Author: Iris, Liu Honglin
Who is it that can get CZ and V God, the Web3 bigwigs, to stand on the same stage? And who is it that can get the top international journal Nature to publicly praise? At the end of 2024, decentralized science (DeSci) has abandoned its previous low-key and mysterious ways, and is now taking center stage on the Web3 scene as the new "top stream":
- On November 6, 2024, Binance Labs announced an investment in the DeSci project BIO Protocol (BIO);
- On November 13, 2024, at Binance's Bangkok DeSci Day event, CZ and V God discussed the development direction of DeSci on the same stage;
- On December 11, 2024, one of the world's most highly 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, 2 of which were MEME coins with a DeSci concept;
- .....
At the same time, the crypto market's DeSci sector is showing renewed vitality. On December 26, according to SoSoValue data, the DeSci sector bucked the trend and performed particularly well in the crypto market correction. So what kind of revolution is the DeSci track brewing? What is the current state of industry development? Lawyer Mankun will tell you from a compliance perspective.
DeSci Reshapes the Scientific 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 scientific research, data sharing, and distribution of research results.
How to decentralize? DeSci relies on three key components:
- Token issuance. DeSci provides a globally accessible fundraising channel for research projects through token issuance (such as MEME coins). Researchers no longer rely on government funding or large foundation grants, but can directly issue tokens or NFTs to global investors to raise research funds.
- On-chain data. DeSci uses blockchain to store research data on a distributed network, ensuring data tamper-resistance and traceability, and can also confirm the rights of research results, making the circulation and trading of research data and patents more transparent and compliant.
- DAO governance. DeSci projects are managed by DAO organizations, and token-holding investors and researchers can jointly decide on the allocation of funds, research directions and resource allocation, thereby achieving community-driven governance and decision-making, which not only enhances the transparency of decision-making, but also reduces the problem of interest bias in the research process.
In simple terms, DeSci is a research organization operated by a DAO, which raises funds through token issuance, and its research results and data will ultimately be shared on the chain. The advantage of this model is that it breaks through the high barriers to traditional research funding, the closed nature of data, and the centralization of decision-making, providing a more open and flexible ecosystem for scientific research innovation.
In fact, DeSci is not a newly born concept at this stage, this track has existed for a long time, it's just that doing scientific research has not been able to quickly commercialize, so the current DeSci projects are all quietly working hard.
Review of DeSci Landing Projects
In 2024, the DeSci concept became popular, and many originally dormant research projects also entered the public eye.
ResearchHub: Web3 Version of Scientific Research Collaboration Platform
ResearchHub is a DeSci project supported by Coinbase founder Brian Armstrong, dedicated to reshaping the collaboration and publishing process of scientific research. ResearchHub provides a decentralized new path for publishing and peer review, and introduces a reward mechanism, where researchers can submit papers, comment on research results, and receive the native token $RSC as an incentive. This mechanism has successfully attracted a large number of researchers and peer reviewers to participate in the discussion and improvement of research results, and has been praised by the journal Nature.
BIO Protocol: "Y Combinator" of Chain-based Science
BIO Protocol focuses on the biotech and pharmaceutical fields, and is known as the "chain-based science incubator". The project provides services such as fund management, experimental resource integration, and research result incubation for research teams through DAO governance and token incentive mechanisms, and puts research results on the chain, confirming rights through IP-NFT, to promote the commercialization and circulation of research results.
It is worth mentioning that the popularity of BIO Protocol is partly due to the issuance of its MEME coin $BIO. The project used the market heat and speculative sentiment of MEME coins to quickly complete financing, not only breaking through the traditional scientific research funding barriers, but also providing a more flexible and efficient capital 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 uses the DAO governance model to raise and manage research funds. Researchers can apply for funding directly to the community, while community members participate in decision-making through holding the $VITA token, jointly promoting project progress. This model not only lowers the threshold for scientific research financing, but also makes the flow of 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 the support and cooperation of pharmaceutical giants like Pfizer. The project also uses NFTs to confirm the rights of research results, promoting the commercialization and circulation of intellectual property. In the life science field, where research investment is high and the cycle is long, 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, such as $URO, $RIF, have the issuance of MEME coins as a distinctive feature. Through this path, these projects have completed rapid financing in the short term, demonstrating the breakthrough of this industry in fundraising and scientific research models under the decentralized approach.
Compliance Challenges of DeSci
The popularity of DeSci is due not only to its disruptive scientific research model, but also to the financing effect driven by MEME coins. However, like all Web3 tracks, DeSci is also facing dual challenges of compliance and security behind decentralization and open innovation.
1. Regulatory Challenges of MEME Coin Financing
Currently, DeSci projects generally rely on the issuance of MEME coins for early-stage financing. Some analysis reports, such as the MV Global report, also suggest that the DeSci track can achieve industry explosion through MEME. Although this method is feasible, the reality cannot be ignored: most of the MEME coins that were popular in 2024 have already "died", and how to ensure that MEME coins can be recognized in the long term is a key issue.
In addition, the compliance issue of token issuance is always the Damocles' sword hanging over the heads of all Web3 projects. Not to mention the strongly regulated countries like China that prohibit token issuance, even in the US, which is a pro-crypto country, token issuance is inevitable to touch the regulatory red line.
The current US FIT21 bill is pushing to establish a regulatory framework for digital assets, and once the bill is passed and takes effect, it will provide clear compliance standards for tokens like MEME coins. For example, the FIT21 bill clearly states that only tokens that meet certain conditions will not be identified as securities and thus avoid the strict regulation 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 the token design meets the "function-first" standard.
In addition, the EU's MiCA regulation is about to be implemented, and its regulation of MEME-like high-volatility assets in terms of issuance, marketing, etc. is also quite strict. This will also pose certain obstacles to the financing path of DeSci projects through token issuance in the European region.
2. 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" self-governance logic faces many compliance challenges in actual operation.
Here is the English translation:First, the legal status of DAOs remains controversial. Although DAOs emphasize decentralization and member self-governance, their governance structure is not clearly recognized under the current legal system. This has led to legal gaps in areas such as financial management, tax compliance, and contract performance for DAOs. While the U.S. state of Wyoming has been the first to recognize DAOs as a special form of Limited Liability Company (LLC), most countries around the world still lack a similar legal framework, which creates uncertainty over cross-border jurisdiction for DAOs in international business.
Secondly, the funding management model of DAOs is prone to regulatory scrutiny. Most DAOs manage funds through smart contracts, which, while increasing transparency, also increases the risk of fund misuse or money laundering. According to the latest guidance from the Financial Action Task Force (FATF), decentralized organizations involved in fund flows still need to 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.
Summary by Mankun Lawyers
From CZ and V God's endorsement to Nature's thumbs-up, DeSci has opened a new window for scientific research financing through MEME coins and DAOs. But scientific research is a long-term experiment, and the next step for DeSci is not just to continue telling the "decentralization of science" story, but to answer a practical question - how long can the flames ignited by short-term speculation burn?
Whether exploring programmable financing mechanisms or promoting the establishment of DAO's legal identity, the DeSci track must find a fulcrum between innovation and compliance. On this path, Mankun Lawyers will continue to follow the progress of the DeSci industry, helping scientific innovation go further and stand more firmly.
