.

Conclusion​

The rise of Web3 is a fascinating, complex phenomenon and projects such as these, supported by the likes of a16z Crypto Startup School, are contributing to this dynamic evolution. For a more in-depth exploration of each project, the a16z Crypto Startup School page provides comprehensive details.

• Twitter: https://twitter.com/BlockEdenHQ
• Discord: https://discord.gg/4Yfvs2HWey
• Source Link: https://blockeden.xyz/blog/2023/06/08/exploration-a16z-crypto-startup-school-projects/

Earning rewards by staking your SUI with BlockEden.xyz through the Sui Wallet, Martian Wallet, or Suiet! We're excited to announce that SUI staking on Mainnet is finally accessible, providing an opportunity for you to generate passive income from your $SUI by earning staking rewards. This guide will explain, step by step, how to use your preferred Sui wallets: Sui Wallet, Suiet, and Martian Wallet.

• Staking SUI with Sui Wallet
• Staking SUI with Martian Wallet
• Staking SUI with Suiet
• Staking SUI with Ethos Wallet

Staking SUI with Sui Wallet​

First, you'll need to install the Sui Wallet browser extension. Currently, Sui Wallet is available exclusively on Chrome, though future updates may include support for other browsers. If you aren't using Chrome and wish to stake SUI, consider using the other wallets discussed in this guide.

To create your wallet, click on "Get Started", then "Create a New Wallet". If you already have a wallet, you can import it by clicking on "Import an Existing Wallet".

Now you need to set a password. It's recommended to choose a strong password with a minimum of 12 characters, including numbers, letters, and symbols. Also, be sure to write your password down and store it in a safe, offline location. Once you've agreed to the terms and conditions, select "Create Wallet".

Make sure to note down your recovery phrase in a secure place, preferably offline. It's crucial for future access to your SUI.

Staking Your SUI​

After your wallet is set up, it's time to stake! On the dashboard, click "Stake & Earn SUI". Choose your desired validator from the list, confirm your selection, and click on the validator.

Next, specify the quantity of SUI you want to stake. Verify all details before clicking "Stake Now".

Upon successful transaction confirmation, your stake will begin to earn rewards from the beginning of the next epoch. There's no need to restake as rewards are automatically compounded.

Unstaking SUI with Sui Wallet​

To claim or unstake your SUI, click "Currently Staked". You'll see a list of your validators. From this list, select the validator with whom you'd like to unstake.

Then, click on "Unstake SUI". Verify all details before confirming with "Unstake Now".

Congratulations! You've successfully unstaked your SUI.

Staking SUI with Martian Wallet​

Firstly, download the Martian Wallet app and set up your wallet account. Be sure to download the browser extension using the official website’s download button. Once the extension is added to your browser, Martian Wallet will open.

On the "start" screen, click "Create a New Wallet" to initiate the process. If you already have a wallet, select "I already have a Wallet", enter your private phrase, and recover your wallet.

As before, set a secure password of at least 12 characters, mixing numbers, letters, and symbols. After selecting your password and agreeing to the terms and conditions, click "Continue".

Your recovery or seed phrase will be presented next. Remember to securely store this phrase offline and not to share it with anyone. It's vital for future access to your assets.

Staking Your SUI​

With your account ready, you can now start staking. In the Martian extension dashboard, click "Stake your SUI". Scroll to find and select your desired validator.

Enter the amount of SUI you want to stake and remember to reserve some SUI for gas fees. The minimum staking amount is 1 SUI. After filling this out, click "Preview".

Finally, verify all the details on the pop-up, including the staked amount and gas fees. If everything is correct, click "Confirm and Stake". A "Success" message should appear shortly, indicating a successful stake. You can now close the window, and your stake will start earning rewards from the next epoch.

Process for Unstaking or Claiming with Martian Wallet​

Unstaking your SUI from Martian Wallet is a straightforward process. Begin by navigating to the Home screen and selecting “Stake”. From there, you will be presented with a list of all your staked SUI and their respective epochs on the stake dashboard. Please note that you must unstake all SUI at the same time. Identify the SUI you wish to unstake, click on it, and then select “Unstake”. After a brief wait, your assets will be unstaked, congratulations!

Steps to Stake SUI using Suiet​

To start, you need to download the Suiet Wallet extension. This can be done by visiting the official Suiet website, where you should select the download option that best suits your needs. Please exercise caution and ensure you download the wallet from the official Suiet site.

After downloading and installing the extension, you'll need to set it up. To do so, open the extension and click on “Create Wallet”.

The next step is to create a secure password that includes a mix of capital and lowercase letters, symbols, and numbers, with a minimum length of 12 characters. Safely record this password, preferably offline, then proceed to the next step.

You'll then be given a recovery phrase, which is vital for future access to your assets. It is paramount that you keep this phrase confidential and store it in a secure location, preferably offline.

Staking Your SUI​

With the preparation complete, it's now time to stake your SUI. Start by going to the dashboard and selecting “SUI”, then choose “Stake”.

On the top of the dashboard, you'll find a list of validators. Select your preferred validator and decide on the amount of SUI you wish to stake. Remember to keep some SUI reserved for gas fees and future transactions. Once everything is in order, confirm the transaction.

Once the transaction is confirmed, your stake will start accruing rewards from the start of the next epoch.

How to Claim or Unstake SUI with Suiet​

Claiming your SUI rewards or unstaking your SUI with the Suiet wallet is a straightforward process. Just navigate to your staked assets, click on the one you wish to handle, and select “Unstake”. After a brief wait, you will receive a confirmation of successful unstaking. It's as simple as that!

Staking SUI with Ethos​

Similar to the other wallets, you first need to create your wallet to stake SUI with Ethos. Visit the official Ethos Wallet for Sui website to start.

Once the Ethos extension is downloaded and installed, click on “Generate New Wallet” and create a secure password, following the same guidelines as mentioned before. Write down your password securely.

You will then be provided with a recovery or seed phrase. Remember, this phrase is essential for accessing your assets in the future and should not be shared with anyone. Safely store this phrase, preferably offline.

Ethos also gives you the option to customize your wallet with a color and emoji. This step doesn't affect the wallet's security and can be skipped or completed based on personal preference.

Staking Process for SUI with Ethos​

For staking on Ethos, select “staking” on the dashboard. From the list of validators, select your desired one and proceed.

Enter the amount of SUI you wish to stake, taking care to reserve some for gas fees and future transactions. Review the transaction details and if everything seems fine, click “Review”, and then “Confirm”. A message stating “Staking Complete!” should appear shortly. Your staked SUI will start earning rewards from the next epoch.

You'll need to wait for an epoch (24 hours) to unstake your SUI. The rewards on SUI are auto-compounded, so you won't have to restake your rewards.

Claiming SUI Rewards with Ethos​

To claim your SUI rewards, navigate to "staking" on Ethos's top right menu. This will open up your staking overview where you can see your accumulated rewards.

For unstaking, select the validator you wish to unstake with and click “Unstake SUI”. Confirm your decision and that's it, you've unstaked your SUI.

Remember, staking not only provides rewards but also contributes to the SUI ecosystem and aids in securing the blockchain network.

Closing Remarks​

Staking plays a key role in ensuring the sustainability and security of blockchain networks. By staking your digital assets, you help in operating the network and get rewarded for it. For those interested in staking SUI or learning more about this process, you can reach out to BlockEden.xyz through their Website, Twitter, Blog, or join the Discord community.

DISCLAIMER: This article does not provide financial advice. Staking, delegation, and cryptocurrencies involve considerable risk, and there is always the possibility of loss, including the loss of all staked digital assets. Delegators may face the risk of slashing in case of security or liveness faults on certain protocols. It is advised that you do thorough research before choosing a validator.

Etherscan stands as the leading Ethereum block explorer and has significantly grown since its inception in 2015, extending its services to include other chains such as Fantom, Polygon, BSC, Arbitrum, among others. While Etherscan has successfully secured funding twice - in 2016 and 2021, the specific amounts were never disclosed. Interestingly, the company didn't take advantage of favorable funding conditions to raise more capital, suggesting they're likely profitable.

Etherscan's main revenue streams come from Software as a Service (SaaS) offerings and advertising. Their range of SaaS solutions includes various on-chain tools like wallet-to-wallet messaging, staking, token approvals, and more.

As per LinkedIn data, Etherscan maintains a workforce of 29 employees. The estimated cost of this staffing level, also referred to as the headcount burn, is approximately $1.2 to $2.15 million each year.

Income Sources​

• (58.4%) SaaS / Total - Estimated Income: $2.91M - $12.55M / yr
  • Explorer as a service
  • API plans
  • BSCscan's delegation services, wallet-to-wallet messaging, token approval-revoke tool, etc.
• (1.4%) Newsletter - Estimated Income: $0.12M - $0.3M / yr
• (40.2%) Website Ads - Estimated Income: $2.4M - $8.64M / yr
• Donations

Headcount and Burn​

Here is the burn rate for headcounts, not including operational costs such as third-party vendors, office spaces, etc.

It would be relatively easy for Etherscan to expand to businesses like Dune’s dashboard or Nansen’s wallet tagging. However, they are not doing so, which indicates that they might be extremely profitable.

Blockchain technology has emerged as a leading force in the digital world, offering revolutionary solutions that extend beyond cryptocurrency. Programming languages dedicated to blockchain technology are carving a unique space for themselves. Among these languages, Move has secured a significant spot, thanks to its robustness and inherent security features. Today, we will introduce an innovative tutorial called "Sui Move," designed to teach developers the Move programming language using a learn-by-example approach.

Understanding Move: The Programming Language​

Before we jump into the tutorial, let's briefly recap what Move is. Created by Facebook's subsidiary, Diem Association (formerly Libra), Move is a statically-typed, resource-oriented programming language. Its design is centered around enforcing safety and security, making it the ideal language for coding blockchain and cryptocurrency projects. The Sui Move is a variant of the Move programming language.

Resources in Move are a key construct that makes it stand out from other blockchain programming languages. These are special types that can't be copied or discarded, only moved between storage locations. This feature allows for precise control over digital assets and significantly mitigates the risk of common security issues, such as double-spending.

Sui Move: A Learn-by-Example Tutorial​

Located at https://blockeden.xyz/docs/sui/sui-move/intro/, "Sui Move" is a comprehensive, learn-by-example tutorial designed to teach developers how to code using the Move programming language.

"Sui Move" is constructed on the philosophy that hands-on learning accelerates comprehension and proficiency. The tutorial is divided into small, manageable chunks, each focusing on a specific aspect of Move. This allows learners to not only understand the technicalities of the language but also gain insights into how and where they can be implemented.

"Sui Move" stands out in its approach to teaching. Instead of overwhelming the learner with dense theory, it offers an array of examples for every concept. The learner can directly interact with these examples, providing a dynamic learning environment that encourages exploration and understanding at a deep level.

The tutorial is designed to be accessible for various experience levels. Whether you are a seasoned developer looking to dive into blockchain development or a beginner who's just starting, "Sui Move" is tailored to ensure you grasp and master the concepts effectively.

What You'll Learn​

"Sui Move" covers a broad range of topics that form the core of Move programming language. Here's a snapshot of what you can expect:

• Understanding the syntax and structure of Move.
• Deep dive into Move's unique resource-oriented model.
• Manipulating data using Move's functions and methods.
• Learning to create and implement Modules and Scripts.
• Handling exceptions and ensuring security in your Move programs.
• Learning how to create a custom coin and NFT.

Why Choose Sui Move?​

"Sui Move" is not just a tutorial; it's a well-structured learning journey. It offers:

1. Real-world Examples: Every concept is paired with a practical example that demonstrates how to use it effectively.
2. Comprehensive Coverage: It provides a thorough understanding of Move, from basic syntax to advanced constructs.
3. Step-by-Step Guidance: Every module is designed to gradually build your understanding, reducing the learning curve and making complex concepts easier to grasp.
4. Flexibility: It caters to a wide range of learners, from beginners to experienced developers.

Blockchain technology is shaping the future of numerous industries, and mastering a language like Move can open new avenues for developers. With "Sui Move," you have a resource that can guide you effectively through your learning journey. So, dive in, start coding, and explore the exciting opportunities that Move and blockchain technology hold for you.

Get started now at https://blockeden.xyz/docs/sui/sui-move/intro/.