World Bank Won't Help El Salvador With Bitcoin

What you need to know today in crypto and beyond

June 17, 2021

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Top Shelf

DENIED: The World Bank has denied a request from El Salvador to help the country implement bitcoin as legal tender. The bank could have offered grants and loans to the country but a spokesperson said it will not be able to provide support given the “environmental and transparency shortcomings.”

U.K. HODLERS: The U.K. Financial Conduct Authority says 2.3 million adult Brits hold cryptoassets, its preferred term, compared to 1.9 million last year. The level of consumer understanding, however, is declining, with only 71% of respondents identifying the definition of cryptocurrency from a list of statements. In a separate survey of U.K. independent financial advisers, 95% said they would not advise clients to invest in crypto or meme stocks, the Opinium research firm found.

MORE HIRING: Hong Kong’s first licensed cryptocurrency exchange, OSL, has hired six senior staff members, including Joe Zhou and Arion Ho, two former VPs at the Hong Kong Stock Exchange. OSL, together with parent company BC Technology Group, is looking to launch a digital asset brokerage and exchange for the European and U.K. markets.

LOOK WHO'S ACCEPTING CRYPTO: The National Republican Congressional Committee (NRCC) announced it will accept donations in cryptocurrency. Contributions will be processed through BitPay before being deposited to the committee’s account. The NRCC also said that it will collect identifying information from all individuals who use crypto to donate.

POLYGON HYPE: An increasing number of institutions and DeFi whales are shifting to Ethereum layer 2 solution protocol Polygon, according to blockchain data by Nansen. Transactions above $1 million account for two-thirds of daily stablecoin transaction volume on Polygon, which hints at the shift of large DeFi companies from Ethereum to Polygon. Meanwhile, banks are inching towards Ethereum 2.0 staking.

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Putting the news in perspective

The Takeaway

Curve DAO Contemplates Its Intellectual Property

Hydrosam, a trained lawyer and Curve token holder, did what all enterprising lawyers do when they’re annoyed: he searched for documents. What he found in the Curve GitHub was surprising. Curve, the second-largest decentralized finance (DeFi) project with over $7 billion in assets locked up, lacked a clear way to protect its intellectual property.

That’s an issue, the lawyer thought, especially in the fast-paced environment of DeFi where it’s become common for projects to launch under new names but with the same code as their competitors. In Curve’s case, there have been a number of copycats including the fork, Swerve, projects like Pickle and mStable that used some of the veCRV mechanisms and the venture capital-backed protocol, Saddle Finance.

So, Sam Miorelli, the Sam behind the hydro moniker, did another very lawyerly thing: He wrote a proposal suggesting legal recourse.

“This is real and valuable [intellectual property]. If the DAO is serious about governance, they are going to have to handle a critical thing like IP, whether it's licensed agreements or open sourcing or whatever it might be. There are strategic decisions to be made there,” Miorelli told CoinDesk. “The way you do this in a DAO is you post a proposal and see what people think.”

Curve Improvement Proposal #xx (not a misprint) could be seen as a first in the world of decentralized governance. To use Miorelli’s words, it could “set an important precedent” for decentralized organizations to act a bit more like corporations and protect their property.
Viewed over 2,000 times, the proposal has opened up a lively debate inside and outside Curve’s governance structure. Some see it as antithetical to DeFi, which draws a direct line to the free and open software movement that views code as a public good – even for bad actors. Others see it as an advancement for DAOs and DeFi, a way to legitimize this emergent industry.

The Block first reported the story.

In his post, Miorelli wrote that Saddle Finance has often been accused of porting over Curve’s code. He takes a “natural rights” view of property law, and said that such an action is “doubly wasteful” in that it fails to contribute anything new to the world, wasting the time of the original creator and copier.

What’s worse is that Saddle is supported by at least nine venture funds – including major players like Polychain, Alameda Research, Framework, Boost and Dragonfly Capital – and claims copyright over its own code.

“VC’s investing in projects that infringe are scum and Curve should gleefully return their ill-gotten gains to veCRV holders,” he wrote. In conversation, Miorelli was less bombastic and highlighted he is only raising governance questions and not yet threatening legal action against any party.

“Personally, I think this is a knee-jerk reaction from Curve's community members who are less technical or less familiar with clean room implementation cases,” Saddle engineer John Lim said in a direct message. He added that Saddle is a re-implementation of the StableSwap algorithm in Solidity, not a “line-by-line” reproduction of the entire project.

DeFi has seen similar arguments before. Last summer, SushiSwap forked from the VC-backed Uniswap and added a governance token. Months later, Uniswap, a decentralized exchange that sometimes sees more volumes than Coinbase, launched its third version with a protective software license.

There are members of Curve’s community who see forks as additive. Avi Meyers, of data provider Flipside Crypto, wrote that Sushi didn’t end up bleeding Uniswap dry in its vampire attack but created “healthy” industry competition.

Others wrote that Curve’s “competitive moat” isn’t its code or “incomprehensible math,” as user anon-cat wrote, but the team behind the project, whom he trusts “to iterate rapidly to blow out any competition out of the water.”

For his part, Curve developer “Charlie” said that it’s good this conversation is happening, especially because the project “is seen as a fairly passive DAO.” However, he doesn’t know “if there's anything worth wasting our time on there.” He added that Saddle did port Curve’s code but that hasn’t necessarily hurt CRV token holders.

Ultimately, it’ll be a community decision on how to proceed, Charlie said, adding that it's “sad” to see projects copy code and take funding, which Curve has rejected.

Matt Luongo, founder of Thesis and adviser to Saddle, thinks the post is without merit and lacks understanding of both the legal system and culture of DeFi. Dragonfly’s Haseeb Qureshi, a Saddle backer, declined to comment.

“I would say to people who are interested in this, please participate on the forum,” Miorelli said. “If more people engaged there we might be having a richer discussion and maybe coming to better answers.”

–D.K.

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