Written by: Iris, Liu Honglin
Who can get Web3 giants like CZ and Vitalik to stand together? Who can get top international journals like Nature to publicly commend them? By the end of 2024, decentralized science (DeSci) has transformed from its previous low-key mystery, stepping onto the central stage of Web3 as a new 'top player':
On November 6, 2024, Binance Labs announced an investment in the DeSci project BIO Protocol (BIO);
On November 13, 2024, during Binance's Bangkok DeSci Day event, CZ and Vitalik discussed the development direction of DeSci on stage;
On December 11, 2024, one of the world's highest citation rate scientific journals (Nature) published an article introducing the DeSci protocol ResearchHub;
On December 19, 2024, Binance Alpha announced the third batch of 10 projects, of which 2 are MEME coins related to the DeSci concept;
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Meanwhile, the DeSci sector of the crypto market is revitalizing. On December 26, according to SoSoValue data, the DeSci sector has risen against the trend, performing particularly well in the declining crypto market. So, what kind of revolution is brewing in the DeSci track? What is the current state of industry development? Lawyer Mankun will elaborate from a compliance perspective.
DeSci reshapes the research model
DeSci, short for Decentralized Science, aims to build a decentralized platform through blockchain technology and smart contracts, establishing a decentralized model for funding research, sharing data, and distributing results.
How to decentralize? DeSci relies on three key components:
Token issuance. DeSci provides a global fundraising channel for research projects through token issuance (such as MEME coins). Researchers no longer rely on government grants or large foundation funding but can directly issue tokens or NFTs to global investors to raise research funds.
Data on the blockchain. DeSci uses blockchain technology to store research data on distributed networks, ensuring data integrity, traceability, and allowing for the rights of research results to be confirmed, making the circulation and transaction of research data and patents more transparent and compliant.
DAO governance. DeSci projects are managed by DAO organizations, where token-holding investors and researchers can collectively decide on fund allocation, research direction, and resource distribution, thereby achieving community-driven governance and decision-making, which not only enhances transparency in decision-making but also reduces interest bias issues in the research process.
In simple terms, DeSci is a research organization operated by a DAO, financed through issuing coins, and their result data will eventually be shared on the blockchain. The benefit of this model is that it breaks down traditional barriers to research financing, data isolation, and centralized decision-making, providing a more open and flexible ecological environment for scientific innovation.
In fact, DeSci is not a newly born concept at this stage; this track has existed for a long time, but research has not been able to quickly commercialize. Therefore, all current DeSci projects are inevitably working quietly.
Review of DeSci landing projects
In 2024, the DeSci concept gained popularity, bringing many previously dormant research projects into the public eye.
ResearchHub: Web3 version of the scientific collaboration platform
ResearchHub is a DeSci project supported by Brian Armstrong, the founder of Coinbase, dedicated to reshaping the collaboration and publishing processes in scientific research. ResearchHub offers a decentralized publishing and review pathway and introduces a reward mechanism where researchers can submit papers, comment on research findings, and earn the native token $RSC as an incentive. This mechanism has successfully attracted numerous researchers and review experts to participate in discussions and improvements, leading to recognition in journals such as Nature.
BIO Protocol: On-chain science version of 'Y Combinator'
BIO Protocol focuses on biotechnology and pharmaceuticals, known as the 'on-chain science incubator.' The project provides services such as fund management, experimental resource integration, and research result incubation through DAO governance and token incentive mechanisms, and puts research results on-chain, confirming rights through IP-NFT, promoting the marketization and circulation of research results.
It is worth mentioning that the explosive popularity of BIO Protocol is partly due to its issuance of the MEME coin $BIO. The project quickly completed financing by leveraging the market heat and speculative sentiment around MEME coins, breaking down traditional barriers to research funding and providing a more flexible and efficient funding solution for decentralized science.
VitaDAO: Anti-aging research under DAO governance
VitaDAO is a decentralized 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, while community members participate in decision-making by holding the $VITA token, collectively promoting project progress. This model not only lowers the threshold for research financing but also makes the flow of research funds more transparent and controllable.
As of 2024, VitaDAO has funded over 20 early research projects related to longevity and has attracted cooperation support from pharmaceutical giants like Pfizer. The project also uses NFTs to confirm the rights of research results, promoting the marketization of intellectual property. In the high-investment, long-cycle field of life sciences, VitaDAO provides a new path for research funding and result transformation, becoming a landmark project in the DeSci track.
It is worth noting that some current DeSci projects, like $URO and $RIF, have distinct characteristics in their MEME coin issuance behavior. Through this pathway, these projects have completed rapid financing in a short time, showcasing breakthroughs in fundraising and research models under decentralized approaches.
Compliance challenges of DeSci
The explosive popularity of DeSci is due both to its disruptive research model and to the financing effect driven by MEME coins. However, just like all Web3 sectors are experiencing 'growing pains,' DeSci also faces dual tests of compliance and security behind decentralization and open innovation.
1. Regulatory challenges of MEME coin financing
Currently, DeSci projects generally rely on issuing MEME coins for early financing. Some analysis reports, such as the MV Global report, suggest that the DeSci sector can leverage MEME for industry breakthroughs. Although this method is feasible, reality cannot be overlooked: most MEME coins that were popular in 2024 have already 'died'; how to ensure MEME coins can be recognized for the long term is a key issue.
Moreover, the compliance issues of issuing tokens always hang over all Web3 projects like the sword of Damocles. Not to mention countries represented by China, which have strict regulations prohibiting token issuance; in the U.S., such crypto-friendly countries also inevitably touch regulatory red lines when issuing tokens.
Currently, the U.S. FIT21 Act is promoting the establishment of a digital asset regulatory framework. Once the bill is passed and comes into effect, it will provide clear compliance standards for tokens like MEME coins. For example, the FIT21 Act explicitly states that only tokens meeting specific conditions will not be classified as securities, thus avoiding strict SEC regulation. This means that if DeSci projects want to finance through MEME coins, they must strictly differentiate between 'utility tokens' and 'security tokens,' ensuring that token designs meet the 'functional use priority' standard.
In addition, the EU's MiCA Act is about to be implemented, which will impose strict regulations on the issuance and marketing of highly volatile assets like MEME coins. This will also create certain obstacles for DeSci projects in Europe when issuing coins for financing.
2. The legal gray area of DAO governance
DeSci projects widely adopt the DAO (Decentralized Autonomous Organization) governance model, managing research funds and decision-making processes in a community-driven manner. However, this 'code is law' autonomy logic faces many compliance challenges in practice.
First, the legal positioning of DAO as a legal entity is still controversial. Although DAOs emphasize decentralization and member autonomy, their governance structure has not been explicitly recognized under the current legal system. This results in legal gaps in financial management, tax compliance, and contract performance. Although Wyoming in the U.S. was the first to recognize DAOs as a special form of limited liability company (LLC), most countries worldwide still lack similar legal frameworks, leading to uncertainties regarding cross-border jurisdiction in international business for DAOs.
Secondly, the funding management model of DAOs can easily trigger regulatory scrutiny. Most DAOs manage funds through smart contracts, which improves transparency but also increases the risk of fund misuse or money laundering. According to the latest guidance from the FATF (Financial Action Task Force), decentralized organizations involved in fund flows must still comply with anti-money laundering (AML) and know your customer (KYC) regulations. For DeSci projects, this means finding a balance between decentralization and regulatory compliance.
Lawyer Mankun's Summary
From CZ and Vitalik standing together to Nature giving a thumbs up, DeSci has opened a new window for research financing with MEME coins and DAOs. However, scientific research is a long-term experiment. The next step for DeSci is not just to continue telling the story of 'decentralized research,' but also to answer a practical question—how long can the flame ignited by short-term speculation last?
Whether exploring programmable financing mechanisms or promoting the establishment of legal identities for DAOs, the DeSci track must find leverage between innovation and compliance. Along this path, lawyer Mankun will continue to pay attention to the progress of the DeSci industry, helping scientific innovation to go further and stand more firmly.