Ethereum vs. Delaware - Market Monday LITE (09/14)
Why an Ethereum DAO is the 21st century Delaware LLC
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Dear Bankless Nation,
I registered a new business entity recently. It kinda sucked.
Not because it was any worse than it had been. But because I’ve now experienced something so much better. It felt like a landline in the era of smartphones.
This is the website for the State Corporation Commission of Virginia. Every state in the U.S. has one. It’s the interface layer for a central database of legal entities—LLCs, S-corps, C-Corps—all Virginia registered entities are here.
If you want to organize capital in the economic geography of the United States of America you need an entry in a database like this. By organize capital, I mean starting a business, creating a fund, forming a partnership—basically anything related to pooling resources with others to accomplish something.
Why do you need an entity?
To coordinate capital.
That entry in the database—the registration of an LLC—that gives your entity the protections of the U.S. legal system. It solves coordination problems. Say you have three founders, a product idea, and a market to capture, how do you trust each other to share in the costs and upside of this venture? Well…you register a Delaware LLC, split equity, and draw up an operating agreement.
Once registered your capital pool is settled in the U.S. legal system. Founder dispute? U.S. courts sort it out.
And once registered this capital pool becomes a recognized entity by the U.S. financial system. Want to store your entity’s assets in a bank? Spend them? Lend them? The banking system requires a tax ID number (TIN). You only get a TIN by registering.
So I filled out the forms and paid a $100 transaction fee to register. Another $100 to get it done in two business days instead of ten.
Soon I’ll receive something like the above. A certification that my entity is registered on a state-run node of the legal entity ledger of the USA! With it, I’ll get my unique TIN ID so my capital pool can get a bank account and pay its taxes!
With this, I can coordinate capital with my partners using a USA-settled entity! I don’t mean to diminish this—it’s a marvel of the nation-state leviathan & 20th-century tech.
But it all sucks compared to Ethereum.
An Ethereum DAO can already accomplish many things a Delaware LLC can’t and at a fraction of the cost—no bank, no nation-state required.
An Ethereum DAO:
Can coordinate capital and ownership interests with many parties (tokens shares)
Has access to a powerful internet-native banking system (DeFi)
Is programmable and inherently borderless and global (crypto native)
It comes with a better banking system. Easier setup. It gives access to a faster-growing economy. And humans are optional—robots can register, protocols can be partners.
Remind me why I need Delaware?
Of course! To pay my taxes.
I’m overstating the case right now. There are still things I can’t do with Ethereum vs Delaware LLC. Credit is one. Real-world payments are tricky too. But how many things and for how long?
No, we’re not there yet. There’s reason to keep a foot in both worlds. To have a traditional bank account and an Ethereum address. To have a Delaware LLC and an Ethereum DAO.
Yes, there were 226k capital pools registered in Delaware in 2019.
But there were 39m Ethereum addresses registered in the last year and how many of these represent multi-party capital pools?
An Ethereum address is the 21st-century version of a bank account.
And an Ethereum DAO is the 21st-century version of the Delaware LLC.
The frontier is digital.
Scan this section and dig into anything interesting
Scan this section and dig into anything interesting
Market numbers 📊
ETH rises +9.1% to $381 from $349 last Monday
BTC climbs by +5.3% to $10,745 from $10,203 last Monday
TVL pushes up +9.5% to $8.64B from $7.89B last Monday
DAI base fee up to 2.00% for non-ETH collateral w/ savings rate steady at 0.00%
Market opportunities 🤑
Prepare for Gitcoin Grants Round 7 — starts tomorrow! (hints of a Gitcoin Coin??)
Trade DeFi tokens on Loopring DEX & save on gas fees(link gets you 6 bps fees)
Register for ETHOnline on October 1st & 2nd
Lend DAI on Aave to earn 44.34% APY(demand for Dai is high!!)
Research Aavegotchi’s DAICO & GHST token (first DAICO we’ve seen go live!)
Yield Farming 🌾
What’s new 🗞️, what’s hot 🔥, & money reads 📚
WHAT I’M & WHAT YOU’RE DOING
Make time to complete this assignment before next week
DeFi Dad is back in action (he was moving across the country) and he’ll be dropping an assignment TOMORROW on Set Protocol’s new DeFi Pulse Index Set.
He’ll show you how to buy the Set and get exposure to the top 10 DeFi tokens with automatic rebalances too! Stay tuned — dropping with our tactic from Lucas.
Meanwhile, you can check out OG Tactic #3 “how to hire a money robot from Set” to get prepped!
Extra Credit Learning
Some recent tweets…
The only good thing left from the internet are the protocols it’s built on
Brian Armstrong @brian_armstrongIn the wake of other companies struggling with Apple's App Store restrictions, I want to share a bit about Coinbase's own struggle here.
Execute any good market opportunities you saw
Complete weekly assignment: Dropping tomorrow!
Listen to Synthetix to Billions with Kain Warwick
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Aave is an open source and non-custodial protocol for money market creation. Originally launched with the Aave Market, it now supports Uniswap and TokenSet markets and enables users and developers to earn interest and leverage their assets. Aave also pioneered Flash Loans, an innovative DeFi building block for developers to build self-liquidations, collateral swaps, and more. Check it out here.
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