The Protocol: Crypto Turns Up Nose at Trump Token Sale, 'Gold Paper'

As I delve deeper into the world of blockchain and cryptocurrencies, it’s fascinating to see the pace at which innovation is taking place. Sergio Lerner’s announcement about Union, a trust-minimized bridge based on BitVMX, seems like a significant step towards unlocking new use cases for Bitcoin. His background as chief scientist at RootstockLabs undoubtedly plays a role in driving such pioneering work.

Supporters of cryptocurrency trading and business leaders have shown approval towards Donald Trump’s views on Bitcoin and digital currencies. However, this positive sentiment has not extended to his current venture, World Liberty Financial, or its WLFI tokens – a fact that became clear this week when it was revealed that the tokens are not experiencing strong sales. (A hint: They’re not selling like hotcakes.)

ALSO:

Kamala Harris’s “opportunity agenda” falls short on crypto-policy details.
Bitcoin’s ecosystem is creeping not leaping, argues Coinbase’s research chief.
Answering questions you didn’t know you needed to ask about decentralized exchange Uniswap’s new layer-2 chain.
A new way of ranking blockchain oracle projects – with a different result.
Tesla’s bitcoin transfers.
$76 million of blockchain project fundraisings.
Top picks from the past week’s Protocol Village column: Karate Combat, Hedera, Nexus, RootstockLabs, BitVMX, The Depository Trust & Clearing Corporation (DTCC), Ben Rubin, Towns.

This article is showcased in the most recent edition of The Protocol, a weekly newsletter delving into the technology behind cryptocurrency, piece by piece. Subscribe here to have it delivered directly to your email each Wednesday.

Network News

A screenshot taken from the front page of this week’s “Gold Paper” by World Liberty Financial.

Is there interest in small-scale investments related to a cryptocurrency project backed by former U.S. presidential candidate Donald Trump? Despite the endorsement, World Liberty Financial’s fundraising initiative for WLFI tokens fell short of expectations. As of the latest report, an Ethereum wallet associated with the campaign had amassed only $11 million in cryptocurrency, which represents approximately 3.6% of the intended public sale total – a sum that doesn’t even cover operational costs.

For those familiar with The Protocol, you may remember that CoinDesk was the initial source to reveal, back in early September, about the covert preparations for World Liberty Financial. This information was largely substantiated a few weeks later. Furthermore, we documented the criticism expressed by dedicated Bitcoin enthusiasts towards this project, who usually oppose the concept of creating easily minted tokens. As a result, some of these supporters found themselves re-evaluating their political backing for Trump.

The specifics of the project have started to surface last week: It’s a consumer app that’s still under development and will be launched soon, boasting an easy sign-up process and a user-friendly interface. This is achieved through one-click social login and wallet creation, as stated in a blog post. The project aims to run an instance of the DeFi project Aave on the Ethereum blockchain initially, with future plans to move to the layer-2 network Scroll. World Liberty Financial has also presented a proposal on the Aave governance forum for community feedback. Some users questioned if it’s beneficial for Aave to collaborate with this Trump-affiliated project, given that it would give 20% of its revenue to Aave instead of 100%, and wondered if it might spark competition between the two platforms or if the new users and increased liquidity would outweigh any potential negatives. One witty commenter pointed out the irony of a man known for not repaying debts launching a decentralized lending protocol.

On Monday, a number of significant figures in the cryptocurrency world participated in a Spaces session to publicize the upcoming token release. Among them were Stani Kulechov, founder of Aave; Sandy Peng, co-founder of layer-2 network Scroll; and Luke Pearson, a senior research cryptographer at Polychain Capital. In a casual remark, Sandy Peng mentioned that her direct messages had been flooded since the project was announced. The team on Spaces stated that approximately 100,000 users had already been granted access to claim the tokens.

On Tuesday, further information emerged as the project disclosed a comprehensive report called “Gold Paper.” This document contained fine print detailing several aspects, one of which was the announcement that an initial sum of $30 million from “net protocol revenues” (which encompasses token sale proceeds) would be reserved for covering “expenses, indemnities, and obligations.” The remaining funds were intended for a company called “DT Marks DEFI LLC,” whose key figures include Donald Trump. Notably, this company was also granted 22.5 billion $WLFI tokens, valued at approximately $337 million each at the fixed price of $0.015.

On Tuesday, the public sale of tokens commenced ahead of U.S. business hours, but the website for acquiring the tokens experienced problems soon after launch and remained inoperable throughout much of the morning; there was minimal information from the team regarding the situation. Many users on social media platform X pointed out that the token could not be transferred, which they perceived as a significant disadvantage for active cryptocurrency traders. At approximately 7 p.m. Eastern Time, Donald Trump shared his endorsement of the token sale on X with the message “Today’s the day! @WorldLibberyFi token sale is live.” Later, it was discovered that World Liberty Financial’s handle on X had been misspelled in the post, leading to its deletion and subsequent re-posting with the correctly spelled handle, @WorldLibertyFi.

It seems that the additional promotion didn’t lead to significant changes, as sales have remained relatively low. As per the data from Wednesday, a total of 761.8 million tokens have been sold out of the 20 billion available, as shown on the crypto-monitoring site Dune Analytics.

Dave Rodman, founder and managing partner of Rodman Law Group, who specializes in digital assets and venture capital, told CoinDesk in an email that World Liberty Financial seems to be riddled with both securities regulation and campaign finance risks – “a poorly conceived project intended to exploit buyers in a very calculating manner, whose leaders are unlikely to face any significant repercussions. If things go awry, it could potentially damage this industry’s reputation for a long time.” In another perspective, the Bankless newsletter stated, “Whether this project can shake off doubt and regain traction is yet to be determined, but its rocky beginning serves as a cautionary tale in DeFi; even high-profile supporters don’t guarantee success.

Here, it’s worth mentioning that despite multiple attempts, the team associated with World Liberty Financial has yet to provide a response to our inquiries over the last 48 hours.

ELSEWHERE:

Vice President Kamala Harris touted her “opportunity agenda” during a campaign speech on Monday without elaborating on what it would mean for digital assets. Earlier in the day, the campaign unveiled the broad agenda, which included the first thing resembling a substantive policy position from her on cryptocurrencies. But anyone hoping for more details from her speech in Erie, Pennsylvania, was left disappointed.
Tigran Gambaryan, the crypto exchange Binance’s head of financial crime compliance, who has been detained in Nigeria since February, was denied bail by a judge in the country, a family spokesperson said Friday. He has been in the notorious Kuje prison, facing charges including money laundering.
A British man who says he accidentally threw out a hard drive in 2013 containing $527 million worth of bitcoin has filed a legal claim against a local council in Wales in an attempt to retrieve the device from a dump, according to news website WalesOnline. James Howells, 39, alleges he has made requests to Newport Council – proprietors of the landfill where the hard drive ended up – but has been “largely ignored.”
Coinbase Head of Research David Duong published a lengthy report on Bitcoin’s blooming ecosystem of layer-2 networks, designed to accommodate faster and cheaper transactions, as well as greater programmability. But the report cautioned that “many of these protocols are in their early development stages, so we think it will likely take time for their utility in the Bitcoin ecosystem to be fully realized.” He wrote that “many of the network’s L2s are mainly sourcing capital from among crypto natives within the Bitcoin ecosystem, while the lion’s share of bitcoin unsurprisingly still remains on the L1. Moreover, bitcoin accumulation is happening more and more via spot bitcoin ETFs and other exogenous sources.”
Ethereum suffers from “middle-child syndrome,” Zaheer Ebtikiar of Split Capital wrote on X. “The asset is not in vogue with institutional investors, the asset lost favor in crypto private capital circles, and retail is nowhere to be seen bidding anything at this size.”
JUST IN: Crypto Usage Setting Records Amid Regulatory Uncertainty, A16z Says in Report

Uniswap’s New Layer-2 ‘Unichain’ on OP Stack: Industry Reactions

Uniswap Labs CEO Hayden Adams (Uniswap Labs)

The developer behind Uniswap, the biggest decentralized exchange, announced plans for Unichain, its own layer-2 network atop Ethereum, built with technology borrowed from the Optimism ecosystem. We rounded up some of the commentary.

Per Messari’s Kinji Steimetz: “Unichain can’t incentivize liquidity through traditional means since the token has already been released, eliminating the possibility of airdrop farming for TVL…. The most plausible path for Unichain to gain traction could be something akin to the Base launch, where people bridged over to chase early memecoin opportunities. With Unichain, UNI now has a potential path to monetization as an L2 token.”
Per Coinbase Research: “The network is designed to facilitate ‘seamless multi-chain swapping’ among Superchain L2s while supporting ERC-7683 to enable broader interoperability for non-Superchain L2s. But the documentation provided by Uniswap doesn’t detail an explicit plan for how it will migrate existing liquidity from the Ethereum base layer to the new L2, nor does it confirm whether this is even necessary for Unichain’s immediate strategy.”
Eric Waisanen, cofounder of Astrovault, an automated market maker, wrote in an op-ed for CoinDesk that, “Despite the platform’s continued success and prominence within DeFi, serious questions remain about the sustainability of its business model and those of similar automated market makers (AMMs).”
DeFi Report founder Michael Nadeau noted that “instead of paying $368 million in settlement fees to Ethereum validators, Uniswap Labs and potentially UNI holders would capture all that value when they launch on Unichain,” according to a story by Unchained.

Money Center

Fundraisings

Predicate, a project to build a “network for simplifying transaction prerequisites,” has raised $7 million led by 1kx and Tribe Capital. According to a thread on X: “As was the case for apps like Venmo and Uber, pre-transaction rules become a critical building block as Web3 apps scale into the broader global economy. Predicate brings this concept on-chain, offering a library of prerequisites enforceable in a trust-minimized way. At the core of our system is the Predicate function, which evaluates conditions and returns true or false, deciding whether an onchain action can proceed. Predicates are the foundation for rules, which are stacked to form policies. Any entity – individuals, DAOs, organizations – can create and manage policies, which use both onchain and offchain data like flow-of-funds, allowlists, and verifiable credentials.”
Others (Details in Protocol Village column): Ithaca ($20M), Solv ($11M), PiP World ($10M) Mento ($10M), Yala ($8M), Apex Fusion ($6M), Blockcast ($2.85M), Moonveil ($2M)

Deals and grants

Kadena’s Alana Ackerson (Kadena)

Kadena, a proof-of-work blockchain that says it can scale to power global financial systems by braiding together multiple Bitcoin-like chains, has appointed Alana Ackerson, a executive of Thiel Foundation, SoFi and Digital Currency Group, as strategic advisor, “marking a strategic push into asset management and institutional tokenization.” Ackerson previously served as CEO of HQ Digital, a wealth management subsidiary of DCG that catered to crypto millionaires, and she co-founded Figure, a crypto unicorn best known for its blockchain-powered home-equity lines of credit, according to the team. She also led the Thiel Foundation as CEO.
SingularityDAO Plans to Merge With Cogito Finance, SelfKey to Form AI-Focused Layer-2
Ripple Names Exchange Partners for Stablecoin RLUSD, Awaits NYDFS Approval
Bitcoin Developer Blockstream, led by Early Blockchain Contributor Adam Back (of Recent HBO Documentary Fame), Raises $210M in Convertible Note Financing Round

Data and Tokens

Crypto Degens Baited an Experimental AI Bot Into Promoting a Token. It’s Now Up 16,000%
Is Elon Musk Selling Bitcoin? Tesla Transfers All $760M of Its BTC to Unknown Wallets.
How a Crypto ‘REIT’ Misled Investors With Family Deals and ‘Unjustified’ Real-Estate Markups
Crypto VC Market ‘Tepid’ as Q3 Investments Declined 20%, Says Galaxy Digital
Ex-Valkyrie Founder’s Canary Capital Group Files for First Litecoin ETF
Grayscale Looks to Turn Multi-Token Fund Into ETF (The fund tracks the CoinDesk Large Cap Select Index, which measures the market cap weighted performance of five of the largest cryptocurrencies, including bitcoin (BTC), ether (ETH), solana (SOL), XRP (XRP) and avalanche (AVAX).)
Scroll Airdrop Allocation Met With Dismay From Points Farmers
Arkham’s Token Soars 16% on Report Sam Altman-Backed Crypto Firm Plans Derivatives Exchange
Has Ethereum Lost Its Way? (Opinion)

Regulatory and Policy

Coinbase Escalates SEC Fight Over the Agency’s Inside Chatter on ETH
Bitnomial Exchange Sues U.S. SEC, Alleging Regulatory Overreach
Heather ‘Razzlekhan’ Morgan Should Spend 18 Months in Prison, Prosecutors Tell Court

Who’s the Biggest Blockchain Oracle? It Depends

Let’s examine the contrast between Oracle project market-share ratings, considering the overall worth obtained (on the left side), and the total volume of transactions (according to Blockworks Research).

As an analyst, I recently came across a Blockworks Research report highlighting various approaches for ranking blockchain oracle projects. Interestingly, the results from these rankings can vary significantly, emphasizing the importance of understanding each methodology.

In simpler terms, oracles play a vital role in Decentralized Finance (DeFi) systems as they transmit data from outside the blockchain network – like current crypto prices – into the blockchain, making it accessible for use by various decentralized apps and smart contracts.

One thing to note here is the huge disclaimer that the Blockworks research was funded by Pyth Data Association, an organization supporting the blockchain oracle project Pyth, which clearly benefits from the report’s conclusions.

As a crypto investor, I’ve noticed that “Total Value Secured,” often abbreviated as TVS, has been a widely used method for evaluating these projects. Essentially, TVS represents the amount of value each oracle is responsible for safeguarding. In other words, it’s the total sum that could potentially be at risk if an oracle malfunctions or provides inaccurate price data in the worst-case scenario.

In simpler terms, as stated by Ryan Connor, TVS (Total Value Staked) primarily focuses on the value tied to a service provided by an oracle, but it does not take into account the activity that occurs within the application due to the oracle’s services.

A different measurement, referred to as Total Transaction Value (TTV), is more closely tied to the regularity of oracle price updates and ultimately oracle earnings, as stated by Connor.

The report concludes that, given the issues found in TVS, the rising need for swiftness within the DeFi sector, and the importance of DeFi to outperform centralized exchanges, TTV is currently the most valuable, publicly accessible metric for evaluating oracle fundamentals.

Protocol Village

Here’s a summary of the most significant developments in blockchain technology from the past week, as featured in our Protocol Village column:

At the CoinDesk Consensus event held in Austin, Texas, in May 2024, a battle between Karate Combat’s Tech Innovator and Tactical Investor will take place. [CoinDesk Consensus Shutterstock image]

Karate Combat, a Web3-enhanced professional contract sports league, is launching UP, a layer-2 blockchain and crypto-native software licensing platform built on Hedera in Q1 2025, according to the team. “Partners on UP can clone, customize and launch KC’s native mobile apps with no licensing fee. The $UP token is expected to launch in 2025.” According to a press release: “The software stack includes native iOS and android mobile apps, a web app and an on-chain backend.”
Nexus, developer of a zero-knowledge virtual machine zkVM written in Rust, says it has launched the first beta release of the Nexus network, “the world’s first open prover network.” According to the team: “This is the first distributed zero knowledge VM-based prover network that is accessible to anyone. The network aggregates the collective power of any connected device, from massive GPU farms to your computer or phone. Our goal is to unite the world’s computers into a single supercomputer that will be able to prove all the Internet’s computations, unlocking the Verifiable Internet.”
Sergio Lerner, chief scientist at RootstockLabs, announced that development has begun on Union, a new permissionless and trust minimized bridge based on BitVMX and the disputable computing paradigm. According to the team: “In addition, it was confirmed that the full codebase for BitVMX will be open sourced as a gift to the Bitcoin community. BitVMX unlocks a whole host of new use cases for Bitcoin, including the creation of new Bitcoin L2 light clients, zero-knowledge contingent payments and autonomous bug bounty programs. These announcements were made on stage during Bitcoin Amsterdam.”
The Depository Trust & Clearing Corporation (DTCC), a post-trade market infrastructure for the traditional financial industry, unveiled “DTCC Digital Launchpad,” described as “an industry sandbox intended to bring together financial market participants and clear the path to scalable adoption of digital assets. As an open ecosystem, DTCC Digital Launchpad will feature market participants, technology providers and others working together to identify and collaborate on meaningful pilots that have a clear path to production. “We’ve reached a critical inflection point in the adoption of digital asset technology,” said Nadine Chakar, global head of DTCC Digital Assets.”
Ben Rubin, the former founder of HouseParty and Meerkat, has launched Towns, a decentralized messaging platform built on the River Protocol. According to the team: “Towns enables secure, permissionless group chats designed for digital communities, allowing users to own and manage their spaces. Key features include end-to-end encryption, decentralized ownership, and a reputation system that prioritizes privacy. Backed by a16z, Towns aims to blend the user-friendly experience of Web2 messaging with the incentives of Web3, offering a secure alternative to traditional platforms often criticized for privacy concerns.”

Calendar

Oct. 15-17: Meridian, London.
Oct. 16-18: Avalanche9000, Buenos Aires.
Oct. 17: Worldcoin’s A New World, San Francisco.
Oct. 18-19: Pacific Bitcoin Festival, Los Angeles.
Oct. 21-22: Cosmoverse, Dubai.
Oct. 23-24: Cardano Summit, Dubai.
Oct. 25-26: Plan B Forum, Lugano.
Oct. 30-31: Chainlink SmartCon, Hong Kong.
Nov. 9-11: NEAR Protocol’s [REDACTED], Bangkok.
Nov. 10: OP_NEXT Bitcoin scaling conference, Boston.
Nov. 11-14: Websummit, Lisbon.
Nov 12-14: Devcon 7, Bangkok.
Nov. 15-16: Adopting Bitcoin, San Salvador, El Salvador.
Nov. 20-21: North American Blockchain Summit, Dallas.
Dec. 5-6: Emergence, Prague
Jan. 21-25: WAGMI conference, Miami.
Jan. 30-31: PLAN B Forum, San Salvador, El Salvador.
Feb. 19-20, 2025: ConsensusHK, Hong Kong.
May 14-16: Consensus, Toronto.
May 27-29: Bitcoin 2025, Las Vegas.

2024-10-16 21:32

The Protocol: Crypto Turns Up Nose at Trump Token Sale, ‘Gold Paper’