Crypto Market Weekly Recap - June Week1
Today let's talk about Optimism, which has been a big hit for a while, and particularly the governance of Optimism.
Have a great weekend. Today let's talk about Optimism, which has been a big hit for a while, and particularly the governance of Optimism. The concept of "governance" in Crypto refers to the decision-making mechanism for the future development of a protocol. The governance of most protocols today revolves around Token. Although it is called a governance mechanism, it is actually a "proposal-decision" mechanism.
Generally speaking, anyone can make proposals, and the discussion of proposals is completely open. But the final decision, which is decided by the vote, is based on the number of Tokens held. In this process, some protocols require the users to lock the protocol's Token and then create a new voting token (vToken) to represent the decision-making power.
vToken is generally non-transferable, which means it cannot be traded (except on over-the-counter or specialized trading markets). Locking Tokens also reduces Token liquidity in the secondary market, which helps Token become more valuable.
Almost all governance mechanisms focus on so-called "Token value capture", as the majority of Token holders want Token prices up. So, one of the keys to governance is to get the Token price up and help the protocol develop in a positive way.
So most of the time, we judge the governance of a protocol by its ability to raise the Token price. But the maximization of the Token holder's financial interests and the best strategy for protocol development sometimes do not coincide. When this conflict arises, the existing governance mechanism clearly favors the holders over the other party.
Vitalik wrote an article called Soulbound back in January this year. The article proposed using non-transferable NFTs as a symbol of power for governance, rather than relying on Token alone, i.e. a Token-Free governance structure. At the same time, Vitalik used the adage that those who most want to rule people are those least suited to do it. In Crypto governance, those who most want to govern are those least suited to do it. This requires that the governance of the protocol no longer revolve around the protocol's Token.
You might argue that if we just made the distribution of Tokens equal and truly decentralized governance, we could solve this problem. But the truth is that things don't go in the direction we expect. One of the best examples of this is $CRV and $CVX, where once governance is profitable, then someone is bound to pay for the power to govern. The result is concentration of Tokens, and concentration of Tokens means concentration of power. So such a governance mechanism is bound to be "self-destructive" in the long run.
Moreover, average does not mean good. If the goal of Token distribution is not to be equal but to give it to those who can afford it, then there will be Token (power) as well. Then there will be Token (power) acquired by others in various ways. So the essence of the problem here is that the transfer of Token is equivalent to the transfer of power, which means that the transaction of power is reduced to the transaction of Token.
In the real world, especially in developed countries, we hardly ever see a situation where the ruler is also the richest person. Of course, it cannot be denied that at all times the trade of power and money exists and bribery is a problem that will never go away. But we do find that some regions/countries have better "governance".
And our goal is simply "better". We hope that governance in the Crypto space will improve in the future and that better governance structures will emerge.
Optimism's approach to governance this time is a combination of the two models described above. The NFT holders, also known as Citizens, are designed to be more focused on the long term development of the protocol, while the Token holders are more focused on the financial/incentive side of the protocol's governance.
So far, no one can know if this approach will work or be better than single Token governance. But at least this is an attempt by a relatively well-known, scaled-up project.
Of course, some say this approach is a negative for the protocol's Token $OP, as it permanently disperses some of the power/value of the Token. But it would be sad if the majority of $OP holders only cared about the short-term benefits of the token price, but not the long-term benefits of this governance mechanism.
More unfortunately, it would be sad not only for Optimism, but for Crypto as a whole.
Some of the major events in Crypto in the past few days.
Binance will launch Terra 2.0 token $LUNA on May 31. The new version of Terra is already on major trading exchanges, but CZ said he will continue to follow up on whether there is price manipulation in the old version of Terra.
$OP fell to $1.1707, down 34.45% in 24H. The price of $OP took a dive after its launch, largely due to outright selling by some people. And the community is now discussing how to avoid such a situation from happening again.
Immutable X started a 6-week NFT trading bonus campaign. Officials will be counting transactions made by users on the Immutable X order book during the special event. The total number of eligible transactions for all users during the special campaign will be finalized by the snapshot date.
CZ has asked the team to investigate FatMan's allegations against Do Kwon and Terra. He said he has been reading the tweets posted by Terra insider FatMan against Do Kwon and Terra.
KuCoin launches decentralized crypto wallet Kucoin Wallet. The official KuCoin Wallet website is now live and the mobile app is expected to launch this month.
Chainlink VRF v2 launches on Polygon. VRF is a smart contract random number generator solution that Polygon developers can use to create more advanced blockchain games, NFT projects, and more verifiable sources of randomness.
goblintown.wtf series NFT floor price is currently at 6.4 $ETH. The lowest price when it was first launched even went to 0.05 $ETH. I have to say that the team has a very clear idea of how to do things. goblin has become the focus of discussion now.
Binance Labs has established a new $500 million investment fund. Funds will be used to invest in projects that expand crypto use cases and drive applications of Web3 and blockchain technologies.
Dune Analytics announced the launch of Dune Engine V2. The system is more scalable and will be able to integrate more new chains faster.
Moonbeam is working with Lido to bring liquidity staking services to the Polkadot ecosystem. The integration enables $DOT holders to stake their assets in the form of $xcDOT (cross-chain $DOT) and then receive $stDOT tokens.
Crypto payments company Merge closed $9.5 million funding round with participation from Coinbase Ventures and others. The funds raised will be used to improve payment efficiency and strengthen partnerships with traditional financial services.
This week's daily news roundup is here, in English and Chinese.
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