x*y=k...An Ethereum Story

The story behind how Ethereum community members came together to buy Uniswap's famous x*y=k inspired NFT
Mar 31, 20219 min read

Dear Bankless Nation,

A single tweet sparked one of the most interesting stories we’ve seen in awhile.

Uniswap’s now-famous NFT was sold for over half a million dollars. And what started off as any normal bidding war on an NFT, turned into a social experiment.

In less than 12 hours, a tweet turned into a collective of individuals who came together to raise $800K. And with it, they were able to win the auction.

All of it was only possible with Ethereum.

This article also contains:

This is a story on the power of community and the power of what Ethereum enables—an open, global technology for human coordination.

Crypto culture is tight.

- David

Writer: David Hoffman, Bankless Founder & Co-Host

The Story Behind x*y=k

On Monday, March 22nd, Uniswap’s Twitter account released a 0:45 animation of a Unicorn that walks through a trippy, colorful, seemingly DeFi-themed landscape.

The Unicorn walks alongside flowing 3D curves, which are an allusion to Uniswap’s x*y=k price-curve model. The colors used in the animated are influenced by the various tokens that trade on the Uniswap exchange.

Life blossoms in the wake of this Unicorn, illustrating the creative power that Uniswap and Ethereum bestows upon the world. Notably, it’s also an allusion to the Forest Spirit from the Princess Mononoke, which is believed to be a beloved movie of some of Ethereum’s deepest contributors, and the artist pplpleasr herself.

Every single element of the x*y=k has a deep metaphor to DeFi, Ethereum culture, and the values it bestows upon the world. This is the story behind x*y=k.

This NFT was minted and gifted to PleasrDAO!

📺 Bonus Video: Listen to the artist behind x*y=k discuss the behind the scenes of making this amazing piece!

PleasrDAO’s Genesis

x*y=k opened bids on March 24th at $15,000 . The auction started with bids slowly creeping upwards, until Andrew Kang landed a cannon ball at 100 ETH, which held the top spot for 12 hours—over half the length of the auction!

But just a few hours before the end of the auction, Andrew’s bid was beaten by a brand new entrant into the game—PleasrDAO—for just over 110 ETH.

In under 24 hours, PleasrDAO formed specifically to source enough capital to purchase this NFT. The genesis originated from this tweet from PoolTogether’s Founder, Leighton Cusack.

Leighton really wanted to own the ‘x*y=k’ NFT, but assumed that it would sell for a price far higher than what he could afford. As a result, he had an idea that’s only possible on Ethereum—to pool together (pun intended) capital and collectively bid on the piece together. But he needed a little help from his friends to do it!

And after that tweet went out, surprisingly, there was a lot of interest to be part of it.

Listen to this brief interview with Leighton Cusack on PleasrDAO

I quickly got Leighton on the line to get his side of the PleasrDAO story!

The Power of Community

Access to the DAO was passed by word-of-mouth from people who signaled interest.  PleasrDAO was open to anyone who cared enough to voice their interest, and was ready to contribute!

Members of the DAO sent in lots of 10 ETH each, and with enough contributions, 110 ETH was sourced to outbid Andrew Kang’s 100 ETH bid. But here’s where it got interesting:

Instead of entering a bidding war with the DAO, Andrew Kang instead joined forces and sent in his 100 ETH to gain membership to PleasrDAO!

With the power of a handful of individuals coalescing, PleasrDAO was now a force to be reckoned with. Only two bidders remained between PleasrDAO and its desired NFT. Bidder 0x421595 was out-priced by a 165 ETH bid from PleasrDAO

With 0x421595 eliminated, the only remaining bidder was ‘Vas Rel Por’, an anonymous account behind address 0x84534.

Vas Rel Por kept on dropping in 100 ETH into the wallet from Tornado Cash, which Leighton said was intimidating because it was unknown how well-capitalized the anonymous bidder was. How much ammo did they have at their disposal?

But imagine being vas_rel_por. He was bidding against a DAO with an open invitation to anyone who was interested in contributing. The capitalization of the DAO was only limited by the number of interested parties in joining, and who knows how much total desire there would be to be apart of this collective. Even worse, the amount of funding from the DAO was transparent—he knew while they didn’t.

After a bidding war that kept on extending the end of the auction, PleasrDAO slapped down a massive 310 ETH bid.

Vas Rel Por folded to the power of the DAO, and PleasrDAO successfully won the auction for ‘x*y=k’ with a $529,000 bid.

Thanks to the capital formation power of permissionless financial tools, the power of the many was able to coalesce and become focused upon a single objective: generating more capital for the desired object than a single opponent. This is a story of group coordination overpowering a single entity.

The Artist

On the other side of this story is the artist, pplpleasr.

She has an impressive resume of animations. My favorite piece (after x*y=k) of hers is the Diablo IV cinematic. And while Uniswap may be her most popular now, it isn’t her first DeFi animation. She actually has done extensive work with making animations for various DeFi teams.

Here are a few highlights:

…and now of course, Uniswap

Interview with pplpleasr

I had the chance to sit down and talk with pplpleasr about the creation of x*y=k!

📺 You can watch the full 25-min interview with pplpleasr on her perspective behind x*y=k.

pplpleasr told me the story of how her and Uniswap teamed up to produce x*y=k, and where the early inspiration for the piece came from. Her story shared some thematic components with what I see going on in Ethereum at large:

  • Finding enjoyment in the collaborative process
  • Gaining confidence from her community and environment
  • Discovering a mechanism to create value from her skills
  • A desire to help others achieve similar results

She also said she was inspired by a tweet from Qiao Wang, who suggested that people who have recently made a lot of money should find ways to flex that wealth by helping others financially.

Here’s what she has to said on recirculating the wealth generated in Ethereum:

Ethereum’s maximum potential to redefine society doesn’t stop at permissionless, dis-intermediated financial services. Ethereum’s true potential extends into redefining the culture and people that inhabit Ethereum.

In my opinion, Ethereum will truly change the world by inspiring a new cultural disposition with how wealth circulates. While applications like Uniswap and NFTs can help facilitate alternative wealth circulation mechanisms, it’s ultimately up to the psychological disposition of the people that make up the cultural environment in which Ethereum operates.

I believe pplpleasr and her work are an exemplar of this new cultural ethos found in DeFi and Ethereum. I hope that pplpleasr leads many new artists to come and create in ways that recirculate the value that is generated throughout the world!

If Ethereum is going to meaningfully change the world for good, it needs to do more than just build new financial software.

It needs to generate a more positive-sum attitude in the people that it enables.

This is…

The Power of Ethereum

x*y=k was sold for over half a million dollars because it leveraged the best of what Ethereum has to offer the world:

  • Capital formation (the DAO)
  • A financial asset (the NFT)
  • Cultural expression (the animation)
  • Market value based on human values (the legitimacy)

The permissionless nature of Ethereum enabled a DAO to form under extremely tight time constraints. A single tweet was made signaling interest in forming a DAO, and in under 12 hours, it sourced 465 ETH (~$800,000) with the singular goal to purchase this NFT.

The power of Ethereum is its ability to produce attentional focal points.

Tokens are things that can receive attention from people.

DAOs are things that can focus attention.

Ethereum is a lens that allows people to focus capital upon objects they perceive to be valuable.

The power of NFTs is that they manifest a specific instance of an object into reality, and that object is then associated with a piece of digital art, digital creation, or some other form of value.

That ‘thing’ becomes instantiated in the NFT.

The power of DAOs is that they facilitate the coordination of like-minded people who have a shared goal they are all in the individual pursuit of. Because of the DAO, people can combine their energies (money, value, or labor) in pursuit of a shared goal.

The power of Ethereum is that it enables the instantiation of objects of desire (tokens) and desiring objects (DAOs & individuals), and these two separate instantiations have no intermediaries separating them; they connect directly.

Valuing Legitimacy

Just earlier this week, Vitalik wrote on his blog a piece The Most Important Scarce Resource is Legitimacy, in which he illustrated various examples about how human subjective perception of legitimacy is an extremely powerful force. If humanity collectively determines something to be legitimate, it has value.

Things that lose their legitimacy similarly lose their value.

Legitimacy is a pattern of higher-order acceptance. An outcome in some social context is legitimate if the people in that social context broadly accept and play their part in enacting that outcome, and each individual person does so because they expect everyone else to do the same.

Which NFTs people find attractive to buy, and which ones they do not, is a question of legitimacy: if everyone agrees that one NFT is interesting and another NFT is lame, then people will strongly prefer buying the first, because it would have both higher value for bragging rights and personal pride in holding it, and because it could be resold for more because everyone else is thinking in the same way. If the conception of legitimacy for NFTs can be pulled in a good direction, there is an opportunity to establish a solid channel of funding to artists, charities and others.

Some institution (or even DAO) could "bless" NFTs in exchange for a guarantee that some portion of the revenues goes toward a charitable cause, ensuring that multiple groups benefit at the same time. This blessing could even come with an official categorization: is the NFT dedicated to global poverty relief, scientific research, creative arts, local journalism, open source software development, empowering marginalized communities, or something else?

- Vitalik Buterin, The Most Important Scarce Resource is Legitimacy,

That last line is crucial to this story. Vitalik suggests that an NFT can further instantiate its own legitimacy as an asset by committing to donate some of the revenue generated from its sale to valuable social institutions that are aligned with our values.

Oh yeah…did I forget to mention that pplpleasr is donating 100% of the 310 ETH revenue from the NFT sale to charities supporting AAPI and other minority representation?

You couldn’t have orchestrated a better Ethereum story if you tried:

  1. Uniswap, an application highly resonant with the values of Ethereum, launches a V3 promotion animation from a renowned creator.
  2. A new financial asset (NFTs) instantiating the value of the animation
  3. Many disparate individuals coming together to get something they all want individually, but need the power of group coordination to access.
  4. The ‘bestowing’ of legitimacy by financial contributions to public goods.

This story is a perfect example of what makes me so optimistic about the future that these networks can help enable:

A world of open financial tool that help facilitate humans alignment between our cultural values and the market valuation of our assets

Congrats to pplpleasr for producing something worth $529,000!

Congrats to PleasrDAO for winning the piece!

Congrats to both groups for donating all the money to marginalized communities that don’t have access to the crazy upside that crypto brings!

Congrats to Uniswap for inspiring all of it!’

Now, a final message to the members of PleasrDAO:

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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