Interview: Coinbase Ventures & Chapter One invest in FOX Success

Shapeshift, a non-custodial cryptocurrency platform, made headlines last year when it announced that it decentralized the entire enterprise, with governance delegated to customers via their FOX token. The company, which has been around since 2014, staged the largest airdrop in history to achieve this: awarding 340 million FOX tokens to more than one million recipients.

In terms of what they do, in short, they enable customers to interact safely, securely, and privately with digital assets. This includes trading, tracking, and yield earning, and a variety of channels are incorporated on the platform.

Now the Shapeshift DAO is making headlines again, working with UMA, an upbeat Oracle validating knowledge for Web3 protocols. The duo announced last week that Coinbase Ventures and Chapter One had taken a significant chunk of newly minted FOX Success tokens.

The purpose of these new tokens is to raise funds for the project without selling tokens at a high discount, which makes sense. But it’s the names involved that really made waves; Whenever parties like Coinbase Ventures or Chapter One are in the discussion, people are going to take notice.

So we caught up with WBU Treasurer Kevin Chan to get his thoughts on some of the questions we were looking forward to asking on the back of the announcement. This includes an area that I think has become increasingly important in the crypto world – the role of venture capitalism and how incentives align or contrast with mainstream investors, which is particularly poignant. in the context of how Shapeshift has chosen to raise these funds.

Cryptoadvisor: The press release states that Success Tokens offer DAOs an alternative way to diversify their cash flow – can you tell us more?

Kevin Chan: The majority of DAO treasuries tend to be made up of mostly their own native tokens. These DAOs also have basic diversification needs and need various assets to be able to pay their team and other contributors as part of their routine operation. For this reason, it is important to maintain a balance of stablecoins.

After launching a project, besides selling tokens with a high discount to investors, there are few alternatives to raise funds. Achievement Tokens offer an important alternative to fundraising. Instead of offering investors a steep upfront discount, investors are rewarded with more tokens if a success metric is met.

Price can be that metric of success. Achievement Tokens work as a call option or even a KPI option, allowing investors to align on additional metrics such as TVL, volume, new users, and more.

THAT : You state that selling tokens to venture capitalists on an incentive basis is also a benefit. Can you elaborate on FOX Success’ role here, as well as give your thoughts on the state of VC crypto (given how interesting it has been to follow over the last year or two)?

KC: When it comes to FOX Hit Tokens, investors have a call option. Price is therefore the measure on which we align investors and the ShapeShift community. If ShapeShift succeeds in developing its protocol, the FOX token should rally. If he rallies, those Achievement Token holders will be rewarded with more FOX Tokens.

Prior to the use of Success Tokens, VCs typically purchased tokens at a discount in exchange for locking in their investment for a year or two, providing stability and support for the project. However, there are scenarios where this arrangement has created friction between the investors and the project and the wider community.

Some members of the community do not like the idea that large investors are allowed to buy tokens at a discount while they work hard for the project and buy tokens at market price. Additionally, as the acquisition date approaches – and if the tokens have not rallied or sold – the community and the project team may fear that these investors will drop their tokens given that they have bought them. at discounted price.

Success tokens only reward investors if the token rallies. This makes the community more comfortable and avoids some of the friction described above. VCs should also be attracted to this payout structure. VCs aren’t here for a 25-30% discount; they are looking to make 10x or 100x on these investments. So if they are more exposed to success, it would suit them better too .

THAT: Many worry about wealth consolidation as Web 3.0 takes hold. holders and those working on the DAO. Do you think this is a concern for crypto, or do you think this is just growing pains and the vision of web 3.0 facilitating a more democratic, transparent and accessible environment is on the right track? way ?

KC: There are fears that crypto wealth is concentrated at the moment, but we are still very early in the evolution of Web 3.0. An important difference with Web 3.0 is that it is permissionless, transparent, and everyone is on an equal footing.

In traditional finance, there are backroom deals that favor those in power and unfairly advantage established relationships with “old money” or people with political influence. People with money have access to more investment opportunities due to patronage and regulations that protect the status quo.

In DeFi, many of these unfair advantages are removed. We can see where the funds go and who does what. You don’t need previous wealth to access investments. The main idea and vision is that DeFi benefits, services and products are available to everyone.

If you have an internet connection, anyone, anywhere in the world should have the same access to opportunities. These are the ideals we seek, but there is still much work to be done.

THAT : Where do you see the crypto market moving in the next year? Do you think the geopolitical climate (Russia/Iran, etc.) or the monetary environment (inflation, Fed hikes on the horizon, etc.) are shaping a bullish future for Bitcoin and crypto?

KC: Yes, there should be positive long-term growth for crypto and DeFi. Current geopolitics and monetary policy highlight the need for self-custody and asset management independent of government influence or control.

In the short term, there is still a lot of uncertainty as to how this translates in terms of regulations and other government responses.

THAT : How do you think the FOX Success token would perform in an extended bear market?

KC: FOX Success Tokens will trade like a regular FOX Token in a major bear market, assuming it is significantly lower than the call option strike price. The investor benefits from a free option. This might cause some investors to lose interest in the project, but that would be the case for many projects in a bear market.

ShapeShift, on the other hand, would have done better because they didn’t give up the initial discount and got more funds now and they can retrieve the excess collateral stored in the success token (for the call option), and use it for future fundraising.

The success token will prove more effective.

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Interview: Coinbase Ventures & Chapter One invest in FOX Success


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