Newsletter: A "Trustless" Ecosystem

This week we cover Ledger's Controversy, Jacob Horne from Zora w/ “Onchain”, Scoot Moore on collective intelligence and public goods, Pudgy Penguins adorable physical toys, Visa exploring account abstraction, mainstream news and Signal TL;DR.

By Forefront - May 22, 2023

Good morning and Happy Bitcoin Pizza Day!

This week we cover Ledger's Controversy, Jacob Horne from Zora w/ "Onchain", Scoot Moore on collective intelligence and public goods, Pudgy Penguins adorable physical toys, Visa exploring account abstraction, mainstream news and Signal TL;DR.

Let's get to it.

--- This edition is brought to you by Purple.

Week’s Highlight

Ledger -- a well-known hardware wallet company -- just experienced a PR nightmare. Early in the week, the company introduced a new feature that caused outrage throughout the crypto community. The feature in question is Ledger Recover, an ID-based private key recovery service that would allow users to backup their private seed phrase directly to their personal identity through three different custodians. Despite the company adamantly stating that this is a voluntary service, and users can continue to back up their seed phrases themselves, Ledger owners are still unsettled over what this means for the hardware wallet company's security.

"The code path to send private key material over the internet will be on your device, whether you opt in or not," wrote 0xfoobar on Twitter. "Hackers can take advantage of this, and software bugs more likely to leak. Ledger's business trajectory is one of wanton disregard for customer safety."

Now, four of Ledger's main competitors have been quick to respond to the community's pushback to the update, and slashed prices on their products.

The Co-founder and former CEO of Ledger took to reddit to explain his views on the situation. "So people started to think Ledger was a trustless solution, which is not the case. Some amount of trust must be placed into Ledger to use their product. If you don't trust Ledger, meaning you treat your hardware wallet manufacturer as an adversary, that can't work at all."

The reddit community wasn't having it, expressing widespread belief that Ledger had blatantly lied to their customers. Videos have been posted across Twitter of people smashing their Ledger wallets.

**Take Note. **Trust is a delicate thing, and being a trusted intermediary in a supposedly "trustless" ecosystem is one of the most difficult positions to be in as a company. Ledger saw this week just how delicate that trust could be.

What's Poppin'

It's "Onchain" not On-chain. Jacob and the Zora team have been pushing "onchain" hard over the last few months. This essay discusses the term and its significance to the industry. "Onchain" represents the tangible and powerful expansion of the internet associated with crypto. The benefits of putting something onchain include provenance, ownership, public accessibility, self-platforming, permissionlessness, permanence, and composability. The essay emphasizes the distinction between onchain and offchain, highlighting that services or objects can operate on or off a blockchain regardless of being centralized or decentralized. "Onchain" is seen as a new transformative place within the internet, embodying trust, value, decentralization, and transparency. See you onchain!

Collective Intelligence and Remaking the World. In this interview, Scott Moore, co-founder of Gitcoin, discusses the concept of public goods, the role of blockchain, and the importance of decentralization in the crypto space. The recent introduction of the Grants Stack allows quadratic funding to be more easily used across communities. Moore emphasizes the need for more infrastructure and better developer tooling to improve usability and accessibility in blockchain applications. He also introduces Public Works, a fund aimed at supporting core infrastructure projects in a community-first approach, focusing on ecosystem funding at a pre-seed level. Moore highlights the political nature of crypto and the importance of principles and values in shaping the space. He calls for a shift from individualism towards collective coordination and expresses hope for a more mutualist and empowering future in web3.

Web3 Social Media Under the Lens. This essay from Variant Fund explores the concept of web3 social networks and their potential to revolutionize the social media landscape. It highlights the decline of web2 social media platforms like Facebook due to algorithmic changes and extractive monetization strategies. Web3 social networks prioritize user control over data and censorship resistance, utilizing blockchain technology and tokenization. Lens Protocol is presented as an example of a web3 social graph that enables user-owned social relationships represented as NFTs. The essay discusses the defining features of web3 social, including platformlessness, portability of data, and composability. It emphasizes the benefits for creators in terms of monetization, wider distribution of success, and targeted audience engagement. However, challenges such as spam and bot activity and the need to attract large user bases remain for web3 social networks to surpass traditional platforms.

Pudgy Penguins Physical Toys. This week, Pudgy Penguins launched a line of adorable physical toys on Amazon. The toys sold out in 48hrs, generating over $500,000 in sales. Pudgy Toys marks the first mass-market product licensed directly from the PP community. Every toy comes with a digital experience: Pudgy World is an experience that gives the non-NFT public their very first blockchain wallet, Soulbound NFT, and Tradeable NFTs, all in one simple sign up with an email address. The project is clearly taking inspiration from Webkinz, and it will be interesting to see what adoption looks like over the next year!

The Eternal Art of the Online Riff. What are "riffs" in web projects and what are their impact on user experience? The author draws inspiration from a scene in the TV show "The Office" to highlight the importance of cultivating better riffs. They propose a framework consisting of three core roles: the context maker, the creator, and the patron, which contribute to successful riffs. The essay presents examples of successful web projects from different eras, including the Million Dollar Homepage, r/place, and Exquisite Land, showcasing their unique approaches to fostering engagement and collaboration. The author discusses the current state of the creator economy and NFTs, acknowledging the challenges and criticisms surrounding them. However, they also highlight inspiring projects and developments within the space, emphasizing the potential for creativity and innovation. The essay concludes by encouraging project creators to focus on creating meaningful and engaging experiences that facilitate good riffs.

The DAO Takeover Playbook: The New DeFi Strategy. Some DAOs are worth more dead than alive. This essay explores the concept of "rage quitting" in DAOs, where a DAO shuts down and distributes its treasury assets to token holders. It discusses the example of the ROOK DAO, which voted to shut down and saw its token price increase by 5x as the value of its treasury exceeded the total market cap of the token. The essay also highlights the challenges faced by DAOs, including legal clarity, liability limitation, governance, and talent management. It examines the case of the alleged "51% governance attack" on Aragon DAO and the strategy of taking over DAOs by identifying those with treasury assets valued lower than their market capitalization. The essay provides examples of DAOs at risk and emphasizes the importance of conducting due diligence before participating in such activities.

Latest on Mainstream...

First, Tether pledged to buy more bitcoin for its stablecoin reserves, adding to the $1.5 billion of Bitcoin already backing its dollar-pegged token, USDT.

Next, UK regulators have argued that crypto should not be regulated as an asset. Rather, it should be seen as gambling and regulated as such.

Finally, Pakistan's government has hardened its stance against cryptocurrencies, even as retailers continue to hedge their financial bets against a devaluing Pakistani rupee partly due to a volatile political situation in the nation. Cryptocurrencies will "never be legalized in Pakistan," said Minister of State for Finance and Revenue Aisha Ghaus Pasha to the country's Senate Standing Committee on Finance on Wednesday, according to local reports.

Signal TL;DR

Autonomous Worlds Aim to Free Online Games From Corporate Control

Unleashing the potential of autonomous virtual worlds, the article explores how these innovative spaces aim to liberate online games from corporate control. By leveraging blockchain technology and decentralized governance, players gain ownership of assets and the ability to shape the gaming experience. This exciting vision offers a tantalizing escape from the current landscape of corporate dominance in online gaming.

Build Back Blockchain

This essay by Eli Zeger highlights the challenges faced by the blockchain industry and proposes strategies for its revitalization. The article emphasizes the need for collaboration, education, and inclusive practices to foster a more robust and sustainable blockchain ecosystem. By addressing these challenges head-on, the article suggests that the blockchain community can build a stronger foundation for future growth and innovation.

▹ Updates ApeCoin DAO <> BAYC
▹ Deep Dives - Vampire Attacks Competition
▹ Opinion - Bitcoin 2023 Conference
▹ Mainstream - Biden at G7
▹ Research - Visa on Account Abstraction
▹ Interesting - Coinbase Membership
▹ Tooling - Introducing Centaurs
▹ Web2 - On-Chain AI Music
▹ Techy - Bluesky Is Open-Sourced

Check out Signal  for daily top web3 social headlines

For the Culture

13 years ago Laszlo Hanyecz bought 2 Papa John's pizzas for 10,000 $BTC. If he had held onto them until Bitcoin's all-time high price of $68,990, he could have potentially amassed a fortune of around $690 million.

Today, those pizzas would be valued at $267 million.

Happy Bitcoin Pizza Day, Everyone 🍕

10,000 Bitcoin Pizza Day
“I will kill the entire economy unless you stop buying those coins with pictures”

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The information in this newsletter is not intended to constitute legal, financial or investment advice and should not be construed or relied upon as such. Any opinions reflected are the opinion of the author(s) of the newsletter only and not necessarily of Forefront. Please DYOR.

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