Rollup Summer思考:叙事推演和投资机会

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Mint Ventures
3 months ago
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Celestia会是Rollup时代的以太坊吗?

Original author: Alex Xu, Research Partner at Mint Ventures

The content of this article is the author’s observation of new trends in the Rollup market, its future development, and the deduction of possible opportunities. Try discussing the following topics:

  • What is Rollup Summer?

  • New Rollup Examples: ZKFair and Manta

  • Development of Rollup Summer

  • Secondary Market Opportunities: Related Subjects of the Rollup Summer Narrative

The following article contains the authors staged views as of the time of publication. It is more deduced and explained from a business perspective and less about the technical details of Rollup. This article may contain errors and biases in facts and opinions. It is for discussion purposes only. We also look forward to corrections from other investment research colleagues.

1. What is Rollup Summer?

Similar to the Defi Summer starting in 2020, the inscription Summer of 23 years,Rollup Summer is the author’s definition of the state of the possible explosion of new Rollup projects in multiple dimensions such as quantity and business volume (TVL, active users, ecological projects). Although the initial signs are currently emerging, it is only a deduction and hypothesis.

Rollup Summer is specifically reflected in:

  • A large number of new Rollup or application chain projects have been launched and the mainnet has been launched.

  • Users, funds, and developers are flowing into the Rollup ecosystem at a much faster rate than in the past year

  • Business data and asset prices reinforce each other, contributing to the rapid expansion of the total market value of the Rollup track and related projects.

Rollup Summer may start at the end of 2023 or the beginning of 2024, and may become an important narrative throughout half the year or even the whole year.

The main factors that incubate Rollup Summer are:

1. The flywheel effect of the new Rollup

Rollup itself is not a new species. Already launched Rollups including Arbitrum and Optimism already have huge market capitalization and business volume. Other ZKRollups such as Starknet and zkSync have also been running for a long time.

But the protagonists of this round of Rollup Summer will be the new Rollup projects that have just appeared in this cycle, because:

  • The concept of modular blockchain is deeply rooted in the hearts of the people, and the infrastructure of each module of Rollup is becoming more and more perfect, such as OP stack, DA layer Celestia, decentralized sequencer, and various RaaS service providers, etc., which are developed and maintained with a modular concept The threshold for a Rollup is falling rapidly

  • New Rollup, new tokens, sufficient budget for cold start and incentives, more radical token distribution and incentive methods, more attractive to users and funds

  • Low starting market value, big room for imagination

  • Bull market atmosphere, boosted by market optimism

Simply put, the characteristics of this new round of Rollup are: new projects, tokens, modularity, generous incentives, making the project’s initial business and currency price flywheel spin faster.

The flywheel of Rollup Summer may come from the initial stage: token airdrop plan → introduction of user assets, increase of core business data i.e. TVL → expansion of project market value.

The second stage may come from: Token ecological airdrop plan → Directly subsidize dapps in the ecology and indirectly subsidize users → Further introduce user assets and increase core data TVL + number of active users + gas fees → further increase the market value of the project → new rollup flip old generation Rollup calls appear → further market sentiment Fomo.

2. Cancun upgrade

In addition to the flywheel effect of emerging Rollup, another background factor is the Ethereum Cancun upgrade expected to come in February this year. The Cancun upgrade itself directly benefits Arbitrum and Optimism, reflected in the rapid reduction of their L1 costs, forming a larger Second level profit margin. But Cancun itself will also draw attention to the rollup circuit as a whole, bringing attention and money to new types of rollups.

2. New Rollup cases: ZKFair and Manta

The author takes two recent Rollups that have attracted much attention as examples to analyze the operation mode and characteristics of the new Rollup, the protagonist of Rollup Summer.

  1. ZKFair

Rollup Summer思考:叙事推演和投资机会

Official website: https://ZKFair.io/

The main features of ZKFair as a Rollup are:

  • Built on Polygon cdk, DA layer will use Celestia (currently maintained by self-operated data committee), EVM compatible

  • Use USDC as gas fee

  • 100% of the Rollup token ZKF is distributed to the community. 75% of the tokens will be distributed in four installments to participants of Gas consumption activities within 48 hours. Essentially, participants participate in the primary market sale of tokens by paying Gas to the official sorter. The corresponding The financing valuation in the primary market is only $4 million

Rollup Summer思考:叙事推演和投资机会

ZKFair has attracted more than 110 million funds to participate in the event. Image source: https://ZKFair.io/airdrop

  • Rollups operating profits promise to be 100% returned to the community, of which 75% will be distributed to ZKF LP pledgers and 25% will be distributed to qualified dapp deployers. The profit here = total expenses – operating costs (Rollups browser, oracle and other infrastructure cost)

Since ZKF is distributed based on the ratio of participants total Gas consumption during the event to the total Gas amount, this means that the sale of ZKF is a game of fighting for funds, and a large number of users cross-chain USDC to ZKFair mainnet. During the airdrop event of ZKFair, the on-chain funds soared from 0 to a maximum of about 140 million US dollars in 2 or 3 days, which was comparable to Starknet, the head project of ZKRollup at that time. Even at the current stage when the airdrop has ended, ZKFair’s TVL of $70 million+ is higher than the ZKRollup project Scroll, which was launched earlier.

The benefits of ZKFair’s above operation are obvious:

  • Rapid cold start and popularity gathering: TVL on the chain went from 0 to over 100 million in 3 days (currently still 70 M+), and is one of the fastest growing rollups, with 334,000 addresses.

  • Direct token empowerment: Sorter fees are directly allocated to users and developers, providing support for the intrinsic value of Rollup’s tokens.

The current FDV of ZKF is about 100 million. For a Rollup, its market value is still not high compared with the horizontal valuation of other Rollups.

Rollup Summer思考:叙事推演和投资机会

2.Manta

Rollup Summer思考:叙事推演和投资机会

Official website: https://Manta.network/

Rollup Summer思考:叙事推演和投资机会

Manta Rollup features:

  • Built on Celestia DA+Polygon zkevm, EVM compatible

  • In addition to Rollup, the overall product line is rich, especially a large number of ZK-based suite services

Rollup Summer思考:叙事推演和投资机会

Mantas Rollup was officially launched in September 2023, but the business data took off after the new paradigm event was launched in mid-December. The current total amount of funds on the chain (official data) is close to 750 million.

Rollup Summer思考:叙事推演和投资机会

The picture below shows the trend of Manta’s on-chain Defi TVL. We can see an obvious growth inflection point after the launch of the new paradigm.

Rollup Summer思考:叙事推演和投资机会

Manta’s investment lineup is also very luxurious, with a valuation of $500 million in its last round of financing:

Rollup Summer思考:叙事推演和投资机会

Image source: https://www.rootdata.com/

The activity logic of New paradigm is very simple and is an upgrade of blur’s blast mode:

  • Distribute your own rollup token rewards according to the amount of cross-chain funds, quickly increasing the amount of funds on the chain

  • Cross-chain assets will at least receive the basic interest rate in the crypto world (eth pos + stable currency treasury bond income), reducing the user’s opportunity cost of funds.

  • Set airdrop expectations for dapp interactions, encourage users to interact with existing dapps after cross-chain, and boost developer confidence

New paradigm will distribute a total of 45 million Manta tokens to NFT holders, accounting for 4.5% of the total. The author roughly calculated based on today’s (24.1.5) NFT secondary market data that the FDV valuation of the project after the Manta token is launched is at $1.5-2.5 billion range.

Rollup Summer思考:叙事推演和投资机会

In addition to ZKFair and Manta, other similar new Rollups are also appearing in large numbers, such as Blast, which was launched earlier, and Layer X, which recently mixed ZKFair and Manta modes, etc.

In addition, considering that ZKRollup projects such as Scroll and zkSync have not yet issued tokens, these projects that were launched earlier on the main network also have the opportunity to refer to the models of ZKFair and Manta and directly attract users and users for their own ecology through a clearer token reward mechanism. funds.

3. Rollup Summer follow-up deduction

Next, we can deduce the possible development path of Rollup Summer:

  1. The new Rollup is launched, with rapid growth through token airdrops and interactive activities. The rapidly soaring data and better mechanisms have given the market good expectations for its growth (implementation in progress)

  2. The Rollup projects currency is launched online or listed on exchanges, and the wealth effect is evident (ZKFair 25-30 times increase), stimulating the attention of more players and funds.

  3. Token incentives have shifted from pure TVL in the initial stage to increasing ecological activity, gas fee consumption and project introduction, and the market has shifted from observing TVL to observing the sustainability of ecological development (challenges begin to increase here)

  4. A large number of new Rollups have been launched wholesale, and funds and attention have been diluted (which also means that the wealth effect of new Rollup tokens has declined). Project quality has plummeted, and even fraudulent projects have appeared (the funds are stolen or run away after attracting funds). Market confidence damaged

  5. Summer has subsided and Rollup competition has returned to a steady state, but the distribution method of Rollup tokens in the future may inherit the method of this round (to solve the problem of business cold start)

We can see from this that the biggest challenge for new Rollups and Rollup Summer after their initial success is how to stimulate the sustainable development of the ecosystem after completing the initial distribution of tokens, and how to make their own Rollup ecosystem emerge and retain Users and funds, applications and services with wealth effects, whether it is Meme, Defi or more airdrops and exquisite Ponzi.

4. Secondary opportunities: Rollup Summer narrative-related targets

Which secondary targets will benefit from the development of Rollup Summer? From Rollup Summer, further sub-narratives may be derived as follows:

Subnarrative Guess 1: “Celestia is the Ethereum of the Rollup era”

ZKFair and Manta, as well as more new Rollups, will feature Celestias DA products, and Celestia is moving from stories to examples. Once an example project using Celestia receives good market feedback, more new Rollups will inevitably follow suit. Using Celestia as the DA layer may become the standard configuration of the new Rollup. Celestia becomes the new consensus layer of Rollup, and then becomes the core infrastructure of the Rollup era.

From this, a sub-narrative of Celestia is the Ethereum of the Rollup era may emerge. Whether this story can come true in the future is not important in the short term, because judging from Celestias current circulating market value of only $2.3 billion, it is far away from Ethereum. The circulating market value of $270 billion has enough room for two orders of magnitude.

Rollup Summer思考:叙事推演和投资机会

Rollup Summer思考:叙事推演和投资机会

Data source: https://www.coingecko.com/

Sub-narrative speculation 2: Interest-earning assets become standard

Interest-bearing assets, especially interest-bearing stablecoins such as sDAI, have been slow to replace mainstream stablecoins in the past. However, in the airdrop activities of Blast and Manta, ETH interest-bearing assets and interest-bearing stablecoins have almost become the native assets of this new type of Rollup. , if more Rollups follow this approach, it will directly promote the expansion of user groups and the development of habits. This directly benefits issuers of interest-earning assets who have the ability to obtain strong Rollup cooperation. For example, Blast chose Lido and MakerDao, and Manta chose Stakestone and Mountain Protocol.

Sub-narrative speculation 3: Rollup devours L1 market share

In terms of experience, there is no real difference between Rollup and L1. The L1 public chain wave in the previous cycle may reappear in the form of a sovereign Rollup wave in this cycle. While Rollup competes with each other, it will also directly compete with L1. A battle for users and funds occurs. At the same time, some fast-growing native dapps on Rollup also have opportunities worth paying attention to. For example, the lending project LayerBank on Manta has a total deposit size of more than $300 million, which is close to the data of Radiant, the leading lending project on Arbitrum.

However, while optimistic about the rapid development of many Rollups, it is also necessary to consider the risk of narrative failure.

Rollup Summer Narrative Risks

The core challenge of the new Rollup is the smooth transition from startup to growth. It is relatively simple to use token airdrops to stimulate capital inflows, but if you want to retain users and funds for a long time, the incentive challenge will be more complex. In fact, various L1s in the previous cycle also made similar attempts, such as launching hundreds of millions of public chain incentive funds to encourage the leading Defi on Ethereum to migrate, and Defi will transfer the incentives they received. Giving their own users to improve their business data, such measures achieved good results in the early stages. However, as various public chains launched similar policies, the incentive effect gradually declined in the competition.

Even the current established Rollups such as Arbitrum and Optimism have been distributing their own token subsidies to ecological projects and then delivering them to users through ecological projects, hoping to retain users activity and funds. The total incentive amount of Arbitrum’s latest round has exceeded 70 million ARB (currently worth more than 140 million US dollars).

So, well still have to see whats next for the new Rollup as to how Rollup Summer, as an embryonic narrative, will play out next.

Original article, author:Mint Ventures。Reprint/Content Collaboration/For Reporting, Please Contact report@odaily.email;Illegal reprinting must be punished by law.

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