Hey fam, issue 88 highlights:

▹ Week's Top Signal
▹ Decentralized Society by Vitalik
▹ A Theory of Justice for Web3 by Li Jin
▹ Crypto Cities by Drew Austin
▹ Web3 Decentralization Debate via Wired / Twitter
▹ ... much more
 
Plus: Market Pill, Member Spotlight, What else is Poppin'

Let’s get into it.

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Unstablecoins... Just a few weeks ago, the Terra ecosystem was the second largest DeFi ecosystem by TVL and was on a mission to revolutionize the global economy with their algorithmic stablecoin, UST. At the time of writing, Luna (Terra’s native token) is sitting substantially below $0.001. Luna and UST were supposed to work in tandem to maintain UST’s peg: the stabilizing mechanism was that you could always redeem $LUNA for $UST dollar-for-dollar, and vice versa. Once the market cap of $LUNA fell below $UST’s total supply, things hit the fan.

This collapse will have ripple effects throughout the entire ecosystem and beyond. Regulators are already voicing concern, calling for immediate action to crack down on stablecoins. Meanwhile, the entire industry is keeping a close eye on USDT (Tether), crypto’s largest stablecoin. While it has managed to maintain its peg despite intense market volatility, there are concerns around whether USDT is as adequately collateralized and could eventually see the same fate as UST.

That said, sentiment around USDT, USDC, and other non-algorithmic stablecoins are still positive. The real question is: as the bear market settles in, what will survive and what will be exposed?

Investors and founders alike have long said that, the best companies and communities are built in the bear market, either by being founded in one or surviving one. Ruthless prioritization, experimentation, and conservative capital allocation will be necessary, but also a deep focus on the community that sticks around with you when the money isn’t rolling in like it was 12 months ago.

TAKE NOTE
Sticking around for a bear market will be tough but rewarding. This is the time to find the projects and communities you deeply care about and go all-in, and understand that things that work in times of abundance aren’t always sustainable in times of scarcity. Terra is a hard lesson for the entire ecosystem, but we should take it to heart.

“Soulbound” NFTs and Decentralized Society. This week, Vitalik Buterin joined forces with Glen Weyl and Puja Ohlhaver, publishing a paper about the opportunity of "soulbound" NFTs. Vitalik coined the term in a previous blog post, but the trio has certainly pushed forward the discussion since then. They argue that Soulbound NFTs make a “Decentralized Society” (DeSoc) possible, a “more transformative, pluralist future of increasing returns across social distance.” Specifically, DeSoc can build non-transferrable social relationships that are represented on-chain, allowing for new property rights and governance systems that deprioritize financialization. The possibilities here are endless – let’s just get the name right first.

A Theory of Justice for Web3. Li Jin has long worked to frame the creator economy and web3 in their broader economic and philosophical contexts. This piece is another step in that direction, adapting Rawlsian Theory of Justice to web3. Specifically, Rawls’ theory leaves space for builders to be rewarded for their contributions while placing a burden on everyone to support the less-advantaged. Li and Katie Parrott argue that web3 should reward contribution over capital and implement initiatives that explicitly benefit the disadvantaged, like basic income and creator funds. These ideas are easier said than done, but this is certainly a necessary conversation in the space.

The Web3 Decentralization Debate. Oftentimes, the discussion around "decentralization" in web3 is a matter of degree – how decentralized is this network/organization? This piece from Wired, and recent thread from Will Papper, argues for a different framing. Rather than being focused on the “amount” of decentralization, we should focus more on the type. Will makes this argument by drawing a distinction between "trustlessness" and “decentralization.” Meanwhile, Kevin Owocki argues that the "not a real DAO" movement on Twitter is actually killing experimentation and progress in the space. While differences of opinion will continue to exist, it’s extremely important for us to constructively engage and critique these different points of view rather than being “definition maxis.”

Keep Your Enemies’ Tokens. Token swaps are all the rage, but why are they important? Friend of Forefront Joey DeBruin explores token swaps from the perspective of science, arguing that competition between scientists (and startups) is often net-negative relative to the ignored possible scenario: collaboration. Token swaps allow for two independent organizations to do work (and accrue reputation) while still being incentivized to support one another and reap the rewards. This is a massive unlock in science, technology, business, and more – collaboration as an optimal scenario.

To Voice or to Exit: Crypto Cities. Communities in crypto are often compared to cities, but crypto is also being used as a means of building and evolving traditional cities. In this essay, Drew Austin explores CityCoin, CityDAO, and the wave of city-building crypto projects. Specifically, Drew differentiates between projects that emphasize “voice” vs. “exit,” or working within an existing city vs. building an entirely new one. While there is often more excitement around the prospects of building a utopian city from scratch, Drew argues that the voice option is underexplored – less exciting, but as Vitalik argues, just as valuable of a journey.

Value Flow: How Chaos Artists Are Getting Paid. Chaos is the most recent project from Songcamp, and it’s incredible. Forefront had them on the podcast last week, and the amount of experimentation happening in that community is off the charts. The crew is piecing together parts of the web3 puzzle to build new forms of value flow for musical creation, a space that has not been super creator friendly throughout its history. The team dives into the philosophy and mechanics of rewarding over 80 contributors for their work. Definitely worth the read.

It's a VUCA world, we're just living in it. In this piece, Samantha Marin defines “VUCA” in the context of DAOs: Volatility, Uncertainty, Complexity, and Ambiguity. The acronym is from General Stanley McChrystal's book Team of Teams, but its also useful in examining and evaluating existing DAOs. One of the key points of the essay is an emphasis on removing “personal uncertainty” from a DAO. Given how complex a DAO is at the organizational level, it is even more necessary to ensure that folks are clear on their role as to not create two different dimensions of uncertainty.

Market data on the last 7 days. Last updated May 16, 2022

Updates from the DAO

Forefront is launching the Web3 Creator Residency, and applications are now CLOSED. We’re working through all of the incredible applications – stay tuned in #pre-launch! In the meanwhile vibes sneak peak.

The proposal to onboard Jihad as Full Time Media and Ecosystem Lead and Timi as Full Time Developer have PASSED! We're excited to continue to expand the FF family 🙂

▹ FF Library - Core DAO leadership
▹ Mainstream - Digital Euro "Soon"
▹ Read - Web3 and Social Capital
▹ Latest - Luna's LFG Treasury Latest
▹ NFTs - Spotify NFTs Profile
▹ Regulation - Portugal Crypto Tax Plans
▹ Opinion - Why NFTs <> Commerce
▹ Listen - FF Podcast Roundup
▹ Updates - Twitter takeover "on hold"
▹ Cool - Lil Nouns
▹ Techy - Sybil Resistant Airdrops
▹ Tooling - Soulbound Airdrop

◎ Check out FF Signal  for more headlines