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Many years ago, it was AI. Now, its metaverse, he says. From the governments perspective, […] as long as you dont have a coin itself, theyre willing to support a lot of these new technologies Doo Wan Nam from StableNode

South Korea: The land of the metaverse

If you had to pick the one country thats most primed to take advantage of the opportunities offered by the metaverse, South Korea would be high on the list. 

Its a technology-obsessed country that eagerly adopts new products, where 98% of people own a smart device and more than 10% of the population own at least some cryptocurrency. Despite being the 13th-largest economy in the world by GDP and the 27th by population its the fourth-largest gaming market in the world, with its 33 million gamers generating $8.3 billion in revenue for the sector in 2021.

Gaming is already a metaverse-style social activity. The most popular games are either cooperative or competitive, and the country dominates esports, with thousands packing stadiums to watch professional players battle it out. 

For [Australians], our entertainment on a day-to-day basis would be watching TV or watching a movie or whatever, says Melbourne-based Zerocap analyst Nathan Lenga, who has researched South Koreas metaverse plans.

But 50% of people in Korea actually reported that their daily dose of entertainment was gaming. So, its really, really immersed and just integrated into their culture, he says.

The metaverse and South Koreas Digital New Deal

The South Korean government has an ambitious 58.2 trillion won ($44.6 billion) plan to transform its economy to embrace new technologies, called the Digital New Deal. Part of this package includes 223.7 billion won ($171.6 million) earmarked to help South Korea become ranked No. 5 among the most metaverse-adopted countries in the world by 2026 up from its current place at No. 12. According to the Korea Herald, experts believe the domestic metaverse will be worth 400 trillion won ($306.5 billion) by then.

The money is being handed out as grants to universities and corporations working on metaverse technology and platforms but they barely need any encouragement, as the country already accounts for almost one out of every five metaverse patent applications filed globally since 2016, second only to the United States. Local tech giants LG Electronics and Samsung lead in the number of filings.

And the metaverse sector is already well established. A report from the innovation advisory firm Mind the Bridge estimates that as of June 2022, South Koreas metaverse sector had 109 scaleups a fast-growing business with a profitable product and up to 300 more metaverse startups. Their scaleup density ratio is 3-4 times higher than the Silicon Valley and the UK (3% of total), Europe and Israel (2%) ones, the report says, noting that scaleups had raised $10.6 billion toward building metaverse platforms.

The countrys metaverse plans were developed under the previous government, and current President Yoon Suk-Yeol cited 10 metaverse-related ambitions among his 110 national tasks.

Why is South Korea so keen on the sector? Because they see a big opportunity if they can get in early, with the government estimating it could create 1.5 million virtual jobs in the sector in the future. To get the ball rolling, it will train 40,000 students on the metaverse through higher education courses.

Thats obviously going to have a significant impact on the wealth of the country and really stimulate their economy,” says Lenga on the target of 1.5 million jobs. Theyre trying to produce experts that will push the country to the top of the metaverse market and bring new developers into the country because of these programs and initiatives.

How South Korea is leading in metaverse technology

Sangmin Sam Seo is a representative director of the Klaytn Foundation, the blockchain and metaverse offshoot of Korean internet giant Kakao.

He says there was a sea change in views on the metaverse after everybody was forced to work from home due to COVID-19 and interact in virtual worlds on Zoom and Google Meet.

Just seeing other faces on your screen is not that fun, right? he says. 

So, we were trying to find a more interesting platform that can help people work and also provide fun and entertainment. And I think thats why people were more excited about the metaverse, and why the metaverse became a new area for Koreans and the Korean government.

To mark its third anniversary this year, Klaytn unveiled its metaverse blockchain for all plan to help develop AAA blockchain and play-to-earn games, NFTs, and DeFi services for metaverse businesses. It announced a $500 million grant scheme and is fine-tuning its blockchain for high scalability and low latency for a better metaverse experience. It also offers metaverse as a service, allowing other companies, publishers, creators and users to seamlessly plug into the metaverse.

In case you missed Magazines previous article on South Korea: South Koreas unique and amazing crypto universe

Seonik Jeon, founder of Korean Blockchain Week, says that Klaytns internet giant parent company, Kakao, is giving 100% support to its metaverse offshoot.

Kakaos founder, Brian Kim, personally strongly believes that blockchain is the future of Kakao, and hes putting most of his manpower all the elite manpower to Klaytn these days,” he tells Magazine.

Right now, they are having some issues because they are changing a lot of stuff. But once the settlement is done, I think they will grow fast, he says.

Local telecom company SK Telecom launched its own social metaverse platform called Ifland in mid-2021, and it already has 12.8 million users. It has plans for world domination, having launched in 49 more countries as of the end of November. 

What is the Seoul metaverse?

Even municipal governments are on board with the City of Seoul creating the first virtual public administration platform in the metaverse with its Metaverse Seoul, which is slated to open by the end of the year. Around 3,000 residents have already played around on the beta, visiting the virtual City Hall and playing games in Seoul Plaza.

The five-year plan will see residents able to attend a virtual campus of Seoul Open City University, lodge official complaints and apply for licenses. Visitors can take a virtual stroll through specific tourism content.

Time magazine named it one of the Best Inventions of 2022, and other Korean cities like Changwon and Seongnam have announced plans to replicate themselves virtually too. 

In September, the Israeli Embassy in South Korea opened a diplomatic mission in the metaverse that you can visit via an Android and iPhone app. When Magazine visited it recently, it was totally empty of people and content-free a good reminder that unless metaverse platforms serve a purpose and can attract users, they are simply expensive 3D games that arent much fun.

Why did South Korea ban blockchain and play-to-earn games?

Korea has a very complicated relationship with gambling, and a study from the Korean Center on Gambling Problems suggests that the average South Korean is two to three times more likely to suffer from gambling addiction than someone of another other nationality (though its unclear why). Gambling, apart from lotteries and horse racing, has been banned.

So, while South Korea is big on the metaverse, its not that keen on incorporating cryptocurrencies. In December 2021, South Koreas previous government banned the most obvious forerunner of the metaverse play-to-earn blockchain games.

This threw a wrench into the works for local companies working on blockchain games and recalls previous concerns over video game addiction, which from 2011 to 2021 saw teenagers banned from playing online PC games after midnight as part of the Shutdown Law.  

Doo Wan Nam, co-founder of research and advisory firm StableNode, believes the P2E game ban is a sign of the power of the big traditional gaming companies, which lobbied to have the games outlawed.

They saw their competitors going into play-to-earn, and they were able to gain literally millions of users. So, for them, it was like, Is this fair? They have a lot of lobbying power because its a big industry.
He notes that while lobbying is illegal, people know there is lobbying, directly or indirectly.”

The future of the metaverse in South Korea

However, Jeon disagrees, saying that the top game companies in South Korea are already exploring blockchain-based games.

All the major top-tier gaming companies are adopting blockchain right now and figuring out how they can make better play-to-earn games, he says. I think these gaming companies are preparing for the future.

Companies developing P2E games include Com2uS, Kakao Games, Neopin, Nexon and Krafton. Mobile gaming giant Netmarble, which earned $2.2 billion in 2021, has more than a dozen blockchain and metaverse titles, including Golden Bros, A3: Still Alive, Yokai Dual, Meta Football, Seven Deadly Sins: Origin, and many more. It launched its own MarbleX blockchain ecosystem on Klaytn and has a currency called Inetrium. One of its biggest titles is Everybodys Marble: Metaworld, part of a franchise with a user base of 200 million. Its a real-estate investing game where players buy land and develop properties in a metaverse world based on the real world.

Will South Korea lift the ban on blockchain games and P2E?

Arguably the most successful South Korean game company utilizing blockchain technology is WeMade. When Magazine catches up with its CEO, Henry Chang, in Seoul, he says he believes the ban will soon be lifted thanks to a more favorable approach from President Yoon. I think the new government, the current government, will modify the laws according to the current situation, he says.

I expect it will be next year.

Klaytns Seo agrees: I believe that once they have enough use cases and enough good stories, [] the Korean government will think about their previous plan differently, and they might change their declaration.

This has yet to happen, and the collapse of Terra, Celsius and FTX hasnt really helped the case to ease regulations on anything related to crypto. However, officials from the Ministry of Science and ICT have indicated that theyre working on laws to regulate the metaverse that are separate from video game regulations. 

WeMade created the popular Legend of Mir series and claims that Mir 4, released in 2021, is the most successful blockchain game in the world. It enables players whove gotten far enough in the game to head down a virtual mine to gather metal to smelt into the cryptocurrency Draco.

It became insanely popular, says Lenga. Since February of this year, theyve had 650,000 average users.

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At the time of writing, there were 61,000 players online, with 5.4 million over the month. Sure, thats small beer compared with the 253 million monthly users of Fortnite or the 172 million people playing Minecraft, but its very good for a blockchain game. Some of those users, however, are in Korea, where theyre playing a version without blockchain.

I believe that blockchain games are games, and to make a blockchain game successful is very similar to a regular game, Chang says of his approach with Mir 4.

Games with blockchain can be more enjoyable than games without cryptocurrency. So, I believe that in three years, almost all games, conventional games, can be transformed into blockchain games.

In June, WeMade launched Wemix3.0, a gaming platform it hopes will become the Steam of blockchain gaming, with DeFi services and its own stablecoin, WEMIX. Net profit grew 72% this year compared with 2021, and the future was looking bright. 

However, in late November, South Koreas biggest exchanges delisted the WEMIX token over concerns about the accuracy of its supply figures, instantly wiping 70% off its market capitalization. The company is taking legal action, but this once again demonstrates that blockchain developers face significant risk.

Can the metaverse exist without cryptocurrency in South Korea?

Nam believes the metaverse is so appealing to the South Korean government because it harnesses the power of blockchain while being a few steps removed from cryptocurrency itself.

Many years ago, it was AI. Now, its metaverse, he says. From the governments perspective, […] as long as you dont have a coin itself, theyre willing to support a lot of these new technologies.

Unfortunately, thats precisely the direction many of the South Korean metaverse platforms have taken so far.Ifland, Metaverse Seoul, the IsraelKorea Embassy these are just 3D-world versions of the existing internet (although Ifland 2.0 will have cash-like points). You can tell how non-disruptive the metaverse is to the existing order because even the big Korean banks KEB Hana Bank and Shinhan Bank have metaverse branches.

Until users themselves are the ones building the metaverse, incentivized by digital ownership provided by NFTs, the current generation of metaverse platforms is really just a new lick of paint on the same old Big Tech-dominated Web2.

One-quarter of the global populace is going to be spending at least an hour a day in the metaverse by 2026, according to tech consulting firm Gartner, for shopping, gaming, education and more. But at some point, people are going to have to demonstrate that its really them behind the avatar.

Thats just one reason many believe that decentralized identity (DI) is likely to play an increasingly important role in Web3s evolution. And even if DI has been generally overlooked by mainstream media, recent events suggest that is about to change.

Consider that in July, the World Wide Web Consortium (W3C) announced a new standard for decentralized identifiers, culminating years of mostly quiet work and deliberations in this area. In August, Gartner proclaimed DI a must-know emerging technology, where people can control their own digital identity by leveraging technologies such as blockchain [] along with digital wallets. Earlier this year, Ethereum co-founder Vitalik Buterin proposed Soulbound Tokens (SBTs), which would include many DI elements in a non-transferable NFT format.

Sometimes called self-sovereign identity (SSI), decentralized identity can play a key role in mitigating fraud, data breaches, social engineering and theft in the expanding metaverse, say technologists, but perhaps more importantly, it may impact broad and diverse sectors of human endeavor, including education, healthcare, law, travel and employment. 

I believe that SSI will be revolutionizing how we perceive identity management in the upcoming years, Adam Ggol, co-founder of Aleph Zero, tells Magazine, while others suggest it is on course to disrupt traditional identity management. 

Im not sure I would say disrupt as much as catalyze, Scott Kominers, an associate professor at Harvard Business School who has written about DI, tells Magazine. My hope is that decentralized identity solutions will make existing sources of information on individuals background, activity history and interests more powerful and useful than before.

An NFT of a diploma in your crypto wallet, for instance, would turn into a permanent academic certification, Kominers and Jad Esber wrote recently in a Future article. 

Decentralized identity wont necessarily exclude a bit of fun along the way, either. With public histories, it would be possible to prove that you were early to a trend or active in a project before it took off like, say, being into Taylor Swift before she was popular, Kominers and Esber noted.

Recent events, like the collapse of the FTX crypto exchange, suggest other possible uses for DI/SSI, which can be applied to organizations as well as people. Fraser Edwards, CEO and co-founder at Cheqd, envisions audit opinions issued as VCs [verifiable credentials], where the focus is less on sovereignty and identity but more on trusted data and reputation i.e., Do I operate in good faith? Or simply, Am I trustworthy? he tells Magazine.

Decentralized identifiers and verifiable credentials 

DI has two main components: decentralized identifiers (DIDs), which are like traditional identifiers a legal name, an email address, a social security number, etc. with the key difference that DIDs are controlled and sometimes even issued by individuals. An example would be an Ethereum account. You can create as many Ethereum accounts as you like and share them with whomever you like. There is no central repository. They reside on an encrypted decentralized digital ledger i.e., a blockchain. 

The second component is verifiable credentials (VCs). These can be derived from familiar credentials such as diplomas, library cards and passports, but again, they are not held on a centralized repository with a single point of control or failure, but on a blockchain where they can be read by machines. They offer familiar benefits like persistence and accessibility, but also more technical ones like cryptographic verifiability (your identity is more secure because it is encrypted) and resolvability i.e., its possible to discover metadata about a user from that persons DID. 

Kim Hamilton Duffy, director of identity and standards at Centre Consortium, offers this example of how decentralized identifiers and credentials might work in an education and employment context: 

A fictional Sally earns a masters degree from the University of Oxford for which she receives a digital diploma that contains a decentralized identifier she provided. This digital diploma is signed using a decentralized identifier which has been published and verified by the University of Oxford.

Over time, Sally updates the cryptographic material associated with her DID, adding biometric protections and also a quantum-resistant algorithm. A decade after graduation, she applies for a job in Japan, for which she provides her digital diploma by uploading it to the prospective employees website. A decentralized identifier authenticates that she is the actual recipient of the degree. Moreover:

Cryptographic authentication provides a robust verification of her claim, allowing the employer to rely on Sallys assertion that she earned a masters degree from the stated university without having to contact the university directly.

Generally speaking, DI has grown with the expansion of blockchain technology, and almost all DI use cases involve a cryptographically secure blockchain at some point. DI is also developing along with zero knowledge technologies that, for example, enable individuals to prove they own or have done something without revealing what that thing is. A person applying for a mortgage, for example, would be able to prove that their income falls within a certain approved band without revealing to the bank their actual salary.

An important milestone?

The DI movement has arguably been flying under the radar, but the recent agreement on DI standards makes for faster progress. The announcement of DID Core as a W3C recommendation is a very important milestone, something that many DI and SSI projects have been waiting for, Markus Sabadello, CEO at Danube Tech, tells Magazine. Its a signal to the whole ecosystem that the technology is ready, not just for experimentation and proofs of concept but for serious solutions to real-life projects. 

The W3C DID standards importance is on par with phone numbers or email address standards vitality, Rouven Heck, decentralized identity lead at ConsenSys Mesh and executive director at the Decentralized Identity Foundation, tells Magazine. A high level of interoperability becomes possible once every provider uses the same specification. 

Today, Big Tech players like Microsoft are conducting pilots, and even some governments, including the United States, Canada the European Union, Germany and Finland, have been looking at DI as a tool to improve state-backed identity solutions, notes Heck. 

Still, the movement is arguably waiting for its first big use case. Pilots are happening at the fringes and are often modest in scope. 

Germany, for instance, recently launched a private/public DI pilot for the travel and hospitality sector. Data from government ID cards and employee certificates were extracted and merged to create a single verifiable credential so that when a company employee checked into one of the 120 German hotels participating in the project, the front desk operator learned immediately from a swipe of the QR code on the guests mobile device that this is really a traveler from that corporation and is allowed to use whatever services we have in in the contract, reports Florian Daniel, chief information officer of Deutsche Hospitality, who added that the trial will soon be expanded beyond Germanys borders. 

It may seem surprising that pilots like these are happening in areas like travel rather than in healthcare or education or other places where the need for DI/SSI solutions seems more urgent. But cases like the travel example are more straightforward to pilot, as less sensitive data is involved, Heck tells Magazine.

Distributed identity’s impact in healthcare

Healthcare is one sector where DI could really change things. It sometimes defies common sense that a persons health records are stored for years within a single hospital. At a minimum, decentralized identifiers would make it easier for individuals to change health service providers and platforms, but challenges remain.

For clinicians, DIDs are much more of a sure thing because they enable better reputation registries and reduce the dependence on hospitals and other institutions as keepers of a clinicians reputation, Adrian Gropper, a medical doctor and chief technology officer of Patient Privacy Rights a national organization representing 10.3 million patients tells Magazine. 

How close is DI to mainstream adoption in the healthcare sector? It will take many years, says Gropper, explaining:

The single biggest obstacle is that clinicians have allowed hospitals to control their access to patient records, and hospitals have little incentive to break their control and risk disintermediation from the clinician-patient relationship. 

DI solutions may be closer to fruition in areas like retail business. The convenience store sector has developed a DI solution called TruAge thats aimed at curtailing underage purchases of products like alcohol and also restricting the amount of certain other products that can be purchased, Peter Steele, vice president of research at The Pinnacle Corporation, tells Magazine.

The system allows consumers to carry digital proof of their age on their mobile phones, which can be scanned at a POS [point of sale] to approve age-restricted purchases, says Steele, adding:

It might be possible for an adult to purchase a large number of vape products and then give them to kids. But with TruAge, they will be restricted from purchasing a large quantity and that restriction is across all stores, not just one type of store, or a single store. 

TruAge is now being implemented by POS suppliers, adds Steele, but it will take a few years before it becomes ubiquitous. 

Governments role in decentralized identity

Many governments are also following DI progress. State agencies are likely to remain the primary issuers of many identifiers like drivers licenses, birth certificates and social security numbers, even though DIDs and related technologies will eventually give governments less control over them, says Sabadello. 

I think it will take a few more years, but there are already several governments investing into DID technology, he says. The EU Commission has been promoting the EBSI/ESSIF infrastructure which is based on DIDs as a key building block of a European digital identity framework. 

The U.S. government is also looking into DI solutions. As reported, the U.S. Department of Homeland Security contracted with Danube Tech several years back to develop blockchain security solutions for digital documents like passports and green cards. Eventually, military commanders could send orders to troops in the field across decentralized digital networks, Sabadello tells Cointelegraph, and the soldiers could verify the order using DI solutions. 

In many EU countries, we already see the exploding popularity of gov-tech solutions allowing users to identify themselves using a smartphone app, says Ggol. One-time Know Your Customer protocols replacing repeated uploads of passports, drivers licenses, health certificates, etc. should prove popular, though this will require much more privacy-aware solutions, as typically a lot of sensitive data is passed around in the KYC process, Ggol adds.

Questions about SBTs 

Buterin created something of a stir in SSI quarters with his May paper on non-transferable soulbound tokens. Does the future belong to privately controlled digital wallets that contain ones education and employment credentials, but also some social identifiers like fanships and recent travel destinations? 

With NFT-based DI/SSI or soulbound tokens users can choose to supply or omit as much identifying information as they like, Amit Chaudhary, head of DeFi research at Polygon, tells Magazine. The end-user is in control of their information and decides how much they want to interact with or be targeted by businesses and marketers if at all.

Others arent so keen on SBTs, however. I do not like the concept of incentivizing users to have a single wallet, Ggol tells Magazine. Nor does he think that the vast majority of identity-related features like employment credentials, fan club memberships, etc. should be private by default and revealed only at the request of the user.

Some types of identity information, including academic credentials like diplomas, should be soulbound in the sense that the information is tied to the individual rather than being tradable, says Kominers. But others say using NFT tokens like SBTs to represent specific identifiers may not be appropriate, as this leads to a correlation of an individuals activities and, therefore, their identity, Alastair Johnson, founder and CEO of Nuggets, tells Magazine.

A boon for the developing world?

Identity-related problems, including certification fraud, loom especially large in the developing world. According to the World Bank, some 1 billion people on the planet have no way of verifying their identity, which vastly limits their access to digital services. 

These problems are very large, yes, says Snorre Lothar von Gohren Edwin, co-founder and chief technology officer of Diwala. The problems that existed with regard to identity in the U.S. and Europe 15 years ago are now bubbling up in Africa, he tells Magazine.

Diwala, which claims to be the first company to develop blockchain-enabled digital credentials on the African continent, has built a platform in Uganda that allows skill providers to issue digital certificates to trainees, recruiters or employers that can be easily verified online. The company claims to have issued over 10,000 credentials to people and businesses across East and West Africa, with 67% customer growth in 2022.

Scalability and usability questions 

Obstacles remain before DI becomes commonplace, however. Can the technology be scaled up? Will DI as currently constituted be usable not just by businesses but by private individuals? 

On the first question: DI proponents are often insistent that private information in the future be shared on a need-to-know basis. Optimally, says Ggol: 

Users should have an option of performing a very exhaustive KYC for the purpose of uploading the data to the ID system, but then they should only selectively disclose the information that is absolutely necessary for a given platform.

Only binary information should be required. For example, is the buyer old enough to purchase alcohol in an online shop: Yes or no? Still, the technology to do this may not be up to speed at present, Ggol tells Magazine. Such selective reveals are certainly possible with zk-SNARK technology, but we are yet to see a large-scale deployment of such solutions. 

Usability must get better before DI goes mainstream, too. We need user-friendly digital wallet solutions that can make building ones decentralized identity intuitive and accessible to the broader population, Kominers says.

DIs components DiDs, VCs and personal datastore protocols are each incredibly powerful on their own, Daniel Buchner, head of decentralized identity at Block, tells Magazine. But so far they have been mostly deployed for relatively narrow use cases, usually in the business world. 

Solutions do not offer sufficient utility or new experiences to consumers that are toothbrush-frequent in use, Buchner says.

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Edgar Whitley, associate professor of information systems at the London School of Economics, expressed concerns about account recovery, especially if credentials are only held in a personal device, as well as challenges with regard to inclusion and exclusion. 

One also cant assume that all employers will embrace DI soon, either. In the United Kingdom, where employers are required to conduct right-to-work checks on employees, for instance, many companies still favor face-to-face checks and have no obvious plans for making the transition to the new approach, Whitley tells Magazine.

Recognition by regulatory bodies is probably one of the biggest obstacles that needs attention, adds Chaudhary. Once regulation is in place, companies will be receptive to decentralized identity as part of their daily operations, and the rollout can begin in earnest.

The future of decentralized identity

If SSI/DI ever do become commonplace, they could spur some interesting spinoffs. Asked recently about the future prospects of blockchain-enabled public elections, Marta Piekarska-Geater, senior DAO strategist at ConsenSys, answered:

The first question that I would ask is: Where are we with self-sovereign identity? Because right now, when it comes to any usage of public services or engaging with governments, you need to verify yourself. 

Decentralized identity should give people the ability to leverage their information frictionlessly across a wide array of platforms and that, in turn, creates new use cases and sources of value for the underlying information itself, Kominers tells Magazine.

Chaudhary foresees decentralized credit scores for financial primitives and social payments in DeFi becoming common. Other possible innovation areas are player reputation profiles for Web3 games, delegated voting, decentralized Sybil scores, and domain-expertise reputation for DAOs to enable new decision-making and governance models, he says. 

Some believe that decentralized identity solutions are long overdue. Piekarska-Geater, based in the U.K., was born in Poland and still travels with a Polish passport. I was in situations where I couldnt leave a country because my passport wasnt accepted at the border, she tells Magazine. In one instance, she was held up because her passports biometric page had a slight tear. We are in the 21st century, and that is still happening on a regular basis.

Chaudhary offered some consolation:

Once the DI infrastructure is in place, carrying physical IDs will become obsolete.

Maybe its the language barrier, or the walls authorities have set up to prevent money from leaving the country. But whatever it is, South Korea has built its own unique corner of the cryptoverse thats unlike anywhere else on the planet.

Doo Wan Nam, a MakerDAO delegate who co-founded the research and advisory firm StableNode, laughs as he describes how crazy the intense speculation and crypto gambling can get in South Korea. He says its a country where the price of stablecoins like Dai or USD Coin can sometimes trade sky-high because if the price starts to rise a little above the $1 peg for some reason, speculators will jump in on the momentum trade. 

They sometimes trade for $20 because they dont know its a stablecoin, he explains. They go, You know, it was trading at $10, I bought it because it was pumping I dont know, I didnt read, I just bought.

So, I think that kind of tells you whether people knew what Terra was.

The spectacular $60-billion implosion of the Terra ecosystem, headed up by the charismatic but ultimately deluded Korean developer Do Kwon, casts a pall over the entire ecosystem.

Terra is also instructive about some of the unique characteristics of the crypto culture in Korea, which places less emphasis on decentralization and puts more trust in project leaders like Kwon.

Crypto is huge in this country obsessed with the latest and greatest technology. The capital city Seoul is a futuristic metropolis with massive high-res screens and blistering fast internet everywhere. One in three people in the country owns cryptocurrency, and the government has unveiled an ambitious plan to transform it into the fifth-most metaverse-friendly country in the world.

South Korea technology

While English is taught in schools, few speak the language at a conversational level. This is true of many countries of course but helps explain why many Koreans arent plugged into the same information sources as crypto fans in the United States. Forget western social media and tech giants such as Reddit, Google, Twitter and Facebook Google Maps barely works in the country and good luck getting an Uber.

Instead, South Koreans access the internet, chat, search, order food and call for rides using local giants Kakao and Naver.

More than 90% of Koreans are using (social media app) KakaoTalk every day, explains Sangmin Seo, who prefers to go by Sam. Hes the representative director of the Klatyn Foundation, Kakaos blockchain and metaverse offshoot. Naver is the most dominant search engine in South Korea. Googles share is about 10%20% and 70%80% of the market share for search engines is Naver.

Founded in 2011, Kakao is now the 15th-largest company in a country thats dominated by around 40 mega-corporations. Samsung, LG, Hyundai and SK together account for half the local stock markets value, while Samsung produces one-fifth of the countrys exports alone.

Zerocap analyst Nathan Lenga has researched the South Korean ecosystem in detail and explains theres a whole other crypto world bubbling in the country. He cites blockchain-based video game and Roblox competitor Zepetto.

People havent really heard about it, but it has 20 million users (a month), which is mindblowing, he says. 

Theres this whole other side of crypto that we just dont hear about thats based on Asian culture. And thats all originating in South Korea, and thats why theyre such adopters because they have their own versions.

2017: South Korean crypto news

Seonik Jeon, CEO of Financial News and founder of Factblock, says that prior to 2017, the only time South Korea made international news was when North Korea was firing missiles.

However, as the blockchain market began in Korea, around 2017 and 2018, the amount of searching for blockchain and Korea together increased significantly, he explains.

Observers were fascinated by the speculative cryptomania that saw South Korea become the worlds third-largest crypto market in 2017. Bitcoin sometimes traded up to 20% higher in the country (also known as the famous Kimchi premium) due to capital controls introduced after the 20072008 global financial crisis to stop money from leaving the country. 

Many tried and failed to exploit this mouth-watering arbitrage opportunity, including cryptos current main character Sam Bankman-Fried but a handful succeeded.

Cryptocurrency and gambling

Koreas relationship with crypto is tied up in its complicated relationship with gambling, which is mostly outlawed for locals (except lotteries and horse racing). A study from the Korean Center on Gambling Problems suggests the average Korean is two to three times more likely to suffer from gambling addiction than other nationalities, and gambling is seen in a very negative light. 

Gambling itself is illegal in Korea, so a lot of people with gambling or a speculative [nature] then tend to go into stocks or crypto, says Nam. Crypto is very fast, high risk, high reward.

Nam got into the space during the initial coin offering boom of 2017 after finishing his military service and joining a blockchain company.

It was quite crazy. In Korea, it was very, very, highly speculative. Like, there were people literally especially middle-aged or the elderly, who didnt know much about blockchain they just had money, and they go to different events and say, I want to invest; how can I invest?

South Korean authorities banned ICOs toward the end of 2017, and news reports at the time claiming it was mulling a complete ban on crypto sent Bitcoins price plunging in January 2018 from a record high in December 2017.

Crypto bull run

The complete ban never happened, though, and there was a huge surge in adoption in 2021 due to skyrocketing prices that put the ICO boom to shame. According to Koreas Financial Services Commision (FSC), at the beginning of 2021, just 1.9 million citizens owned cryptocurrency. By the end of the year, that number had grown to 15.25 million citizens.

That means one in three citizens now owns crypto, and the FSC put the countrys digital asset market cap at 55 trillion won (currently $40,719,445,990), making it the seventh-largest country in the world for crypto ownership by market capitalization. Lenga attributes the surge in adoption to the 2021 bull run and the successful presidential campaign of Yoon Suk-yeol, which was strongly pro-crypto and even released a nonfungible token collection for supporters. Yoon took office in May this year.

Jeon, however, believes that tech-loving millennials are behind the surge. 

I believe the popularity of crypto in Korea is largely due to the younger generations curiosity and willingness to try new technologies, he explains.

The millennial generation here is often called the mobile native generation due to their familiarity and acceptance of technology. They are enthusiastic and passionate and ready to quickly accept and adapt to changes and development in areas such as blockchain, Web3, NFTs and GameFi.

Growth slowed the following financial year (to June 2022), adding just 13.2% more transactions.

South Korean crypto exchanges

The surge in adoption in 2021 was accompanied by new licensing laws brought in around September that effectively banned the vast majority of crypto exchanges in the country. Each provider was required to get approval from both the Korea Internet and Security Agency and the FSC, and the 63 exchanges operating in the country were cut down to just a handful, including Upbit, Bithumb, Coinone and Korbit.

They have almost complete domination over the crypto industry, says Lenga. Once the new president starts to introduce more positive regulations and legislation in South Korea, I think that more diverse exchanges will come back. But most of them are just gone forever because they werent allowed to survive.

Although viewed as overreach by many in the crypto community outside of Korea, inside, there was more acceptance of the need to clean up the industry, which Jeon said was fiercely competitive. 

In this small market, there was a competition for listing coins between exchanges, and all these scam coins were listed, which sometimes caused damage to investors, he says. 

Many insolvent coins that did not have proper business feasibility were sorted out. And it was an opportunity for investors to invest in a safer environment.

Nam puts the blame more on the banks than the government and points out that while 40 different exchanges were approved on the governments side, the ones that passed the banks side was only five, he says. Exchanges needed a banking partner to get fiat in and out, and few banks were willing to do business.

Another much-discussed regulatory issue surrounds crypto taxes, with longstanding plans to charge an additional 20% tax on crypto capital gains. Originally due to be implemented in January this year, its been delayed to 2025 and may never happen.

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Jeon says the government is feverishly studying the industry to understand it properly and regulate it effectively. Once they have these regulations ready, I think many companies are ready to jump into crypto, he says.

With the collapse of FTX following so quickly after the fall of Terra, reports emerged this week that the FSC is looking at bringing in new regulations to keep customer deposits separate from exchange assets and to regulate exchange tokens more strictly.

Korean technology: Decentralization

Probably the biggest difference between the crypto community in South Korea and in the West is the lack of emphasis and ideology around the importance of decentralization.

Nam explains that while American conceptions of crypto are built around ideas of self-sovereignty and decentralization, not your keys, not your coins, those sorts of ideas are not widely embraced in Korea.

Weve done a lot of surveys and research, and most Koreans dont really access crypto from, lets say, MetaMask. Most of them just put it in the crypto exchanges, and they never withdraw to [a wallet]. In fact, we have some surveys and realize that a lot of them dont even know [private cold wallets] exist.

As a result, decentralized autonomous organizations are an alien concept to many, and decentralized finance (DeFi) adoption is not as widespread. This is common to the East Asian region according to recent data from Chainalysis, which shows that just 28% of transaction data is related to DeFi. Thats lower than any other region apart from Eastern Europe and miles behind North Americas 43.3%.

Nam explains that theres a level of trust and faith in centralized projects with identifiable leaders that western crypto enthusiasts simply doesnt share.

They kind of believe in this having single leadership we kind of saw with Terra as well. Despite the fact that they were very big, we saw that Do Kwon had a lot of power, and he was able to hold sway within this ecosystem, which, for more decentralized protocols, might be criticized but, at least within Korea, felt like it was very natural, he says.

It doesnt really have this strong ideal of libertarianism; its seen more as a company or another form of cooperation. And second, theres still a lot of faith in traditional institutions. Ironically, that was the reason Ripple became really popular in Korea, Nam adds.

From their side, they believe its better to trust a centralized entity than themselves.

Sam, however, says that is starting to change and he believes it must change to embrace the opportunity fully.

Kakao and Koreans also care about decentralization, and we believe that our world will be more decentralized in the future, but we need time, and we need to educate people about the power of decentralization and how we lose from decentralization and what we get from decentralization, he stated.

Keep an eye out for part 2 which will explore South Koreas fascination with gaming, its blockchain game industry and ambitious plans to dominate the metaverse. 

When it comes to designing a metaverse map, its more about the vibe than practicality. From space pods to jungle islands and celebrity neighbors, users want to feel like they are someplace special.

What considerations go into designing a metaverse platform? Insiders explain that one key factor is that virtual worlds need to be created with features familiar to their human users even if such elements, like beaches and nature preserves, offer no practical benefits in virtual reality. Old habits die hard, and people prefer spaces that are familiar and, ideally, neighboring a celebrity like Snoop Dogg.

Alexis Christodoulou, a 3D architect who has been creating virtual spaces for 10 years and NFTs for two, recently got the job to design 2117, a space-themed metaverse platform imagining the United Arab Emirates stated goal to colonize Mars in the year 2117.

If I was told to just build a metaverse, Id have had a proper nervous breakdown starting with a space pod was intuitive.

Outer space, like the metaverse itself, is a foreign environment for humans. Looking 100 years into the future, it is easy to imagine a creepy, inhuman, alien-like ship without many points of familiarity. Instead, Christodoulou has aimed to form the environment into one that appears comfortable, familiar and inviting. 

Noticing that his early design seemed a little cramped, I started putting windows in the space pod and realized it was more comfortable a concept that sounds odd, given it is effectively a video game, but somehow makes intuitive sense.

Were still so human and base everything on the real world because we havent spent long enough in the metaverse, he reasons, explaining that real-world bias explains why people are likely to prefer secluded metaverse beaches or islands instead of properties closer to infrastructure, such as portals. We still have real-world values in the metaverse, but that might change in 10 years, Christodoulou predicts.

To begin the virtual future journey to Mars, users need to purchase a citizenship card, an NFT that gives users access to their pods. Like in any work of fantasy, there is an element of worldbuilding that needs to be created by which the designed space is made to follow a certain logic.

How does the spaceship work? What is it carrying in order to facilitate its task of Mars colonization? What are the people doing on their way there? Christodoulou asks himself, calling 2117 a story-driven metaverse with an ongoing and developing plot.

What really is a metaverse?

But are metaverse platforms really just video games? For Christodoulou, a video game is something that is primarily task-driven, catering to the completion of defined quests where community and social aspects are secondary for example, a shooting game where an online guild may train together to become better online marksmen. The metaverse is somewhere you want to simply exist you can choose to do quests, but its not required, he says, explaining that instead of being a mere individual challenge, it is more of a collective journey through a developing story.

Sounds a lot like life itself.

Sara Popov, creative director at the Paxworld metaverse platform, agrees, explaining that a the metverse is more of an experience than a game, with the latter having clear objectives, while the former is more of a facilitating environment for whatever the player wants to do. 

World of Warcraft was one of the first metaverses, she says, referring to an online multiplayer game set in a virtual world where players themselves could decide whether they wanted to fight monsters, trade, make friends or help new players. Whatever the differentiation, Popov clarifies that the process of metaverse design is very similar to that which can be found in a video game production.

Janek Borkowski, digital strategist at Paxworld, describes the metaverse as a growing world that is not defined without beginning, middle or end, adding that he believes that a generational gap prevents many from understanding these new developments:

If you talk to a younger person, they may understand video games differently than an older person.

It is perhaps for this reason that Apples CEO Tim Cook recently explained that the company has avoided associating itself with the concept altogether, because Im really not sure the average person can tell you what the Metaverse is.

Buying virtual land

To facilitate its development into a social community, Paxworld has three tiers of land some of which is sold to individuals in order to give people a sense of ownership and to allow them to express themselves, that which is reserved for the community as public space to facilitate co-creation, and finally, land that is preserved in its natural state and acts in essence as a nature preserve and buffer.

We all know the mantra of location, location, location when it comes to real estate, but how does this translate to the metaverse, where the supply of virtual land can be understood as artificially limited and where commute times are effectively nonexistent?

Brian McClafferty, who is responsible for marketing Paxworlds digital land, believes that it is important to keep variety in the types of land available because we all have our preferences in the real world, too some value waterfronts due to some subjective feeling, he notes. The location, though digital, can inspire all kinds of thoughts, as users might soon start dreaming of digital boats. What will you do with a boat in virtual reality? The same thing as reality: You will go on it and enjoy the view! he explains, as if stating the obvious. If boats are not supported on a particular metaverse, enough popular demand and community requests are likely to bring them to reality.

Indeed, there are already people designing and selling metaverse yachts.

People imagine this as a second life maybe they cant live in the house of their dreams in the real world, but in the virtual world, people can have a better virtual house than others, he explains. Why does someone pay more to be far from others on a metaverse beach? Maybe thats how theyd want to live in the real world.

In Paxworld, he explains that algorithms say that those land plots closer to seas, hubs (sarais, as they are called in Paxworld) and highways cost more, while those further away from defining features can be had for cheaper. 

Another type of coveted metaverse land can be found around the plots of famous brands or celebrities, such as Snoop Dogg, who famously owns a large plot in The Sandbox. According to McClafferty, such notable land plots raise the value of nearby land due to buyers who want bragging rights by being neighbors with a celebrity, or companies looking to associate with the brand or person by way of proximity. Influencers who are trying to draw people to their land, on the other hand, may select such plots because they are perceived as being busier due to the attention.

It could be said that celebrity- and brand-affiliated metaverse plots serve as Web3 landmarks. Indeed Animoca Brands a major investor in The Sandbox has built its strategy around attracting users to virtual worlds through the use of familiar brands.

Read more: Billions and Billions: How Brands Take Blockchain From Niche to Normal

Building in the metaverse

When we first started Paxworld, it wasnt called a metaverse, Popov recalls, describing the idea as a virtual space that would bring people together and foster communities while bringing art and new aesthetics into the mix.

This was meant to attract a more mature audience than more gamified and playful metaverse platforms, such as The Sandbox and Decentraland, she explains. Among architectural influences, she lists Bauhaus and minimalism as key elements to be combined with video chat functions.

When designing items for metaverse platforms, Popov says that whatever you design, expect people to use them differently than expected such as tables being flipped in order to make walls.

When it comes to metaverse architecture, there are two broad approaches: recreating models of reality and designing fantastical elements that would be difficult to implement due to the physical, financial and/or engineering constraints of the real world.

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While the 2117 spaceship concept would firmly fit into the latter, at least in 2022, it is worth noting the efforts made to make the space pod interiors appear familiar.

Historical accuracy is the opposite of imagined futures and is another example of how a metaverse can be constructed. In a metaverse world based on ancient Greece, for example, people can gain a historical appreciation that is far more immersive and interactive than by watching a mere documentary, allowing people, items and activities to come to life.

When you are in a classroom listening, you learn 10%; if you read a textbook maybe 20%. If you are taken into a metaverse to walk around, its entirely different.

We are seeing architects recreating 1:1 copies from real life, only with a metaverse twist of floating elements or movement, she explains, saying that such additions remind the user that the environment is not real.

Were not looking at static sculptures or Renaissance paintings in museums anymore Were looking at sculptures that are actually moving, she explains, optimistically adding that the metaverse is allowing new generations to experience in upgraded and relatable ways, going as far as to compare the metaverse age to a new Renaissance. 

Its the golden age of the artist because it was during the Renaissance that art moved from churches to private homes. Now were seeing this next big evolution in art where we are seeing it in a new medium.

Though NFTs are one way in which art can be connected to the metaverse, not everything needs to be an NFT. One does not need an NFT to display artwork in a metaverse world any more than one is needed to show a JPEG on a website the NFT, in this case, is perhaps better understood as the artist-sanctioned authenticity certificate, and this is not necessarily always needed, especially if there is no intention to sell.

The role of blockchain

Blockchain, decentralization, cryptocurrency and NFTs are seen as an intrinsic part of an interoperable metaverse by many readers of Magazine. After all, digital ownership via NFTs is an important factor that will encourage users to create and profit from constructing their own corner of a world, or items that can be used in it. 

But big companies arent as keen, and Mark Zuckerberg, for one, does not seem to equate the two particularly closely, with his vision falling closer to a centralized virtual space rather than a decentralized world owned and controlled by users. 

But perhaps instead of being an essential component, decentralization and blockchain technology will merely be a component in part of the metaverse space. Much like laws vary wildly between countries in real life some allow absolute ownership of land, whereas others only recognize temporary occupancy rights, for example it perhaps makes sense that there will be different types of metaverse platforms, some operating on principles of anarchy, others on absolute rule just like despite millennia wars and philosophic debate, the real world, too, maintains many different systems of government.

If you want to go down the Web3 route and start handing ownership over to the users/citizens of these worlds, then I think you do need to consider using blockchain technology, explains McClafferty, who concedes that a metaverse does not necessarily need a blockchain element. Similarly, we can make the argument that while augmented reality is a great tool to bring metaverses to life, it is a separate technology and does not define the movement.

Everything makes its way to the sea, and none more so than plastics. There are now five floating plastic islands in different oceans across the world, with the largest island even having a name, the Great Pacific Garbage Patch, which is three times the size of France. Lying between California and Hawaii, it is the worlds biggest ocean waste repository, with 1.8 billion pieces of floating plastic that kill thousands of marine animals each year.

Of course, we now know that 35% of waste originates from wealthy countries and 50% of this waste is exported to developing countries. At the same time, 70% of developing countries mismanage their own waste and lack the infrastructure to collect and recycle waste. Finally, 90% of all plastic waste enters the oceans through rivers, mostly through a few hundred rivers in Asia, Africa and Latin America.

Many projects have sprung up looking to tackle the problem of plastic pollution at the end of its journey. On Bitcoin Beach in El Salvador, one of the projects funded by Bitcoin philanthropists is the collection of plastics in the river before they reach the sea. 

Plastiks.io is another project that addresses the end games, identifying credible recycling and cleanup projects typically in developing countries that are funded by business or philanthropic individuals in the west.

Canada-based Plastic Bank also works to incentivize stewards to collect plastic from the oceans and, to date, claims that its Ocean Stewards have stopped more than 64 million kilograms of plastic from entering the ocean.

In 2014 in Malaysia, students from Nottingham University, then led by a co-founder of DeFi app Alluo, Remi Tuyaerts, were involved in a number of social enterprise businesses, including one that uses black soldier flies to eat waste and another that converts plastic into beanbags employing the homeless. These businesses are still thriving.

In 2019, Manila Bay Beach in the Philippines was filled with so much plastic waste it earned the nickname rubbish beach. Then, within a couple of months, it was reclaimed in a major cleanup. Initially, 5,000 volunteers removed over 45 tons of garbage. Prior to the onslaught in 2018, Bounties Network paid fishermen to collect trash and rewarded them with tokens, and the continued payments helped fund fishermens precarious livelihoods and keep the beach clean.

Bounties Network got a partnership with a local digital payment provider, Coins.ph, to make sure people could exchange the Ethereum into fiat, says Simona Pop, co-founder of Bounties Network.

Mark Beylin, then CEO of Bounties Network, documents the impact of the cleanup on the local supporters:

One of the most interesting dynamics we saw throughout the weekend was the manner in which people shifted from being extrinsically motivated to intrinsically. Many who attended the event came out simply because they saw the opportunity to earn supplemental income. However, as we engaged with participants on an individual basis, we learned about the sense of personal accomplishment they felt in collectively improving their environment. 

However, these projects are all trying to tackle the consequences of littering and its impact on developing countries. What about the projects tackling the issues closer to the source? 

A revolution in geography

In 2008, Sen Lynch, founder of OpenLitterMap and LitterCoin in Cork, Ireland, discovered GIS, the mapping software for real-world data such as what governments use to map roads or pipelines and as a gamer saw that it was very similar to many of the maps in his games. He then wondered whether he could use this tool to map real-world data into a game. The next question was the use.

Where I lived in Cork, I had to pass a litter blackspot on my way to college. This was in 2008, and I wondered if I could use GIS to plot this illegal dump onto a map and start a conversation locally. I knew that while litter generally is a global problem, if you could identify local issues, then you might generate interest and, from that, generate action.

This was in 2012, and Lynch was puzzling away about how to capture the data when the perfect tool in smartphones arrived.

I was traveling and working as a scuba diver in Thailand, which I adored. I had a really close personal connection with the ocean. Other divers and backpackers like myself picked up a lot of litter from the beaches every day. But it was only with the advent of social media that we realized how badly the planet was polluted, he says

One day, I remember seeing someone with an iPhone on the beach, and they were using it to track their location, and this was my next aha moment: Why not use this increasingly common mobile device to take photographs and document the litter?

Inspired by this revelation, Lynch returned to his native Cork to study for a masters in GIS to fully understand how to use technology to solve the pollution problem. He also realized that the mere presentation of the problem, however huge, would not be a sufficient motivator it had to be more immediate.

Lynch evolved his thinking into a citizen science platform where data can be crowdsourced on a hyper-local basis:

People are being asked to make changes to help mitigate climate change, but I cant pull a CO2 molecule from the air and show it to you. People hear about the environment as some far-away place being polluted, and although its true, this approach is disconnected from most peoples day-to-day reality. But if I can help people discover litter on a more local level, like when people zoomed into their home on Google Maps for the first time, I have your attention.

The timing in terms of the evolution of geography is also on Lynchs side. He explains that the study of the planet has gone through several iterations and paradigm shifts. Up until the 1960s, the study of geography, and the practice of teaching it, is largely a descriptive process. Then, a computational revolution occurred where universities started getting access to computers and governments started putting satellites into space.

Suddenly we were able to take this quantitative information about the planet and store it on a computer. The geographers of the world realized they could not only describe how landforms looked but they could actually count things such as the amount of rainfall or how green the grass is. Its referred to as the quantitative revolution in the study of geography.

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This revolution, combined with approximately 4 billion people owning a powerful data collection instrument their smartphone  gives birth to citizen science. It is no longer just a few experts counting and collecting geographical data but thousands of possible data aggregation points.

Now it is just a case of making the data count and finding out what data is relevant.

In 2014, Lynch started following Bitcoin and particularly liked the concept of proof-of-work, where miners are rewarded for securing the network. When Ethereum launched a few years later, Lynch saw that he can create his own token, which gave him another aha moment.

I had been toying with the idea of using bracelets to reward people, but while an attractive idea, it wasnt practical, so the idea of rewarding people with a token was infinitely more compelling.

And so, in 2015, Littercoin was born. In 2022, Lynch got his first funding from Project Catalyst from Cardano. 

Mind you, Littercoin is not like other crypto. It wont be listed on any exchange, and you wont be able to buy it it can only be earned by downloading the OpenLitterMap app and starting recording the litter.

Lynch argues that there is a low barrier to earning the token and notes that it will only be spendable at pre-approved stores, and these stores will be in the zero waste stores in the climate economy.

You earn the Littercoin by improving the environment, and you can spend it in stores that also improve the environment its a virtuous circle.

Since launching the app in April 2017, there have been 6,500 users, with new people coming on board daily. This growing community has been responsible for 500,000 tags and more than 350,000 photographs.

And if you keep the map open, you can see the updates in real-time. So, if someone spots some litter and picks it up anywhere in the world, you can see it update on the map. We are creating a global community working to rid the planet of litter, Lynch says. 

We give the tools to create the knowledge, and that is a very empowering thing to do.

To make the process fun, Lynch has created a global #LitterWorldCup with the countries all competing to be the top. Ireland was No. 1, but the Dutch community has since overtaken them. Maybe litter collection begins at home after all.

Crypto communities can often implode, despite the best intentions of everyone involved.

Genuine communities with plausible but convoluted project ideas can fail just as easily as projects like DeFi Wonderland, which imploded because of its CFOs connection to the controversial, defunct Canadian exchange QuadrigaCX.

Plausible projects face scaling challenges like Zilliqa or project management problems like Bitcoin Diamond or simply run out of money like any startup. So, they need a strong and well-coordinated community to ensure they can survive if and when things go wrong. 

So, what can be done to help create a healthy community that pulls together to achieve its objectives? Here are some reflections from founders and community managers. 

But for starters what even is a crypto community?

What even is a crypto community?

Theres a lot of moving parts to a community. Theres no one way to define a community in crypto, says Jett Nathan, community organizer for the Perion gaming DAO.

The types of community have a lot to do with a project. Different crypto initiatives also behave differently whether it be DeFi or NFTs. As a pro-gaming team, what gels Perions DAO together is clear: members trying to become pro gamers or learning to be programmers. 

Being part of a community is more than transactional. Owning a coin does not make you a community member. Investor communities want their horse to win, so Twitter feedback loops can make project builds opaque and unrealistic. A project needs to create a digestible story for a community to hold dear. However, the needs of a project and the needs of the community may differ. 

Within the community, traders and true believers are different, too. Traders are obviously incentivized to be passionate about their holdings, as attracting further investors helps their hip pockets. But true believers genuinely have faith in the story, the mission. So, a community can be a pack of wolves or an altruistic group of saints, depending on the narrative.

Founders and project community managers have to play nice and keep these diverse groups in check.

Community stereotypes 

Ivan Fartunov is Aragons head of ecosystem. He says, A community is a community full stop. If you cant build a good community outside crypto, you cant build one inside. Tokens dont solve every problem, and they wont hold a community together in a bear market.

Monetary incentives can also break the social contract. You dont ask for payment when you invite a friend for dinner. But bull markets mean people do things simply for monetary rewards, and this is a false community that will turn on you as soon as you stop paying.

For Fartunov, there are three broad categories of crypto communities today, each of which helps and hurts the space in different ways. 

Blind idealists

They have a we will change the world idealism and excitement, which is helpful in an industry that requires you to hold convictions others will call crazy. Some of them tend to be too academic in thinking; others are democracy maxis. But democracy doesnt always work too well. Usually, academic concepts dont translate well in this space. Still, everyone has to be a little bit of an idealist to realistically work in Web3.

Moon bois 

Fartunov says unlimited financial upside is the gateway for the moon bois, and a lot of people enter the space with that mindset.

Each adoption cycle is driven by moon bois hoping to get rich quickly on the latest upswing: In 2013, we had the Bitcoin forks the first wave of shitcoins. Then in 20172018, we had initial coin offerings a lot of white papers and proof-of-concepts and little intent by founders to do much real world applications.

Then in 20202021, we had DeFi and NFTs promising interesting applications, but the financial upside is what generated the most interest. Hopefully, some of these people stick around and join one of the other two types of communities.

Pragmatic builders

These are the most useful community members and the ones who actually get stuff done. Theyre pragmatic builders, who have a long-term horizon; theyre looking to build solutions for problems within the industry. They realize the paradigm shift is not really just around the corner, and things should first make sense in the Web3 sandbox. 

But keen speculators and builders are not mutually exclusive, says Fartunov. Being active and connected in the space helps speculators transition into builders and join decentralized autonomous organizations (DAOs) thanks to their relationships, and familiarity with the tools being used as well as the common pain points. Yet DAOs lets call them non-hierarchical not-so-automated bodies have also further complicated crypto communities. Are DAOs even a good product management tool?

Failed DAO experiment

Fartunov participated in the Aragon Network DAO experiment, which is set to wind down soon via an active vote. The DAO was built to test-run three experimental products from Aragon, including a decentralized court system. No one objected to the idea, and the 11-month DAO-based project generated insights, but in Fartunovs opinion, it is not sustainable. As these three governance products are being shut down the DAO is, too.

Workstreams and contributors appeared readily, says Fartunov. The problem was that there was little filtering of contributors. When you give the job to the first person to raise a hand, you create the incentives to attract people who are good at raising their hand, not necessarily at delivering the work, he says. There are undeniably some great people in there, but overall, you can end up with a bloated contributor base. It was the opposite of a lean startup.

Too little accountability of output is how a community implodes.

Still, we have a good core team as well as some strong contributors who could see the ratio of burn rate to output was off. Without a gut check there, you can just spend the entire treasury on unrelated moonshot pursuits, and the project would cease, Fartunov tells Magazine.

Crypto is a coordination tool, and crypto-economic primitives accelerate community building. Aligning personal incentives with the best direction for the organization is crucial because teams have strong financial incentives to keep their workstreams funded, even if its not adding any value. 

So, while some crypto believers now have a strong affinity to DAOs as the glue that holds Web3 Kickstarters together, project treasuries can suffer from inefficient spending with foresight the tragedy of the commons. The solution to this existential crypto problem may be mechanical or cultural, Fartunov now reflects.

Crypto communities can actually be more aggressive in a good way, as they can introduce incentives for certain actions without relying on social pressures, says Fartunov.

But DAOs are only an infrastructure layer, notes Fartunov. You can have cool race tracks, but you need drivers and cars and fans to operate in other words, leaders and agenda-setters. DAOs are flat but still need leadership, he says from his experience.

Try things out but pick a clear direction 

Another common challenge for DAOs is a lack of strategy. Exploring all paths simultaneously is too expensive. You cant go off vision alone you should be somewhat specific in the path to get there, he says. For example, Uniswap is establishing a foundation to drive the product, and MakerDAO is now engaged in some heavy debates on how to determine a consistent path forward, says Fartunov. 

A lack of clearly communicated strategy is the problem. If you have several hypotheses of a first use case, early on, test a few. But ultimately, you must commit the organization to a first use case. Experimentation is important, but there is an organizational limit to the number of experiments you can run in parallel before the vision for the organization gets clouded.

But a strategy that is clear can be a self-filtering mechanism for divergent stakeholders.

Work out who has skills

Projects should also vet contributors in terms of reputation and credentials, says Fartunov. There is a lot of promising work around on-chain reputation and verified credentials, but that will take some time to become functionally useful, he says.

He suggests projects start with contributor bounties to identify the skills of a contributor. Then empower them to take on larger workstreams. Organizations scale at the speed of trust, but trust takes time to build; ultimately, you need a credentialing filter to accelerate.

You can use GitHub to vet developers, but outside of that, the system is broken. This maybe explains why so many people are on Twitter being thought leaders its the only way to signal relevant skills and expertise outside your immediate network.

Community management is all about touch points 

Nick Saponaro founded Divi Project in August 2017 as a 23-year-old just as the ICO boom was beginning to end and the term ICO was poisoned by then. In those days, Discord communities were in Slack, and you could advertise on Google and Facebook, which is no longer legal for decentralized projects. Their product is a one-click masternode, a blockchain-based passive income yield tool.

He says there is no way to get any particular person to pay attention to most posts on the communitys Discord. Every person has a different agenda, and for most people, its purely monetary gain.

So, community building is all about touch points. Find many ways to connect and explain.

Saponaro has built a community over five years, and he argues the reason why his Divi Project has lasted is because of its consistent philosophy and modest capital raise of $2 million in late 2017. That has kept his community relatively rational.

There arent many coin-flipping degens in our community. To an extent, thats our mistake we are too rational of a community. Degens create hype and exposure but also drop off the fastest. We dont want to ruin our cool culture. 

That culture involves much grassroots activity, such as outreach programs like teaching technical skills in Mexico and charitable food deliveries in the Philippines. 

Building a community should be totally organic. Its a simple formula of delivering a good product after a token sale, he now thinks. Saponaro makes a point to get to know and meet people in the community. Its ironic, but the most important thing is building trust with the community. The crypto personality cult circus means the community needs to see the faces behind the names. 

And there are wholesome moments like meeting grandparent retirees real Nebraska farmers who run Divi masternodes during the winter when there are no crops. And he went to literally his first-ever Texas rodeo with people in the Divi community.

There are still inflection points, though. Five years running a project in crypto will see some crazy stuff. Employees go rogue; people will dump a coin, Saponaro tells Magazine.

Motivations within a community can be complex. Trolls are very entertaining. One person in our community gets off on saying constantly aggressive things to get a rise of people. Lets call him Steve he’s supportive then hes not in a bipolar way. He spreads FUD, but then continues to support the project. We believe he is adding to his position.

Saponaro notes that community management can be funny and strange, too. These trolls with a financial incentive are very different kinds of trolls. They create multiple accounts, then go on Twitter and have a conversation with themselves. We are convinced by their use of language and tone of voice that they are talking to themselves on Twitter. Its kind of funny.

They are ideological people who cant see anything besides their own agenda.

Amplify the NFT champions

NFT communities are very different, and you have to own one of a collection to join. Amanda Gadbow, head of culture and community at Proof, suggests that an NFT community depends on entry or timeline mint and right after mint. Theres a lot of euphoria about what the project brings can be monetary value or connections, so much to be said of psychology, or where does this take me? Is this the next Bored Ape?

But euphoria diminishes quickly. In the beginning, everyone is super excited to be there, but soon enough, people need to decide if they are in it for the long haul a community is formed later when a group of people gets together with the same goals. 

Gadbow was in charge of communications and emergency management for the City of Pasadena in California until earlier this year. Real-world community building translated well to building crypto communities, and her previous role proved the right training for when things go wrong. We dealt with crazy storms, worked around the clock, so I dont stress out or freeze I can think on my feet, she says.

She was also a stock investor, and while she was on maternity leave in 20192020, she was trading options constantly while getting information from social media. Then she started in NFTs. She says there was more psychology behind trading NFTs, which required now spending all day on Twitter and Discord.

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I started realizing that I had the background for an NFT community team. I was incredibly passionate about community building, communications and Web3: the three critical components of a successful community manager.

There is, however, a trade-off between community health and current NFT prices and a clear correlation between the size and activity of an NFT community and the floor price. So, she says that managing expectations is the key to helping the community move from something based on speculation to something more sustainable.

 There are so many aspects. Ultimately, it is the activity of a community that makes someone want to buy an NFT and brings people in with a cascading effect, opines Gadbow.

Proof is an interesting story. It is a flagship members-only NFT group involved with drops like Moonbirds, Oddities, Grails and others. The collective is unique in that access to online investing guru Kevin Rose was a selling point of the NFT collections. Gadbow says that while Roses personality cult helped sales, building as a small community first before each NFT range helped organically expand the community. 

The small community then expanded as demand grew externally. This is the smart way to do it. Its kind of a road map for everyone else. Find the smaller champions needed to prove yourself as a project.

Champion the community champions then. Theres the idea that the company works for you. Community managers need to cultivate a long-term mentality for NFTs as a tool for a built-in, engaged network. Amplify the champions who provide nuanced perspectives rather than those who just fear.

Communication needs to be pointed and considered during this experimental phase in 10 years, we wont be able to experiment as much.

Fair valuations stop implosions 

Like Divi Project, the proof-of-stake public blockchain Aleph Zero is another smaller but successful organic community project. It has cultivated a community of diehard enthusiasts and brand evangelists, with followers posting footage of the logo on everything from birthday cakes to tattoos to private helicopters. 

Aleph Zero is not a hype-slinging, chest-thumping cliche. If you respect them, they will stay, says Antoni Zolciak, a Krakow-based co-founder of the project. 

The community is really a group of stakeholders in a project. By default, theyre not necessarily customers but, rather, the people you build with. They can have amazing ideas for business development, new products and other things. The community definitely helps to shape Aleph Zero.

He says that offering a fair valuation is crucial to a long-term community. Lowball valuations and no artificial mechanism to lock in retail investors help create longevity for a community. 

Zolciak notes that its a significant spend to build a community but that they sought to do it in an organic fashion. The solution is becoming a community member yourself. It cannot be outsourced.

To retain that community day in, day out, answer questions and remain accountable to the group. The perception of availability of founders and core team matters, says Zolciak. 

Finally, Zolciak says the healthiest community is when a newbie who asks genuine questions is assisted by random community members, which helps encourage them to stick around. 

This is how you stop the community from imploding. Founders keep showing up until others step in. Its like any other relationship: care for it on a daily or weekly basis. Be transparent and caring then I dont see how a community can implode.

If Andy Warhol the most famous artist of the 20th century were alive today, he would make NFTs. The reasoning is simple: because for Warhol, business was art. So, I decided to do some digging and speak to Warhol experts to see if there is a case.

But Warhol was an artist who defies easy definitions, and not everyone was keen to explore the highly speculative nature of the hypothesis. Professor Golan Levin, professor of electronic art at Carnegie Mellon University, said he couldnt help and instead suggested that I ask a Warhol biographer or a psychic medium.

Fair enough. So, I messaged Warhols renowned biographer, Blake Gopnik, author of Warhol.

And then I found a Warhol psychic.

Gopnik is an art critic and a regular contributor to The New York Times. Hes the author of Warhol, a definitive biography of the pop artist.

An internet search determined it was also possible to arrange a seance with Andy Warhol, as part of a Los Angeles tourist experience.

I put the seance on hold for later. I wouldnt dare dispute the mediums direct line to Warhol my concern was the psychic might struggle to explain NFTs to Warhol.

Andy Warhols legacy is a nod to NFTs

Gopniks biography of Warhol seemed to posit that money was a means, but provocation was always Warhols end goal. Warhol enjoyed making money to fund all his creative pursuits, but he always sought to be provocative. So, NFTs which can be both provocative and lucrative seem like a medium he wouldve embraced. 

For a start, Warhols later film and photographic works certainly became increasingly provocative, bordering on pornographic. The Warhol Diaries provide a fascinating insight into pre-woke times and Warhols artistic motivations in the 1980s. 

Secondly, what is art and whether NFTs are art is not the right question. Thats a minefield. Colborn Bell, founder of the Crypto Museum of Modern Art, tells me mostly, theyre not. Out of the gate, a lot of NFTs arent art. They are really not.

A key argument in favor of my pet theory is how Warhol immediately used a new artistic medium whenever available for commercial success.

And his work was also not considered art by much of the establishment he was forced to embrace that reality. Thats a similar position to NFTs in popular culture today. Acclaimed collections from Fidenza call into question the very concept of art and artists. If a computer produces the work, is it even art? they question.

There are many historical parallels.

Warhol was a pioneer in transforming commercial and mundane items like Campbells soup cans into art. He made films, produced early music clips, and even had a TV talk show that ran on MTV in the 1980s.

He also produced hundreds of pieces in a well-staffed studio known as The Factory.

Shunned by art critics the Museum of Modern Art in New York refused his free donation of a work called Shoe in 1956 Warhol then realized that portraits of people could be very lucrative. 

Lots of different patrons sat for him, but each portrait might exist as only one or two paintings, according to Gopnik. His biggest editions of the Marilyn Monroe prints were of 200 images, and they were never cheap, explains Gopnik. 

For comparison, while NFTs can be wholly unique one-of-ones, mints typically number 10,000.

Warhol painted political leaders, such as Mao and Lenin, (Che Guevara was attributed to him but was a fake painted by his assistant). And he painted celebrities, such as Elvis, Marylin Monroe and Mick Jagger.

Clearly, its easy to presume that Warhol would love NFTs: easily reproduced mass collections on a theme or a widely recognizable person.

And heres the kicker: Those images were Warhols f— you to the establishment. He was saying, My work is commercial and Im going to sell them. 

Crypto is, to varying degrees, a big f— you to the established financial order and the art world. NFTs are a new business model for creators a speculative one, sure but a new model for scaling art sales.

Some highly successful NFT businesses are a modern scalable version of older business models. For example, Moonbirds sought to create a proof mechanism, and its emerging into a kind of studio for creatives. And Bored Yacht Ape Club is arguably a spin on the country club model. They aim to overcome scale limitations faced by those IRL business models, in which NFTs represent a form of club membership and grant owners free entry to events, for example, or the ability to simply hobnob with other club members by virtue of their shared exclusive golden tickets. 

For Warhol, business was art

Perhaps Warhols art foreshadowed NFTs because he proved that business itself could be an art form.

So, Warhols art proved that business could be an art form. Jon Ippolito, professor of new media at the University of Maine, drew the link to NFTs in his blog, writing:

Good business is the best art, Warhol claimed. He once insisted that he wanted to sell shares of his company on Wall Street. While Warhol pushed the boundaries of what art is, he also said: Dont think about making art, just get it done.

To an extent, Warhol sought to scale the art industry and thats exactly what NFTs do. So, its easy to imagine Warhol would enjoy pumping out NFTs on a larger scale than Damien Hirst. 

Gopnik disputes this idea. The Factory was an ironic nickname for his art studio he only had one to two assistants. He was playing at factory production. Warhols output was no more than any other contemporary artist, Gopnik explains to Magazine.

Gopnik should know, as he is currently curating an exhibition on Warhols idea of business art. This turn of phrase refers to business as an ironic medium for art making. He says Warhol was simply playing with the idea. He always wanted to be taken seriously as an artist.

NFTs would bore Warhol, thinks Gopnik. He would find it a tired concept by now and be into something else. As evidence, Gopnik notes that in 1962, Warhol painted the 32 Campbells Soup cans as the first steps of a young pop art movement. By 1965, he said he would never do another painting. 

Warhol would play with business as an art supply, as a way of pretending to be part of that non-art world of commerce: Just watch me. I am a great artist, I can do whatever I want, I can take art to this other domain.

NFTs too commercial for Warhol 

While hes a fan of Warhol, Gopnik is not a big fan of NFTs and wrote in a March 2021 feature in The New York Times that NFT art simply does not exist. The art is in flipping the NFT for a profit, he wrote. The way NFTs are bought and sold automatically raises issues over the meaning of ownership. He noted that Damien Hirst, one of the first major artists to get into NFTs in 2021, ironically called his NFT release The Currency.

But isnt that the point? NFTs are a cultural business currency. The ability to scale offers artists the ability to meet consumer demands at many price points.

In this experimental phase, there is some emerging artistry in the business models derived from NFTs. Establish a community, create some exclusivity, and the buyers will come. NFTs have transcended crypto as a pop culture movement. In 2021, NFTs became cryptos mainstream moment. 

Still, Ippolito also believes that NFTs might now be too mainstream for Warhols provocations:

Its also conceivable that Warhol would be happy to see more people making art in general, and I am, too. But I dont think he would have touched NFTs himself. I see his business-like initiatives as pushing the boundaries of art, not reinforcing a hierarchy. 

So, if NFTs are not about art but creating an audience for scalable sales, perhaps they are too commercial for Warhol to embrace. I think most NFTs serve a dual purpose: overtly to support those who make art, and covertly to validate cryptocurrencies, Argues Ippolito.

NFTs were arguably designed as a crypto onboarding mechanism, even before they exploded to speculative investors in 2021. As I noted when I tried to value NFT clones or derivative NFT projects, the art is in the code for the open-source advocates, as well as the curation of the collection. 

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And NFTs do reinforce business hierarchies. Nike has already made $200 million on NFT sneaker royalties and sales. Warhol likely would not like to be a tool of a corporation, but perhaps Warhol wouldve taken on Crypto.com or Coinbase as a patron sponsor of his art.

He might be interested in the resistance inherent in cryptocurrencies, as a kind of primitive capitalism, says Gopnik, who notes that Warhol was very left-wing and anti-elitist. Perhaps he would have been taken with resistance NFTs used to fundraise the UkraineDAO then.

Warhol loved to experiment

Regardless of whether business success was secondary to Warhols goal of pushing artistic boundaries, Gopnik believes the immutable tech would certainly have fascinated Warhol.

Gopnik notes that as NFTs preserve deeds, not art history and the celebration of art, Warhol might be interested in that part of the transactional side and playing around with the underlying technology.

I hate guessing what Warhol would do, but NFTs are terribly nave artistically, so its more credible he would be interested in blockchains.

Its true, most people cant conceive of a long-term price or value for most NFTs. Theyre also so generic in their style, its often hard to remember them, so longevity for particular series or mints is not yet assured. But the tokens immutability (subject to some tech caveats) is assured. That is, after all, the whole idea behind pushing the boundaries of the art and creative industries through NFTs.

There are hints that Warhol may have loved that blockchains could, in theory, render proof of ownership for eternity. Warhol famously said, The idea is not to live forever; it is to create something that will. 

Warhol was always a futurist looking for the next new medium.

Warhol and computer-generated art

In May 2021, the Warhol Foundation auctioned some undiscovered computer-based Warhol originals as NFTs but not without controversy. The archivist who found the file was outraged as they had recreated original files.

Professor Levin, who worked on creating the collection, did not consider them original works by Warhol but were more of a tribute to his experiments. According to Levin, Warhol had been given the second such Amiga computer in existence.

The story of Warhol and the early computer is curious, though. Alana Kushnir, an art lawyer and curator, tells Magazine that the first mover for a medium is part of the artistry.

Warhol using an early personal computer to create digital artworks this is an important historical precursor to artists working with NFTs. Warhol had a connection to NFTs without knowing it.

She suggests Warhols overtly commercial focus was way ahead of its time, and he was also happy to form brand partnerships in the 1980s. Art and commerce can intersect in interesting ways, and Warhol knew that. Think about his screen prints of dollar signs from the early 80s he combined wealth and art in a light-hearted, simplistic way to attract the masses.

Kushnir explains, Some artists have a good sense of whats to come and can tune their art practice to address that. Warhol did, for example, have a prophecy that in the future, everyone would be famous for 15 minutes. That came true in the case of reality TV and became even briefer with the advent of social media.

Yet she also posits that where the Warhol would love NFTs argument fails is that good artists, like Warhol, are social commentators they pull back the curtains on the inner workings of contemporary society. Most NFTs dont bother to do that.

Thats three strikes against my theory from the experts. And theres a final problem in this theoretical discussion

Art still needs a connection to the artist

Returning to the business is art argument, it may be true that crypto has created a new experimental mechanism for commercializing and trading art, including new royalty mechanisms. Warhol wanted to IPO his company, so he may have loved the idea of artists being paid fractional royalties. 

But art needs an identifiable artist, and that doesnt always exist with generative art like CryptoPunks or the works of Fidenza.

Ippolito doubts any artistic merit of code art. The fundamental difference between pop art and an ERC-721 smart contract is the connection to the artist, he says.

Its tempting to say algorithmically generated PFP-style images cant have personality, but I do believe the personalities of many artists who use code show up in their work.

Its only fitting that Warhol biographer Gopnik gets the last word:

Warhol might be interested in the most ridiculous NFTs but only once they crashed to $0.99. He liked to undermine the notion of valuable art. He loved anything that was problematic and troublesome. NFTs are that: a problem for the art world and the financial world and the journalistic world.

But on the other hand, Warhols work required tremendous novelty and subtlety. 

The thing most people dont understand is that he was completely dedicated to the notion of Avant-Garde art. What matters about Warhol is his exceptional complexity and ambiguity. And that makes it very hard to imagine that he would like NFTs now.

For me, NFTs, for now, are like trading cards, but Im waiting for an NFT collection so specific to NFTs that it blows my socks off. 

And maybe thats the point. Who knows what Warhol could have done with NFTs?

It seems that every time one turns on the TV, something, somewhere, is going catastrophically wrong. Whether it be Hurricane Ian tearing through Cuba and Florida, war raging in Eastern Europe, or floods devastating Pakistan, there has been no shortage of crises in 2022 both natural and human-caused. 

And as the climate continues to warm, extreme weather events and other natural disasters are only expected to occur more frequently, which may also potentially lead to greater overall regional and global instability. In response, some groups working to build decentralized community resilience are now turning to blockchain and Web3 tools to help strengthen their initiatives.

The United States experienced one of its worst natural disasters in modern history when the Category 5 Hurricane Katrina slammed into the New Orleans area on Aug. 29, 2005. The morning prior, the National Weather Service had issued an ominous warning to the residents of the city and the surrounding area:

MOST OF THE AREA WILL BE UNINHABITABLE FOR WEEKS…PERHAPS LONGER. […] POWER OUTAGES WILL LAST FOR WEEKS…AS MOST POWER POLES WILL BE DOWN AND TRANSFORMERS DESTROYED. WATER SHORTAGES WILL MAKE HUMAN SUFFERING INCREDIBLE BY MODERN STANDARDS.

Unfortunately, the bulletin proved to be accurate. Thousands of people lost their lives, and millions were left homeless after the citys outdated, flawed levee system was overwhelmed by flood waters.

The governments response to the disaster, particularly that of the Federal Emergency Management Agency, was one of utter dysfunction. Affected residents were left with little to no assistance from government authorities, instead banding together as communities and decentralized networks to support one another. The crisis served as a wake-up call for many that the government and its centralized institutions wont always be there to save them in a catastrophe.

Three and a half years later, Satoshi Nakamoto mined the genesis block of the Bitcoin blockchain born out of another major emergency, the global financial crisis, which devastated economies worldwide in 2008. Like Hurricane Katrina, it opened the eyes of a generation to the reality that established systems propped up by politicians and government officials are actually rather fragile. Given that governments may fail to protect their citizens, it is often up to communities to build alternative support structures.

Since the genesis of Bitcoin, the crypto and blockchain space has greatly evolved and expanded, heavily fueled by the growth of Ethereum and its smart contract functionalities. Today, the Web3 ecosystem built around networks like Ethereum is thriving, and even the greenest of crypto participants can mint tokens, drop NFT collections and vote in DAOs with a few minutes of research and a few clicks.

Should it come as a surprise, then, that more and more people in the world of community resilience are turning to blockchain technology to help prepare for and recover from disasters? For these organizers, Web3 solutions such as multisig wallets and DAOs provide a level of democratic governance that cant be achieved through traditional systems, while also offering innovative ways to fundraise and empower residents. But convincing their peers that its worth embracing these tools can be an uphill battle, and not everyone believes they will make any significant difference.

A history of innovation

People and communities using decentralized technologies in response to disasters is nothing new. After Hurricane Sandy swept through New York City in October 2012, for example, the nonprofit Red Hook Initiative established a decentralized wireless network called Red Hook WiFi by using mesh networking that allowed residents to communicate and coordinate while power and internet service were still out in the neighborhood. And as the military conflict in Ukraine has proven, having access to cryptocurrency during large-scale crises can be invaluable, especially if one needs to flee the country.

One area within the broader community resilience space that has proven itself particularly forward-thinking is mutual aid and the onset of the COVID-19 pandemic and the lockdowns that followed resulted in an explosion of interest in it. According to the book Mutual Aid: Building Solidarity During This Crisis (and the Next) by Seattle University law professor Dean Spade, mutual aid is, simply put, collective coordination to meet each others needs wherein we choose to help each other out, share things, and put time and resources into caring for the most vulnerable. Magazine spoke to Spade, who adds: 

Its only mutual aid if it comes from a shared understanding that the systems in place arent going to meet the needs and also caused the crisis that were in, and if it includes an invitation to collective action.

The argument is that governments and large nonprofits are generally incapable of or uninterested in truly meeting everyones needs. These systemic failures are then amplified in times of disaster, such as during the ongoing COVID-19 pandemic.

In a sense, mutual aid is a decentralized approach to disaster management that takes power away from centralized gatekeepers and puts it in the hands of communities. As Spade describes it, Mutual aid is something that is decentralized and dispersed, not something where a certain group holds the purse strings or has all the materials and is distributing them. The whole point of it would be that everyone would have everything they need.

Why centralized institutions falter

To further explore why centralized responses to major disasters are often so inefficient, Magazine spoke to Devin Balkind, a technologist who has been active in numerous mutual aid initiatives in New York City over the past decade. In the aftermath of Hurricane Sandy, I firsthand saw how the disaster management establishment works, what their organizing principles are, Balkind says. They are a giant, multifaceted set of bureaucracies. And, you know, they dont do a very good job. 

Mutual aid groups can be nimble, easily adopting new technologies without the burdens of bureaucracy that come with centralized institutions. Balkind shares how volunteers responding to Sandy started using Google Sheets to collaborate and how government workers were prohibited from accessing Google documents from their work devices.

It can take months to years for governments and large nonprofits to enact new technology policies, and they often enter into multiyear contracts with IT providers and software companies, which restricts their ability to adopt new technologies even if they want to. This creates an environment where idealistic new hires who want to shake things up frequently burn out and quit, leaving those content with the status quo in the majority and, even worse, in charge. 

As COVID-19 spread through New York City and the government imposed lockdown measures, Balkind helped launch a website, Mutual Aid NYC, that connected mutual aid groups with those looking to volunteer and those seeking help. Balkind and his associates were able to prop up the website quickly at a time when the city was struggling to share basic information with the public. By December 2020, the website had been viewed over 250,000 times.

According to Spade, its not necessarily that mutual aid groups intentionally seek to be on the cutting edge of innovation, rather that: 

Were going to use whatever seems easiest, whatevers going to work. And when its not working, were going to ditch it.

Mutual aid, meet Web3

One of the many mutual aid groups to form during the height of the pandemic is New York City-based Pact, which formed with the goal of raising money for grassroots organizations doing important work on the ground but lacking visibility. Pact established a subscription-based donation service where supporters could pledge $3, $10 or $25 to support the groups goals. Each month, Pact would promote a different NYC-based mutual aid organization and donate the raised funds to that group.

At the end of 2021, Pact made the strategic decision to pivot toward Web3. The Pact team tells Magazine that while our team of five followed cooperative principles, the tools we were using prevented us from having true democratic ownership. For example, the group was initially incorporated as an LLC and had to pick one person to have their name associated with the corporation and its bank account. We wanted to find a way to have true democratic ownership.

The group transitioned to a DAO and launched a crowdfunding campaign on Mirror.xyz, which is more than halfway toward achieving its goal of raising 20 ETH. While backers receive PACT tokens, the group doesnt actually use them and considers them purely for fun and engagement. Instead, one can join the DAO in a variety of ways, including participating in the crowdfunding but also by subscribing with dollars, contributing to the project or being a part of a like-minded organization. 

Pact writes, Shared values (and not financialized tokens) are at the core of our community. Altogether, Pact reports that it has raised over $30,000 for mutual aid, organizing and educational initiatives as of September 2022. Pact tells Magazine that blockchain-based solutions offer several advantages:

Multisignature wallets allow you to share funds easily across individuals and groups. Smart contracts allow you to program bylaws and agreements into technological actions. On-chain voting provides total transparency and asynchronous connection among a group (or multiple) in its decision-making. These are all tools that enticed our team and solved some of the collaboration problems we were facing.

Taking the power back

Collaboration is the name of the game in community resilience, and another mutual aid-focused organization that Pact has worked alongside is the Paperboy Prince Love Gallery. The Brooklyn-based gallery was founded in September 2020 by Paperboy Prince a community activist, musician and artist. It has given away millions of dollars worth of free food and even provided 200 days of free housing in a tiny house it built on its property during the worst of the pandemic.

Prince has long been an active participant in the cryptosphere. In 2018, they released a crypto-themed rap album titled Crypto Cowboy, featuring songs such as How to Sell CryptoCurrency and Big Bitcoin BTC. Prince has run for both NYC mayor and U.S. Congress and has described themselves as a Web3 candidate. They tell Magazine, We come to revolutionize and transform everything that were a part of, and the Web3 world is no different.

Prince has a long list of Web3-focused plans for the gallery that they hope will strengthen and fund its mutual initiatives. Earlier in 2022, they announced the Paperboy Love DAO, whose members will help fund and make decisions around the gallerys food distribution work, community space and events, housing efforts, and more. Prince is also working with an artist on an NFT collection, the proceeds of which will go toward the Paperboy Prince Love Gallery and its mutual aid efforts.

A lot of these projects are experiments that weve done without saying, Oh, were gonna wait for some big crypto NFT fundraiser, Prince tells Magazine. This is what weve done because this is what we do. So, were saying, lets even take this to the next level. Were ready to take this to a higher level with more capital. We can build more, and we can teach more people.

For Prince, embracing blockchain and bridging it with community resilience is not just about finding new ways to raise money and organize its also about taking power from elite technocrats and bringing it back to the community. Its responsible leadership that stakes the communitys future in the correct places, argues Prince, saying:

A vocal and influential minority of the internet is shifting into Web3 and using this to influence our world and the world around us. […] If were not focusing on that as a way to organize, then were being neglectful.

Facing resistance

Not everyone is on board with bringing blockchain and crypto over to the community resilience space, however. Many are turned off by the potential climate impacts of proof-of-work blockchains, rampant pump-and-dump schemes, libertarian influence on the industry, lack of regulation and association with financial markets not to mention the negative reputation of NFTs.

The first time I ever posted about NFTs, I lost like 500 followers, says Prince, who was met with reactions like Gross, Huge L and Bad call. Prince tells Magazine, There could be a lot of misinformation and folks that dont understand that just because you turn away from something, it doesnt mean its going away. For the community activist, if you dont learn and utilize new technologies, they will be used against you: 

Use these platforms for what your goals are and your community goals are. Dont let them use you.

According to Pact, All they see are the current use cases, which are hyperfinancialized, capitalistic and superfluous. So, when they hear about a project like ours, they think this is what were trying to do to mutual aid turn it into a JPEG, financialize it and/or run it as a scam. While this couldnt be further from the truth, we respect their skepticism and take it as our duty to show them what these tools and our organization can do with them to benefit our local community.

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Apart from ideological barriers, there is also the simple fact that crypto is still relatively obscure for many people, outside of when Bitcoin price movements make the news. Using crypto wallets and accessing blockchain networks still requires particular technological know-how. The challenge specific to DAOs, which is a place we are inching into because of its shortcomings, is in the accessibility of the technology itself, says the Pact team. 

At present, setting up a wallet, purchasing cryptocurrency, etc., is not accessible or used by most people.

Blockchain is no silver bullet

At the end of the day, tools are just tools the real work in building resilience to crises is done on the ground level. And that work is difficult. There are no shortcuts to network building and community organizing. There is no technology that can replace outreach, collaboration, trust-building, empowering individuals and showing up for one another, and that work is fundamental in building community networks that will help neighbors survive the next major crisis.

For me, doing mutual aid for the last 25 years in lots of different contexts, the problem has never been a tech problem, says law professor Spade. Its that enough people are not doing it. The real problem is that people are at home playing video games and looking at their phones and are feeling really isolated and dejected and are not connecting with community members.

But thats not to say that new technology cannot help strengthen those essential efforts. Technology has proven quite useful during a wide range of recent crises, as demonstrated by the experiences of Balkind, Pact, Prince and others.

Web3s biggest strength is in coordination, which is exactly what individuals do during times of crisis, says Pact. Web3 tools would allow them to do that by giving them ways to immediately pool and share resources with not only their neighbors but globally, tap into existing networks for support, and make decisions democratically and transparently.

For Spade, technology is neutral. It can be used to strengthen communities or tear them down to help free us or help oppress us. The bigger question is: How is the technology actually being used? And can we recognize that technology wont save us? I dont think any technology is inherently positive or negative, says Spade. The question is, Can we not fetishize them or glamorize them? He adds: 

I think we should just be careful with the idea that Web3 stuff is going to fix everything.

Looking forward

As for centralized institutions like governments, the technologist Balkind himself a believer in the potential of blockchain technology believes New York City could transform its emergency management infrastructure for the better were it not burdened by systemic inefficiencies. After all, the city is known for its long, rich history of crypto culture and innovation. Would having competency around building web applications that might use a blockchain, could that be a useful tool in the tool chest? Of course, he tells Magazine. However, the city still has a ways to go first: Its not even close in terms of just being able to deliver usable apps that could be helpful for emergency management.

Balkind shares a suggestion for the city and its network of community organizers: If I were New York City, or if I were an infinitely funded community organizer type, I would be building volunteer apps with game mechanics rewarding people with stablecoins. That would be what I would do. I think that would be cool. However, he adds, The other thing this is a big indicator that I think blockchain is not ready for that is that the user experiences on these things are terrible.

The potential of blockchain-based tools to strengthen community resilience is a growing factor for an increasing number of people in the space, but what will the future of community collaboration actually look like? Will mutual aid groups find the ideal balance between boots-on-the-ground organizing and implementing innovative technological solutions? Pact, for its part, had the following to share in a recent blog post:

We needed to step back and remind ourselves that organizers know whats best for them. All we can do is provide them with the information and spaces for dialogue. […] If we see value in these tools, we can show them by sharing that value in our combined efforts. We have to meet them in the struggle, support their work, and then offer our expertise when/if web3 tools come up organically as a solution.

Decentralized finance is beginning to embrace a hot new phrase: real yield. It refers to DeFi projects that survive purely on distributing the actual revenue they generate rather than incentivizing stakeholders by handing out dilutionary free tokens.

Where does this real yield come from? Are fees really a sustainable model for growth at this early stage?

It depends on who you ask. 

The DeFi ponzinomics problem is our natural starting point.

Ponzi farming

DeFi started to arrive as a concept in 2018, and 2020s DeFi summer saw market entrants DeGens piling headfirst into DeFi to early mind-blowing returns of 1,000% a year for staking or using a protocol. Many attributed the real explosion of interest in DeFi to when Compound launched the COMP token to reward users for providing liquidity. 

But these liquidity mining models were flawed because they were based on excessive emissions of protocols native tokens rather than sharing organic protocol profits.

Liquidity mining resulted in unsustainable growth, and when yields diminished, token prices dropped. Depleting DAO treasuries to supply rewards programs or simply minting more and more tokens for new joiners looked like a Ponzi scheme. Known as yield farming to some, others preferred to call it ponzinomics.

While recognizing these returns were unsustainable, many sophisticated investors became enthralled with staking (locking up tokens for rewards). One VC told me they paid for their lifestyle by staking tokens during 20202021 even knowing it was akin to a Ponzi scheme about to collapse. 

The dangers of unsustainable yields were seen in mid-2022, when the DeFi ecosystem and much of the rest of crypto were gutted in a handful of days. Terras DeFi ecosystem collapsed with grave contagion effects. Its founder, Do Kwon, is wanted by South Korean authorities and is subject to an Interpol red notice but says he is not on the run. High-profile hedge fund Three Arrows Capital (3AC), which heavily invested in Terra, was liquidated in June 2022.

The reality is that returns based on marketing dollars are fake. Its like the Dotcom boom phase of paying customers to buy a product, says Karl Jacob, co-founder of Homecoin.finance of Bacon Protocol a stablecoin backed by United States real estate. 

20% yield how is that possible? Marketing spend or digging into assets are the only way to explain those returns. This is the definition of a Ponzi scheme. For an investor, high yield indicates a tremendous amount of risk.

Henrik Andersson, chief investment officer of Apollo Capital, notes the yield in Terra wasnt actually coming from token emissions. I wouldnt call Terra a Ponzi scheme even though the yield wasnt sustainable; it was essentially marketing money, he says. 

Real yield enters the chat

Its easy to be cynical, then, when the phrase real yield started to emerge to popular applause recently. Bankless analyst Ben Giove wrote recently, DeFi isnt dead. There are real, organic yields out there, in a piece explaining that real yields are opportunities for risk-tolerant DeFi users to generate yield at above market-rates through protocols such as GMX, Hop, Maple and Goldfinch. With the bulk of their yield not coming from token emissions, it is also likely that these protocols will be able to sustain their higher returns for the foreseeable future.

Real yield is a hashtag reaction to Terra LUNAs collapse, but that means people agree more on what it isnt than on what it actually is, argues Mark Lurie, founder of Shipyard Software, which operates a retail-focused DEX, Clipper.exchange.

Ive been on the real yield train for a year and a half and Im glad someone is paying attention. He says there are a few potential definitions, but sustainable returns on capital is one that actually makes sense.

An example of real yield is interest on a loan, like Compound Finance. Another example is fees charged on transactions and returned to capital providers e.g., gas fees in proof-of-stake layer 1s, trading fees in DEX protocols.

Manufactured narratives

Jack Chong, who is building Frigg.eco to bring financing to renewable energy projects, says there are a lot of manufactured narratives in the crypto space. Real yield is one of them, he posits.

The meaning of real yield depends on which corner of crypto you sit in, and theres two variants, says Chong, an Oxford graduate and Hong Kong native. One definition suggests that real yield is a protocol that has cash flow. It is a digital native cash flow denominated in ETH or crypto. 

In other words, its a business model that has revenue.

The exact wording of many threads on Twitter is that real yield is staking for cash flows. The distinction is the source of that yield a lot of crypto ecosystems are self-reflexive, Chong argues, referring to the digital money circulating and creating gains for investors without coming from actual revenue, like Terra.

Linguistically, real yield doesnt have to be about trading protocols, he continues. The other meaning is yield from real world assets. An example is a rental return from a tokenized piece of real estate, such as a fractionalized city car space split among investors.

Chong, who founded a biotech startup and once studied Arabic in Jordan with diplomacy in his sights, has a mission to deploy crypto for productive use. Any North Star for any financial system should be to deploy capital and make a profit. The whole real yield story is just common sense in TradFi, he points out.

Real yield is of course linguistically disparaging of all that came before it as fake yield. So, what are these yields?

Real yield: Interest and fees

Real yield can involve lending and borrowing models in which higher risk equates to higher interest rates for borrowers and, consequently, higher yields for lenders. Thats the model of the under-collateralized lending platform and real yield pin-up boy Maple Protocol. 

Maple enables institutions, such as market makers or VCs, to take out under-collateralized loans via isolated lending pools. A pool delegate assesses the risk of a borrowers creditworthiness. To date, Maple has originated $1.8 billion in loans and recently launched a $300-million lending pool for Bitcoin mining firms.

Interest from loans (or usury) is an obvious but lucrative business model. Banks mostly make money from loans. 

One of the most obvious sources of real yield is providing tokenholders with a slice of the revenue generated by fees imposed on users of the platform. In other words, there is an actual product or service earning revenue.

Jacob, an OG dating back to Web1, argues that proof-of-work staking returns on Ethereum now incorporate real yield.

ETH could be considered a real yield. With Eth1, most money flowed to miners proof-of-work (or mining transactions to prove their validity) was a kind of real yield already. Miners were getting real yield. Now stakers are able to earn yield from network transactions. Transactions happen often, and a lot of more people get paid. For every transaction, ETH stakers make money.

In other words, transactional revenue is a reward for ecosystem building. 

Others are joining the real yield trend or emphasizing that part of their protocol.

Synthetix is a highly successful decentralized protocol for trading synthetic assets and derivatives. Tokens on that platform are actually synthetic assets designed as a tokenized representation of investment positions.

Its too complicated to explain here, but the elevator pitch is that users stake the native token SNX to mint the stablecoin SUSD, which underpins all the liquidity and other tokens on the platform. Stakers are handsomely rewarded with token emissions sometimes over 100% APY as well as a cut of the SUSD fees paid by traders to use the platform. 

All of a sudden this year, SUSD fee revenue went through the roof when 1inch and Curve realized they could use Synthetixs synthetic assets for no slippage trading between things like BTC and ETH.

As a result, Synthetix is now considering a proposal by founder Kain Warwick to stop inflationary rewards and move to rewarding stakers based entirely on real trading fees.

Thats the very definition of real yield. It will be interesting to see if their real revenue is enough to incentivize stakers on the fairly risky and complicated platform.

But how does this all succeed in a bear market?

Impermanent loss and other risks

Another way fees might be earned for providing liquidity is to assist in cross-blockchain liquidity. Liquidity providers risk facing exposure to the price volatility of the underlying asset they are providing liquidity for. Impermanent loss happens when the price of your deposited assets changes from when you deposited those assets. This means less dollar value at the time of withdrawal than when deposited. So, your rewards or headline real yield from staking liquidity may be offset by the losses upon withdrawal. 

Lurie says:

Ponzi yields may be defined as the unsustainable granting of speculative tokens. But yields from protocol transaction fees can also be fake if the underlying economic model is unsustainable. For example, liquidity providers to SushiSwap earn fees from transactions, but typically lose more to impermanent loss than they make from fees, which means they are losing money.

The important thing, obviously, is income minus expenses, says Lurie. The biggest problem in DeFi is that actual gains are complex to measure because of the concept of impermanent loss, Lurie tells Magazine. This is the greatest trick in DeFi, he says. 

Protocols that are fundamentally unsustainable make themselves seem profitable by relabeling revenue from fees as yield and relabeling loss in principal as impermanent loss.

Naturally, they advertise revenue (which can only be positive) while claiming that losses are impermanent and/or hard to measure. At the end of the day, real yield should mean profits to capital providers. Focusing on revenue without expenses is just the Ponzi principle in another form.

Traditional investors like real yield

Real yield has emerged due to current investment cycles and market conditions. Chong points out, Real yield more closely reflects TradFi and has a lot to do with the cycle of market participants.

During the DeFi summer, hedge funds acted as speculative vultures. Now institutional investors like Goldman Sachs are looking for new directions in crypto on what will survive the bear market. Others such as Morgan Stanley, Citigroup and JP Morgan are all watching closely and writing their own reports on crypto.

Apollos Andersson notes that real yield means that while there were historically wide question marks around the value of crypto assets, since 2020, protocols that generate revenue as on-chain cash flow are not that different from equities in that sense.

He defines real yield as on-chain derivatives protocols with profit to earnings multiples that make sense, without incentives like liquidity mining.

Traditional investors like real yield because it enables them to use traditional metrics like price-to-earnings ratio (P/E ratio) and discounted cash flow (DCF) to value whether a token is cheap or expensive and whether its worth investing in. 

The P/E ratio is a stock (or token) price divided by the companys earnings per share for a designated period like the past 12 months. DCF refers to a common valuation metric that estimates the value of an investment based on its expected future cash flows.

The transparency of blockchain revenue also provides a stream of data to constantly update decisions thanks to protocols like Token Terminal and Crypto Fees. In crypto, you dont have to wait for a quarterly statement like stocks, says Andersson. Revenue minus or divided by the newly minted token for incentives can generate cleaner numbers, he suggests. Real yield is revenue without incentivizing volume, such as in the cases of Uniswap and GMX.

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Yet Andersson cautions investors that in crypto, income and revenue can be very similar, as the cost base looks very different than for a traditional company. This makes yield for crypto protocols highly attractive in comparison. But cost bases and margins can be higher in crypto as there is often an initial distribution of tokens when a project launches. He asks:

What is the protocols revenue compared to the value of the tokens minted? is the question.

Will the real yield trend stay?

The real yield trend shows that DeFi is maturing and beginning to act like genuine businesses. Its also growing in popularity. 

One way to validate a DeFi protocols use case can be to assess if it has been forked by other founders looking to leverage the original code and design, says VC analyst Angliss. 

In this case, protocols such as Gains Network, Mycelium.xyz and MadMeX are all replicating GMX, by offering real yields to stakers in the form of fees earned via swaps and trading on a decentralized derivatives trading platform.