Proof of Humanity | Scan your Eyeball for $

Paradigm's appchain | Hamster Racing | ETH CC

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Decential Media
July 28, 2023

Decential Media
A weekly recap of the most insightful news, analysis, and capital flows in the wild west we call crypto.

Hello and welcome back to the Web3 Rewind! Per usual in this industry, lots has happened this past week. Here's what we have in store for you:

  • Worldcoin

  • Paradigm’s new exchange

  • Hamsters!

  • EthCC recap

  • Telegram bots

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The Latest

Okay, here we go again. Still in the depths of a bad crypto winter, Worldcoin has reared its reeking head to grab cash and attention. The cycles are upon themselves, melding and merging so that we can’t even get a decent price rally before a major risk and reputational threat emerges. I’ve been heartened to see pushback again Worldcoin online from folks who’ve been in Ethereum for many years. We’ve seen this before and yet don’t always speak up when necessary.

I’m guilty of this. In March 2021 I wrote a profile for Bloomberg News about BlockFi, the crypto lender that blew up in the FTX wake. I remember feeling that something wasn’t right with BlockFi. I didn’t push hard enough on that sense and as a reporter that’s a major failure. With the failures of FTX, Celsius, Genesis, Gemini, BlockFi and others still so fresh in the mind, the risks of Worldcoin can’t be ignored. It’s centralized, stores biometric data, is offering a coin whose float is wildly small compared with the total supply, has already dropped 90 percent in a day and is controlled by insiders that include Sam Altman, currently working his ass of to be the Steve Jobs of AI.

The company claims to not store the iris scans it requires to open a World ID. Do you believe them? A coin with strong links to Altman, who controls ChatGPT and other artificial intelligence apparatus. You think he wouldn’t love a database of humanity’s irises? I think the idea of biometrics is here to stay, and must be managed carefully with security and privacy paramount. So that’s not the problem I have necessarily with Worldcoin. It’s the crypto part. It reeks of a giant rug or another unforeseen colossal fuck up. If that were to transpire, I’m not sure the industry could weather it. The sharks are already circling, we don’t need to be chumming the water.

Of course, Worldcoin is already a thing. An iris scan can earn you about $55 as of now, as long as you’re not in the U.S., where regulatory uncertainty kept WC from offering its services. I hope I’m wrong about Worldcoin, but the thing to do is resist it, call it out when necessary, and try to remember the decentralized and resistant architecture at the heart of blockchain networks that make all this amazing new tech possible. – Matthew Leising, editor in chief, Decential Media

What’s the definition of insanity? dept.

Scan your eyeball for $50

Proof of humanity, one eyeball at a time. That is the promise of Worldcoin, an electric startup that has captivated the attention of millions and is run by Sam Altman. Yes, that Sam Altman, the one that is also running OpenAI. The thesis is simple. In a world powered by AI, filled with fake images, fake online identities, fake work, we need something to prove our identities and what we put on the internet. Worldcoin is that promised solution.

How it works is fairly simple. You find someone with an orb, you scan your iris, the orb checks that your iris has not been scanned before to prevent fraud, and a unique hash is generated for you that is linked to a wallet address you hold. Now you can guarantee that behind every wallet address, there is a real human being and that the human being is unique. The hash is quite literally generated by an algorithm that derives it from your iris, but only the hash is uploaded to your database. Don’t worry, Worldcoin won’t have a database with a scan of every single human’s eyeball. That would be terrifying.

There are genuine use cases to a proof of humanity system. For example, a protocol could easily use Worldcoin to prevent sybil attacks on an airdrop by requiring users that want to claim the airdrop to have used their associated Worldcoin account. Similarly, Worldcoin could be used for voting in DAOs, or even real-life voting systems where one has to prove their identity. It could also be used in social media networks to protect against bots, or as an alternative to captchas that so many sites have these days. A proof of humanity system opens up a huge variety of use cases that are currently not possible.

All that sounds great, but to date, there are only roughly one million WorldApp wallets. We’ll need multiple orders of magnitude more than that to really have a useful proof of humanity network. This is where token incentives come in. For scanning your eyeball, you get 25 WLD tokens, and the token just launched earlier this week. The token currently trades at a $256M marketcap with a $23.5B FDV. The ludicrous float/total supply ratio is due to a large majority of the WLD supply being reserved for future users who scan their iris. If you scanned your eyeball right now, you would make roughly $55. Not a bad day, especially if you are an individual living in a developing country.

Of course, when there is monetary compensation involved, humans will find a way to game it. Worldcoin accounts are being sold across the web, entrepreneurial individuals are bringing Worldcoin orbs to villages across the world and scanning as many eyeballs as they can to maximize their referral fees, often at the expense of individuals living in rural areas who have no idea what they are signing up for. In addition, we got the usual drama during the token launch as it was revealed that 95% of the float was controlled by market makers. This is fantastic if you are an investor or the protocol and want to control price above a certain level through market maker incentives, but seems fairly predatory to everyone else as it is vastly misleading for the actual token’s value. — Joseph Cooper, Decential Media

Crypto charting

Here's a deeper look into the economics and mechanics of web3 and crypto courtesy of charts by Pyth Data Association. To see more Pyth research click here.

Pyth launches new ETH/BTC price feed, unlocking highly-demanded market pair for DeFi

Pyth Network launched its newest ETH/BTC price feed on July 26 to give DeFi applications access to a real-time calculated price of the classic market pair. Protocols looking to launch their own on-chain ETH/BTC markets no longer need to create their own cross-pair of ETH/USD and BTC/USD price feeds.

Pyth’s ETH/BTC is the network’s first non-USD-denominated price feed. This launch opens up exciting opportunities for greater capital efficiency and diversified trading strategies for the broader DeFi ecosystem.

FRS further increases rate range while digital assets market remains relatively stable

On July 26, the U.S. Federal Reserve (FRS) increased the key rate range by 25 basis points from 5.25% to 5.5%. This decision came after the U.S. Federal Bureau of Labor Statistics reported a decrease in the consumer price index from 4% to 3% in annual terms. In response, Jerome Powell stated that interest rates would continue to rise, albeit at a less aggressive pace than previously anticipated.

Despite this announcement, the digital assets market remained relatively stable. Overall market capitalization of digital assets had increased by ~0.7%. Bitcoin and ETH did not experience significant price fluctuations or expansion in confidence bands according to the Pyth price charts.

Quick Bits

Paradigm’s derivatives exchange

  • Paradigm, a company that provides institutional-grade liquidity for crypto derivatives, is launching an appchain on Starknet, called Paradex. The exchange will be built on the recently announced Starknet appchain stack.

  • The DEX will combine CeFi’s liquidity with DeFi’s transparency, providing deep liquidity, capital efficiency, and low fees. The exchange will also be fully self-custodial and feature an on-chain risk engine. 

Hamster racing

  • Last week, we went hamster racing on the blockchain. As crypto’s final use case, someone released a platform called Hamsters.GG where you could bet on four hamsters racing along a track.

  • In an absolute whirlwind of an adventure, someone spread FUD about the platform, stating that the races were looped. The platform later came out to clarify that the streaming site crashed from too much web traffic.

ETH CC Recap

  • ETH CC, held in Paris, recently concluded. Many participants threaded about their key takeaways from the event. One main one was that it did not feel like a bear market event at all and that it had one of the highest signal-to-noise ratios in history.

  • No expenses were spared, with events being held in the Eiffel Tower amidst other lavish locations. Infrastructure was a big theme, however instead of scaling infrastructure, a large focus was placed on infrastructure that improved the crypto user experience.

And last but not least

Telegram Bots

Telegram bots are all the rage right now, the most popular one being Unibot. But what are telegram bots? The most common telegram bot is a trading bot. It allows one to trade memecoins through a telegram chat. Specifically, the bot creates a wallet, you fund it with a certain amount of assets, and voila. The bot has an advanced suite of features for the professional memecoin trader, such as having trading presets so that you only have to enter a token address and it will immediately buy the token for you. The bot also has the ability to help you copy-trade other wallet addresses or snipe token launches. It’s safe to say that these telegram bots are built for power traders who want a significant edge. If you’ve ever been an on-chain degen, you know how painful it is to watch your trade fail because you didn’t set a high enough slippage or that by the time you load everything up to trade, the token has 10x’d already.

Telegram bots are popping up left and right for everything, These days, there are bots to help you bridge through telegram, bots that act as customer support using AI and LLMs, bots that help you farm airdrops, and bots that help scan for potential hacks. Even though these bots have not gained a significant amount of traction in the grand scheme of things, both degens and VCs have talked about their implications. When using a telegram bot, one trades convenience for security. In having a bot abstract away all the complexities of interacting with on-chain protocols, one gives up custody of their assets as the bot actually owns the private key of the wallet. It’s telling that users are willing to give up custody of their assets just for a smoother and better user experience and shows the entire industry has a long, long way to go before we reach an acceptable state for your everyday consumer. — JC

Have you read the definitive history of Ethereum? No? Well then get your copy of Out of the Ether while you can.