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Are the corporate structures of crypto companies unstable?

Written by Thu 3 Feb 2022

The rise of Bitcoin and other cryptocurrencies have created countless new millionaires and paved the way for NFTs (non-fungible tokens). Stored on the blockchain as a non-interchangeable unit of data, NFTs can be any form of digital content, including GIFs, songs and artwork.

Projects focusing on NFT content are big business, with some of the more successful NFTs costing in excess of $10 million to purchase. However, a number of high profile projects have faced governance challenges in recent months. The Pudgy Penguins NFT project was expected to create “a game, a token, an educational book on NFTs and more”, according to a Pudgy Penguins owner. But according to a report by Coindesk, after half a year, these plans have yet to come to fruition.

Combined with an alleged lack of transparency, some Pudgy Penguins owners and others in the NFT space are offering to buyout the founders of the project, in a bid to ensure that the initial plans are achieved. One prominent NFT collector called @beaniemax publicly offered to buyout the founders:

“500 ETH public cash offer to the founders of Pudgy Penguins to sell me the project “as is”. I will deliver on all of the promises of a game with exciting tokenomics. Development entirely funded out of my pocket.”

In such an innovative and cutting-edge ecosystem, good governance issues are still being worked out, with the Pudgy Penguins situation illustrating problematic elements of NFT project management structures. Due to the structure of NFT projects, little can be done by the NFT owners to demand change or transparency from the founders.

Centralised teams often run the projects, with decentralised projects being far less typical. The future of the NFT ecosystem will be informed by what happens with the Pudgy Penguins project and if it can successfully transition to a decentralised model.

Written by Thu 3 Feb 2022

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Bitcoin Blockchain corporate cryptocurrency
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