Dear readers, welcome to the weekly cryptocurrency summary from Gryphsis Academy. We bring you key market trends, in-depth insights into emerging protocols, and fresh industry updates, all aimed at enhancing your expertise in cryptocurrencies and Web3. Follow us on Twitter and Medium for deeper research and insights.
Market and Industry Snapshot:
Layer 2 Overview:
In the past week, Starknet has shown impressive growth with an 8% increase in total locked value (TVL) within the Layer 2 space, while most other platforms have seen slight declines. In terms of on-chain activity, zkSync, Starknet, and Base are leading the pack. Several protocols, namely Rigoblock, Tangible, CoChilli, and PixelsSwap, have caught market attention with significant TVL surges.
LSD Sector Overview:
As usual, the Liquid Staking Derivatives (LSD) sector has experienced stable growth, with all indicators continuing to rise. Rocket Pool's market share of rETH continues to gradually increase.
RWA Sector Overview:
As usual, the Liquid Staking Derivatives (LSD) sector has experienced stable growth, with all indicators continuing to rise. Rocket Pool's market share of rETH continues to gradually increase.
Main Topics
Macro Overview:
US Stock V.S. Crypto
Highlights of the Week:
Telegram $TON Wallet
Weekly Protocol Recommendation:
Stadar Labs
Gryphsis Research:
Cosmos, Polkadot, L2 Stacks
Weekly VC Investment Focus
PahdoLabs ($15 M)
Mocaverse ($20 M)
Twitter Alpha:
@CryptoGirlNova on the best wallet and best DEX.
@TheDeFinvestor's watch out on big selling pressing next week
@punk 6529 experiences surviving two crypto bear markets
@CryptoMichNL insights on Altcoins's start trending upwards
Macro Overview
In the past week, there haven't been any significant price fluctuations in the stock market and the cryptocurrency market. It's worth noting that BTC has shown some positive price movements and now has a market dominance of nearly 50%. Looking ahead to the next week, important events to watch include the release of the Federal Reserve interest rate decision, initial jobless claims, and the S&P Manufacturing Purchasing Managers' Index (PMI).
Major Events of the Week
Telegram Integrates TON Network: A Vision for a Broader Ecosystem and Web3 Adoption at Scale
Telegram officially recognizes TON network as its preferred Web3 infrastructure blockchain, leading to a 13% increase in the TON token price. As part of this recognition, Telegram will integrate TON into its user interface and offer exclusive promotions within the application. Three years after the initial announcement, Telegram has launched a cryptocurrency wallet integrated with the TON blockchain, which is open for the 800 million global users. Additionally, projects developed on the TON blockchain will have priority access to Telegram Ads, the application's advertising platform. This partnership aims to promote cryptocurrency adoption and provide Telegram users with an entry point into the world of cryptocurrencies.
Telegram's Chief Investment Officer, John Hyman, said that the integration of TON aims to empower all users with digital ownership and provide TON project with access to Telegram's large audience. Hyman further clarified that TON will continue to operate as an independent decentralized organization, while Telegram will remain focused on providing an instant messaging platform.
TON Space
is already an independent bot on Telegram that has attracted 3 million registered users with its TON-based Web3 wallet. It will soon be integrated into the application, reaching all 800 million users. The wallet features a user-friendly interface and a range of convenient functionalities, including easy bank card top-up, selection of preferred currency, and effortless purchasing and trading of cryptocurrencies. Built on TON blockchain known for its fast transactions and support for decentralized applications (dApps), the wallet ensures a smooth and seamless user experience. Its main objective is to introduce decentralized digital asset management to Telegram's wide user base.
Furthermore, Telegram users outside the United States can expect the launch of TON Space, the self-custodial version of the wallet. The TON Foundation anticipates the launch in November. TON Space empowers users to engage in cryptocurrency trading, manage their Telegram usernames, and perform DNS-related tasks. Additionally, the wallet includes a peer-to-peer marketplace for seamless transactions between cryptocurrencies and fiat currencies.
These two wallets together form a powerful ecosystem. The custodial wallet optimizes payment flows and user onboarding, while the non-custodial wallet supports advanced operations in decentralized finance (DeFi) and gaming sectors. This comprehensive suite of financial tools within Telegram paves the way for widespread adoption. Telegram's approach emphasizes empowering users with control over their digital assets, aligning with its vision of becoming a comprehensive "super app."
Telegram's History with SEC
Telegram's blockchain project TON faced regulatory hurdles in 2020, including a lawsuit from the U.S. Securities and Exchange Commission (SEC). The lawsuit concluded with Telegram paying a $18.5 million fine and committing to refund unused investor funds. While Telegram is now relaunching and expanding its crypto wallet globally, certain countries (including the U.S.) are excluded, likely due to ongoing regulatory challenges.
Our View
Integrating the TON wallet into Telegram is a significant step forward
Milestones have brought several benefits and considerations for users, Telegram, and the wider cryptocurrency industry. Let's examine these pros and cons from different perspectives.For Telegram Users:
Pros:
1. Easy access: Users can conveniently enjoy the benefits of the TON network, including low fees, fast transactions, and high security, without leaving their familiar chat interface.
2. Expanded functionality: Users can create and join groups and channels that support TON payments, as well as participate in decentralized applications (DApps) on the TON blockchain.
3. Increased control: Telegram guarantees not accessing users' private keys or funds, providing them with more freedom and control over their funds.
4. No fees: Using the TON wallet, Telegram does not charge any fees.
Risks:
1. Custodial wallet risk: TON's custodial wallet means that Telegram holds users' private keys. Users must trust Telegram to safely and reliably store their funds, introducing the risk of Telegram being hacked, offline, or freezing accounts.
2. Legal risk: Telegram's wallet operates in a legal gray area, using it may expose users to legal risks such as tax evasion, money laundering, or violations of sanctions. Users must also abide by Telegram's terms of service that can change at any time.
3. Limited compatibility: The Telegram wallet is not compatible with other cryptocurrency wallets or exchanges, reducing choices and flexibility. It also makes fund recovery more difficult if users lose access to their Telegram accounts.
For TON and Telegram:
1. Empowering users: The integration of the TON network with Telegram empowers users by expanding their access to Web3 adoption and increasing the market value of Toncoin.
2. Potential for the Telegram ecosystem: This integration opens up possibilities for new applications and financial tools within the Telegram ecosystem, similar to the WeChat ecosystem (with a transaction volume of 3.5 trillion Chinese yuan in 2022). This includes in-app purchases, e-commerce, revenue sharing, DeFi integration with USD tokens bearing interest and loan options.
3. Potential for future development: Potential future developments on the TON network include decentralized P2P fiat-to-cryptocurrency markets, TON native stablecoins, multi-chain wallets, AI agents, crypto games tailored for chat groups, NFTs, and membership tokens.
4. Challenges: Some of the challenges the TON network faces include the need to improve TON wallet accounts, native stable assets, and user interface/user experience.
OverallIn terms of the adoption of the TON network into Telegram, it is a significant move that empowers users, expands the adoption of Web3, and increases the market value of Toncoin. It represents a step towards the future of information communication and blockchain integration. Although the integration brings multiple benefits to users, TON, and Telegram, there are also risk considerations related to the custodial nature of wallets and legal implications.
Weekly Protocol Recommendation
Welcome to our weekly protocol recommendation. This week, we have selected Stadar Labs, a protocol that provides liquidity re-collateralized tokens (LRT) for illiquid assets deposited into re-collateralization platforms like EigenLayer.
Restaking has attracted 177,000 Ether (ETH) and is ready to explode. Now, with the introduction of LRT (Liquidity Restaking Token) infrastructure, the restaking experience has been taken to another level. Stader Labs, a liquidity staking protocol, has now launched Liquidity Restaking Token (LRT), also known as $rsETH, a synthetic token representing ownership of restaked ETH, including assets staked on EigenLayer. $rsETH is the first token of its kind and was launched on the testnet on August 21, 2023. Stader Labs aims to address the challenges of node operations by introducing LRT DAO, which will be responsible for selecting validators and staking services. End users will be able to exchange ETH and LSTs for LRTs. Subsequently, the LRT contract will distribute tokens to individual node operators and accumulate rewards.
What is restaking?
Restaking is a feature within EigenLayer that acts as middleware, allowing you to stake your ETH on multiple protocols, known as Active Validation Services (AVS), to simultaneously secure multiple networks/services with merged security.
What is EigenLayer?
EigenLayer is an Ethereum-based protocol that allows users to earn additional rewards by restaking already staked assets. Restaking involves using Liquidity Staking Tokens (LSTs) like stETH, rETH, or cbETH to safeguard services like rollups, bridging, and data availability networks. EigenLayer serves as a bridge, enabling users to reallocate their LSTs between different protocols and options, such as AVS. Through the use of EigenLayer's smart contracts, users can strengthen the security of other applications while earning additional rewards.
Advantages:
- Capital Efficiency: Stakeholders can earn rewards from multiple validation services without locking up additional capital.
- Enhanced Security: EigenLayer enables new protocols to leverage the existing security layer of Ethereum.
- Developer Freedom: Developers can save time and resources by not having to build new security layers.
- Economic Security: EigenLayer empowers developers to effectively bootstrap economic security for new protocols.
- Flexibility: Protocols can improve their unique application features while benefiting from the security of EigenLayer.
Keep control over consensus and penalty conditions.Disadvantages:
- Learning difficulty: Heavy staking may be a complex concept for stakers.
- Node operator discovery: Stakers need to understand which node operators align with their risk characteristics.
- Complex reward dynamics: Rewards from unstable market values from multiple sources can be bewildering.
- High gas fees: Claiming rewards can be costly, especially for small investors.
- Liquidity issues: Accessing or trading staked ETH is restricted until the unlocking period is over.
- Opportunity cost: Stakers must choose between restaking and exploring other DeFi opportunities.
How does LRT address these issues?
Due to the limitations of EigenLayer restaking, LRT (Liquidity Restaking Tokens) were developed to solve the problem. Stader Labs aims to address the primary challenges of node operation by introducing LRT DAO. The LRT DAO is responsible for selecting validators and services for staked ETH, providing validators with permissionless joining opportunities. This process is facilitated through a multi-pool architecture, similar to $ETHx. Liquidity Restaking Tokens (LRT) enhance returns by unlocking this liquidity and adding another leverage layer.
Here is a detailed explanation of how it works:
- LRT DAO selects validators and services for re-staking ETH, allowing validators to join without permission. The multi-pool architecture, similar to $ETHx, helps with the selection process.
- Re-stakers stake their $ETH or LSTs.
- The LRT contract distributes tokens to different N.O.s that operate with the DAO.
- The price of LRT tokens assumes a base price for various rewards and staked assets.
- Re-stakers can exchange LRT tokens for other tokens on AMMs, redeem underlying assets, or take advantage of the composability of DeFi.
- The LRT DAO will continue to monitor the services and validators to be onboarded.
- Tokenomics will ensure the distribution of stake between the services.
Understanding rsETH from a technical perspective
- rsETH is a liquidity re-staking token that allows users to receive Ethereum staking and re-staking rewards while retaining liquidity and the ability to participate in DeFi. The main modules driving rsETH are the Deposit Pool, Node Operators, Reward Market, and Withdrawal Manager contracts.
- Deposit Pool: A treasury that allows re-stakers to transfer their liquidity stake tokens based on the current exchange rate and receive rsETH tokens as a reward. It simplifies the re-staking process by abstracting the complexity of rewards and validator delegation.
- Node Operators: A module that handles the transfer of deposited liquidity staking assets to each operator contract. The assets in each Node Operator are delegated to selected operators, providing economic security for all nodes operated by that operator. The Node Operators automate the reward redemption process and achieve gas savings.
- Reward Market: Provides different strategies for interacting with various rewards. Decisions about these strategies are made through DAO governance. The Reward Market helps the Asset Verification System (AVS) avoid malicious token activities and allows re-stakers to obtain better returns. It serves as the foundational layer for all rewards obtained through re-staking.
-
Withdrawal Manager: A module that allows rsETH token holders to convert their tokens into shares of all assets managed by the protocol. Redeemers receive a combination of various rewards earned by delegators to nodes operated by subscribers of different AVS protocols.
Our Insights
The introduction of liquidity repledging and LRT tokens has brought exciting changes to the staking world. The core advantages of LRTs include improved liquidity, higher returns and gas fee savings, automated governance aggregation, and risk reduction through diversification across multiple operators.
However, it is also important to consider certain risks associated with LRTs.
- Mitigation Risk: Staked ETH is at higher risk of loss due to malicious activity.
- Centralization Risk: A significant shift of stakers towards EigenLayer poses systemic risks to the decentralization of Ethereum.
- Return Risk: Intense competition between protocols may dilute staking rewards.
- LRT Protocol Risk: LRT protocols are relatively new, so it is important to carefully assess the technical and protocol-related risks.
In summary, LRTs provide a noteworthy narrative worth paying attention to. They have the potential to benefit liquidity repledgers, AVS, and operators within the LRT DAO ecosystem. However, it is crucial to acknowledge the involved risks. Similar to any financial leverage mechanism, LRTs introduce risks that make the system susceptible to market volatility and system failures, as we have observed in the early days of DeFi. While Ethereum itself may not be affected, the emergence of numerous new AVS and LRTs can dilute investments and attention, leading to a decrease in the governance token prices. It is also important to keep an eye on other LRT protocols like Astrid Finance and InceptionLST, which may offer airdrop rewards and are worth watching in this space.
Gryphsis Research Spotlight
Welcome to this week's Gryphsis Research Spotlight, where we will share with you the latest insights from our team. Our dedicated research team continually explores the cutting-edge trends, developments, and breakthroughs in the crypto space. This week, we are excited to share our research titled "Cosmos & Polkadot V.S. Layer 2 Stacks: Series 1 - Exploring the Underlying Technology aims to deepen your understanding of the evolving world of encryption and ignite your curiosity.
This research explores the current status of Layer 2 solutions in Ethereum, such as Optimism, zkSync, Polygon, Arbitrum, and StarkNet. These solutions address scalability and high gas fees, but there are compatibility issues and a lack of sovereignty at the code level. The universality of the Ethereum Virtual Machine (EVM) hinders optimizations for different types of applications, leading to trade-offs. Furthermore, all Dapps share the same infrastructure and are governed by the EVM, limiting their ability to meet specific needs without EVM upgrades.
To overcome these challenges, projects like Cosmos and Polkadot enable developers to build independent blockchains with independent governance, aiming to achieve high-performance cross-chain interoperability and an interchain network. The first series of the research will outline and compare the technical solutions of each project.
Cosmos
Architecture Framework:
The Cosmos Network is a decentralized network consisting of independent, scalable, and interoperable blockchains.
It adopts a layered architecture with two types of blockchains: Hubs and Zones.
Hubs are designed to connect multiple Zones and facilitate communication between them, reducing complexity.
Every chain in the Cosmos ecosystem operates independently in a sovereign manner, and any chain can act as a Hub.
Key Technologies:
IBC (interblockchain communication) enables the transfer of tokens and data within the Cosmos ecosystem.
Cross-chain communication is achieved through a consensus level of eventual consistency, ensuring that once a transaction is added to a block, it is final.
Tendermint BFT is the foundational consensus algorithm and engine used by Cosmos, providing a generic engine solution.
Cosmos SDK is a modular framework that simplifies Dapp development at the consensus layer, allowing the creation of specific applications or chains without writing code from scratch.
Interchain Security allows independent chains to share validators with the Cosmos Hub, achieving shared security and reducing the barrier to entry for new chains.
Interchain Accounts enable users to directly access all Cosmos chains that support IBC from the Cosmos Hub, promoting interchain interactions.
Polkadot
Architecture Framework:
Polkadot's architecture consists of a relay chain that serves as the network's core, with parachains surrounding it.
Parachains are dedicated chains connected to the relay chain, secured through the staking of DOT tokens.
Parathreads, similar to parachains, share slots between them and operate on a pay-as-you-go model.
Bridging mechanisms facilitate communication between parachains and external chains, enabling cross-chain functionality.
Key Technologies:
BABE (Blind Assignment for Blockchain Extension) is Polkadot's block production mechanism, randomly selecting validators to generate new blocks.
Grandpa is a mechanism used to finalize blocks and resolve potential forks.
Substrate is a development framework that supports building custom blockchains compatible with Polkadot, allowing for native compatibility and shared security.
XCM (Cross-consensus Message Format) is the standard message format for cross-chain communication within the Polkadot ecosystem, enabling interaction between different chains.
OP Stack
Architecture Framework:
OP Stack is a series of components maintained by the OP Group that provides software solutions for L2 solutions and governance.
It follows a layered architecture, including the data availability layer, ordering layer, derivative layer, execution layer, settlement layer, and governance layer.
Ethereum serves as the underlying secure consensus, and OP Bridges facilitate communication between superchains within OP Stack.
Chains built on OP Stack can customize their functionality and benefit from shared security, communication layer, and unified development stack.
Key Technologies:
Op Rollup: Ensures security through data availability challenges and parallel transaction execution, allowing for efficient andSafe transaction processing.
Cross-chain bridging: Enables communication and asset transfers between different chains within the OP Stack. This includes L2 message passing, cross-chain transactions with a shared sequencer, and Hyperchain transactions using the Plasma protocol.
L2 message passing: Addresses communication issues between L2 OP hyperchains using modular proofs, offering different bridging options based on security and latency requirements.
Cross-chain transactions: Achieves transaction sequence consensus for cross-chain transactions by utilizing shared sequencers on different chains, reducing the risk of asynchronous execution.
Hyperchain transactions: Enhances data availability and scalability within the OP Stack by leveraging the Plasma protocol and recording data commitments on the Plasma chain.
ZK Stack
Architecture framework:
ZK Stack is an open-source, modular codebase built on ZK Rollup, allowing developers to create custom L2 and L3 hyperchains. Developers can customize their blockchains based on their specific needs, whether as a second-layer network parallel to the zkSync Era or as a layer built on top of it.
ZK Rollup hyperchains operate independently and rely on Ethereum L1 for security and verification.
Key technologies:
ZK Rollup: Allows users to submit transactions that are collected by sequencers, verified using zero-knowledge proofs (STARK/SNARK), and updated on L1 for validation, ensuring high technical and security standards.
Cross-chain bridge: Facilitates interoperability between hyperchains by deploying a shared bridge smart contract on L1 and validating transactions on the hyperchains through Merkle proofs. Smart contracts on each hyperchain communicate asynchronously, enabling asset transfers across chains within minutes without intermediaries.
Compression technology: Achieves higher compression ratios by compressing at the L3 layer and amplifying at the L2 layer, reducing costs and enabling trustless and fast cross-chain interoperability for each transaction within minutes.
Polygon 2.0
Architecture framework:
Staking layer: Operates based on a PoS protocol, supervised by validator managers overseeing all Polygon chains, while chain managers handle validator management for each individual chain.
Interoperability layer: Includes a message queue for communication between Polygon chains.bsp;Secure message passing within the chain, as well as an aggregator for efficient services between Polygon and Ethereum.
Execution Layer: Allows the Polygon chain to generate ordered transactions with components such as consensus, mempool, and P2P communication.
Proof Layer: Generates proofs for the Polygon chain using high-performance ZK proof protocols, including a general-purpose prover, state machine constructor, and customizable state machine.
Key Technologies:
zkEVM Validium: Upgraded version of Polygon's PoS mechanism based on zkEVM principles. It provides cost-effectiveness and scalability for high transaction volume applications such as GameFi, SocialFi, and DeFi platforms.
zkEVM Rollup: The primary network within the Polygon ecosystem that combines Polygon's PoS mechanism (to be renamed Polygon Validium) and zkEVM Rollup. zkEVM Rollup offers high security but may have slightly higher fees and limited throughput, making it suitable for high-value transactions where security is crucial.
Weekly VC Investment Focus
Welcome to our Weekly Investment Focus, where we reveal the most significant venture capital trends in the crypto space. Each week, we will highlight protocols that have received the most funding.
PahdoLabs
Pahdo Labs has raised $15 million in funding to develop an anime-style role-playing game (RPG) and user-generated content (UGC) platform. The startup aims to revolutionize the anime RPG genre by enabling players to use AI tools and procedural generation. The funding round was led by Andreessen Horowitz (A16z), with participation from Pear VC, BoxGroup, Long Journey Ventures, Neo, and Global Founders Capital. The team's upcoming project, codenamed Halcyon Zero, will blend creativity and social features, allowing players to shape their own anime-style world.
Pahdo Labs has invited anime and action RPG enthusiasts to participate in the upcoming game The alpha testing of the game "Halcyon Zero" is being announced. This New York-based studio aims to create a next-generation anime RPG platform that combines user-generated content and AI. The funding received has allowed the team to expand and ensure resources for the early access stage of development.
Halcyon Zero is an isometric anime fantasy RPG and online game creation platform built on Godot Engine. It offers vibrant towns, challenging wilderness areas, and fast-paced combat with an emphasis on teamwork. The game features character classes and plans to release a diverse, anime-inspired roster of heroes after launch. Pahdo Labs is focused on empowering players to become game designers through powerful level-building tools and user-created content integration. The company plans to initially release the game on PC and introduce cross-platform functionality on platforms such as iOS and Switch. The core gameplay is currently in development, with larger-scale testing expected in the coming years.
Movaverse
Animoca Brands has raised $20 million in funding for its Mocaverse project, which aims to be an identity and scoring system for Web3 games, culture, and entertainment. The funding round was led by CMCC Global, with participation from other investors such as Kingsway Capital, Liberty City Ventures, GameFi Ventures, and individual investors Aleksander Larsen and Gabby Dizon. These funds will be used to drive the development of Mocaverse, including product development, promoting Web3 adoption, and ensuring partnership relationships.
Mocaverse is a membership NFT collection of Animoca Brands' distinguished companies, projects, investments, shareholders, and partner family. Mocaverse aims to empower users in the gaming, culture, and entertainment space by allowing them to create their own digital identities, earn loyalty points, and access the Mocaverse ecosystem. The project will introduce Moca ID, a non-transferable NFT collectible that enables users to participate in the ecosystem and earn loyalty points. CMCC Global, a venture capital firm focused on blockchain and Web3 investments, expressed support for Mocaverse and its potential to provide access to the Web3 and metaverse ecosystem for millions of users.
Protocol Events
SSV.network hits mainnet to increase decentralization of Ethereum staking pools
Polygon 2.0 — MATIC conversion to POL outlined in preliminary improvement proposals
Lidos’ wrapped staked ETH is coming to Cosmos
Tokensoft and Connext Host World’s First Cross-Chain Distribution, Attract ~ 1 Million Registrants
LBank Announces MetaExpand (UMM) as Second Launchpad Project
Particle Network Launches V2 of Its Intent-Centric Modular Access Layer of Web3
Ancient 8 Launches A Web3 Gaming Layer 2 Chain on Ethereum
Industry Updates
DeFi economic activity drops 15% in August — VanEck
Ethereum launches new testnet ‘Holešky,’ allocates 1.6 B ETH for devs
Bitcoin BSC Crypto ICO Reaches 50% Of Soft Cap After Raising Almost $ 2 Millions in 10 Days
Liquidation cascade puts crypto marketCrypto Liquidation Cascade Market Shock Report: Report
Ether Turns Inflationary As On-chain Activity Slides
Crypto funding: Metaverse, gaming and fintechs dominate $80M week
PayPal enables US users to sell cryptocurrency via MetaMask wallet
Twitter Alpha
There is a lot of Alpha in crypto Twitter, but navigating through thousands of Twitter threads can be difficult. Every week, we spend several hours researching and curating a selected list of insightful threads for you. Let's dive in!
https://x.com/poopmandefi/status/1701240604804456540?s=20
https://twitter.com/CryptoReviewing/status/1700917190310978035?s=20
https://twitter.com/CryptoGirlNova/status/1701248749815595364?s=20
https://twitter.com/DOLAK1NG/status/1703061354633216470?s=20
Next Week Events
News Source:
https://venturebeat.com/games/pahdo-labs-raises-15m-for-anime-inspired-game-world-and-ugc-platform/
https://www.animocabrands.com/animoca-brands-raises-usd-20m-for-its-mocaverse-project
https://www.staderlabs.com/blogs/understanding-rseth-tech-explainer/
https://www.tekedia.com/telegram-integrates-ton-based-crypto-wallet/
https://mpost.io/telegram-launches-ton-based-crypto-wallet-after-3-year-regulatory-hurdle/
The above is all the content for this week. Thank you for reading this week's newsletter. We hope you benefit from our insights and observations.
Follow us on Twitter and Medium for real-time updates. See you next time!
This newsletter is for informational purposes only. It should not be construed as investment advice. Before making any investment decisions, you should conduct your own research and consult with independent financial, tax, or legal advisors. Past performance of any assets does not guarantee future results.
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