BadgerDAO Working to Refund $130M Exploit

The biggest crypto news and ideas of the day

Dec. 16, 2021

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–Daniel Kuhn

Today's must-reads

Top Shelf

POLITICAL NFTS: Shrina Kurani, a Democrat running in California's 42nd Congressional District, will publish 2,022 non-fungible tokens (NFT) on the Solana blockchain today as part of her election campaign. Meanwhile, former first lady Melania Trump is also launching a set of Solana-based NFTs, with some of the proceeds going to support foster-care charities. Talk about apolitical technology.

LEVELING UP: Ethereum software firm ConsenSys has launched "ConsenSys Rollups" with the help of Mastercard's engineering team. The scaling system promises to process 10,000 transactions per second (compared to Ethereum's 300 TPS) and could have viability for CBDCs and micropayments. Separately, the Banque de France, the nation's central bank, has completed the first stage of its experiments with a wholesale CBDC built for industrial use. Speaking of...data firm MoffettNathanson found established payments providers – from banks to Visa – don't see crypto as a threat.

DECENTRALIZED GOVERNANCE: BadgerDAO, a bitcoin-focused decentralized finance tool on Ethereum, has begun a restitution plan to refund victims of a recent $130 million exploit. According to BadgerDAO founder Chris Spadafora, the undertaking depends on the contributions of Badger's 32,000 users and 25 core contributors to handle a situation where losses well exceed the DAO's current treasury of roughly $53 million. Meanwhile, members of FreeRoss DAO were airdropped FREE tokens this morning as the collective decides on how to use its treasury to advance prison reform and free Silk Road founder Ross Ulbricht.

PRIVACY PAYS? Nansen, the go-to on-chain analytics tool for NFTs, has raised $75 million in a round led by Accel and including participation from GIC (Singapore's sovereign wealth fund), Andreessen Horowitz (a16z), Tiger Global and SCB 10X, among others. The 55-strong team will build new products (including a secretive "social" product) and look for acquisitions. Separately, the privacy-focused Ethereum-scaler Aztec Network closed a $17 million Series A to bring its zero-knowledge rollups (ZK-rollups) deeper into Web 3.

ASIAN MARKETS: Binance affiliate WazirX, India's biggest cryptocurrency exchange, had an annual trading volume of over $43 billion, a stunning 1,735% growth over 2020, according to a new report. Signups are up 700%. Though the exchange listed 200 new cryptos, bitcoin remained the most traded cryptocurrency, followed by stablecoin tether and meme tokens DOGE and SHIB. Elsewhere, Lambda265, the blockchain arm of South Korean crypto exchange operator Dunamu, closed a $60 million Series B funding round, bringing its valuation to $300 million, according to a Wednesday press release. The firm builds "blockchain-as-a-service" products.

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What others are writing...

Off-Chain Signals

Coinbase billionaire goes full tech bro, co-founds life extension startup (Protos)
Dune Analytics is raising funds at a $1 billion valuation (The Block)
Fed Chair Jerome Powell says he isn't concerned about crypto disrupting financial stability in the U.S. (Cointelegraph)
Z Fellows wants to give you $10K to launch a crypto startup (Tech Crunch)

How crypto is changing media and entertainment – and forging its own culture. Follow along with our continuing coverage here.

Can NFT Art Survive Its Own Addiction to Elitism?

The fine art world has long since learned the value of inviting the world in. NFT entrepreneurs still haven't taken the hint.

Web 3 Is More Than Fun and Games; It's for Work

The internet is where culture forms. How can we make it as secure as possible?

Putting the news in perspective

The Takeaway

Should Porn and Crypto Get Intimate?

Hello. Daniel Kuhn here. When I think about culture, I think sex, drugs and rock and roll. Given that bitcoin found its first true use as a medium of exchange on popular (now-defunct) darknet market Silk Road, and the explosion of interest in music-geared NFTs and crypto brands, it's safe to say crypto is becoming a cultural force. CoinDesk's Layer 2 has a whole package on that theme running this week. But what of sex?

Last summer, when OnlyFans decided to boot sex workers off its platform (basically used for holding intimate meetings between creators and fans) many made the call for the adult industry to embrace cryptocurrency. The site, which at the time and is currently filled entirely with bespoke porn, almost killed that business line at the behest of banks. At the last second, OnlyFans reversed course.

The situation revealed how clearly crypto could benefit the adult industry. Crypto's technological innovation is pretty simple when it comes down to it: distributed, digital tools are difficult to censor or stop. For an industry that's routinely under fire by socially conservative moralists, having a little resilience to censorship could help.

"Independence and counterculture. That is what the two industries have in common," Deborah Sundahl, a celebrated author and leading expert on female ejaculation, told CoinDesk in an email.

There are a number of crypto platforms built with sex in mind. SpankChain, founded by Ameen Soleimani, wants to be the go-to tool for buying anything from naughty videos to sex swings. Bits and Chains is a wallet that lets sex workers take greater control over their BTC. LiveStars launched on Ethereum as a sexy streaming platform and social network. Individual creators also benefited from this year's NFT revolution; auctioning off "thirst traps" and nudes for hundreds, sometimes thousands, of dollars.

Then there are industry heavyweights like Pornhub, one of the most traffic sites online, period, which moved to only accept cryptocurrency payments in 2020. This came after feeling pressure from traditional payments operators like Visa and PayPal.

Playboy, the "men's lifestyle" brand, has long experimented with crypto. A few years ago, they issued the "vice industries token" that would power a "video entertainment platform" with crypto as its native currency. This year, Playboy issued a rabbit-themed non-fungible token (NFT) set and is supporting a more cerebral meditation on "the art of gender and sexuality."

A host of smaller sites either launched with or incorporated crypto as a payment option. Some – like Strip 4 Bit, Xotica, Tits For Bitcoin – build bitcoin into their brands, following a long lineage of punny porn titles.

But here's the nut. As intimate as crypto and porn are, most of these services are hardly used. To the extent that Spankchain is discussed, it's usually by media publications by people with a financial stake in $SPANK making the same case that I'm laying down: that crypto and porn should intermingle, not that they have. It's been slow going, at the very least.

For instance, Litecoin creator Charlie Lee said, the "[$97 billion] porn industry is definitely a leading indicator of technology adoption … I'm glad to see them opening up to cryptocurrency." That was in 2018, when Pornhub first announced it would integrate the altcoin Verge (out of all coins) for payments. Has the industry really developed much further since then?

Porn is often celebrated for driving technological adoption. There's good evidence that the home-tape standard VHS beat out the more-established Betamax because it was the preferred option for the porn industry. It's an industry that was early on "independent cinemas" and DVDs, too.

"They took new technology and made a product out of it. Practical use. Innovative. It would be very, very interesting to know what they are doing now with blockchain, payment systems and who knows what else," the ejaculate scholar Sundahl said, referring to the innovators in the adult industry.

For one thing, it's possible that most of the innovation with crypto is happening behind closed doors, so to say. Crypto is a powerful tool for online creators, those who strike out on their own to build brands and businesses independent of larger structures. Porn is seeing a similar fragmentation and specialization as elsewhere on the web – there are more independent creators than ever.

Crypto could empower sex workers unaffiliated with talent managers to publish content that is a little much even for sites like Pornhub, which has certain regulations and stipulations. So those with particular fetishes – like really particular – might be willing to go through the process of paying with crypto if they're already forced to use a specific site for their desires.

Plus, crypto provides a certain level of anonymity. It's exceedingly difficult for anyone, even platform managers, to gauge how many individuals are using crypto services because not every address corresponds to a unique user. This semi-privacy is attractive for buyers and sellers, for pretty obvious reasons.

To the extent that crypto-tools are helping sex workers diversify their revenue streams or opt out of fiat-payment systems (Mastercard could drop anyone at a nickel), it remains to be seen whether crypto-sex tie ups can ever go mainstream. (Not that a niche industry should set that as its objective.)

Many popular social apps, including SnapChat and Tumblr, basically used sex as a test subject. Users embraced them for their lax standards on nudity. Communities formed, platforms scaled – only for porn to later be purged.

It's easy to write off Christian moralizers like Exodus Cry, the group that led the effort against OnlyFans, as out of touch. But there are lots of good reasons why the adult industry should have some form of oversight. So far, no one has figured out how platforms can weed out abuse, exploitation and human trafficking without harming the vast majority of well-intetioned creators.

Many popular social apps, including SnapChat and Tumblr, basically used sex as a test subject when getting started. Users embraced them for their lax standards on nudity. Communities formed, platforms scaled – only for porn to later be purged. That's because it was difficult to manage things like age restrictions and FOSTA/SESTA regulations while keeping the platform open for all.

Crypto platforms, in theory dedicated to open source/open access, have a ready-made answer to people or governments looking to censor abuse claims of copyright infringement: that you must take the good with the bad. When it comes to human rights violations that may not be a satisfactory answer. And, in reality, it's more often just a bit of mental masturbation, as plenty of crypto projects have been willing to give up the pretense of decentralization to reverse transactions, block content and uphold copyrights. (You might ask, what's the point of crypto then?)

Clearly, crypto is not a perfect solution. But to the extent that it's helping people explore their boundaries, it's a good thing. It's perfectly OK for some things to stay niche.

–Daniel Kuhn

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