Every week, the editor selects their top picks (0715-0721).
"Editor's Picks" is a "functional" section of Odaily. In addition to covering a large amount of real-time information every week, it also publishes many high-quality in-depth analysis content. However, they may be hidden in the information flow and hot news, passing you by.
Therefore, our editorial department will select some valuable articles worth reading and collecting from the content published in the past 7 days every Saturday, bringing you new insights from the perspectives of data analysis, industry judgment, and opinion output in the encrypted world.
Now, let's read together:
Investment and Entrepreneurship
Bitcoin Spot ETF Market Size Forecast: What Impact Will It Bring?
Bitcoin funds already have a considerable asset management scale.
In addition to the investor protection provided by exchange-traded products, the well-known BlackRock and iShares brands, familiar buying and selling methods through securities brokers, simplified position reporting, risk measurement, and tax reporting, spot ETFs have better liquidity than private funds, lower tracking error than trusts/closed-end funds (CEFs), and possibly lower costs (definitely lower than GBTC), although the fees have not been disclosed.
Compared with gold, the estimated increase in demand for Bitcoin ETF is nearly $30 billion. Banks and brokers have smaller exposures to Bitcoin futures-based ETFs. Depending on a 10.0x currency multiplier (observed in 2018 was 11.36x), every $1 AUM flowing into the ETF will affect the value (market value) of Bitcoin by $10. In the worst case, a $1 billion ETF AUM will be comparable to the existing futures-based BITO ETF. In the best case, $100 billion will surpass the combined AUM of GLD and IAU of $85 billion.
veDAO Research Institute: Tracking Smart Money in Crypto, the First Step towards Financial Freedom
Layer 1 Transformation Layer 2, Talking about the Business Truth behind "Ethereum L2"
It is the cost and benefit that determine whether a project chooses to create a separate L1 or parasitize on Ethereum and run its business on L2. The data also confirms this point.
In addition, in a bear market, it is more difficult for projects to raise funds from venture capitalists and gain recognition from retail investors. It is inevitable for a new L1 project to experience setbacks in both primary and secondary markets, so it may be more practical and cost-effective to build on L2. More importantly, it's about "user traffic" and where users come from.
In terms of competition, L2Beat currently tracks 26 L2s, which is roughly one-seventh of the competition pressure faced by L1. Although Arb and OP are the dominant players in terms of market share, other projects have relatively scattered and average market shares, which presents opportunities for another dominant player to emerge. However, considering the technological architecture, the various L2 solutions in the existing market already have typical representatives. The business truth of L2 can be quickly effective, but hopefully, it will not be overfished.
DeFi
Since the beginning of this year, traditional players represented by DAI, FRAX, and LUSD, as well as emerging players represented by crvUSD, GHO, and HOPE, have been exploring new business directions. It is highly likely that they will bring new variables to the decentralized stablecoin market and even the entire stablecoin industry.
In the context of excluding stability considerations for decentralized stablecoins and the dual crisis of "reserves + regulation" faced by centralized stablecoins, the search for new exploration directions in the turbulent decentralized stablecoin market has become the greatest expectation of the market for the stablecoin industry "Holy Grail".
For decentralized stablecoins, the degree of decentralization, stability, application scenarios, and future expansion space are all crucial dimensions to truly determine their value.
LD Capital: A New Narrative of Blue-Chip DeFi, Reviewing Aave & Compound
Aave has a funding volume that is 2.6 times larger than Compound, making it currently the largest protocol in the DeFi lending sector.
From the perspective of risk control measures, both introduce reserve funds as a remedy for debt losses. In addition, Aave has a built-in security module, where token pledgers provide overall backup security for the protocol, not only empowering the protocol token, but also locking up some token liquidity to reduce market inflation.
From the perspective of token issuance, both currently have relatively low issuance volumes, and token sell pressure has a minimal impact on the secondary market prices.
From the perspective of protocol revenue, Aave has a more diversified income source, with all borrowing interest from stablecoin GHO going to the national treasury. Looking at the trend of treasury revenue, since the last bull market, Aave's protocol income has sharply decreased; however, the current income is sufficient to cover protocol expenses, while Compound still relies on COMP token rewards for subsidies. Compound has a relatively singular source of income, with Aave's protocol income being around four times that of Compound.
SNX Surging, an Analysis of the DeFi Innovation Behind Synthetix
Synthetix V3 includes a series of upgrades that take Synthetix to a new level: providing a cross-chain liquidity layer for DeFi.
V3 is currently in the alpha stage, and various features will be gradually released:
Multiple collateral, not just SNX;
Permissionless liquidity layer;
Developer-friendly ecosystem;
Seamless cross-chain implementation.
Synthetix's ultimate goal is very exciting, but the key is to create demand and attract developers to build solutions using Synthetix as a liquidity layer. The more protocols (such as Kwenta) built on Synthetix, the higher the returns for liquidity providers (pledgers on Synthetix). With increased returns, more liquidity will be provided, and deeper liquidity will attract more protocols to build on top of Synthetix. This is a mutually beneficial cycle.
60-70% of the fees earned by SNX pledgers come from traders on Kwenta. Trading on Kwenta is strongly incentivized by a large volume of OP and KWENTA token issuance, so it is difficult to estimate the extent of recent user growth.
In-Depth Analysis of Pendle: The "Yield Flywheel" in the LSDFi Track
Pendle is a yield tokenization protocol built on multi-chains, allowing users to purchase underlying assets at a discount by separating interest-bearing tokens from the principal. At the same time, for yield traders, they can express their bullish or bearish views on the yield of interest-bearing assets through trading Yield Tokens (YT). Pendle is a relatively mature DeFi protocol with rapid development in recent times. On the one hand, it has kept up with the development of the LSD track and timely launched relevant products. On the other hand, it has followed the current trend of multi-chain ecosystem development in the blockchain industry and actively deployed its products on multiple chains.
Moreover, this year the protocol made significant changes to its token model and introduced the vePendle model in version 2, greatly enhancing the value capture capability of its tokens. This has attracted more user and investor participation and contributed to the ecosystem surrounding the protocol.
If Pendle can continue to maintain a leading position in LSDFi, following the development of the LSD track, it is highly likely to have significant growth potential.
LD Capital: The Increasingly Intense Pendle War
Liquidity within the Pendle protocol mainly comes from LST assets, with GLP, stablecoins, and other tokens accounting for only about 30% of its TVL. The income of GLP mainly comes from traders' profits and protocol fees, which fluctuate daily, providing higher game space and tradability for yield rates.
The initial income of LST assets comes from ETH PoS, and there are differences in staking volume, LSD protocol operating mechanism, and platform fees, resulting in slight variations in yield rates among different LSD platforms. However, these differences are not significant, with yield rates typically maintained at around 4%. The limited elasticity of yield rate variations also determines the relative inflexibility of tradability for LST assets.
The Pendle protocol adopts the veToken and Gauge voting model for liquidity mining, allowing the Pendle LST pool to achieve yield rates of 10%-30%.
From a data perspective, the TVL of the Pendle protocol is steadily growing, and its fundamentals are gradually solidifying. However, the risk lies in the continuous emission of PENDLE tokens. Both the PENDLE protocol and Penpie and Equilibria cannot sustain high APR in the long term, making it difficult to continuously attract users to stake PENDLE. Additionally, there is currently a large amount of ePENDLE and mPENDLE that cannot be sold due to lack of market or unpegged status, causing hidden selling pressure.
Bitcoin Ecosystem
Good news for Bitcoin? Understand the upcoming Nakamoto version of Stacks
Stacks allows developers to build dApps that use real Bitcoin for payments, collateral, tokens, NFTs, DAOs, and more. By extending Bitcoin's scripting functionality, it enables DeFi, metaverse, Web 3.0, and other use cases, while respecting the principles of Bitcoin.
The next important version of Stacks is called Nakamoto, which includes:
sBTC - a trustless decentralized two-way peg that brings Bitcoin liquidity into smart contracts.
Finality of Bitcoin - once confirmed in a PoX block, Stacks transactions are irreversible.
Faster blocks - producing a block every 5 seconds while maintaining security.
By enhancing the functionality of Bitcoin while deeply respecting the spirit of BTC, Stacks + Nakamoto can unleash the full potential of Bitcoin in Web 3.0.
Ethereum and Scalability
Bankless: Eight Highlights of EthCC 2023
Lens V2, UniswapX, Chainlink CCIP, Starknet application chains, Gnosis Pay + Gnosis Card, Mantle mainnet Alpha, Linea mainnet Alpha, expanding the influence of EVM.
Report: LSDFI, New Stablecoins, and the Next Narrative of the Bull Market
LSDFi will be an important driver of the next bull market as it creates a new currency multiplier tool in the industry, greatly improving the efficiency of currency usage. The new narrative is that derivative assets will replace native assets like ETH as the new underlying layer. Currently, there are roughly two or three main tracks where LSDFi is taking shape: lending, stablecoins, and yield strategies.
In terms of operating models: Lido and Frax are similar and can be called banking models,
In terms of interest payment models: Frax and Rocket Pool are similar as they follow rate models, while Lido follows an interest payment model.
LST Yield: Currently, frxETH has the highest yield because it diverted some frxETH holders to provide liquidity on Curve.
New Ecology and Cross-Chain
Messari: Filecoin 2023 Q2 State of the Network Report
The Filecoin storage market continued to grow in Q2 2023, with active trading volume increasing by 64% compared to the previous quarter.
Due to a 12% decrease in storage capacity, storage utilization increased from about 4% in Q1 2023 to nearly 8% in Q2 2023.
Driven by a 64% increase in active storage trading volume and a 60% increase in the number of large dataset clients, fee revenue in Q2 2023 increased by 91% (67% in USD terms).
The release of Filecoin Virtual Machine (FVM) will introduce Ethereum-like smart contracts to Filecoin, promoting new use cases in areas such as liquidity staking, perpetual storage, and distributed computing.
In-depth Analysis: Will Aptos Ecology Become a Growth Engine in Gaming Infrastructure and Tools?
Technology itself does not guarantee success. Aptos adopts two key strategies to ensure sustainability and survival in the L1 war: implementing future-oriented networks through scalability; expanding its ecosystem through Web2 partnerships. This approach involves introducing validated products and services and leveraging the intellectual property and user base of Web2 companies. It is also a bet on the future of the blockchain industry, predicting that the future of the blockchain industry will be driven by global heavyweight companies rather than Web3 startups.
Aptos is likely to build its own ecosystem around the gaming industry. It is one of the few public blockchains that can technically support AAA games. Aptos also actively collaborates with METAPIXEL to leverage their extensive game development expertise in building the infrastructure and tools required for Web3 game development. The features currently under development include token object models, proxy gas fee payment, VRF, and game SDK, which will streamline the development process for game companies. In addition, the highly anticipated "Gran Saga: Unlimited" (GSU) adopts NPIXEL's famous IP and is scheduled to be released in January next year.
Weekly Hot Topics Recap
Over the past week, the US SEC started reviewing the application for a Bitcoin spot ETF, with a maximum review period of 240 days. Multichain: the team has been forced to cease operations and is currently unable to shut down the front-end website, advising users not to continue using the service. Fantom Foundation: more than $62 million in stablecoins have been frozen in Multichain wallet addresses, currently in contact with Circle and Tether to explore potential uses for the frozen funds, and Celsius starts selling altcoins, including 1.27 million LINK, 2.83 million SNX, 4.45 million 1INCH tokens, and more;
In addition, in terms of policies and macro markets, the US SEC officially acknowledges multiple Bitcoin ETF applications from companies such as BlackRock, Invesco, and Fidelity, US SEC acknowledges Valkyrie Bitcoin ETF application, and SEC Chairman applies for an additional budget of $72 million to strengthen regulation in the cryptocurrency field.
Regarding viewpoints and opinions, J.P. Morgan stated that the ruling concerning XRP is a "milestone victory" for the cryptocurrency industry and may impact other cases. The Financial Stability Board called for "consistent and comprehensive" global regulations for the cryptocurrency industry. Paradigm Partner mentioned that UniswapX will change the rules of DEX, MEV, and interoperability games. zkSync announced that the actual airdrop recipients will be the first 10,000 eligible community members, and similar airdrops will occur after ETHCC. Argent plugin wallet, in one version, uploads user mnemonics under certain conditions. The official has been notified. MetaMask users can disable the "account balance batch request" feature to prevent all addresses from being exposed to the used RPC.
Organizations, major companies, and top projects: Sequoia Capital restructures its venture capital team, two partners in the crypto field will resign, Tesla's official website has added Dogecoin to its payment code, OPNX supports bankruptcy claims trading on FTX, Aave's native stablecoin GHO goes live on the Ethereum mainnet, Curve launches GHO/crvUSD liquidity pool, cLabs initiates a new proposal, proposing Celo's transition from an independent EVM-compatible L1 blockchain to Ethereum L2, Polygon unveils new governance model: including three governance pillars and introducing an "ecosystem committee", Starknet to launch Starknet Appchains, Starknet introduces high-performance sequencer Madara, will enhance Starknet's interoperability and on-chain privacy, Solana Labs launches compiler Solang, supports Solidity contract writing, Arkham token airdrop is open for claiming, Dune releases new features aiming to enhance team collaboration;
NFT and GameFi fields, Opensea releases NFT combination exchange function Deals, UniSat launches Ordinals native Swap platform brc 20-swap, Founder of Blur: plan to allocate more than the originally set 300 million BLUR in Season 2...Hmm, it's been an eventful week.
For the series "Editor's Picks of the Week," click here.
Until next time~
