Uniswap Gets Sued – Bankless

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Dear Bankless Nation,

Here’s a recap of this week’s events in crypto.

1. Uniswap gets sued

A class-action lawsuit is being launched by a North Carolina resident against Uniswap and its major investors for allowing “fraudulent activity” on its platform. 

You might ask: What fraudulent activity? By listing pump and dump tokens like EthereumMax, Rocket Bunny, and a bunch of tokens that wouldn’t come across the radar of even the most degen crypto users.

Translation: Someone lost money gambling and now wants the coercive help of the government.

It might be easier to take the lawsuit a little more seriously if it wasn’t also riddled with demonstrably false claims. For instance:

“102. Uniswap’s power to unilaterally remove tokens from the Exchange further confirms that Uniswap can (and does) exercise complete control over its Exchange.”

Blatantly false. Anyone can list an asset on the Uniswap protocol. Uniswap Labs merely deployed immutable, permissionless code, which is protected as “speech” under the First Amendment.

What Uniswap Labs can do however, is delist the tokens from the front-end app interface, which they did for 100+ tokens last July under regulatory pressure. But that obviously isn’t the same as Binance or FTX delisting a token from its services. Any user with the know-how can still swap those tokens by accessing the smart contracts directly or through a decentralized interface.

That’s DeFi 101 📚

Putting aside the absurdity of users trying to pin the blame on a decentralized protocol for not complying with “securities laws”, it does raise some interesting questions about who the guilty party is in a pump and dump scheme, if any.

Is it Uniswap Labs? If not, is it the liquidity providers who designed the schemes? Ethereum’s node operators? The address that created the pool? The token issuers?

What’s the personal responsibility of the individual who aped into the tokens?

In any case, a lawsuit that has all the optics of a smear job surely isn’t slowing Uniswap down.

Uniswap announced this week its own venture capital arm, Uniswap Labs Ventures. Uniswap is sometimes thought of as a “VC-captured” protocol.

Will this mark the end of traditional VCs?

2. Meta’s 50% NFT tax

Meta announced this week that NFTs sold through its Horizon Worlds metaverse platform will be charged at an (approximate) whopping 47.5% commission fee, which its Vice-President has defended as a “pretty competitive rate in the market”.

This is either a late April’s Fool joke or just Web2 product managers seriously underestimating what Web3 will become.

One of the core narratives of Web3 is the empowerment of the little guy. Taxing an NFT transaction at a near-50% rate is highly against that ethos.

But it’s Facebook. Despite a hefty tax rate, it won’t be crazy to rule out a market of users that are happy to make their NFT purchases on the centralized rails of a familiar brand name, especially in a space where the idea of “non-fungible art” is still relatively new.

It may even do some good by drawing the mainstream into the space. But it won’t last. Not with the countless Web3 alternatives lying around.

Should the metaverse live up to its hype, that tax will become extravagant, just as Apple’s 30% App Store cut appears extravagant in the mature smartphone app sector. This is also ironically what Apple’s competitors (including Zuckerberg) spent the whole of last year lambasting as “anti-competitive” and monopolistic.

3. The Merge is delayed

Ethereum’s Merge has been delayed…

But not really.

The June 2022 date was never announced by Ethereum developers. It was an aspirational hope put together by the community in fervent anticipation of the network upgrade.

According to lead developer Tim Beiko, the merge will come “likely in the months after” June. 

The good news is that we’re definitely in the last lap. 

Lesson: Decentralized scaling takes time and work. Good things don’t come free.

4. Twitter bidding war

In typical Elon Musk fashion, the Tesla CEO made a public $43 billion cash offer for the whole of Twitter.

Major shareholder Saudi Prince Alwaleed bin Talal rejected the offer.

Then Tron founder Justin Sun counter-bid at $60 per share.

Is a bidding war coming? What does this mean for crypto? 

Beyond the public spectacle and jokes, this may have interesting ramifications for crypto. Twitter has acted as a pseudo-governance platform for crypto and a deep source of knowledge for anyone trying to get up to speed on the space.

Should Twitter fall into the hands of Musk, maybe we can take heart that he is at least crypto-friendly.

Here’s what we have for Bankless next week: 👇

  • Vitalik is coming on the podcast. LFG.

  • It’s Terra/LUNA week on the newsletter (beginner guides + token analyses!)

  • Kevin Owocki is dropping an article on ImpactDAOs

Have a good Friday and enjoy the long weekend.

– Bankless Team

P.S. Help build the future of web3 at Graph Day June 2nd-5th in San Francisco. Bankless listeners get an exclusive $50 discount with the code GRAPHBANKLESS!

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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

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