2023-02-20 09:40:56 UTC


How do we build crypto sustainably? Are we serious about decentralization and open design frameworks? Or are we doomed to build Fintech 3.0 with the same tech giants dominating or (at best) providing marginal improvements in privacy, accessibility, and interoperability?

For me, this is the chapter that outlines some of the most burning investment needs in crypto (and, I think, the greatest long-term opportunities). We don't need a 30th DEX AMM variant or another 10,000 image animal PFP collection. We do need tools that will ensure crypto truly cannot be shut down.

These tools come down to hardware, wallets, browsers, secure data pipes, and new governance primitives and social contracts. The first few aren't easy, but they are fairly straightforward.

We can't be reliant on Amazon, Google, and Microsoft for hosting; Apple, Facebook, or Google for browsing; or any of the Big Data giants to provide our oracle data for trustless applications. If they do help for some bootstrapping period, great! We just shouldn't get used to it or feel that the relationship is sustainable (we've seen the censorship risks in staking hardware already).

I'm even more interested in the "Layer-0" stack, though.

These are the tools we messy humans use to encode ethical underpinnings in our communities. Balaji calls Layer-0 (or the "moral stack") the baseline for the network state. That makes sense. Most good companies consider culture, mission, and values to be more important than their strategy or product at any given time. What's lacking most in crypto isn't talent, so much as good governance and social primitives that encode better Layer-0 values at the community level. Especially after this year.

Whether you're talking about DAO operations, legal structures, financial management, strategy, or product, the way we work in crypto and the why behind it still need major upgrades.

Wallets & Browsers

The backbone of the crypto economy is the personal wallet, not the exchange-based account. Wallets act as virtual money clips, identity credentials, and personal data vaults. They unlock your access to the crypto realm, whether you're using a DeFi app, NFT, or DAO, and they support access to protocols and assets that might not otherwise be supported by your favorite exchange.

The upgrades this year to personal crypto wallets have been incredible.

MetaMask integrated with fintech Sardine to allow instant bank-to-crypto transfers. Coinbase announced its plans to expand Coinbase Pay to enable users to fund Coinbase Wallets directly from a bank account, added an SDK for developers looking to integrate fiat-to-crypto services directly within their dApps, and rolled out support for Ethereum dApps in its standard mobile wallet. Ledger completed an integration with several exchanges that allowed its customers to leverage CEX order books without losing control of their private keys (Ledger hardware wallet FTX traders are SAFU). And the new Ledger Stax looks sick.

At the same time, portfolio tools from Zerion, Zapper, and Nansen made it easier to track specific wallets in real time and manage full, complex portfolios from a single dashboard. My personal favorite is Frame, a privacy-focused Ethereum wallet and native desktop application, which is my preferred command center for crypto transactions.

Better wallet infrastructure helps users manage the "not your keys, not your coins" problem, and turns personal crypto custody from a purity test to an accessibility, safety, and user experience upgrade. Good personal wallets also dim the contrast between CeFi and DeFi and give users better and more seamless choices. Retail traders might leverage central limit order books from their Ledgers, while institutional investors might execute DeFi transactions without assets ever leaving their regulated custodians.

While we've made good progress on wallets, there's still work to be done on the browsers and app stores. The most crypto-friendly browser, Brave, has grown tremendously, doubling from 24 million to 50 million MAUs from 2020 to 2021. They also rolled out a privacy-preserving ads program in beta, created a Wallet Partner program that counts 75 dApps, and integrated with Solana and IPFS. I'm keeping an eye out for their 2022 year in review in January.

The most acute remaining access gaps are in mobile, though. As discussed earlier in the NFT chapter, it's gonna be a battle to ensure users have unrestricted access to crypto apps in the iOS and Android app stores. We may very well need a crypto native dApp store (will Brave build it?) or better jailbreaking tools to route around the monopolists. (Good discussion here.)

Suffice it to say, there are still major censorship risks that confront crypto. And the backend challenges are even more acute.


Our physical survival depends on the decentralization of hardware. The war against censorship will be fought in the cloud, and how effectively we wrest control of that infrastructure from Big Tech monopolies could be the difference, as we hang in the balance between an open internet and a global police state.

Decentralized Physical Infrastructure Networks (DePIN) help bootstrap decentralized networks of physical hardware. Things like file storage, wireless access, and cloud computing require lots of capital expenditure and operational headaches, and it's a non-trivial challenge to scale a hardware network    to viability. Tokens have proven effective at catalyzing the development of these networks as they coordinate decentralized hardware investment at scale.


While it's been possible to incentivize hardware supply with token rewards, it's been slower to generate sticky demand.

This is a sector dominated by three of the largest and most reliable tech companies in the world – Microsoft, Google, and Amazon. That means partnerships, business development, and organic demand may be tougher to come by than other areas of crypto, and success hinges on a continuation of the trend towards greater Big Tech censorship. I believe crypto infrastructure will grow exponentially in regions where governments tighten their grip on dissent and crack down on speech, and there is tremendous opportunity for catering to gray market customers.

The same things that make this a challenging sector, also make it critically important and interesting for investors in the years to come. Hundreds of billions of dollars worth of spending. The backbone of the free and open web. A check on government suppression. That's the long-term trifecta of mission, market need, and monetizability we like to see!

In the medium term, if tech giants don't want to touch DeFi or DeSoc, those giant apps (and their user bases) will end up leveraging things like Filecoin and Arweave to get up and running. 

On the demand size, this feels like one of the more linear growth sectors of crypto.

Demand hinges on utility and more straightforward blocking and tackling of sales and partnerships. It's not as driven by token speculation (which has a much bigger impact on the supply side). For illustration, check out Filecoin, where both storage capacity and utilization have grown more or less in a straight line the past 18 months.

(We'd love to do quarterly reporting for Arweave, too. Sam, call us!)

We've seen similar growth in video transcoding usage around services like Livepeer, which, like Filecoin, has seen pretty steady growth despite brutal token market conditions.

We've also kept our eyes on Decentralized Wireless ("DeWi") projects like Helium (5G and LoRaWAN network for IoT devices) and Pollen Mobile (5G network), and mobility sensor networks like HiveMapper (mapping) and DIMO (vehicle data). And we expect more protocols will look to decentralize their node infrastructure (Pocket) and their compute and hosting (Akash).

I don't think I could be more long-term bullish on this segment. Remember way back in Chapter 1 when we did the relative market sizings for the top sectors by market cap?

Well, I'll repeat: legacy cloud infrastructure is $5 trillion in global market cap versus a $3 billion market cap for crypto players. Not a bad sector to spend time in. We're tracking it quarterly.

(Note: I also liked this prediction from a16z's  Big Ideas for 2023and didn't know where else to put   it. One area of DePIN that could be exciting is energy. "Power grids are dated, centralized, and face several other issues like high upfront capital expenditures and misaligned incentives. There are great opportunities to build microgrids and storage and transmissions networks, by solving issues such as high capital expenditures and disparate incentives solved through tokens. There are also burgeoning markets for renewable energy certificates (REC), and carbon credits on-chain. What's possible when we decentralize energy networks?")

(Required Reading: The Telecom Cowboys of The Decentralized Wireless Movement, The ExponentialDemand for Compute, How Are Web3 Infrastructure Protocols Trying To Capture Value?)

Data Integrity

There are three core types of data in crypto: blockchain transaction data (including metadata), off- chain markets data (e.g., CEX orderbook data), and "real-world" data that gets ported into crypto through crypto's oracle services such as Chainlink. We need better reliability and standardization around on-chain data, and better access to secure, verified "real-world" data in order for crypto (particularly DeFi) to reach its full potential.

With respect to on-chain data, The Graph is the dominant decentralized data infrastructure project today. Data consumers typically use APIs to pull blockchain data that is otherwise not easily accessible or well-structured. Most data providers, like Coin Metrics or Glassnode, offer a limited number of API endpoints for general-purpose datasets. Adding more endpoints is up to the providing entity (e.g., Coin Metrics or Glassnode). On the other hand, The Graph offers tooling that enables the developer community (or independent teams and entities) to develop open APIs of specialized subgraphs that data consumers can query to power unique application features. Anyone can build and publish open APIs, called subgraphs, making data easily accessible.

Given the fragmentation of the on-chain data API space, we decided to invest in subgraph development earlier this year. The result, we hope, is an emergent set of standards that mirror GAAP or IFRS reporting, which give us true apples-to-apples comparisons of various protocols.

Over the past six months, The Graph has seen an explosion in the growth of subgraphs deployed (58%), revenue generated from GRT token query fees (288%), staked Indexers joining the network (33%), Curators joining the network (7%), and Delegators joining the network (20%).

(Messari may have had something to do with that! Earlier this year, Messari partnered with The Graphas the first-ever Core Subgraph Developer team. Since we've got to work in this role, our team has deployed 7% of the actively deployed subgraphs on the decentralized network, which account for 5% of all query fees in the month of December.)


With respect to off-chain data sources (whether we're talking about crypto asset prices or any other conceivable feed), you need healthy oracle infrastructure, and Chainlink remains the 800 pound gorilla in that space with thousands of oracle networks and partner projects in its ecosystem. Chainlink is the backbone for the DeFi sector with leading projects such as Aave, Compound, and Synthetix all relying on their network for off-chain data, and they appear to be the only oracle platform that has seen consistent active user growth, given that API3, Band, and other oracles seem to have plateaued after steep early growth post-launch.

(More on projects like The Graph, IoTeX, API3, Covalenton Messari Pro.)

Actually Useful DAOs

Decentralized Autonomous Organizations or "DAOs" have been bandied about since the earliest days of the industry. They can loosely be described as subreddits with bank accounts and governance. A simple, yet powerful construct to solve our most pressing coordination challenges. Last year, I predicted that 2022 would be "the year of the DAO." In recent weeks, Vitalik has doubled down on his excitement for DAOs, and so I guess I will too.

It won't happen overnight, but I still believe DAOs will change countless aspects of the economy, politics, and society at large in the years ahead.

Blockchains give us the ability to run centralized marketplaces on autopilot, giving their peripheral contributors more financial upside, autonomy, and governing control. The lenders and borrowers in a crypto lending protocol govern the "code bank's" risk parameters and fees - and earn them. The drivers and riders in a crypto ridesharing protocol govern pricing tiers and safety standards. The patients  in a rare disease community can raise funds for their own treatment research, then recoup the upside  if a drug is successfully commercialized.

It's awesome, and I'm certain it's going to work. It's just going to take some time.

To understand why I'm so bullish, you have to appreciate the unique, order-of-magnitude improvements that DAOs can offer contributors (at least technically):

  1.  Unprecedented control over how money is invested and directed versus most types of corporate structures. DAO contributors and workers truly are its owners.
  2.  The ability to leave a DAO, remove funds from its treasury at any time, and fork-off from the community (rage quit) without penalty is profound and inherently decentralizing.
  3. An order(s) of magnitude improvement in the speed and cost of spinning up and winding down entities. (Though real-world jurisdictions still cause headache and expense.)

The foundational legal work needed to bring the DAO vision to fruition is significant, as we outlined last year: "One of the things that is going to be a long-term hassle to figure out is how DAOs actually work in the real world from a tax, contract law, and compliance standpoint." a16z has some of the best proposals for how to create legal DAOs as unincorporated non-profit associations, and Wyoming took the national lead on this already with its recognition of DAOs as a type of LLC.

It's not getting any easier, but I think we'll ultimately like the results:

  • New Business Models: In Web2 there's a health-focused social network called Patients Like Me. It specializes in helping patients with rare diseases find new treatments and connect with others like them. In crypto, there's Vibe Bio, which aims to actually change the incentive structures in biotech. The protocol makes it easier for patients and families affected by rare diseases to fund (and profit from) the drug funding and research process.
  • Small SPACs: ConstitutionDAO was the equivalent of a flash mob, a toy that showed how easily single purpose communities could rally around a given cause and fund an investment. In this case, it was the Constitution of the United States. But could this concept extend the "SPAC" model to rescue a sports club? Or buy out a small business or crypto venture? What about funding litigation versus a deep-pocketed enemy? The toy works. More innovations will follow.
  • Investment Clubs: Syndicates make it easier to spin up NFT and token investment clubs, which don't require accreditation by members for many on-chain assets.
  • Impact DAOs: Gitcoin has remained one of the most innovative early DAO projects, having pioneered quadratic funding and helped seed core ecosystem infrastructure like ethers.js, Optimism, and Uniswap with over $70 million in grants since 2017. Their eight rules for creating Impact DAOs are good commandments for DAO organizers.
  • Social DAOs: LinksDAO will let you play golf with Mike Dudas (among other things). They raised $10 million from 9,000+ members in January in order to DAO a golf course.
  • Network States: Balaji wrote his book y'all. "A network state is a highly-aligned online community with a capacity for collective action that crowdfunds territory around the world [DAO!] and eventually gains diplomatic recognition from pre-existing states." The network states will be led by leaders who write like storytellers and code like engineers.

These things actually work! Again, not at scale, but they work! How can you not be excited?

DAO Management

Calling DAOs "managed" is a bit generous if you know what I mean.

The political processes are messy, and conversations are chaotic. If you think email and Slack are time sucks, try Discord. If you think political debates are tedious, wait until you have to try to debate every minor business decision in public. And ohhh baby, if you think elections are rife with dark money conflicts, wait until you hear about metagovernance and bribes!

Suffice it to say, current DAO management structures are not sustainable. But the universe of governance tools that support them continues to grow fast.

In the spring, we introduced Governor V2, a product that lets you search for DAOs, monitor and vote on proposals, and quickly discover the top tools other DAOs are leveraging.

We want to help people parse signal from noise in DAOs more quickly. There are essentially two groups you should be paying close attention to: the delegates with real voting power and how they are concentrated, and the developers who hold the keys to the code base.

Everything else comes in a distant second.

You can think of most DAOs as boards of directors with unequal (token-weighted) voting power. Except that most of the board doesn't usually show up to quarterly meetings, and the tokenholders don't respond to proxy solicitations. Participation rates have ticked up slowly over time as delegation tools have improved, but we've also seen a rise in *literal bribes* as a result of low quorums and high stakes: bribes have proven to be lucrative in moving votes and rewarding certain stakeholders.

This mechanism started to gain prominence last year. Convex was built on top of Curve in order to allow voters to decide where CRV token emissions should be allocated. Users were able to lock up liquidity in Curve pools in exchange for governance power, and protocols that wished to direct Curve liquidity for their pools were often willing to bribe Curve tokenholders for their voting power, creating a synthetic voting asset (veCRV) on top of the base protocol.

There is admittedly some value in metagovernance as a tool to attract partners and protocol joint ventures. Communities can lobby for liquidity and better economics and share incentives, and it solves the voter participation issue by moving more DAO governance from apathetic individuals to DAO2DAO delegates.*

Another solution to the DAO operations morass is improved subDAO infrastructure, and "pod" level decision making tools. Metropolis (formerly Orca Protocol) has created an access token protocol that wraps around community governed Gnosis Safes (multi-signature wallets) and makes it easier for DAOs to distribute responsibilities to subcommittees.

Harvard MBAs rejoice: there's a place for you in crypto after all.

*A few things to watch for, though!

The jury is still out on how much big exchanges plan to engage in governance on behalf of their customers. And whether VCs are being responsible when they delegate their tokens or simply covering themselves by not putting their thumbs on the scales. (Shadow governing token communities they've invested in could create liabilities.) And what roles protocol founders will play as voters and delegates should they find themselves in swing vote situations where they are potentially conflicted during contentious votes.

These questions aren't just theoretical anymore. The case of the Commodity Futures Trading Commission (CFTC) against Ooki DAO ups the stakes in the future of DAO governance.

The DAO Legal Liabilities are SpOoki

First, let me say that for the third year in a row, I am thrilled to have the opportunity to make fun of bZx. Two years ago, I referred to them as a "decentralized bug bounty program" after they were hacked three times in mere months. When they got sore about the reference, I didn't mind, I just made fun of them again for hack #4 last summer in the 2021 report.

Can you imagine my disappointment when I didn't think they'd be eligible for a three-peat, followed by my absolute elation after realizing that WAIT A MINUTE OOKI DAO IS BZX.

Einhorn is Finkle. Finkle is Einhorn.

The CFTC sued Ooki DAO earlier this year for offering leveraged and margin trading products without registering as a Futures Commission Merchant. Ooki was one of those decentralized-in-name-only projects that thought they would be clever, wrap the old centralized bZx trading protocol in a DAO,  throw in some voting tokens and a Discord, and then say "voila, can't touch this." Then the CFTC said, "lol, no."

It would be fun, as it has been in prior years, to dunk on bZx, but for the high stakes and damaging precedent the Ooki DAO case could create for DAOs everywhere.

bZx and its founders already settled charges with the CFTC, but the agency then complained that every Ooki DAO voting member should be held individually liable for the DAO's purportedly illegal activities, since they were essentially running the same illegal business that the founders and predecessor company had already copped to. It seems like a stretch, but this concept of "joint and several" liability for DAOs (deemed unincorporated associations) would have a big chilling effect on DAO innovation and participation if it were to stand.

Indeed, that's what's led many to cry foul in this particular case.

Holding a 1% tokenholder individually liable for CFTC violations doesn't seem to be a good use of the agency's mandate, and it would turn into a logistical nightmare. Instead, if you're the CFTC, you could use this as an opportunity to set legal precedent and win an easy case by default (regulation via enforcement). You could serve DAO members via a chatbot even though the protocol had ringfenced U.S. users, scare voting members into non-action and let their lack of response lead to a default judgment, and simply hope that no one notices.

One commissioner dissented (and it's worth reading the dissent in full), and fortunately, the crypto legal community sniffed this out and came to the rescue in time, with a number of amicus briefs. Their primary concerns were not about the bZx founders or corporate entity (who had, again, settled), but rather the precedent this would set for decentralized communities. They would essentially be rendered guilty until proven innocent on all future enforcement actions affecting entities in which they had participated.

As the dissent noted: "I agree that conduct illegal under CFTC rules, is not acceptable whether done by a corporation or an unincorporated association. However, in its settlement Order and Complaint, the Commission defines the Ooki DAO unincorporated association as those holders of Ooki tokens that have voted on governance proposals with respect to running the business…I cannot agree with the Commission's approach of determining liability for DAO token holders based on their participation in governance voting for a number of reasons."

She says the approach does not rely on any legal authority or case law (instead imposing governmental sanctions for violating federal rules based on an inapplicable state-law legal theory developed for contract and tort disputes between private parties); it arbitrarily defines the Ooki DAO unincorporated association in a manner that unfairly picks winners and losers, and undermines the public interest by disincentivizing good governance in crypto. It constitutes blatant "regulation by enforcement" by setting policy based on new definitions and standards never before articulated by the Commission or its staff, nor put out for public comment, and ignores an alternate, well-established basis for imposing liability (aiding and abetting) that is specifically authorized by Congress and that would solve all of these problems.

The CFTC bZx / Ooki enforcement action is interesting because of the last paragraph, namely that the CFTC just looked through the DAO and said it is an unincorporated association and the individuals are responsible. This is not decentralized and not autonomous and in absence of a legal structure, what regulatory authorities are going to do is exactly what is written below - go after (some) of the individuals in the DAO, in this case the organizers.

Calling your Discord group a DAO and voting your tokens does not reduce your legal liability. In some ways, it might increase it. Be careful out there!

(Supporters: a16z, Paradigm, Haun Ventures, Def i Education Fund, LeXpunK, Punk6529)

(Required Reading: Ooki DAO vs. CFTC)

DAO "Corporate Actions"

If you want to understand how important the Ooki DAO case is, consider that it would likely chill all sorts of important community governance updates.

I remember reading Arca's overview of "corporate actions" in DAOs in late 2021 and thinking, "this is it, we're going to see DAOs become mainstream corporate structures." Last year, there was a major token merger (Rari and Fei), big token buy-back proposals (Fei and Nexus), DAO fundraises for unique assets (PleasrDAO, ConstitutionDAO), and governance proxy battles (Convex, Curve).

This year's DAO corporate actions didn't disappoint either. We saw communities that:

Though the OokiDAO case could cause a chill, I expect that we'll see even more novel protocol actions in 2023 as part of a broader industry consolidation.

Lots of protocol M&A, and maybe even more network "take-privates." I won't name names, but there are dozens of formerly high-profile projects with working products whose tokens now sit below $50 million in market cap, and look like prime targets, à la Chain's MDT acquisition.

We'll be tracking it all on Messari Enterprise.


DAO Treasury Management

Despite the lessons of history, most DAOs still don't properly diversify their treasuries or spend much time on coherent community budgeting processes. That is thanks, in equal parts, to legal and organizational ambiguities, a lack of tooling, and a fairly blasé attitude toward professional management.

Last year, I wrote about how shocking it was that most big DeFi protocols hadn't capitalized on one of the top wealth generating events in crypto's short history after DeFi Summer in 2020.

"You might think DeFi protocols are financially set for life, but a deeper look into the composition of each treasury suggests the opposite. The vast majority of the "value" in these token treasuries is coming from the reflexive belief that the market will always absorb the new supply. That may happen in bull markets, but things can unwind sharply when volumes subside. In fact, that's exactly what happened during May's market crash."

Surely, other protocols had learned their lessons, and big exchanges wouldn't lever up on their trading tokens with customer funds. 

Right, Anakin? Right?

According to DeepDAO, DAO treasuries now hold just $8.7 billion, with a mere 60 DAOs holding $10 million or more in assets. Worse, native tokens still represent 80% of these treasury assets, making the projects highly susceptible to market downdrafts and highly illiquid when it comes to operating budgets.

It appears that the immediate future of crypto protocols will continue to flow through foundations and VC-backed corporate entities as the catastrophic downdraft in crypto prices this year has essentially relegated many high flying 2021 protocols from unicorn to Series A status.

There are some good reasons to hold large percentages of native tokens: governance sway, signals of health and alignment with other tokenholders, reserves for DAO2DAO M&A and partnerships, etc.

But it is clear that many communities did not take proper advantage to diversify their portfolios at the height of bull market mania last year, and now many may struggle to take advantage of opportunities in this new market.
(Vitalik is an exception. He's a god tier trader. 2017. 2021. All hail.)

We really need more adversarial thinkers in the DAO space. There are a lot of bull market newbies  out there who are about to be unpleasantly surprised when they're thrown into a multi-year deep end without a life jacket. Expect major upgrades to community "banking" and financial management services such as Coinshift, Multis, and Parcel begin to proliferate.

The best time to diversify treasury was 12 months ago, when I wrote "the first recommendation most treasury managers would make today: start selling. A Q1 blow off top doesn't do a DAO any good if the asset nukes 90% mere months later." Communities that didn't heed those bear market warnings will now have to cut community spend, devolve into volunteer-led zombies…or consolidate?

(Required Reading: The Health of DAO Treasuries, What Protocols are DAO Treasuries Using?)

Crypto Talent Marketplaces

There's a lot of interesting stuff to talk about when it comes to the DAO labor force, but I'm running out of gas here, fam. Sort of like the DAO Treasuries above.

I don't want to pick on DAOs, though it is easier to do because communities need to learn the number one rule of running startups is You. Don't. F*ck. Up. The Money.

I agree with Alex here:

"I think 2023 will be a bloodbath for crypto startups:

  1. Most '21/22 seed startups run out of money.
  2. Some get acquired [We're on the prowl].
  3. A few raise new rounds (>80% downrounds).
  4. Tech salaries come down.
  5. Tech job titles deflate [No Chief Fun and Chaos Officers].
  6. VCs invest in other sectors (AI, etc.)."

Perfect. No notes. Except to say that it will be even worse in decentralized communities.

That said, I continue to be enthralled by crypto powered talent marketplace of all kinds. We just incubated one here at Messari called Hirechain, which is a referral-based recruiting network. The "friends-refer-friends" model is 1000x better than the 73 unsolicited recruiting inbound emails per day model.

Do NOT tell me, you're going to read 145 pages and then bail on me now. Open your wallet or I'm going to come find you. Get in loser, we're going shopping.

(Read more about crypto talent marketplaces like Braintrust on Messari Pro.)

Media DAOs

It's wild that two of the top crypto media franchises might soon be up for sale due to the fallout of the FTX bankruptcy. For starters, there was the shocking news claiming that The Block's sitting CEO, Mike McCaffrey, had quietly received $43 million in loans (including $16 million in slush funds that appeared to be used in part to purchase a luxury apartment in the Bahamas) from the disgraced FTX founder in order to execute a 2021 coup d'etat against The Block's original founder, Mike Dudas. McCaffrey immediately announced his resignation as CEO and stepped down as the company's sole board director, but as long as he remains the company's majority shareholder, there's risk of a talent exodus. Expect the company to get restructured. Soon.

On the other side of Manhattan, there's CoinDesk, which was purchased in a distressed sale by Digital Currency Group in 2016. CoinDesk has reportedly grown to ~$50–60 million in annual revenue, largely on the back of the Consensus franchise. (Yours truly ran the acquisition and turnaround, and the original Consensus team that got CoinDesk to profitability is the Messari Mainnet team. Get your tickets!)

In a stroke of irony, CoinDesk may become an acquisition target thanks to its reporting.

Its scoop on Alameda's financial health tipped over the first domino in the FTX bankruptcy, which helped spark a crisis at DCG sister company, Genesis Capital, and now threatens the health of the whole conglomerate (as we covered in Chapter 3). Though "rumors" were flying (I think it was a strategically planted story) that there were suitors who had approached the company with a $300 million offer (haha) that was deemed "too low" (hahahaha), it does seem like a healthy, but non-core business prime for a spinout in order to raise cash at the DCG parent level.

I would be very surprised if either business was profitable on a run-rate and projected basis. CoinDesk's Consensus franchise and video operation are capital intensive, and with ad dollars likely to plummet in the new year, DCG leadership might take a closer look at the CoinDesk operating expense lines to keep the company at break-even. The Block will face similar issues with respect to ad and subscription headwinds, not to mention the black eye (fair or not) from its CEO scandal.

If ever there were a time to build a Media DAO, this would be the time.

  • Distressed, and potentially conflicted, corporate structures create a scenario in which talent starts itching for a potential change of scenery. You could address the "cold start" problem of a Media DAO thanks to a perfect storm of attrition.
  • With 150+ employees each, these companies likely carry over $20 million in payroll, but you could trim those costs considerably (and give journalists a raise and more ownership) if you spun out the core editorial products from the larger operations.
  • Innovations in AI like GPT-3 will change the economics of media, but you'll still need to own the copyrights and data sources in order to create good content, and you'll need professional investigators, fact checkers, and analysts to curate clean data.

This could be structured in a way in which journalists make most of the money, but don't feel conflicted in their coverage. A community funding model with a diverse contributor base could create a good editorial firewall, as you could structure the original raise based on lifetime subscriptions and pre-paid ad impressions, but otherwise limit editorial governance rights.

I think for $10 million per year you could fund a crypto journalism juggernaut with 50 of the industry's top researchers and journalists via a DAO.

Wouldn't you know it, this is the last section of my report! Looks like I've got some free time!

Funding a media DAO is one thing. Operating it successfully is another thing entirely. Remember Civil? Steem?

Don't give me that nonsense about curation of quality and measuring truth on-chain, etc. A media DAO is something that could work, but it's just a funding mechanism and subscription access token at wild scale. Don't muddy things with exotic structures that no one wants. Just give us the news (Ok, and maybe some writing NFTs).

I think there are two ways to make a Media DAO work:

1. Create a Constitution DAO-like community that receives an access token for lifetime subscription rights. You could use Juicebox or something to raise $10 million from 10,000 lifetime members. Use that to bid on the company. Funds are held in escrow and returned if there's no deal. Given the execution challenges (NDAs with non-solicitation provisions) and the completely untethered valuation expectations the current crypto market leaders seem to have, you've probably got to try Door #2.

2. Do the same thing, but open up the application process to a critical mass of journalists you want to poach from multiple entities. Offer a 20% raise to their 12/1 paystub, and only execute the DAO if you can concurrently hire 25–50 of the very best people in the industry on Day 1.

If you are worried about the health of our trade journals without something like this…do it. 

As for me, I'm signing off until 2023, if not forever.

My work here is done. Namaste.