Web3 Lawyer: Detailed analysis of Web3's new top DeSci, how can it be scientific and compliant?

"Who" can make Web3 big guys like CZ and Buterin stand up for it? And "who" can make the top international journal Nature publicly name and praise it? At the end of 2024, decentralized science (DeSci) has changed from its previous low-key and mysterious appearance, and is moving towards the center of the Web3 stage with its new "top-notch" attitude:

· On November 6, 2024, Binance Labs announced its investment in the DeSci project BIO Protocol (BIO);

· On November 13, 2024, at Binance’s Bangkok DeSci Day event, CZ and Buterin discussed the development direction of DeSci on the same stage;

· On December 11, 2024, "Nature", one of the world's most cited scientific magazines, published an article introducing the DeSci protocol ResearchHub;

· On December 19, 2024, Binance Alpha announced the third batch of 10 projects, 2 of which are MEME coins with the DeSci concept;

· …..

At the same time, the DeSci section of the encryption market is revitalized. On December 26, according to SoSoValue data, the DeSci sector bucked the trend and performed particularly well in the correction of the crypto market. So, what kind of revolution is brewing in the DeSci track? What is the current development process of the industry? Lawyer Mankiw will explain everything from a compliance perspective to everyone.

DeSci reshapes the scientific research model

DeSci, whose full name is Decentralized Science, aims to build a decentralized platform through blockchain technology and smart contracts, and establishes a decentralized model that provides fund raising, data sharing and results distribution for scientific research.

How to decentralize? DeSci relies on three key parts:

·Token issuance. DeSci provides global funding channels for scientific research projects through token issuance (such as MEME coins). Researchers no longer rely on government grants or large foundation funding, but can issue tokens or NFTs directly to global investors to raise scientific research funds.

·Data on the chain. DeSci uses blockchain to store research data on a distributed network to ensure data is tamper-proof and traceable, and can confirm the ownership of research results, making the circulation and transactions of scientific research data and patents more transparent and compliant.

·DAO governance. The DeSci project is organized and managed by the DAO. Investors and researchers holding tokens can jointly decide where funds go, research directions and resource allocation, thereby achieving community-driven governance and decision-making, which not only improves the transparency of decision-making, but also reduces the cost of the scientific research process. interest bias issues.

Therefore, to understand it simply and crudely, DeSci is a scientific research organization operated by DAO and financed by issuing coins. Their result data will eventually be shared on the chain. The advantage of this model is that it breaks the traditional limitations of high scientific research financing barriers, closed data and centralized decision-making, and provides a more open and flexible ecological environment for scientific research innovation.

In fact, DeSci is not a new concept at this stage. This track has existed for a long time. However, scientific research has not been able to be commercialized quickly. Therefore, the current DeSci projects are being worked on silently without exception.

DeSci implementation project inventory

In 2024, the DeSci concept became popular, and many previously silent scientific research projects came into public view.

ResearchHub: Web3 version of scientific research collaboration platform

ResearchHub is a DeSci project backed by Coinbase founder Brian Armstrong and is committed to reshaping the collaboration and publishing process of scientific research. ResearchHub provides a new decentralized publishing and review path and introduces a reward mechanism. Researchers can submit papers, comment on research results through the platform, and obtain the native token $RSC as an incentive. This mechanism successfully attracted a large number of researchers and review experts to participate in discussing and improving research results, and was therefore recognized by the journal Nature.

BIO Protocol: The scientific version of “Y Combinator” on the chain

BIO Protocol focuses on the biotechnology and pharmaceutical fields and is known as the "on-chain science incubator". Through DAO governance and token incentive mechanisms, the project provides scientific research teams with services such as fund management, experimental resource integration, and research results incubation. It also puts research results on the chain and confirms ownership through IP-NFT to promote the marketization and circulation of scientific research results. .

It is worth mentioning that BIO Protocol’s popularity is partly attributed to its MEME coin $BIO. The project uses the market popularity and speculative sentiment of MEME currency to quickly complete financing, which not only breaks the traditional scientific research funding barriers, but also provides a more flexible and efficient funding solution for decentralized science.

VitaDAO: Anti-aging research under DAO governance

VitaDAO is a decentralized scientific research project dedicated to anti-aging and extending human lifespan. It raises and manages research funds through the DAO governance model. Researchers can directly apply for funding from the community, and community members participate in decision-making by holding tokens $VITA to jointly promote project progress. This model not only lowers the threshold for scientific research financing, but also makes the flow of scientific research funds more transparent and controllable.

As of 2024, VitaDAO has funded more than 20 early-stage research projects related to longevity, and has attracted cooperation support from pharmaceutical giants such as Pfizer. The project also uses NFT to confirm the rights of research results and promote the market circulation of intellectual property rights. In the field of life sciences with high investment in scientific research and long cycle, VitaDAO provides a new path for research funding and achievement transformation, becoming a landmark project on the DeSci track.

It is worth noting that the MEME currency issuance is a distinctive feature of some current DeSci projects, such as $URO and $RIF . Through this path, such projects have completed rapid financing in a short period of time, demonstrating a breakthrough in the industry's fund raising and scientific research model under a decentralized approach.

DeSci’s Compliance Challenges

DeSci’s popularity is due not only to its disruptive scientific research model, but also to the financing effect driven by MEME coins. However, just as all Web3 tracks are experiencing "growing pains", behind decentralization and open innovation, DeSci also faces the dual test of compliance and security.

1. Regulatory challenges of MEME currency financing

Currently, DeSci projects generally rely on the issuance of MEME coins for early financing. Some analysis reports, such as the MV Global report, also proposed that the DeSci track can use MEME to achieve an industry explosion. Although this method is feasible, the reality cannot be ignored: most of the MEME coins that have become popular in 2024 have "died". How to ensure that MEME coins can be recognized in the long term is a key issue.

In addition, the compliance issue of currency issuance will always be the Sword of Damocles hanging over all Web3 projects. Not to mention the countries represented by China that have strong supervision and prohibit currency issuance. In pro-encryption countries such as the United States, currency issuance will inevitably hit regulatory red lines.

The current US FIT21 bill is promoting the establishment of a digital asset regulatory framework. Once the bill is passed and takes effect, it will provide clear compliance standards for tokens such as MEME coins. For example, the FIT21 bill clearly states that only tokens that meet certain conditions will not be recognized as securities, thus avoiding the strict supervision of the SEC. This means that if the DeSci project wants to finance through MEME coins, it must strictly distinguish between "utility tokens" and "security tokens" to ensure that the token design meets the standard of "functional use first".

In addition, the EU's MiCA bill is about to be implemented, which also imposes strict regulations on the issuance and marketing of highly volatile assets such as MEME coins. This will also cause certain obstacles to the path of currency financing for DeSci projects in Europe.

2. Legal gray area of ​​DAO governance

DeSci projects extensively adopt the DAO (Decentralized Autonomous Organization) governance model to manage scientific research funds and decision-making processes in a community-driven manner. However, this autonomous logic of “code is law” faces many compliance challenges in actual operation.

First of all, the positioning of DAO as a legal subject is still controversial. Although DAO emphasizes decentralization and member autonomy, its governance structure is not explicitly recognized under the current legal system. This has led to legal gaps in DAO’s financial management, tax compliance and contract performance. Although Wyoming in the United States was the first to recognize DAO as a special form of limited liability company (LLC), most countries around the world still lack a similar legal framework, which makes DAO face the uncertainty of cross-border jurisdiction in international business.

Secondly, the DAO’s fund management model can easily trigger regulatory scrutiny. Most DAOs manage funds through smart contracts. Although this model improves transparency, it also increases the risk of fund abuse or money laundering. According to the latest guidance from FATF (Financial Action Task Force), decentralized organizations still need to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations if they involve fund flows. For the DeSci project, this means finding a balance between decentralization and compliance supervision.

Mankiw Lawyer Summary

From the CZ and Vitalik platforms to likes from Nature, DeSci has used MEME currency and DAO to open a new window for scientific research financing. But scientific research is a long-term experiment. DeSci's next step is not only to continue to tell the story of "decentralization of scientific research", but also to answer a practical question - how long can the flame ignited by short-term speculation burn?

Whether it is exploring programmable financing mechanisms or promoting the establishment of DAO legal identity, the DeSci track must find a fulcrum between innovation and compliance. Along this road, Lawyers Mankiw will continue to pay attention to the progress of the DeSci industry and help scientific research and innovation go further and stand firmer.