Smart contract code is supposed to be immutable once it’s deployed on blockchain, but in practice, you can create smart contracts that “metamorphose” into something else. (Imagine turning a token-staking contract into a token-stealing one, for instance!) Since this could undermine trust in web3 decentralized systems, a16z crypto engineering not only shares how the shape-shifting works, but also built a tool to analyze smart contracts for such “metamorphic” properties. While some metamorphic smart contracts may elude detection (or the detector could raise false positives), this tool is a useful first step for builders to understand and build on. learn more about metamorphic contracts / use Detector tool
2. Zero-knowledge information sharing through ‘zkDocs’
Sam Ragsdale, Dan Boneh
Most blockchain transactions are public by design, but this can make them less favorable for relaying private information to institutions. For example: Does your mortgage lender getting your pay stubs really need to know all those details… or just verify that your salary actually meets their loan requirements? This is where zero-knowledge proofs – which allow us to cryptographically prove facts about information without revealing what the information is – come in. a16z crypto engineering (& research) demonstrates how zero-knowledge-enabled documents could improve on traditional, error-prone, inefficient verification workflows — while preserving both privacy and decentralization. learn more about zkDocs / watch demo
3. What can web3 (& other) organizations learn from the history of democratic governance?
Porter Smith, Andrew Hall
web3 has created a new “laboratory” for democratic governance — through widespread experimentation; fast iteration cycles; and unprecedented digital participation and blending of civic and corporate, public and private. To date, however, web3 governance has overly relied on direct democracy, leading to low participation and concerns about weak oversight, interest-group capture, and group decision-making. But these are also the same challenges societies and organizations have experienced for millennia… So there’s lots of room to borrow best practices from the history of governance (drawing on both research, and observations of these systems in practice), to build more effective systems today. read article on ‘Lightspeed Democracy’ here
4. Decentralized creativity & collaboration
Rob McElhenney, Chris Dixon, Sonal Chokshi
“Decentralized media” and “decentralized content creation” are hot topics, but what does this really mean, how would it work in practice… and does it even need web3?! In this first live taping of our podcast ‘web3 with a16z’ — featuring special guest and longtime writer, actor, executive producer Rob McElhenney (It’s Always Sunny in Philadelphia, Mythic Quest; Adim) — we discuss decentralized creativity, collaboration, community; managing writer’s rooms, creator access; IP and NFTs; metaverse, storytelling across mediums; favorite TV shows, nostalgia, and more. listen to the episode here
5. Some books we’re reading this summer
Covering everything from algorithms, cryptography, markets, and system design to time travel, space, food, and philosophy – here’s a list of readings that members of the a16z crypto team are personally reading and recommending this summer. Whether you’re looking for vacation reads for education or for entertainment, whether you prefer non-fiction or fiction (or science fiction!)… there’s something on this list for everyone. check out the list here
To beat the bear, you have to think like the bear. Here’s how…
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Dear Bankless Nation,
If this is your first bear market, you’re probably fighting the urge to bury your head in the sand and wish that it all just goes away.
Don’t do that!
There’s a lot to be gained from engaging with Web3 in times like these — you just have to adjust your perspective.
Today, Frogmonkee offers up strategies for beginner, intermediate, and advanced crypto traders that will have you best positioned for the next bull market.
We’ve also got some words of wisdom on how to keep your mind focused.
Remember: To beat the bear, you have to think like the bear.
Let’s do it together.
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– Bankless
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First things first: are we in a bear market?
Let’s get our basic definitions aligned. Let’s consider the definition offered by our old friend Investopedia:
“A bear market is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.” – Investopedia
Okay, we have questions: What are “prolonged price declines?” How is “pessimism and negative inventor sentiment” defined? “20%” drops? That’s a bad Tuesday in crypto. In 2018, the market experienced drawbacks of 80% or more. Okay, so let’s try another way…
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David put it well when he wrote:
“Instead of trying to categorize recent price action as a bear market or not, ask yourself, does this feel like a bear market? If yes, then act accordingly. If not, then act accordingly.” – 5 reasons to be excited for the bear market
In my degen niche of crypto, I’ve noticed a tangible retraction in enthusiasm. Fewer people are apeing into new NFT projects or taking risks with small-cap tokens, while more are converting their tokens into ETH/BTC or stables.
A quick look at the market shows we’re far, far down from ATHs. According to CMC, crypto’s market cap peaked back in early November at just under $3T. As of writing, crypto sits at roughly $1.25T.
That’s a 58% fall over the span of 7 months.
Even after accounting for crypto’s volatility, we’re still looking at three times the drawdown from the 20% heuristic.
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Evaluating your risk profile
Before we dive into any strategies, I want to first talk about risk profiles. A risk profile is a tool that investors use to identify if a particular investment falls within their appetite for risk. Here are some high-level examples:
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Aggressive Risk Profile
Mostly small cap tokens, some BTC and ETH, no stables.
Willing to use protocols that have not been audited
Invests across dozens of different projects
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Moderate Risk Profile
Majority BTC and ETH, some stablecoins, and some small cap tokens
Stakes in higher yield pools, but is determined to understand the protocol first
Uses a small percentage of portfolio to ape into projects
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Conservative Risk Profile
Entirely BTC, ETH, and stables
Stables are parked in a Compound market earning low single digit yields
Does not keep more than 5-10% net worth in crypto
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Having a risk profile in mind will frame what types of investments you pursue in general. For a bear market, I’d recommend between a conservative to moderate risk profile as more aggressive risk profiles benefit from market manias indicative of bull markets.
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A few Sample portfolios for the bear market:
• Figure out your balance: stables, low risk, medium risk, & high-risk plays.
• Then decide on Projects. I created a few sample portfolios for you to look at. (education, not financial advice )
