Solona Sued: An Opening For Hive

People cannot help but to turn to Big Brother.

What is taking place now is indicative of what typically takes place. People talk about freedom with cryptocurrency, hatred of the establishment, and wanting to be in control. Yet, the second someone loses money, that all goes out the window.

At that point, we watch them running to Big Brother to take care of things.

This is exactly what is happening in California with a class action lawsuit filed against, among others, Solona Labs and the Solona Foundation. At the core of the lawsuit is the accusation that entities illegally gained at the expense of other investors.

Not only do they turn to Big Brother, these people are actually doing the job for the government.

In the complaint, Young said that the way SOL was created and sold meets the three principles of the Howey Test, a case used by the US Supreme Court to determine whether a transaction qualifies as an “investment contract,” and thus would be considered a security and subject to disclosure and registration.

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Decentralize Or Comply

There is little doubt that Solona fails at decentralization. We also know that anytime there is a laboratory or foundation, a point of vulnerability exists which the governments can exploit.

It now appears lawyers are going to do the same.

Certainly, we can conclude the accusations of manipulation and illegal profiting by the entities named in the suit probably took place. Rather than being an outlier, behavior like this is commonplace in financial markets. Cryptocurrency is no different. In fact, a case could be made that action is on steroids within this space.

The challenge is going to come when most blockchains that are in this position face similar actions. Even if the same behavior is not present, anytime one loses money on a coin, the temptation will be to sue.

Are people going to sue Vitalik and the Ethereum foundation due to the price drop? They do control a large portion of the Ethereum outstanding.

Naturally, we can expect people like Chairman Gensler of the Securities and Exchange Commission to be salivating over this. Here we see the private sector doing his job. It is logical this case will make it across his desk and be used against the industry.

Tokenization is going to take a hit on this one. Only those projects that are truly decentralized will be out of reach.

This is going to be key going forward.

2022: The Great Cleansing

We are witnessing a clearing out of the entire cryptocurrency industry. Between the bear market as well as the stablecoin thrashing brought in by the implosion of UST, we are seeing a lot of the fluff in the industry dying out.

The fact that we saw many large project reach illiquidity, necessitating funding from other sources shows how precarious the industry was.

For this reason, 2022 might be known as the Great Cleansing within the world of cryptocurrency. We are watching the end to anything that lacks resiliency.

Centralization, by its very nature, is not as resilient as decentralized entities.

Hive To Benefit?

Many have claimed there are only a few truly decentralized blockchains operating. Since the allure of providing one with a large stake is so strong, most project teams simply do not resist. That means the alternatives can be counted on one hand.

There is little debate about where Bitcoin fits at this point. Even though it started with one miner, Satoshi Nakamoto, it now spread to nodes all over the world.

How many others fit into the category of decentralized? This is a tough question and it is likely we will find out in the next round of attacks. We only need to watch the legal sector to see who it goes after.

One thing we know is that Hive is outside of this. There is no foundation or laboratory behind the blockchain. Much of the development comes from the Decentralized Hive Fund, an account that nobody is in control of.

What is called into question is those projects that were built upon Solona. It is something that is often overlooked. If there are problems with the entities behind the base layer, all Layer 2 solutions could be impacted.

At some point, developers are going to start looking at this.

Clearing The Way For Web 3.0

Sometimes it is beneficial to take a step back before moving forward. It is likely that the industry was in great need of this cleansing. Many project needed to fail since they were utilizing resources that were required elsewhere.

Could we finally be embarking upon the path to Web 3.0?

This became somewhat of a marketing term since the likes of Jack Dorsey jumped on it (his Web 5.0 aside). We saw many endeavors that claimed to be Web 3.0 yet were nothing more than a spin on the existing Internet structure.

One of the main tenets of Web 3.0 is decentralization. If blockchains such as Solona are not moving in that direction, which they obviously are not, then we need to focus upon those which are.

Cryptocurrency, the technology, received a ton of attention due to the monetary aspects. The speculation turned it into the Wild West, something regulators and politicians are not going to allow.

At issue is how technology needs time to flourish. It never is an overnight process. Development happens over years before it is mature enough to stand on its own. Unfortunately, since most approach cryptocurrency simply for the monetary component, this creates headwinds that make moving forward more difficult.

Nevertheless, having a lot of these entities slammed will open up the path for better projects to step forward. Hive is just chugging along, being overlooked by most. That said, we can see progress in many of the project teams.

In the end, we are going to see anything that is centralized attacked. This does not mean they will disappear. However, we are going to see forced compliance which will drive up costs and make innovating more difficult.

At the same time, those projects that start with the idea of moving towards decentralization from the start will have a better chance of succeeding. Over the next couple years, this could really become an concern for developers and where they decide to build.

Hive simply needs to keep maintaining its pace. As the options for developers dwindle, Hive will eventually stand out.

This is now a game of attrition.


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38 comments
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Hive is far superior and the dPoS system is great

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We will see over time. If we just keep chugging along, we should see results. Sometimes just focusing on development and filling in infrastructure gaps is the most important.

Hype dies down.

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Looks like we don't have an Ethereum killer so far.

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The greatest Ethereum killer is ETH.
If they were running their platform well, no one would be trying to make an Ethereum killer.

We will see what happens with ETH 2.0

All the ERC20 tokens could migrate to another platform at any moment.
And it will look like a group of people all got together and decided to go to Theta (or something)

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With all the money, attention, and ultimately Wall Street backing, I agree with you. At the end of the day, I see that being controlled by Wall Street which means that it will be a screaming success.

There are use cases where high fees are not a problem (like to major firms dealing in very large numbers). In the end, I dont think the average person builds on there.

It will be full of heavy hitters.

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Ah yes the Ehtereum killer.

Been waiting for that for years. It was suppose to be EOS. Then BNB. Then Cardano.

Still waiting.

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pixresteemer_incognito_angel_mini.png
Bang, I did it again... I just rehived your post!
Week 113 of my contest just started...you can now check the winners of the previous week!
14

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Fingers crossed for hive! I think all we are here because we believe in this network. Only time will tell though!

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That is true. There are a lot of reasons to be optimistic and none that are hype.

We just keep plugging along, playing the long game.

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Regulating crypto is hard. Regulators have hardly any control over the decentralized ledgers but they still want to have some hold of it so that they can expect tax revenue from users' gains.

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It gets a lot easier if there is a foundation or lab for them to go after. They will use any point of vulnerability.

If this attorney could find someone to go after, but the world the regulators will do the same.

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We need to pause and ask ourselves what Web 3 really means to us in other words decentralization. This applies to developers and users alike, failure to stick to decentralized projects or build we are going to have incidents of these every now and then.

2022 might just be the year of cleaning after all.
Lets keep strengthening Hive, that's all I care about now, not about Hive mooning.

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I think many who are serious about Web 3.0 have clear in their mind where they want things to go.

What we see, though, is a lot of people who talk about Web 3.0 but still want to retain control. That is my view of where Jack Dorsey comes from.

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Yep, we the people, have been sold on the lie that big daddy govern-cement is here to help us.

However, regulators usually make everything worse.
Bernie Madoff made off with so much money because of regulators and regulations.
So many people KNEW it was a ponzi, yet it continued for years.

Look at silver and gold. How long has GATA been showing the regulators that gold is rigged?
And nothing has been done.


Getting one, bright, charismatic guy to lead a team to develop something is quite easy.
Well, compared to get a decentralized group to build it out.

A centralized direction and guidance works when starting.
A decentralized anything usually doesn't get started.

And making money is a great motivator.
Did Steem get started because of the vision? or because of the money?
Knowing things from hindsight, i would say it was a lot about the money.
But that lead to HIVE actually being decentralized.

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I was just talking to someone about the days where people were complaining about not having that "face" or charismatic leader. They were pointing to the fact that Apple had its Jobs. How could Hive (Steem) succeed without that?

Well Bitcoin seemed to do it. And now, as the regulators are circling the wagons, making things worse as you said, having a face is not ideal. In fact, that is the first target for them.

Under the radar is the best place to be right now. In the meantime, keep building infrastructure that spreads things out even more.

That is how we beat the governments, bankers, and politicians.

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It's crazy but it's the same story over and over again. People wanting freedoms but they take zero accountability for their own actions and then go bug the government to do something about it. That mentality is making the goverment more and more in power and restricting your freedoms more every time this happens. The really funny thing those people complaining nearly none of them will see a penny back from the government anyways.

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I agree.
If your big enough to take action, you must be big enough to take the consequences.
It's called personal responsibility, and is in short supply.
:)

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I've been saying for quite some time now that there needed to be a major shake up to trash bin some of these crap coins that are out there. If there is no real use case, it shouldn't really exist. As I was reading through your post I started thinking about Hive and also about Linux and how there are some similarities there. Linux wasn't really know outside a specific group of people back in the day. These days it is more well known, but still probably not the most widely used. All kinds of distros have popped up by enterprising developers just like the communities we have here on Hive. People who know what they are talking about wouldn't hesitate to affirm the power and utility of Linux. Just like Hive.

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It might not be known but it is what runs most of the servers in the world. I think LINUX accounts for more than 80% of them.

So yeah it is a sensible analogy. Hive just keeps building so that it has the infrastructure in place to serve what is needed in the future.

That is the major difference. No hype or pump.

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It is now, but it wasn't always, so yeah, that just cements my analogy even more :)

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No it wasnt always.

Another piece of your analogy. Think back of the LINUX history, how may directions did it go in. Like Hive, it was going a thousand different ways at one time.

Yet, in the end, that created an even more robust system as more solutions were rolled out.

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For sure! You could even go as far as to point out that Linux was born from Unix, but I don't think I would compare STEEM to Unix in any way shape or form :)

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centralization will always be lagging in development and creativity, hive will be found

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Lol, we live in a crazy world. Instead of people to accept their loses and move on, they try taking the whole building down just to 'satisfy their emotions'. I wonder what will happen if Ethereum gets sued? Everyone knows Vitalik Buterin is the main brain behind it and has a significant stake in the project.

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Isn't that the truth?

Was anyone forced to buy into Solona? Sure it might be centralized and there is likely manipulation taking place. But that isnt anything new. Yet we have an individual who lost money and now wants a pound of flesh.

Of course, others jump right on.

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Are people going to sue Vitalik and the Ethereum foundation due to the price drop?

And what would happen, if they would do that?

Vitalik Buterin and the Ethereum foundation is not responsible for the price drop, nor for the investment decisions of the people.

People are obviously sitting on the horse backwards in this case. Everyone is responsible for their own decisions and actions, including buying and selling cryptocurrencies or anything else.

Or at least this is common sense in my opinion. But we will see. Maybe the whole world gone crazy, and the people will indeed sue them, and the court will say something else. Something different. We can never know nowadays. Many crazy things are happening nowadays.

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Vitalik Buterin and the Ethereum foundation is not responsible for the price drop, nor for the investment decisions of the people.

If they were to claim that they illegally sold a security as that their holdings give them the ability to manipulate the price, then they could win.

The key to understand is that, once you are in court, who knows what will happen. Sure, it might be tough to prove for Ethereum but what about smaller chains.

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That really sucks for them and like you just said it's a huge opportunity for us.

Awesome article and very smart and wise breakdown.

Sounds like we are going to get some more opportunities here pretty soon.

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Just had to keep checking continuously as you used solona many times. I just hope to see hive take that stand on the pedestal.

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The centralized systems will always suffer from these big corporations and I wonder whether or not they will really survive. I do know that centralized entities do have a place as it's cheaper to start one up compared to a decentralized one.

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Wow powerful events are taking place, which could further rock our world. Crypto is truly in it's infancy with lots of growth, and death ahead. The strong will survive, the weak wither and die. It will be a culling of sorts, as you say, the projects with disloyal communities, little development and little utility will probably be consigned to the waste bin of crypto history.

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