Weekly Editors' Picks Weekly Editors' Picks (0325-0331)

"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:

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"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:

secondary title

invest

Hermits across bull-bear cycles: crypto market makers

The liquidity of the encrypted market is relatively low and the volatility is high. Market makers need to be more cautious in risk management; and because the trading process of the encrypted market is difficult to be supervised, there is no strict market maker system to restrict it. The relationship between exchanges, project parties and market makers has become more complicated. The market maker business is not only generated on centralized exchanges, but also involves market making on the chain, and based on this, some middleware and protocols for market making services have begun to appear. In terms of technical architecture, the encryption industry needs to have higher technical capabilities to ensure the security of transactions.

Crypto market makers still have a lot of room for development and profitability. Encryption market makers will also present some development characteristics of traditional financial market makers in the future: gradually diversified market makers; diversified market makers; high business leverage;

In the field of investment, you can focus on centralized small market-making strategies or service projects, tools to solve interoperability, and CeDeFi projects.

The Daily Degen、Linn's Leverage、Another Day in Crypto、Seven c Newsletter、The Daily Bot、Dynamo DeFi Newsletter、The Gems Corner、Extensive Vision、The Optimistic Newsletter、The Black Swan、The Ape Enclosure、 1% Better、Wale Drops、The DeFi Investor、Technical Roundup。

The correct posture of the airdrop: five cases tell you how to avoid being "witched"

In order to avoid being "witched", do not distribute/collect funds on the chain, use exchanges instead; avoid short-term concentrated batch behavior, and achieve randomization of operations; keep a low profile, do not disclose your own address; enrich yourself as much as possible on-chain behavior.

start a business

Mastering the Wealth Password: 15 Free Encrypted Information Channels in One Article

Super detailed study guide: How to use the tools website DefiLlama?

The article introduces all the functions of DefiLlama, various data and indicators of DeFi (LTV, Delta neutral strategy, newly listed projects), indicators and methods for finding DeFi Alpha, methods of using corresponding indicators and derivative indicators, novel data of DefiLlama, And recommended several data tool websites.

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start a business

The Moat of the Web3 Token War

In Web3, the aggregation platform mainly relies on the reduction of verification and trust costs.

Aggregators that historically had no tokens and grew easily on the back of equity backers are now at risk as companies offer tokens to users. On the one hand, companies that have long had good cash flows will see revenue decline, and on the other hand, they will see users flock to competitors. This is clearly not sustainable. Ideally, the relationship between token incentives and product users should look like the picture below.

DeFi

But what actually happens is that the users who initially flocked to a project almost completely abandon it as token incentives dwindle (pictured below). There is no reason why they can continue to attract users to contribute, a phenomenon that has plagued DeFi and P2P for the past two years.

What will be the moat in Web3 when everyone can publish a version with an embedded token? Retain the users they already have and expand aggressively so that competitors cannot cannibalize their market share. If companies in Web3 want to use tokens as levers for growth independently of tokens, they only have three levers to focus on: cost, use cases, distribution.

LI.FI is a great example of what went from a novelty tool to a handy one. Founders, please don't fall into the trap of building and selling for VCs (or token traders) without a moat built on cost, convenience, and community.

Etherscan's business experience: how to make tens of millions of dollars?

Etherscan has 80 million visits per month, has no tokens, and is more of a "traditional SaaS business" generating revenue from SaaS, API programs, advertising, on-chain services, donations. Etherscan has 29 employees. Roughly estimated, its gross profit is between 1.9 million and 20.24 million US dollars.

LD Capital: Dangers and Opportunities in USDC Unanchoring Storm

Important events of the USDC unanchor crisis and the price trend chart of tokens related to the stablecoin track:

The price changes of the four largest stablecoins and TUSD after USDC is unanchored:

In this USDC unanchoring crisis, the discount of USDC once brought huge uncertainty to the DeFi system, but with the intervention of the government and supervision, this crisis gradually resolved. In the process, there are not only one-way bets on price anchoring (for example, a wallet received USD 215 million in Tether from Binance to purchase USDC and DAI stablecoins, and made a profit of about USD 16.5 million); Low-risk arbitrage behavior (such as Maker PSM arbitrage); there are also transactions of repurchase of various asset prices due to panic (such as discounts such as BUSD and USDP); in addition, large market fluctuations cannot be ignored. The increase in passive income brought by applications such as Frax and crvUSD (such as Frax and crvUSD can capture related income), such applications have a small USDC risk exposure and become passive beneficiaries instead.

Liquidity Isn't Everything: 10 Stablecoin Projects Revisited From a Holistic Perspective

It is necessary to examine the stablecoin project from an overall perspective, and analyze it from four aspects: assets, liabilities, liquidity, and usage scenarios. The asset structure determines the solvency of the stablecoin project, the liability structure determines the repayment structure of the stablecoin project, the liquidity mechanism reflects how to achieve short-term stability, and the usage scenario is the root of people's demand for stablecoins. How to choose reserve assets and the choice of mortgage rate are both important.

Both USDT and USDC have the ability to withstand the exchange of tens of billions of dollars in a short period of time. USDC has a more stable asset structure and a stronger ability to deal with extreme liquidity crises.

DAI's reserve assets are very stable and diversified, and it still claims to be the safest decentralized stable currency. However, as a trading pair settlement asset, there is still a big gap from USDC. The deposit rate provided by MakerDAO to users is also often criticized, and the subjective initiative of users to hold DAI is also insufficient.

FRAX's asset structure is very stable compared to UST, and will shift to full mortgage in the future. For projects that rely on market arbitrage to maintain stability, the arbitrage mechanism may fail under extreme market conditions, and relying on the protocol itself to manage liquidity is inefficient.

Unsecured stablecoins have proven unable to support their debt issuance for a long time, and will eventually turn to fully collateralized stablecoins.

Multi-ecological LSD Development Report: The track is magnificent and the project is very early

Multi-chaining of LSD business is an inevitable trend, but most LSD projects should start from a certain chain or a certain ecology before starting to develop other public chains.

The UI experience of many LSD projects is very poor. In addition, the LSD of many projects has many Use Cases, but does not tell users how to use them, and the overall UX experience is very poor.

CEX is a factor that must not be ignored.

The BD of the LSDFi project may be able to put the partner on the wallet side.

A “Native Bond Market” Outlook for the Crypto World

Taking Pendle as an example, analyze the underlying logic of the DeFi fixed interest rate/interest rate swap track

NFT, GameFi, and the Metaverse

Pendle is an interest rate swap platform. In short, it separates the principal (PT) and interest (YT) of an interest-earning asset (SY) within a certain period of time; PT / YT is priced by the built-in AMM, and the algorithm The parameters determine the liquidity curve of the AMM, and the free market makes the final pricing. That is to say, the conversion of SY to PT can lock the interest rate within a certain period of time, while YT is a gambling tool for increasing leverage to bet on the rise of interest rates.

Pendle has implemented a market-based interest rate transaction with a fair experience, serving two waves of customers with fixed interest rates and gambling expectations. Most of the products that failed in the fixed interest rate track in the past did not take into account certainty + gambling. Pendle has done a good job, and LSD/Perp DEX has brought a lot of interest-earning assets, Pendle once again seized the opportunity to enter the upward range. However, the value capture ability of its tokens is currently low.

A “Native Bond Market” Outlook for the Crypto World

The weak development of the encrypted bond market is due to: from the perspective of supply, the cycle is not conducive to long-term low-risk investors; from the perspective of demand, the large-scale entry of institutions and the narrative of DAO Treasury have not yet been fulfilled; at the same time, the token itself has dual attributes of stock and debt (equity and debt).

NFT, GameFi, and the Metaverse

The author analyzes the two new skills, Fuse and Ultrahand, based on the actual machine demonstration of The Legend of Zelda: Tears of the Kingdom, and emphasizes the core logic behind them.

Web 3.0 

Fuse represents the composability of equipment (such as swords, bows, shields, etc.), while Ultrahand represents the composability of vehicles (such as vehicles, ships).

Fuse is an excellent example of "functional design" (as opposed to "numerical design") in games. From the experience point of view, by providing a variety of experiences, it can stimulate players' desire for exploration and creativity, making them pursue new experiences rather than numerical growth; from an economic point of view, low cost, strong composability, and various functions , Basic components with superimposed effects also help to enhance the economic activity and thickness of the game. The equipment composability achieved through the Fuse function can also reduce the player's anxiety about item wear and tear.

There are similarities in the basic logic of "creating interesting games" and "economic model design". "The Legend of Zelda: Tears of the Kingdom" has significantly improved the game's playability and freedom, and provided valuable experience for the entire game industry.

Ethereum and scaling

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The next stop of Web3 wallet: why we are optimistic about the track of wallet without mnemonic word

As of November 2022, the number of digital wallet users has reached 85 million. For individual users, smart wallets may be more suitable for daily transactions and management of digital assets because they have wider applications and better user experience. For institutional or business users, MPC wallets may be more suitable because they are more secure, easier to achieve multi-party accountability, and have lower costs and better scalability.

《Currently, EIP-4337 is the most viable account abstraction solution. There are already many smart wallet projects exploring this path. It is recommended to pay more attention to the construction of account abstraction and smart wallet projects, especially the products in the Layer 2 direction.》《Ethereum and scalingBixin Ventures: EigenLayer will become the guarantee of ETH's trust layer

Non-Ethereum applications cannot directly use Ethereum's trust layer as a foundation. And these non-Ethereum applications or middleware, such as oracles or cross-chain bridge protocols, need to create their own trust layer or active validator service (actively validated service, AVS), which actually improves the innovation of the application layer Thresholds and economic burdens slow down innovation at the application layer. And different AVS will also lead to the fragmentation of liquidity, thus affecting the economic security of each AVS.

EigenLayer's solution is to re-stake and build a trusted trading market. The positive externality of EigenLayer is reflected in accelerating application layer innovation, helping protocol layer innovation, promoting the economic security of the Ethereum trust layer, and improving the decentralization of the Ethereum trust layer, while the negative externality is reflected in the impact of abnormal penalties on Ethereum Damage to the trust layer, trust leverage caused by re-pledging. EigenLayer's positioning is to completely change the current block limit model, and become a new test field to break the trade-off between Ethereum's democracy and flexibility by utilizing the excess resource pool of nodes, thus injecting more possibilities into new business models.

Galaxy: 4D details MEV supply chain and decentralization pathThis article sorts out the key developments in the MEV field. What are the new trends and new ways to play?》《》A detailed discussion on MEV-Boost, other key events, existing problems, etc. from different perspectives.》。

One article sorts out zkEVM solutions: zkSync, StarkNet, Polygon zkEVM, Scroll

Some common trends have emerged among zk rollup implementations: they all seem to take a hybrid approach to data availability, offering a rollup version of traditional on-chain data storage and a validium version of off-chain data storage; they mostly avoid using pure Open source code until they actually run; optimistic rollups, especially Arbitrum, are benefiting from a first-mover advantage and lead the market in terms of applications, transaction volume, and market share. If proven successful, optimistic rollups could combine a proof-of-validity model with their already established user base; they both aim at progressive decentralization to address concerns about centralization; what these zkEVM implementations have achieved over the past year is astounding The results have drawn a new wave of attention to zk technology in general, with companies focusing on various aspects of development, including developing new zk hardware to increase the speed of proof generation.

Also recommend two long articles this week to interpret "

L2 Summer is coming? Master the technical principle and ecology of StarkNet in one article

Comprehensive interpretation of Polygon zkEVM: Rollup technical guide, token economics and ecosystem

New ecology and cross-chain

Many application teams don't want to think about running the infrastructure, and just like how AWS abstracts away the complexity of hosting servers, RaaS projects are doing the same for building and maintaining blockchains. In the near future, deploying a new chain will be as simple as creating a new web page or scaling an application up and down, just like we do today with Docker containers and Kubernetes.

DAO

The article introduces some currently used modular blockchain solutions, including OG: Cosmos and Substrate, Alt-L1, The Ethereum Maxis, Cosmos Ecological Supporters, Celestia Department, etc. At present, there are mainly three categories of applications (games, DeFi, and creator economy) that are actually building new chains. Constructors also need to solve real user pain points: compositional problems, cross-chain value movement, and complete abstraction of chains.

Messari: Taking stock of the 6 major EVM ecology, who is the biggest winner of ETH user spillover?

1. The article mainly analyzes the six major EVM chains: ETH, BNB, Polygon, Arbitrum, Avalanche, Optimism. Identify which specific blockchain ecosystems demonstrate successful user acquisition and retention patterns, and which employ ineffective strategies.

2. The key difference between L2s will be the native applications built on top of them. These apps need to be sticky enough to attract new users and comprehensive enough to carve out a new niche in their chosen field.

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Honey or arsenic? An article exploring the future of private voting in DAO governance

To this day, DAO governance practices are almost exclusively based on token-based voting schemes. With the popularity of zkSNARKs, on-chain privacy voting for DAO governance becomes possible. We really need to start a social experiment in private voting, a basic primitive that is currently lacking in DAO practice. The practical directions of privacy voting are:

Hybrid approach: similar to US Senate/House of Representatives and presidential elections, retaining accountability mechanisms for prestigious members and privacy mechanisms for the general public.

Optionality: Voters can choose to be public or private. One possible problem though is that opting not to be public could be a signal in itself.

The release of dYdX V 4 on the mainnet marks a turning point in the decentralization of the dYdX protocol. From then on, the dYdX DAO will be solely and fully responsible for all aspects of the operation of the dYdX protocol. To this end, the dYdX Foundation released a potential roadmap for the dYdX DAO within the community.

hot spots of the week

In their vision, the dYdX DAO may consist of several autonomous subDAOs, each subDAO responsible for a part of the core functions of the dYdX protocol (such as financial and treasury management, growth, risk management, etc.), and ultimately accountable to the dYdX community. subDAO needs to pay attention to the Request for Comments (DRC) on the dYdX community forum in a timely manner, guide community discussions and promote the progress of proposals, and smoothly implement approved on-chain voting proposals, etc. Discussions on security modules, liquidity modules, funding plans, and incentive plans have aroused widespread enthusiasm in the community because they directly affect dYdX’s protocol income and ecological development. Most of the community members who participated in the voting also expressed their opinions from the perspective of the overall interests of the community Opinion.Rather than compensating a large number of contributors with a small amount of money, Antonio Juliano suggests that it is better to pay a large number of talented contributors.，secondary title，Binance and CZ sued by US CFTC for regulatory violations（hot spots of the weekOver the past week, Fed Chair Jerome Powell:Another rate hike is expected this year；Elon Musk signs letter calling for moratorium on training AI systems stronger than GPT-4（Binance and CZ sued by US CFTC for regulatory violationsInterpretation of the indictment), CZ said:，Ignore FUDBinance uses various methods to block US customers, I have never participated in Binance Launchpad and futures tradingFull Text of Response to CFTC Allegation), the CFTC Chairman:The Binance case is an ongoing fraud that will be vigorously argued in courtFDIC Announces First Citizens Bank Has Acquired Silicon Valley Bank, and undertake all its deposits and loans,；

Silicon Valley Bank's U.S. stocks plummeted 97.41% before the market, and Signature Bank's U.S. stocks fell more than 99% before the market, Montenegro police charged with forgeryAllegation against Do Kwon, approved by the U.S. court，CFTC：FTX Sells Its Sequoia LP Stake to Abu Dhabi Sovereign Wealth Fund for $45M，In addition, in terms of policies and macro markets, the chairman of the US SEC:；

Existing Securities Laws Cover Most Crypto Market Activities, No Additional Legislation Required, Chairman of the US SEC，Seeks $2.4B in grants and more staff to fight 'misconduct' in emerging fields like cryptocurrencyCrypto Payment Limit to Self-Hosted Wallets Raised to €7,000 in Final Text of EU Anti-Money Laundering Bill

Institutions, large companies and top projects,In terms of opinions and voices, Polygon:It is expected that MATIC will be used for staking and governance in Polygon zkEVM in the futureOKX Releases OKBC Development Roadmap: The OKBC network will be built in three steps;Institutions, large companies and top projects,BitDeer to list on Nasdaq through SPAC merger, valued at approximately US$1.18 billion,Galaxy Digital still plans to launch in the US, registration documents have been submitted to the SEC for review,，zkSync EraOKX Announces Formation of Hong Kong Entity，, is applying for a virtual asset license,，After the BitKeep brand upgrade, it will focus on building an ecosystem and independent Tokenomics, and protect the rights and interests of BKB holders, zkSync EraThe main network cross-chain bridge goes online；

Mainnet Alpha is openToken is expected to be released in one year，Base Ecological Fund Announces Four Support Directions, including stable coins and on-chain reputation platforms, etc.,Lido introduces NFTs to the ETH unstaking processThe NFT and GameFi space, Yuga LabsLaunched "Otherside: 2nd Trip" campaignhas reopened,

With "Editor's Picks of the Week" seriesPortal。

See you next time~