Focus on the second half of the 2021 bull market: Polkadot Parachain Auction / Ethereum Layer 2

If the Bitcoin cycle theory is true, then there will only be a golden period of about eight months left in this round of bull market, and then it will enter a new round of bear market cycle. Then, under the premise of limited time, which areas should investors focus on? This sharing will focus on this topic.

So is the bitcoin cycle theory true? Let's look at historical data.

The first round: From December 2010 to December 2013, the price of Bitcoin rose from around US$0.2 to around US$1127;

The second round: From December 2013 to December 2017, the price of Bitcoin began to fall from around US$1127, and then bottomed out and rose to around US$19,500;

As shown below:

As shown below:

Historical experience tells us that the bitcoin bull market is basically maintained every four years. If this round of bull market also follows this rule, then the second round of bull market will only have about eight months left. In the limited time, investors should focus on which fields? As a long-term observer of the blockchain industry, Afeng believes that the launch of the Polkadot parachain/Ethereum Layer 2 are two areas that should be focused on in this round of bull market.

Next, let's talk about the reasons.

1. The Polkadot Ecosystem Exploding

It is obvious that the Polkadot ecosystem is exploding. Three of the clearest signals are provided.

1) The trend of venture capital investment in the currency circle - the Prophet of Spring River Plumbing Duck

In less than four months in 2021 alone, the Polkadot parachain has received 26 large and small financings (incomplete statistics), of which there are 17 financings with a financing scale of more than US$1 million, and financings exceeding US$5 million There were 5 times, and 2 times the financing exceeded 10 million US dollars.

The following is a brief list of the financing situation that occurred in the Polkadot ecosystem in the past two months. Let’s feel it:

1) On April 28, SporeOcean, Polkadot’s first cross-chain compatible DeFi+NFT protocol, completed an institutional round of financing worth tens of millions.

2) On April 8, Equilibrium, a Polkadot DeFi project, completed a financing of US$2.5 million. Investment institutions include KR1, Signum Capital, and Hypersphere Ventures.

3) On March 29, Thales, Polkadot’s first lightweight high-performance parachain, received an investment of tens of millions of dollars, and ZKfund, Holo Capital, and Digital Assets Investment participated in the investment.

4) On March 30, Polkadot’s ecological project Cere Network completed a financing of US$5 million, with participation from Republic, Woodstork, JRR, LedgerPrime, and G1 Ventures.

5) On March 13, Polkaswitch completed a $3 million seed round of financing, with participation from Arrington Capital, Ascensive Assets, LD Capital, Signum Capital, Bitscale Capital, DFG, Gestalt Capital, Waterdrip Capital, and Vendetta Capital.

6) On March 25, Genesis Shards, a decentralized ecosystem based on Polkadot, raised $2.7 million. The investors are 3Commas, Axia8, OKEx's Block Dream Fund, LD Capital, Spark Digital Capital, Momentum 6, etc. ParaFi Capital partner Santiago Roel Santos, Polygon co-founder Sandeep Nailwal, Bitcoin.com Danish Chaudhry and Alliance Block founder Rachid Ajaja also participated.

As an aside, if you have paid attention to the history of the explosion of DeFi, you will find that Polkadot’s current financing intensity is exactly the same as the period before the real outbreak of DeFi (April-June 2020). It was during the middle of last year that the frequent shots of top encryption institutions promoted the outbreak of DeFi, and now all this is happening in the Polkadot ecosystem.

2) The price of Substrate-based blockchain tokens has skyrocketed, and there are signs of the early stage of Ethereum ICO.

Friends who pay attention to the Polkadot ecology will definitely pay attention to IDO, and do it on this website:https://www.polkastarter.com/。The Polkadot parachain projects launched on the platform have skyrocketed without exception.

Take OptonRoom Public as an example. The project is based on Substrate and will become an oracle machine for the Polkadot ecosystem in the future.

Two months ago, Room registered on Polkastarter at a price of 1ETH=32258ROOM (≈0.052U), and sold 30ETH (≈967,000 ROOM). After ROOM was listed on Uniswap and other exchanges, the price soared to 3U, an increase of 5700%.

Soared 57 times in two weeks!

Let’s look at another project, PolkaCover, which is also a Polkadot ecological project based on Substrate. The project is to provide insurance services for the Polkadot ecosystem. According to public information and Polkastarter information, the public offering price 1ETH=15625CVR (≈0.1U). After listing on Uniswap, the price instantly rose to 0.78U, an increase of 680%.

The above two cases are listed here, OptionRoom Public and PolkaCover (there are many similar cases), to illustrate the fact that Substrate-based blockchain projects and Polkadot parallel chain projects are replicating the popularity of 2016 .

3) Polkadot's most important "parachain slot auction" will be launched soon.

Polkadot parachain auction, recently major media platforms are scrambling to report related content, Ouyi OKEx Intelligence Bureau has also made a lot of sharing recently, which will not be expanded here, but a simple calculation for everyone.

After the Kusama parachain auction starts, it is estimated that the first parachain will pledge 300,000 KSM. Assuming that the subsequent parachains will pledge an average of 150,000 KSM each, based on the calculation of 20 parachains launched in 2021, 3.15 million KSM will be pledged. Staking is on the mainnet. At present, the number of KSM participating in staking on the main network has reached 6.15 million, and KSM is 10 million.

It is conceivable what this means: Kusama parachain auction + Staking means that the circulation of KSM will be greatly reduced, which will inevitably have a positive impact on the currency price.

The first point of view of this article: 2021 will be the year when Polkadot’s ecology will explode. Polkadot’s parachain auction is also the most noteworthy industry hotspot in this round of bull market, and of course there are more wealth opportunities.

2. Ethereum Layer 2 in the making

In late March of this year, Optimism, the much-anticipated second-layer expansion plan of Ethereum, will delay the launch of the mainnet, and announced that it is expected to be launched in July this year.

Since the blockbuster DeFi projects Synthetix and Uniswap v3 were released based on Optimism, this delay really disappointed the community a lot, but then V God said in the community that the delay of the Optimism public mainnet is not expected to affect the development of Synthetix and Uniswap v3 L2 advances, which appeases the community.

The reason why the delay of a Layer 2 project will cause a huge shock to the community is mainly because Optimism adopts the Optimistic Rollup technology, which is currently considered to be the first technology to solve the congestion of Ethereum. But this does not affect the advancement of Layer 2 and the development of the entire Ethereum ecosystem.

At present, there are two types of Layer 2 technologies that people are most optimistic about, namely Optimistic Rollup and ZK Rollup.

Optimistic Rollup, proposed by Consensys researcher John Adler at the Ethereum Foundation Research Forum in July 2019, can increase Tps to 3000, and Ethereum Layer 1 is better compatible with DeFi applications based on Optimistic Rollup. Optimistic means "optimistic". The blockchain based on Optimistic Rollup tends to believe that nodes will not do evil, so the trust cost of Optimistic Rollup technology is relatively high. It takes 2 weeks for assets to return from Layer 2 to Layer 1 (ZK Rollup only takes a few minutes).

ZK Rollup, originally proposed by Barry WhiteHat, a senior researcher at the Ethereum Foundation in 2018, uses zero-knowledge proofs to ensure the security of node verification, and its security is almost the same as Layer1 (Ethereum), which can produce blocks within one minute and Increase throughput to 2,000Tps. The disadvantage is that the current Layer 1 smart contract system supports ZK Rollup very little. DeFi application developers who use ZK Rollup technology need to develop special smart contracts to match Layer 1, and ZK Rollup developed by different DeFi teams Smart contracts are not universal.

The above is a simple science about the latest technology of Layer 2.

Teams currently working on Optimistic Rollup include Optimism (formerly Plasma Group), Fuel Labs, Arbitrum, etc. Projects working on ZK Rollup technology include Matter Labs and Starkware.

You see, there is more than one team working on this technology.

The so-called Ethereum Layer 2, simply understood, is that Layer 2 transfers the "transactions" (ETH transfer, ETC-20 transfer, DeFi interaction) that should have been processed on Layer 1 (Ethereum itself) to Layer 2. The operating efficiency of Layer 2 is hundreds of times that of Layer 1, so as long as Layer 2 is officially launched, Layer 1 will be "relieved" from the current congestion situation. Both Optimistic Rollup and ZK Rollup can achieve this effect.

However, some people will also ask, Layer 2 seems to be beautiful, will there be such a situation: that is, the idea of ​​​​Layer 2 to solve the problem is not based on improving the performance of Ethereum itself, but moving a large number of businesses to Layer 2. Will it cause Ethereum's own interests to be threatened?

Because of the decline in the use frequency of Layer 1, it means that the future ETH1.x will become a role like the "People's Bank of China" or "Federal Reserve", issuing currency according to a certain monetary policy, unless ETH 2.0 arrives at the right time.

V God does not think so. In the previous interview with Gulu, the founder of Bihu, some fans asked the same question. The answer given by V God is that with the development of the Layer 2 ecology itself, the Ethereum ecology may expand. Dozens of times, although the traffic of Ethereum itself is attracted to Layer 2, as the overall traffic increases, Ethereum itself will also gain greater value capture.

I basically agree with this point of view, just like the cake has grown 10 times bigger. Although my share has decreased from the original 50% to 25% later, the overall benefit I get is still larger.

In addition, we have seen many strange phenomena on Ethereum, which will soon become history, such as perverted miner fees. In fact, with the launch of Flashbots, the average daily GasPrice of Ethereum has dropped to 58Gwei recently, a drop of 80%. With the promotion of Layer 2 applications in the future, Ethereum GasPrice is expected to continue to decline.

The second point of view of this article: Projects based on Optimistic Rollup and ZK Rollup are exploding, and various DeFi applications will migrate to Layer 2, and tokens based on such technologies will also be welcomed by the market.