We sat down with Protocol Specialist, Viktor Bunin, to discuss the challenges and opportunities around the upcoming merger of Keep and NuCypher.
Keanu is incredibly exciting because it is the very first decentralized protocol merger. This type of merger is extraordinarily complex, but the potential positive impact for the teams, communities, and users is high.
Keep and NuCypher are incredibly similar in many ways. They are both work token models built on Ethereum that are on the cutting edge of cryptographic tooling. Keep started out by building a random beacon and tBTC while NuCypher began with proxy re-encryption. But given their similarities, they had a choice—continue as they are and begin competing or join forces and work together.
Community is the killer feature. The people you have around you building together are what makes the difference for projects to succeed or fail. This merge is an opportunity for the Keep and NuCypher teams and communities to combine forces to build the most decentralized and advanced cryptographic tooling network in the world.
Keanu has four primary benefits:
In addition, most protocols have only a single dev team, but the new network will have two stand-alone teams with the ability to add more. This is where it gets truly interesting! Because the network will be modular, sustained on fees, and decentralized, it is possible for new teams to develop on the network! Through governance, teams can get funding, create their own modules, bootstrap stakers, not worry about exchange listings, and much more.
There are two key risks to Keanu.
First, the teams and communities will need to transition from running two independent protocols to collaborating on just one. Although the teams and communities are highly ethos-aligned, there’s going to be a forming and storming period as everyone figures out how to work together.
The second risk is on the technology side. This merge is one of the most technologically complex undertakings in crypto (likely second only to the eth1 → eth2 transition). The teams will need to gracefully transition stakers, token holders, and users from the old networks onto the new one. The existing protocols have thousands of nodes and hundreds of millions of dollars in value, so you can imagine how important it is to get this right.
To be honest, I am surprised this is the first merge! I expected DeFi protocols to merge before Keanu, but now that we’ve started the process, I can see why it’s the first. The complexities of two teams combining two protocols, communities, and tokens are huge. Mergers are a natural part of the traditional business world and, as pioneers like NuCypher and Keep blaze a trail, it will make it much easier for other crypto projects to follow suit. I see this as a natural maturation of the industry.
The rc0 proposal built upon many community efforts and discussions. It attempted to take the best parts of the T1, T2, T3, T4, T5, and T6 proposals, and incorporate the token migration mechanism that has been analyzed by third party experts from an accounting and legal perspective.
The proposal had four key components:
The networks have different numbers of nodes, marketcaps, token prices, liquid supplies, products, etc. Our proposal sought to cut through their differences and focus on giving all token holders proportional shares of the new network.
Lastly, we structured the merge as a network upgrade to make it totally opt-in and equally accessible to all. The upgrade process makes sense because it is very similar to how software is usually upgraded, like iPhone software upgrades. Anyone with that software is welcome to stay on the old version, but if you do decide to upgrade, you’re not getting a new iPhone. Network participants are welcome to remain on NuCypher or Keep, but if they would like to upgrade to Keanu, they are always welcome to do so with no penalty or obligations. If at any point they would like to downgrade to a previous version of the software, they are welcome to do that as well, by unwrapping their T tokens back into their original NU or KEEP tokens.
Thank you! Both networks voted via Snapshots. NuCypher had 144 node operators vote, with 100% voting in favor of the merge. Keep had 26 node operators vote, where all but two voted in favor of the merge.
Now that the communities have approved the merge, the teams can begin implementing the new network and transition plan. There are still some factors to figure out, such as Keanu’s inflation schedule and DAO governance process, but at this point these are implementation details.
There are a few things folks should be doing. First off, continue engaging in the governance process and Keanu designs! NuCypher and Keep token holder and community member perspectives are incredibly important.
Stakers on both networks should continue staking. As part of the transition, there will be a stake migration process by which node operators can join the Keanu network. Node operators are the lifeblood of these work token models and should feel secure that they will be treated as first class citizens in this merger.
Exchanges, custodians, and any other service providers should reach out to the Keep and/or NuCypher teams. Because both networks are decentralized and the upgrade is totally optional, both the NU and KEEP tokens will continue to exist in perpetuity. However, because the merge is structured as an upgrade with token wrapping, service providers can provide their users a great experience by performing the wrapping on their behalf without requiring the users to take their assets off-platform.
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