The Token Transparency Framework, Worldcoin, and X’s Super App | Livestream

This episode explores the evolving strategies of crypto exchanges moving on-chain, the critical need for token transparency, and the burgeoning intersection of AI with identity verification and content generation, offering key insights for navigating these shifts.

Permissionless Conference Anticipation

• The hosts, including Dan, Carlos, and Boach, express excitement for the upcoming Permissionless conference.
• Key attractions mentioned are the 0x Arena, a dunk tank, and an arcade basketball game.
• Dan highlights the value of in-person team interaction, given their remote work setup, and praises the talent density and high-agency culture at Blockworks, contrasting it with his Big Four accounting background.
• Boach is particularly interested in Jacob Sharpel's talk on DEX activity and Westy's presentation on active addresses as a useful metric.
• The discussion touches on the unique experience of meeting colleagues in person for the first time, especially for those new to crypto conferences.

Centralized Exchanges (CEXs) Moving On-Chain: An Evolving Playbook

• Dan initiates a discussion on the trend of CEXs establishing an on-chain presence, noting a historical shift in their approaches.
• Binance (BNB Chain): Launched in 2019 as an L1 (Layer 1 - a base blockchain like Bitcoin or Ethereum) with Proof of Authority (a consensus mechanism where a limited number of validators secure the network). Dan suggests Binance aimed to own the full stack and create an integrated ecosystem around the BNB token, using examples like Launchpad staking and incentivized trading on PancakeSwap.
• Coinbase (Base): Launched its L2 (Layer 2 - a scaling solution built on top of an L1, like Ethereum) in 2023. Base generates revenue for Coinbase via gross sequencer profit (fees collected by the entity ordering transactions on the L2). Dan notes Coinbase's strategy focuses on accelerating the exchange's product roadmap, citing USDC integration, CBTC (Coinbase's wrapped Bitcoin) deployment, and Morpho Bitcoin-backed loans on Base. "The chain exists to accelerate the roadmap or the product offering of the exchange," Dan observes.
• Bybit (Solana Programs): Recently announced plans to deploy smart contracts (self-executing code on a blockchain) as a DEX on Solana, opting for the most lightweight approach. This strategy focuses on improving the exchange's core function: listing assets and facilitating liquid trades.
• Dan posits this evolution from heavy infrastructure (L1) to lightweight deployments (smart contracts) reflects a market maturation, where leveraging existing scalable chains like Solana becomes more efficient than building from scratch. He suggests the battle has "moved up the stack getting closer to the user."
• Strategic Implication: Crypto AI investors should note this trend. As CEXs build on-chain, they create new ecosystems. The choice of underlying L1s/L2s and the type of on-chain presence (full L1, L2, or dApp) can influence transaction costs, speed, and composability, which are critical for future decentralized AI applications that might leverage these platforms for compute, data, or model marketplaces.

The Rise of Application-Layer Value and OKX Wallet

• The conversation shifts to the realization that building a proprietary chain isn't always necessary for user acquisition or revenue generation.
• Boach points out that applications like Telegram bots have demonstrated significant earning potential without the long vesting cycles associated with new L1 tokens.
• OKX Wallet is highlighted as an example of a CEX-affiliated product making inroads by integrating on-chain trading infrastructure and routing to partners like Phantom. Carlos notes OKX's DEX aggregator has captured around 18% market share of Solana DEX aggregator volume.
• Boach speculates that much of OKX Wallet's volume might come from mobile users, a growing segment preferring integrated mobile wallet experiences over traditional desktop interactions.
• Actionable Insight: The success of app-layer products and aggregators suggests a shift in value accrual. For AI-focused projects, this implies that user-friendly interfaces and seamless integration with existing, liquid ecosystems might be more critical than building bespoke blockchain infrastructure, especially for AI agents or dApps needing access to on-chain financial primitives.

Camino's Potential and Market Perception

• Carlos discusses Camino, a money market on Solana, highlighting its low price-to-sales ratio. He believes its V2, with a modular architecture similar to Morpho and Aave (referred to as Aave, though the transcript says "Oiler" which is a similar lending protocol), could spark growth by adding new markets like PT tokens from Exponent and private credit.
• Dan connects this to a "left curve thesis," where the influx of stablecoins (some yield-bearing) and eventually on-chain equities will increase demand for lending markets. He sees Camino as well-positioned on Solana, especially with Superstate launching an equity product on the chain.
• A key challenge for Camino, as identified by Carlos, is the lack of clarity around value accrual for its token, which isn't currently used for governance or direct revenue sharing. "People are discounting Camino because they are...not sure like what's the use of the token," Carlos states.
• Strategic Implication: For projects at the crypto-AI nexus, tokenomics and clear value accrual mechanisms are paramount. Camino's situation underscores that even promising technology can be undervalued if token utility and its link to protocol success are ambiguous. This is especially true for AI projects whose value propositions can be complex.

The Token Transparency Framework: A Push for Industry Standards

• Dan introduces the Token Transparency Framework, a Blockworks initiative designed to provide a standardized way for projects to disclose essential information about their operations, team, token supply, market structure, and financials.
• The framework aims to combat ambiguity exploited by bad actors, make crypto more accessible to traditional investors, and reward projects with good disclosure practices. Dan emphasizes, "The goal is to have everybody submitted. We want every project, every token project to have completed this."
• Brian from Jito, one of the first cohort participants, joins the discussion. He shares his perspective from traditional finance, noting the difficulty in finding basic token information and the misaligned incentives for project teams. Brian states, "Changing project incentives and making crypto more accessible to people that want to invest in high quality projects is something that we really need."
• Future Enhancements: Brian suggests including insider token sales reporting as a critical future addition, though acknowledging its complexity. Dan outlines areas for improvement: refining criteria, standardizing who completes submissions (especially for DAOs), and establishing update frequencies (potentially semi-annually, referencing Hester Peirce's Safe Harbor 2.0).
• Actionable Insight: The Token Transparency Framework could be a vital tool for Crypto AI investors. AI projects often involve sophisticated technology and novel economic models; standardized disclosures can help investors assess risks, understand governance, and verify claims, fostering greater trust and potentially unlocking institutional capital for credible AI-crypto ventures. Researchers can use this data to analyze trends in project structuring and tokenomics within the AI subsector.

Worldcoin, Reddit, and AI-Driven Identity

• The discussion touches on Worldcoin being in talks with Reddit for integration, potentially to address Reddit's AI-driven bot and content "slop" problem. Worldcoin aims to provide proof-of-personhood through iris scans.
• Ryan Connor highlights the strong incentives for platforms to adopt solutions like Worldcoin: combating AI-generated slop that degrades user experience and the influence of major investors like A16Z who back Worldcoin and other key internet companies. He mentions, "If you think that slop is going to destroy internet experiences...you could lose hundreds of billions of dollars in internet native market cap."
• The hosts debate the privacy implications, with Boach expressing skepticism about giving up biometric data, while acknowledging that 50 million people have reportedly already done so. Ryan points out the data is encrypted and keys are held on the user's device.
• Strategic Implication: The potential integration of Worldcoin with major platforms like Reddit signals a growing need for robust identity and sybil-resistance mechanisms in an era of pervasive AI. Crypto AI investors should monitor the adoption and efficacy of such solutions, as they could become foundational infrastructure for Web3 applications, especially those requiring verified human interaction or aiming to curate high-quality, human-generated data for AI training.

AI's Impact on Content Creation: VEO3 and Grok

• The conversation briefly touches on generative AI tools like VEO3 (a video generation model, likely referring to a hypothetical or new model as VEO is a Google model, but the transcript uses VEO3) and Grok (X's AI).
• Dan mentions Blockworks' Head of Creative using VEO3 to create an ad, highlighting the rapid evolution of AI tools. He notes the importance of adapting to these changes: "It's just like incredibly incredibly obvious that you need to be adapting and evolving or you die."
• Ryan Connor emphasizes the urgency, drawing parallels to Moore's Law for semiconductors and Netflix's early bet on increasing bandwidth. He points to "scaling laws" in AI (more data + more compute = better performance) as predictable drivers of advancement.
• The discussion also covers the limitations of current AI, like Grok's integration within X, which Dan finds suboptimal.
• Actionable Insight: The rapid advancement of generative AI tools like VEO3 presents both opportunities and challenges. For Crypto AI researchers, this means staying abreast of new models and their capabilities. For investors, it highlights the potential for AI to transform content creation, marketing, and user engagement within crypto projects, but also the need to discern genuine utility from hype, and to consider the impact on information integrity.

Market Sentiment and Memecoins

• The hosts discuss whether the "trenches" (referring to speculative memecoin trading) are back.
• Boach feels they aren't fully back compared to the November-January period, noting tokens are topping out earlier.
• Dan, looking at Pump.fun data, suggests a "new normal" or homeostasis in activity since late February, with consistent revenue and launched tokens, though market caps are below previous highs.
• Ryan Connor's recent success in memecoins is mentioned, suggesting pockets of opportunity exist.
• Strategic Implication: While not directly AI-focused, the memecoin discussion reflects broader market sentiment and risk appetite. For Crypto AI investors, understanding these speculative cycles is important as they can impact liquidity and attention across the entire crypto market, potentially affecting funding and valuations for AI-related projects.

PancakeSwap's Volume Surge and Incentives

• Carlos points out PancakeSwap's dominant DEX volume, exceeding 50% of the total.
• Dan explains this is due to a Binance Alpha program incentivizing trading volume on specific pairs on PancakeSwap (BNB Chain), where users earn points for trade volume. He notes, "It's fee paying volume at the end of the day."
• This has led to unusual metrics, like a token (Bedrock) doing billions in volume on low liquidity and market cap.
• Actionable Insight: The PancakeSwap situation demonstrates how centralized entities can heavily influence on-chain activity through targeted incentives. Crypto AI researchers analyzing on-chain data must be aware of such programs to avoid misinterpreting organic activity. Investors should scrutinize volume and revenue sources, as incentive-driven activity may not be sustainable.

X’s Potential "Super App" and On-Platform Trading

• The discussion turns to X (formerly Twitter) potentially integrating investing and trading features, moving towards a "super app" model.
• Ryan Connor argues X is better positioned than messaging apps like Telegram for financial products due to its wealthier, Western-centric, and more "highbrow" user base. He believes Elon Musk's long-stated ambition for a super app, combined with a potentially more favorable regulatory environment and the availability of internet-native financial products like stablecoins, makes this credible. "It's a very natural place to kind of launch financial products if you have a big audience." Ryan states.
• Dan suggests X could partner with existing products, leveraging its distribution, similar to the Polymarket integration.
• Strategic Implication: If X successfully integrates trading and financial services, it could significantly alter the landscape for crypto adoption and user interaction. For Crypto AI, this could mean new avenues for AI-driven trading tools, sentiment analysis products, or even AI agents to operate directly within a major social platform. Investors should watch for X's moves in payments, crypto, and AI integration (like Grok).

Kraken's Inc. Token and L2 Strategy

• The launch of Kraken's Inc. token for its L2 chain is discussed.
• Ryan Connor notes Kraken's recent efforts to accelerate listings and partner with chains, suggesting they are making a comeback.
• Dan expresses hope that the Inc. token isn't solely an incentive tool, pointing out an interesting aspect: as part of the Optimism Collective, the Inc. token doesn't govern the chain itself. "If there is no governance rights then what is the role of the token? If it doesn't have a governance rights value accrual like it feels like an incentive token," Dan questions.
• Carlos views the token primarily as a distribution tool to bring attention and users to the Inc. chain.
• Actionable Insight: Kraken's L2 and token launch represent another CEX exploring on-chain ecosystems. Crypto AI investors should analyze the tokenomics and utility of such CEX-issued tokens carefully. If primarily for incentives, their long-term value may be questionable. However, if the L2 fosters genuine innovation and integrates AI-friendly features, it could present opportunities.

Conclusion

The crypto landscape is rapidly evolving with CEXs deepening on-chain engagement and a push for transparency, while AI's role in identity and content reshapes user interaction. Crypto AI investors and researchers must track these converging trends, scrutinizing token utility and the strategic integration of AI to identify sustainable value.