Weekly Editors' Picks Weekly Editors' Picks (0311-0317)

郝方舟

Odaily资深作者

@OdailyChina

2023-03-18 08:00 (UTC+8)

This article is about 4446 words, reading the full article takes about 7 minutes

High-quality in-depth analysis articles and weekly hot spots.

AI Summary

Expand

High-quality in-depth analysis articles and weekly hot spots.

"Weekly Editor's Picks" is a "functional" column of Odaily. On the basis of covering a large amount of real-time information every week, a lot of high-quality in-depth analysis content will also be released, but they may be hidden in the information flow and hot news, and pass you by.

Therefore, every Saturday, our editorial department will select some high-quality articles that are worth spending time reading and collecting from the content published in the past 7 days. You bring new inspiration.

Now, come and read with us:

Investment and Entrepreneurship

Now, come and read with us:

secondary title

Investment and Entrepreneurship

DeFi

Re-examining Aggregation Theory in the Web3 Era: How to Build a Market Moat?

If you want to develop, you must first retain existing users and then actively expand. To move away from tokens as levers of growth, there are only three levers to focus on: cost, use case, and distribution. Adjusting products to user needs and allowing them to see value means that entrepreneurial teams can earn more revenue and less competition. Founders can often fall into the trap of building a product and selling a service for VCs (or token traders) without actually building a moat based on cost, convenience, and community.

The cost of user acquisition will skyrocket in a bear market because retail user interest is low, and unless the product has special novelty or convenience, it's in an odd position.

Businesses (B2B) built for other companies may be able to compound enough to survive and then dominate in a bull market, like FalconX.

If poorly designed, tokens are temporary moats and long-term liabilities, and very few communities actually build value for tokens long enough to meaningfully accrue.

Review the operation of "Brother Sun" in the crisis, and sort out the escape guide for 5 stablecoins decoupling

The core purpose of emergency escape is to reduce the risk at the lowest cost, provide a time window for the next operation and judgment, and be able to hook it in the short term.

Among the decentralized stablecoins, PSM: supports direct exchange with other stablecoins, such as DAI supports 1: 1 exchange USDC/USDP; AMO: open market price intervention, such as FRAX/crvUSD, etc.; debt/collateral pricing exchange : Two-way conversion of Luna/UST, one-way conversion of LUSD→ETH; pegging according to fate: Simply put, there is pegging logic but not strong.

In centralized stablecoins, the security of reserve assets from high to low is: treasury bonds = treasury bond reverse repurchase > cash (bank deposits) > low-quality assets (commercial paper/corporate bonds, etc.). Any indirect holding of U.S. dollars in the currency circle is a solution that bears additional risks. The safest way to hold U.S. dollar assets must be to buy U.S. bonds.

Interview with the founder of Frax: Talking about Frax’s currency premium, invisible products, and on-chain governance

Recently, the Frax community voted to stake 100% of the entire supply of FRAX. FRAX is the only fully collateralized decentralized stablecoin. Frax is developing a product called BAMM, which stands for Borrowing Automated Market Maker, a potential zero-to-one innovation for DeFi.

The cross-chain bridge project is essentially a stable currency issuer. The most important and valuable way that large DeFi protocols build moats to protect themselves and maximize their value is to issue a liability that people use as money. The US has no history of screwing up major financial or technological revolutions. Stablecoins require their own regulation.

A detailed explanation of Liquity Protocol: a DeFi protocol focusing on stable currency + lending

Liquity Protocol is a decentralized lending protocol, also known as Collateralized Debt Protocol-Collateralized Debt Protocol (CDP), which can apply for interest-free loans by mortgaging ETH (ETH is the only type of collateral accepted by Liquity), and obtain LUSD stable currency loans. LUSD is pegged to ETH. The Liquity Protocol’s interest-free lending mechanism is that the protocol charges a one-time borrowing and redemption fee. This fee is algorithmically adjusted based on the most recent redemption time.

Liquity Protocol use cases include: borrowing LUSD by staking ETH; depositing LUSD to the stable currency pool to ensure liquidity; staking LQTY to earn the fees paid for borrowing and redeeming LUSD; when LUSD is lower than 1 US dollar, exchange value with 1 US dollar of LUSD $1 in ETH.

RAI: The Decentralized Stablecoin "Ideal Type" in V God's Eyes

The "stable currency" RAI issued by Reflexer Finance does not rely on any centralized currency, not even the Federal Reserve. Vitalik called it "the purely ideal type of collateralized automated stablecoin backed only by ETH."

RAI has been online for 2 years now, which also coincides with the time when the price of Ethereum fluctuates violently. During this period, the price of RAI fluctuates between 2.75 and 3.05 most of the time, and no liquidation accidents or other security risk events have occurred. The core product mechanism has been verified. There is currently $26 million in ETH deposited in RAI, with a total of 150 active borrowers. The number of RAI circulating in the agreement is 2.35 million pieces.

Web 3.0

The trilemma of encrypted stablecoins, that is, the capital efficiency, price stability and decentralization of stablecoins cannot exist at the same time. For decentralized stablecoins, it is easy to choose to introduce more centralized assets, but it is difficult to build a stablecoin system based on complete decentralization. Forgoing greater capital efficiency and more stable prices is the price Reflexer pays for decentralization and censorship resistance.

Read Pendle in one article: the winner behind the LSD war?

Pendle Finance's goal is to provide users with attractive yields by increasing yield exposure during bull markets and hedging yield declines during bear markets. Pendle Liquidity Providers (LPs) earn zero impermanent loss (IL) simply by holding their positions to full maturity. All Pendle liquidity pools will trade PT with its underlying assets, for example, the stETH pool will trade PT-stETH with stETH.

It will be a continuous trend of DeFi to provide users with diversified services of customized income strategies. Market makers or LPs can more effectively hedge their positions through Pendle's liquidity provisions, allowing larger participants to choose to enter the market due to less volatility. Battle-tested smart contracts and ample liquidity are prerequisites for larger institutions to participate.

secondary title

ENS plays multiple roles: infrastructure (ICANN) registry operator and registrar (GoDaddy, domains.com, etc.). The ENS protocol makes money by selling new address registrations and renewals. Users prepay for their crypto domain name/address for a certain number of years, while renewals drive further revenue.

Ethereum and scaling

The agreement generates $55 million in revenue in 2022 and $4.8 million in 2023 to date. Assuming that the growth rate of Ethereum's non-zero addresses is 30% in the next 3 years, there will be more than 200 million non-zero addresses in the world in 2025. Assuming a 30% growth rate for ENS names over the same period (3-year average growth rate of 228%), there would be at least 13.5 million ENS names, or 6.6% of all non-zero Ethereum addresses. Billed at $15 per year per address (an average of $19.71 last year), the protocol will also generate $200 million in annual recurring revenue (ARR).

ENS's Web2 benchmark is Verisign, which currently trades at a P/E ratio of 31.7 and a market capitalization of $20 billion.

Currently, Unstoppable Domains is ENS's biggest competitor. Outside of its internal reporting, Unstoppable Domains is not transparent about its finances or growth. Its registration is valid for life, so there is no recurring income.

The long-term success of the project requires 5 things: a growing developer base, integration with ecosystem infrastructure, ongoing maintenance of smart contracts, effective marketing, and responsible stewardship of the DAO treasury.

Ethereum and scaling

Because the consensus chain itself has no execution capabilities, the ETH accumulated on it cannot be transferred, which means that these validator rewards, while steadily increasing over the past two years, have no way to withdraw them. The consensus chain has generated more than 1 million ETH as cumulative total verification rewards.

New ecology and cross-chain

After the merger, in addition to the above rewards, the validators of the proposed block will receive a part of the transaction fee. These fees are paid directly on the execution chain. Withdrawals are paid with funds generated according to the Ethereum protocol (i.e. newly minted ETH), rather than transferred from existing accounts.A&T Capital: Status, Problems and Improvements of Ethereum MEV Extraction Mechanism》《How to regulate MEV extraction is critical to the decentralization and censorship resistance of the blockchain network. After the merger of Ethereum, the extraction and distribution of MEV is dominated by the MEV-Boost system proposed by Flashbots. How to avoid harmful MEV extraction and how to distribute favorable and neutral MEV profits are the core issues to be solved by projects under the MEV track. To solve the "running away" problem, encryption technology should be used. Based on "encryption-sorting-decryption-execution", the user's transaction is encrypted locally, and the sorting consensus is completed without anyone reading the transaction content, and then the content is decrypted, and finally the transaction is executed according to the consensus sorting.》。

In addition to distributing MEV profits to "searchers who discover MEV opportunities", "builders who build the highest value blocks", and "proposers who have the right to produce new blocks", they should also be distributed to "ordinary users who create MEV opportunities ".

There are two ecological project inventory this week: "

DAO

After the launch of FVM, what are the projects worthy of attention in the Filecoin ecosystem?

A comprehensive inventory of Conflux ecological projects: Wallet, DeFi, Offshore RMB, Shuizang, Metaverse

Conflux has successively reached strategic cooperation with domestic giants such as Xiaohongshu and China Telecom, and combined with the domestic policy environment, it has formed a unique digital Tibetan ecology that other public chains do not have.

CNHC (CNH Coin) is a stablecoin pegged to RMB at a ratio of 1:1, and it is currently issued on Conflux and Ethereum. CNHC Group's fiat currency reserves are protected by licensed trusts held by internationally renowned custodian banks, and independent audit companies regularly review CNHC's offshore RMB reserves.

Outlier Ventures: How to manage DAO governance tokens with bonding curve?