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By Stephen Wink and Adam Zuckerman

Decentralization is the key innovation enabled by blockchain technology, and can have significant technological, economic, and legal implications for web3 companies and protocols. Decentralization remains hard to grasp and define despite its importance. In the web3 spirit of collaboration and open source, Latham has partnered with a16z Crypto to develop two matrices to help enumerate the components of decentralization.

The matrices articulate not only the various categories and factors of decentralization but also suggest…

The SEC’s reliance on a nebulous US Supreme Court decision raises important questions for the future of decentralized finance.

By Benjamin Naftalis, Douglas K. Yatter, and Peter E. Davis

Reves v. Ernst & Young,[1] a 30-year-old US Supreme Court decision on farmers’ co-ops, is garnering attention in the Web3[2] world, specifically in the context of protocol-driven decentralized finance (DeFi).[3] The case popped up in recent speeches by senior Securities and Exchange Commission (SEC) officials, including congressional testimony of SEC Chair Gary Gensler,[4] and featured in one of the SEC’s latest moves in crypto enforcement — an August 2021 action against a company called DeFi Money Market (DMM).[5] These developments raise several important questions. What is the relevance and application of the Reves four-factor test? How does it apply (or not apply) to Web3 generally and DeFi specifically? Most importantly, does it give the SEC broad authority to regulate DeFi?

Popular and institutional interest in digital assets, decentralized applications, NFTs, and blockchain technology skyrocketed, and regulators sprinted to catch up.

By Todd Beauchamp, Yvette D. Valdez, Stephen P. Wink , Adam Bruce Fovent, Adam Zuckerman, and Deric Behar

For the digital asset markets, 2021 was a banner year. Among the milestones:

•  Bitcoin prices hit an all-time high, exceeding $65,000, up from about $30,000 at the end of 2020.

•  Total value locked in decentralized finance (DeFi) surged from under $20 billion to over $250 billion in 12 months.

•  Market capitalization for all digital assets reached $3 trillion.

•  Non-fungible tokens (NFTs) went from crypto curiosity to mainstream phenomenon, with a single NFT selling for $69 million at a traditional auction house and notable NFT collections reaching trading volumes in the billions.

•  Valuations for crypto companies and cryptoassets soared, with at least 40 unicorns (valuation of $1 billion or more) minted.

•  Venture capital (VC) firms invested an estimated $32.8 billion into crypto and blockchain-related startups, including $10.5 billion in Q4 2021 (up from an estimated $8 billion for all of 2020). Furthermore, 49 new crypto-focused VC funds were raised, with three of those funds raising over $1 billion and two topping $2 billion.