n00unish #03
Discover more from The n00unish Newsletter
Twitter | Website | About n00uns DAO
About the newsletter: We believe the best way to predict the future is to create it.
n00uns DAO is an ambitious multi-chain DAO proliferating via the @nounsdao protocol and @y00tsNFT. This newsletter provides updates on what the DAO is building and serves as a bridge of information to introduce Nouns on ETH to the Solana and Polygon ecosystems and vice versa.
Support the DAO ☕️: n00uns DAO formally backed y00ts Coffee in their proliferation of Nouns via our mutual love for coffee. y00ts Coffee is providing directly sourced beans (top 3% in the world) to web3 consumers. Buy coffee today and they will give 25% of revenue to the n00uns DAO treasury.
Overview
n00uns DAO Updates, by @BigsbyWest
How to understand the Venture Capital Landscape in Crypto, by @nftomics
Why MEV Matters & How it differs on Solana vs Ethereum, by @CryptoLink
Nouns DAO Weekly Recap [02/06/23 - 02/12/23], by @blues_content
① n00uns DAO Updates
👥 Author:
📈 n00uns DAO update
It's been an honor to be a builder of the @n00unsDAO for the last 3 months. I've seen a lot of misunderstanding of the @NounsDAO protocol and feel the need to address them. Let me share why this protocol is a protocol for the people and a modern day success story for crypto.
The @NounsDAO funds its treasury through once daily auctions of an NFT. 100% of these proceeds from the auctions go to the DAO treasury. Anyone in the world can participate.
What you get for buying a Noun is an NFT. Not one that you trade for profit, or gains you WLs, or promises you access to an exclusive or elite club. It's an NFT. One that gives you the power to vote on the use of treasury funds and the power to submit a proposal. That's it.
The amount of money you spend on that Noun is the equivalent of a deposit to the DAO, for the DAO and all its holders to pay forward, towards ideas that make a positive impact on the world.
If you don't have $40-50K USD to buy a Noun, @NounsDAO allows for delegation. Meaning any current Nouns holder can delegate their Noun to you so that you can vote on proposals. If you can find 2 Nouns holders willing to delegate their Nouns to you, you can submit proposals.
As long as you have internet, a crypto wallet, and a few Nouns to support you, you can vote on and submit proposals to access a $42M dollar treasury. The idea is revolutionary. Where else in the world does an everyday person have access to that kind of opportunity and capital?
As someone who has lived/worked in many underdeveloped countries, I've seen life without access to capital, under tyrannical governments and corrupt institutions. But imagine a protocol like this, copied and pasted all over the world, and the real impact it would have.
Imagine building a brand for example, that could go towards weaning kids off sugary drinks while sponsoring extreme sports athletes and a healthy life (@gnars_dao). Or maybe funding prescription glasses for 3,000 kids. Or restoring derelict basketball courts in neighborhoods.
Or funding a micro finance initiative that allows for small loans to a small village of entrepreneurs to build a sustainable business to support their families. Or funding laptops for a school in Nigeria or Mongolia to support education initiatives. There is no limit.
I end with something that American screenwriter, Aaron Sorkin, known for writing 'The West Wing' and 'A Few Good Men', once said — "Don't ever forget that a small group of thoughtful people can change the world ..."
Our finish line is not a floor price, or WL, or memes (these are all fine), it's whether or not we've made a tangible impact on the world and the communities around us. Otherwise we deserve all the negative headlines the media writes about crypto, NFTs, and web3 communities.
I hope this helps you understand why having 374 Nouns glasses in the y00ts collection was such a crazy thing. That if we as @DeGodsNFT and @y00tsNFT are about building the best communities on the internet, then shouldn't the world know about the @NounsDAO protocol?
② How to understand the Venture Capital landscape in Crypto
👥 Author: NFTomics
The astronomical rise in valuations over the last 2.5+ years have come to an end. Let's talk about the “great reset" in Crypto (Tokens), Public (Stocks), Private (VC) Markets.
For crypto-native individuals {you should} learn macro economics because it trickles into everything from Tokens to NFTs. I've learned so much from @theallinpod @DavidSacks @jefffluhr @craft_ventures their frameworks.
For investors, collectors, founders (particularly in Solana) who have not experienced a true bear market (think '00, '09) this is an unsettling period.
Nov '21 - Dec '21 was a cyclical peak for markets: Crypto: $3T --> $1.15T S&P 500 $40.4T --> 34T
What happened?
CPI (6.4%) & Fed Funds Rate (4.75%) have gotten out of sink.
Where is the inflation primarily coming from?
1. War in Ukraine / US Governments Lose Approach to China
2. Increased U.S Government Spending (Jan 21-Feb 23)
3. Supply Chain Issues Driven by Previous Lockdowns.
What's its impact?
Since 2020, 10-Year T-Bill has moved from .5% to 3.75%, largely driven by institutional investment.
Stocks move in the opposite direction of the 10YT. Hence, high-growth names like @Affirm @Shopify @Zoom & Solana @avalancheavax @Stepnofficial amongst others have taken hits.
Why this matters:
When public market valuations fall - present valuations become discounted at higher rates. • Stocks that were trading at 35x --> are now 10x (Enterprise Value/RR), which trickles down into what late-stage VC investors are willing to pay (Series D+).
This deeply impacts VC investment in the Solana ecosystem.
Crossover investors, who drove most of the liquidity in recent years, are largely depleted or gone.
1) VCs take their cues from public comps – those are the exit prices.
2) Liquidity has left (or deployment has slowed down) in the venture ecosystem particularly for blockchains like Ethereum & Solana
3) Many firms are frozen while awaiting clarity
Example: SoftBank posts a $21.6 billion quarterly loss on its Vision Fund, one of the highest in its history
"We've been here before"
1) Entry valuations across the stack have/will likely continue to come
2) Cross-over investors will remain further upstream
3) Traditional early-stage investors who have built "war chests" will invest into next-gen companies on next-gen blockchains at a discount
This is why seasoned early-stage investors will win in the next cycle because of investments in the best protocols/projects in Solana/ETH.
- @SolanaLegend & @LoganJastremski@PanteraCapital - @dan_pantera
Where does this leave up-and-coming / A+ founders (Solana/Crypto Included) Advice from: @jefffluhr
Top up if possible, be open to lower valuations
Adjust now to ensure 30+ months runway
Modify hiring plans
Trim S&M unless near-term, measurable ROI
Aim for a Burn Multiple of ~2 or lower
"Heads down, focus on building cool s*&t & watch your run-rate"
The good news is that many of today’s preeminent tech companies were started during the last crisis. Google, Amazon, Salesforce, Airbnb, Stripe, PayPal:
Everything gets easier, except raising capital
Opportunity to course correct
③Why MEV Matters & How it differs on Solana vs Ethereum
👥 Author: CryptoLink
What is MEV?
Every crypto trader ought to be aware of MEV— aka “miner’s extractable value” or “maximum extractable value. In short, MEV is the maximum profit extracted from reordering, inserting, and/or excluding certain transactions.
Below, I walk you through the history of MEV on Ethereum and how it differs from MEV on Solana.
MEV on Proof-of-Work Ethereum
Traditionally, Ethereum was a “Proof-of-Work” blockchain. That meant miners would gather transactions and pack them together to make a “block”. In theory, MEV can arise from miners rearranging, including, or excluding transactions — hence the term “miner extractable value”
For example, suppose Satoshi wants to buy an NFT that someone listed far below the floor price. The miner could “extract value” by frontrunning Satoshi with a duplicate transaction and placing it first in line to be processed!
In reality, this rarely happens because:
Pending transactions are transparent to all users. So when the miner gets caught, no one will ever trust that miner again and their sketchy transactions will never reach blockchain consensus.
The order mostly depends on the amount of gas submitted with the transaction. Gas is simply a small fee that users pay to compensate miners for their work.
Since transactions are transparent, MEV on Ethereum is most common when users look at pending transactions for opportunities to front-run other users. This is achieved by paying more gas than others, which increases the chance of yours getting approved first.
The downside is that everyone pays a non-refundable gas fee — regardless of whether their transaction is successful. This can make transactions expensive, especially for high-demand events. In short, it becomes a “pay-to-win” game.
How Solana differs from Ethereum
One of the main differences between Solana and Ethereum is their proof-of-stake chain. Instead of miners, it uses validators that must deposit tokens into the network —aka “staking” — to receive rewards.
It discourages bad actors because the amount at stake is so large that it’s not worth risking their staked tokens to exploit the network for a small one-time profit.
The way this works is by first organizing validators into clusters. Each cluster has a Leader Validator that only decides the order of transactions. In fact, the leader is the only one who can view these transactions, which prevents network users from front-running each other.
But how do we ensure the leaders are legit? Simple. Other validators in the cluster validate transactions in a first-in, first-out order. This is possible thanks to Solana’s proof-of-history mechanism that timestamps every transaction.
As a result, we see MEV on Solana arise in a few different ways…
MEV on Solana
A validator would get in lots of trouble if it tried sneaking its own transactions in before others — especially with Solana’s timestamps that provide evidence of the crime. Instead, MEV shows up in a few different ways on Solana.
The main types of MEV on Solana are:
Arbitrage
NFT botting
Liquidation
Arbitrage occurs when price differences exist between different exchanges. MEV arises from the opportunity to simultaneously buy on one exchange and sell on another to net a profit.
MEV from NFT botting is when bots spam millions of transactions — usually during a high-demand event like a hyped mint. The hope is that your transaction hits first. Unfortunately, the spam can cause unnecessary network congestion.
Liquidation MEV usually occurs when something triggers a sale (or purchase) of a large position, and results in a price change (e.g. loan liquidations). For example, suppose a loan smart contract is set to liquidate 100k SOL on Nov 8 if the price of sol is below $20.
On Nov 7, a network user might notice this opportunity and extract value by selling SOL immediately before the liquidation. After the liquidation, SOL’s price drops, which lets them buy more sol than they originally had and net a profit.
Another type of liquidation MEV is from a clever use of new code for validators. Here, the idea is to bring back a bidding mechanism for transactions by adding new code. Validators still do the same job as outlined above. But instead of receiving a random bundle of transactions, the validator receives the bundle with the highest bid from traders.
Unlike the other forms of MEV, there is no need to spam the network with this bidding form of MEV. Traders benefit from securing their preferred transaction order with bids. And the network benefits from less congestion due to fewer spammed transactions.
Summary
To recap, here’s what we learned:
MEV refers the the value extracted from the reordering, inserting, or excluded certain transactions
MEV originated from PoW ethereum where network users would frontrun others to net a profit. In this “pay-to-win” style, the highest gas bidder would get their transaction approved first.
Solana’s MEV landscape usually shows up in a “race-to-win” style, where the fastest transaction spammer gets their transaction approved first.
On Solana, we can prevent spam and get the best of both worlds with clever coding solutions for validators.
④ Nouns DAO Weekly Recap
[02/06/23 - 02/12/23]
👥 Author: @blues_content
Proposal Overview
Proposal 222 - Nouns Treasury Management
Votes: 27 For, 197 Against, 4 Abstain → Defeated.
Total asking amount: $110,500 USDC (65 ETH)
Proposal 223 - House of Nouns v2: Public Good
Votes: 45 For, 102 Against, 17 Abstain → Defeated.
Total asking amount: $323,000 USDC (190 ETH)
Proposal 224 (which we will dive into some more later) - Nouns x Artmatr
Votes: 151 For, 17 Against, 3 Abstain → Executed.
Total asking amount: $150,000 USDC (188.24 ETH)Proposal 225 - Noun Sounds: Empowering Musicians + Community
Votes: 24 For, 134 Against, 0 Abstain → Defeated.
Total asking amount: $417,350 USDC (245.5 ETH)Proposal 226 - The Noun Square: A Community Hub and Media Network for the Nouniverse ⌐◨-◨
Votes: 176 For, 39 Against, 2 Abstain → Executed.
Total asking amount: $457,300 USDC (269 ETH)Proposal 227 - Stake additional 5000 ETH in Lido
Votes: 123 For, 93 Against, 23 Abstain → Executed.
Total asking amount: $0 (the funds remain in the DAO treasury, just as stETH instead)
Summary of the DAO Funds
1 ETH = $1700.00 At the time of writing this.
Total amount brought into the DAO from the daily auctions → 216.28 ETH (32.38 ETH less than the week prior), which amounts to $367,676.00
Total amount spent to fund proposals to the DAO → 457.24 ETH, which amounts to $777,308.00
Total votes casted → 546 For, 582 Against, 49 Abstain → 1177 in total, across 6 proposals.
Diving into Proposal 224 - Nouns x Artmatr
I’ll be using some quotes from the proposal to aid me in providing an effective overview.
Artmatr are, in their own words, “an art and technology playground for interdisciplinary creatives to compose unique artworks unlike anything else available today.” They’re asking for $150,000, which will “fabricate one 4’x5’ Nouns painting per Nouns auction over a 7-day period; totalling 7 paintings.” Their goal with doing so is to “create beautiful artworks that will proudly represent Nouns in the real world.”
Winners of the Nouns DAO daily auctions, from 03/20/23 → 03/26/23, will receive the rights to their associated painting for free. After this 7 day period is over, Artmatr will produce an exhibition in their art gallery in Brooklyn, NY. They will livestream the creation of each individual piece, starting at 10am EST daily throughout the 7-day production period.
They hope that this collaboration will increase the prices of the auction pieces, due to the physical pieces coming alongside the auctioned NFT, which will be showcased side by side at their exhibition. “For reference, the latest Artmatr-fabricated artwork (for a digital-native artist) sold for more than $250K.” The exhibition will open on the 28th of March, and it’ll be open for public viewing until the 4th of April, of this year.
You can find comments from some of the Noun community members, regarding how they voted, here.
Common opinions were echoed. A significant amount of members voted for because they believe that it can generate a significant amount of funds back for the DAO, and because it will be an interesting experiment to see how much of a premium those Nouns sell for at auction, if any. They also enjoy the “fun” aspect of it.
Some voted against because they believe that it does not do much for the DAO in the way of proliferation. In addition, there were concerns that it will actually have a poor ROI (return on investment) for the funding required.
If you would like to read the whole proposition, you can find it here.