Article source: Mankun Blockchain
Who can bring Web3 giants like CZ and Vitalik to endorse it together? And who can get the international top journal Nature to publicly praise it? By the end of 2024, decentralized science (DeSci) has shed its previous low-profile mystery and is stepping into the spotlight of the Web3 stage as a new 'top flow':
·On November 6, 2024, Binance Labs announced an investment in the DeSci project BIO Protocol (BIO);
·On November 13, 2024, at Binance's DeSci Day event in Bangkok, CZ and Vitalik discussed the development direction of DeSci together;
·On December 11, 2024, one of the world's most cited 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 DeSci concept MEME coins;
·.....
Meanwhile, the DeSci sector in the crypto market is vibrant. On December 26, according to SoSoValue data, the DeSci sector rose against the trend, standing out particularly in the correcting crypto market. So, what kind of revolution is brewing in the DeSci track? What is the current state of industry development? Attorney Mankun will explain it all from a compliance perspective.
DeSci is reshaping 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 fundraising, data sharing, and result distribution for scientific research.
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 chain. DeSci utilizes blockchain to store research data on a distributed network, ensuring data tamper-proof, traceable, and allowing researchers to assert rights over their findings, making the circulation and trading of research data and patents more transparent and compliant.
·DAO governance. DeSci projects are managed by DAO organizations, allowing token-holding investors and researchers to jointly decide on the allocation of funds, research directions, and resource distribution, thereby achieving community-driven governance and decision-making, which not only enhances the transparency of decisions but also reduces conflicts of interest in the research process.
In simple terms, DeSci is a research organization operated by a DAO that raises funds through token issuance, and their result data will ultimately be shared on-chain. The benefits of this model lie in its breaking of traditional barriers in research financing, data closure, 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 scientific research has not been able to quickly achieve commercialization. Therefore, the current DeSci projects are all quietly working hard.
Inventory of DeSci implemented projects
In 2024, the DeSci concept became popular, and many originally dormant research projects also entered the public eye.
ResearchHub: Web3 version of a scientific collaboration platform
ResearchHub is a DeSci project supported by Coinbase founder Brian Armstrong, aiming to reshape the collaboration and publishing processes of scientific research. ResearchHub offers a decentralized new path for publishing and peer review and introduces a reward mechanism, allowing researchers to submit papers, comment on research results, and receive the native token $RSC as an incentive. This mechanism successfully attracted a large number of researchers and peer review experts to participate in discussions and improve research results, thus receiving recognition from (Nature) journals.
BIO Protocol: The on-chain scientific version of 'Y Combinator'
BIO Protocol focuses on biotechnology and pharmaceuticals and is known as the 'on-chain scientific incubator.' The project provides funding management, experimental resource integration, and research result incubation services for research teams through DAO governance and token incentive mechanisms, and puts research results on-chain to assert rights through IP-NFTs, promoting the marketization and circulation of research results.
It is worth mentioning that the explosive popularity of BIO Protocol is partly attributed to its issued MEME coin $BIO. The project quickly completed financing by leveraging the market popularity and speculative sentiment of MEME coins, breaking 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 focused on anti-aging and extending human lifespan. It employs a DAO governance model to raise and manage research funds. Researchers can apply for funding directly from the community, and community members participate in decision-making by holding the $VITA token, jointly 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 attracted collaboration from pharmaceutical giants like Pfizer. The project also uses NFTs to assert rights over research results, promoting the market circulation of intellectual property. In the high-investment, long-cycle life sciences field, VitaDAO provides a new path for research funding and result transformation, becoming a landmark project in the DeSci track.
It is noteworthy that some current DeSci projects, such as $URO and $RIF, have distinct characteristics of MEME coin issuance. Through this path, these projects have completed rapid financing in a short period, demonstrating breakthroughs in fundraising and research models under decentralized approaches in this industry.
Compliance challenges of DeSci
The explosive popularity of DeSci is attributed to its disruptive research model, as well as the financing effect driven by MEME coins. However, just like all Web3 tracks are experiencing 'growing pains,' behind decentralization and open innovation, DeSci also faces dual tests of compliance and security.
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, have also suggested that the DeSci track can leverage MEME coins for industry explosions. Although this method is feasible, reality cannot be ignored: most MEME coins that were popular in 2024 have already 'died,' and ensuring that MEME coins can be recognized in the long term is a key issue.
Moreover, the compliance issues surrounding token issuance are always a Damocles sword hanging over all Web3 projects. Not to mention countries like China, which represent strong regulatory bans on token issuance; in the US, such pro-crypto countries also inevitably touch regulatory red lines.
Currently, the US FIT21 Act is promoting the establishment of a regulatory framework for digital assets. 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 clearly states that only tokens meeting specific conditions will not be classified as securities, thereby avoiding the strict regulations of the SEC. This means that if DeSci projects want to raise funds through MEME coins, they must strictly distinguish between 'utility tokens' and 'security tokens' to ensure that token designs meet the 'functionality-first' standard.
In addition, the EU's MiCA legislation is about to be implemented, which imposes 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 raising funds through token issuance.
2. Legal gray area of DAO governance
DeSci projects widely adopt DAO (Decentralized Autonomous Organization) governance models to manage research funds and decision-making processes in a community-driven manner. However, this 'code is law' autonomy logic faces many compliance challenges in actual operations.
First of all, the positioning of DAOs as legal entities is still controversial. Although DAOs emphasize decentralization and member autonomy, their governance structures are not clearly recognized under current legal systems. This leads to legal gaps in financial management, tax compliance, and contract fulfillment. Although Wyoming in the US has taken the lead in recognizing DAOs as a special form of limited liability company (LLC), most countries worldwide still lack a similar legal framework, leaving DAOs facing uncertainty in cross-border jurisdiction for international business.
Secondly, the fund management model of DAOs can easily trigger regulatory scrutiny. Most DAOs manage funds through smart contracts, which, while enhancing transparency, also increases the risk of fund abuse or money laundering. According to the latest guidance from the FATF (Financial Action Task Force), decentralized organizations involved in fund flows still need to comply with anti-money laundering (AML) and know your customer (KYC) regulations. This means that DeSci projects must find a balance between decentralization and regulatory compliance.
Summary by Attorney Mankun
From CZ and Vitalik's endorsement to a thumbs up from Nature, DeSci has opened a new window for research financing with MEME coins and DAOs. However, scientific research is a long-term experiment, and DeSci's next step is not just to continue telling the good story of 'decentralized research,' but also to answer a real question — how long can a flame lit by short-term speculation burn?
Whether exploring programmable financing mechanisms or promoting the establishment of legal identities for DAOs, the DeSci track must find a fulcrum between innovation and compliance. On this road, Attorney Mankun will continue to pay attention to the progress of the DeSci industry, helping scientific innovation go further and stand more firmly.