The year is 2021. You're utterly frustrated with Ethereum's sky-high transaction fees, and then, like beacons of hope, Binance Chain and Polygon appear on your radar. Intrigued by their promise and the potential savings on transactions, you make the leap, shifting your precious ETH to explore these new horizons.

As you navigate this new terrain, you're enticed by protocols flaunting top rankings in TVL, backed by the giants Binance and Polygon themselves, offering dazzling APRs of 50% or more. It's not just the returns; it's the thrill of participating in governance, the first taste of real influence in the crypto realm.

You invest your ETH.

Days meld into weeks, and the initial excitement wanes as you notice your rewards diminishing. "Just a market fluctuation," you tell yourself, brushing off the uneasy feeling. However, the calm is shattered when, a month later, DeFi is rocked by news of a protocol hack.

That top protocol you trusted? A mere clone of a DeFi giant, riddled with vulnerabilities left unchecked by its developers. In a flash, your digital treasures have vanished, a harsh reminder of the volatile nature of this ecosystem.

This story isn't unique; it's a familiar tale for countless adventurers in DeFi, navigating a maze of chains and protocols that continues to perplex and confound. It's a landscape that, despite its evolution, remains riddled with the same challenges and pitfalls to this very day.

Problems with current DeFi protocols

Since its nascent stages in 2019-2020, the DeFi landscape has undergone remarkable growth, with both participation rates and transaction volumes experiencing exponential increases. This surge has propelled DeFi from a niche segment of the cryptocurrency market to a significant force in the financial technology sector. However, amidst this rapid expansion, DeFi faces critical challenges that could undermine its foundational principles and jeopardize its long-term sustainability.

1. Liquidity Mining and Mercenary capital

DeFi's reliance on liquidity mining as a primary mechanism to attract Total Value Locked (TVL) has revealed its flaws. This strategy, aimed at boosting a protocol's visibility on platforms like DeFiLlama, inadvertently promotes short-term engagement.

The crux of the issue lies in the transitory nature of TVL, which persists only as long as the incentives do. This phenomenon has cultivated a culture of "mercenary capital," where users hop from one protocol to another, chasing the next lucrative opportunity.

Consequently, the value generated is fleeting, and the constant dumping of reward tokens on secondary markets harms the tokenomics, leaving long-term investors at a disadvantage.

Protocol Owned Liquidity (POL) and vote escrowing have been the only two successful strategies to move away from these predatory mechanics.

POL, pioneered by Olympus DAO, was designed to cultivate enduring value within the protocol by ensuring liquidity remained internal and permanent. This approach marked a significant departure from transient capital strategies, demonstrating success until it encountered challenges with unsustainable yield levels.

On the other hand, vote escrowing offered a mechanism for users to commit their liquidity mining rewards for extended periods, aligning their interests more closely with the protocol's long-term health. Despite this innovation, the issue of excessive reward emissions continues to overshadow its potential benefits.

Despite these innovations, a large-scale paradigm shift in DeFi strategies to combat mercenary capital and redefine liquidity mining remains elusive.

2. The Centralization Paradox of "Decentralized" Stablecoins

The narrative of decentralized stablecoins encountered a stark reality check during the 2023 SVB banking crisis, highlighting vulnerabilities within the DeFi ecosystem.

The depegging incidents of major stablecoins, such as USDC's drop to $0.90 amidst Circle's exposure to a faltering bank, and DAI's decline to $0.85, have underscored the misnomer of "decentralization" in the context of stablecoins.

Efforts by entities like Maker to diminish reliance on centralized stablecoins by diversifying into treasuries and Real-World Assets (RWAs) spotlight the ongoing struggle against centralization.

There's quite the buzz around Ethena lately, pointing towards a trend where central figures are becoming more prominent in this cycle. The collateral backing it up is primarily USDT, stashed away in centralized exchanges and custody services. So, it looks like we're at that point again, huh? Time to move millions across for some shards, right, anon?

3. Bridging and Cross-Chain Challenges

Hundreds of evm chains. All with different niches. You need to bridge through to multiple chains daily. Pay $5 and wait few mins to receive your funds.

The proliferation of EVM-compatible chains has not been matched with adequate solutions for seamless asset transfer and interaction. The current state of bridging requires users to navigate multiple platforms, often incurring fees and waiting times, to move assets across chains.

The lack of comprehensive omnichain protocols that facilitate collateral deposit on one chain and borrowing or yield generation on another underscores a significant gap in the DeFi infrastructure.

To advance beyond these challenges, DeFi must evolve through the development of new models and mechanisms that prioritize long-term value creation over short-term incentives, truly decentralized solutions that uphold the ethos of censorship resistance, and enhanced interoperability solutions that streamline cross-chain activities.

Introducing Tapioca DAO

Tapioca heralds a new era in DeFi as the pioneering ecosystem for natively interoperable money markets and a decentralized stablecoin, spanning over 20+ EVM and non-EVM networks through the innovative use of LayerZero technology.

It serves as a unique platform that enables seamless borrowing, lending, and leveraging of assets across multiple networks. At its core, Tapioca is powered by USDO, the first-of-its-kind natively interoperable and purely decentralized stablecoin, underpinned by network gas tokens and liquid staking derivatives.

Tapioca has 4 main products:

• Big Bang: A platform for minting USDO, allowing users to create collateralized debt positions (CDPs) with various assets.

• Borrowing or Lending Singularity: An omnichain platform for borrowing stablecoins against assets with leverage and lending USDO.

• Yield/Yieldbox: Generates yield on collateral within TapiocaDAO, using strategies to enhance returns.

• Pearlnet and Teleport: Utilizes LayerZero for seamless cross-chain transactions, enabling borrowing, lending, and leverage across various networks.

Big Bang

Minting USDO Overview

Tapioca's minting mechanism, dubbed Big Bang, is a foundational pillar enabling users to mint the USDO stablecoin through collateralized debt positions (CDP). This process is reminiscent of the MakerDAO-Dai setup but tailored to the Tapioca ecosystem, accommodating a wide array of collateral including native gas tokens (e.g., ETH, Matic, AVAX) and their Liquid Staking Derivatives (LSD).

Users have the flexibility to deposit their preferred gas tokens and LSDs as collateral on their chosen chain, selecting loan amounts up to a 90% Loan-to-Value (LTV) ratio. This enables them to mint USDO on any chain for various activities.

The protocol emphasizes using ETH as primary collateral, varying interest rates based on the USDO debt amount issued against different collateral types, benchmarked against ETH's debt. This ensures the stability of USDO's price by comparing the debt of assets like wstETH against ETH.

LSDs used as collateral can potentially reach an LTV of zero, where the accrued interest can be repaid, and the collateral withdrawn. Employing yield-bearing LSDs, such as Lido's stETH, within the Big Bang protocol facilitates yield accumulation on the collateral itself, effectively reducing the LTV ratio over time as the collateral's value increases.

Peg Stability Mechanisms

The protocol incorporates features to sustain the USDO peg, including the ability for users to flash mint USDO and manage loans to adjust the peg dynamically.

When USDO is above the $1 peg, users can open a CDP, mint USDO at $1, and sell it on the open market for a higher value (e.g., $1.05), profiting from the difference. As the USDO supply increases, bringing its value back to $1, users can repurchase USDO to repay their loans. Alternatively, Tapioca allows users to flash mint USDO to arbitrum this instances easily and keep it in peg.

Conversely, when USDO falls below the $1 peg, borrowers can buy USDO at the lower price (e.g., $0.95), use it to repay their CDP loans, and decrease the overall supply, helping to elevate USDO back to the dollar peg.

Singularity

Singularity represents Tapioca's innovative foray into the decentralized money market space, akin to the functionalities offered by Aave and Compound. Its standout feature is omnichain interoperability, enabling users to lend and borrow across a multitude of networks.

What sets Singularity apart is its market isolation; risks associated with assets in one market do not impact the stability or risk profile of another, ensuring a compartmentalized approach to risk management.

Singularity, along with Yieldbox, leverages licensed technology from BoringCrypto’s Kashi V2, initially integrated into SushiSwap, and the updated Yieldbox (Bentobox) utilized by SushiSwap and Abracadabra.

Lending: Users can deposit USDO stablecoins into specific, isolated markets to earn genuine yield from borrowers, along with oTAP call options as additional incentives

Borrowing: By depositing yield-bearing tokens as collateral, users can borrow USDO with up to 10x leverage. The interest rates are elastic, adjusting according to the ratio of borrowed versus lent funds.

Yield through Yieldbox: Yieldbox is a strategic feature where the collateral deposited by borrowers is employed in yield-generating strategies, with the proceeds used to autonomously repay loans.

To encourage lending, Tapioca introduces oTAP call options as incentives for lenders. By locking their positions, lenders receive TAP tokens at a discounted rate, fostering long-term engagement within the ecosystem.

Upon depositing USDO, lenders receive Singularity receipt tokens, signifying the custody of their lent liquidity. These tokens can then be locked to generate oTAP call options, allowing for the purchase of TAP tokens at a reduced price.

Here’s an example of how oTAo works within the Tapioca ecosystem:

• John deposits USDO, creating a lending position and receives a receipt.

• He locks the receipt for a specific duration to determine his discount. Locking for 1 week yields a 10% discount; 4 weeks yields a 50% discount on TAP options hypothetically.

• John locks for 4 weeks, getting the maximum discount, and receives weekly oTAP distributions at a 50% discount for four weeks. He gets 10,000 oTAP shares at a $5 expiry price (while TAP's market price is $10).

• After a week, TAP's price is $9.10. The option remains profitable, allowing John to buy 10,000 TAP for $5 each. He can sell immediately or lock TAP for further benefits.

• The Tapioca DAO integrates the purchased amount into the Protocol Locked Liquidity (POL) in decentralized exchanges (Dexes).

This model rewards long-term value contributors with TAP tokens and builds permanent POL that generates fees. The structured incentives and game theory discourage immediate selling of TAP, aligning user actions with protocol sustainability.

Teleport

Tapioca leverages LayerZero technology to enable seamless asset transfers across more than 20 EVM and non-EVM chains. This integration significantly simplifies the process of expanding to new chains, as Tapioca only needs to deploy a proxy contract for messaging purposes, bypassing the lengthy deployment processes typical of multichain expansions.

Both TAP tokens and the USDO stablecoin adhere to the OFT V2 standard, facilitating free movement across chains. This standard eliminates the need for minting and burning when moving assets from one network to another, thereby avoiding fees, long wait times, slippage, and the necessity for liquidity pools on each network. This innovation ensures a smooth, efficient, and cost-effective cross-chain experience for Tapioca users.

TAP Token

The TAP token serves as the cornerstone of the Tapioca ecosystem, fulfilling three critical roles:

1. Ecosystem Governance: TAP token holders are integral to the decision-making process, influencing the allocation of oTAP rewards among markets by setting option gauges.

2. Ecosystem Fees: TAP tokens capture value through various ecosystem fees.

3. Call Options (oTAP): TAP's supply increases exclusively via oTAP call options, awarded to lenders holding long-term positions.

TAP token holders have the option to participate in a process known as twAML (Time Weighting and Average Magnitude Lock), locking their tokens to receive twTAP. This mechanism grants them access to weekly rewards from a variety of sources within the ecosystem. These sources encompass fees generated from Big Bang creations, Singularity loan origination and interest, Yieldbox's performance, among others, contributing to a diverse stream of rewards.

• 1. Big Bang USDO Creation Fee: 0% - 1% (Variable)

• 2. Singularity Loan Origination Fee: 0.5%

• 3. Singularity Borrowing Interest**: Variable**

• 4. Yieldbox Performance Fee**: 0-1%** (Variable, Per Singularity Market)

• 5. Big Bang Interest: 1.5%* (Variable, Fixed on ETH Market)

• 6. Liquidations**: 5% + Bonus **(Singularity & Big Bang)

• 7. Flash Mint Fee:** 0.001%**

• 8. Arrakis V2 Vault Manager Fee: 50%

Token Launch and TAP LBP

After over two years of development and rigorous audits, Tapioca is set to launch, accompanied by the TAP token. TAP's maximum supply is capped at 100 million, with distribution planned over 6 to 10 years. The initial supply allocation includes an LBP, options airdrop, and tokens for early supporters.

The initial supply consists of LBP, options Airdrop and tokens for supporters.

The LBP is priced at $3.52 per TAP, offering 3.8 million tokens over a two-day sale.

Differing from typical airdrops where tokens are distributed directly to users, this initiative introduces the first-ever call option airdrop. It features a 48-hour expiry and offers a 25% to 50% discount to early supporters, LBP participants, Pearl Club NFT holders, and twTAP lockers.

Proceeds from these options will seed liquidity for TAP/WETH and USDO/USDC Uniswap V3 pools on Arbitrum, as well as a USDO/DAI pool on Ethereum, enhancing the token's market foundation.

Thesis on TAP

Tapioca will be one of my bigger bets in the DeFi ecosystem for 2024 due to the following reasons:

1. Ultimate LayerZero Integration: Tapioca's integration with LayerZero enables a pioneering ultimate stablecoin and money market platform that seamlessly operates across over 20+ EVM and non-EVM chains

2. Symbiotic Ecosystem Mechanics: The ecosystem promotes the use of USDO through a cycle of minting via Big Bang, lending in Singularity, and generating yield from borrowers. This creates a beneficial loop where borrowers use yield-bearing tokens as collateral, earning yield to repay loans, and thus enhancing overall ecosystem liquidity and stability.

3. Extensive Auditing: Tapioca distinguishes itself as one of the most thoroughly audited DeFi protocols, with nearly half of the funds raised being allocated to audits.

4. Supply Scarcity through TAP Locking: The incentive for users to lock TAP tokens constrains supply, bolstering TAP's market value over the next year.

5. Isolated Markets Enhancing Security: The isolation of each market within Tapioca significantly mitigates systemic risk

6. Protocol Owned Liquidity (POL) as a Revenue Source: The POL acquired through the sale of options is anticipated to become a substantial and growing revenue source for twTAP lockers, potentially making it one of the largest treasuries in the long term and creating a beneficial flywheel effect as asset values increase.

7. Sustainable Emissions and TVL Growth: Unlike protocols that rely on unchecked emissions, Tapioca employs a calculated approach through call options, which supports TVL growth and generates fees for twTAP lockers

8. Revenue Generation for twTAP Holders: As Tapioca matures, twTAP holders stand to gain significantly from fees generated across all ecosystem sources

9. Experienced Team with a Proven Track Record: The Tapioca team's two-year development journey, alongside their contributions to successful projects like Yieldbox in collaboration with BoringCrypto, underscores their expertise and commitment to creating a durable and innovative DeFi platform.

Billions of dollars are bridged across evm chains. We are far beyond the era of the single-chain thesis, and this shift is so apparent that even your grandmother could recognize. So many chains, so many niches, so many opportunities.

As multiple EVM chains become popular across various narratives (e.g., parallel execution, gaming, etc.), a huge chunk of liquidity will flow between them. Cross chain volumes have grown significantly from the last bull market from tens of millions in 2021 daily bridging volumes to an average of 250 million in 2023.

Bridges serve as vital infrastructure for facilitating the movement of liquidity between different chains. If you are a blockchain gambler, you probably have used bridges multiple times a week or an hour depending on how degen you are. Inherently, bridges play a significant role in facilitating the movement of funds across blockchains.

When discussing bridges, it's essential to differentiate between two main types: cross-chain token bridges and messaging protocols. Cross-chain token bridges primarily focus on the transfer of tokens between different blockchains. In contrast, messaging protocols facilitate the exchange of data, including smart contract details and block information across networks.

This research piece aims to provide an overview of the token bridge landscape, assess the current state, highlight popular protocols in the space, and delve into metrics and financial models for Across, a leading cross-chain protocol with compelling metrics.

This research is structured into three main segments:

1. Bridge Landscape Analysis

2. Data-Driven Metrics Analysis

3. Across Thesis and Model Evaluation

The landscape of cross-chain bridges encompasses hundreds of EVM bridges facilitating token transactions between different chains. These bridges can be categorized based on the underlying technology and methodology employed for cross-chain bridging.

Broadly classifying token bridges, there are three main types of token bridge designs:

• Burn and Mint Bridges

• Lock and Mint Bridges

• Liquidity Network

Lock and Mint bridges were the first generation of bridges to gain popularity. These bridges relied on locking tokens on a source chain (eg BTC) and wrapping it to mint a wrapped version (eg WBTC) of it on the destination chain.

A good example of a lock and mint bridge would take us back to the early days of Ethereum DeFi. Ethereum was getting popular and users were generating yield by lending and staking assets. Bitcoin holders a slice of the pie too.

This warranted the creating of lock and mint bridge where native BTC could be locked on Bitcoin and WBTC could be generated on Ethereum. If the user wants to port back the WBTC to BTC on the bitcoin blockchain, the WBTC is burned on Ethereum and BTC is unlocked.

Apart from wrapping protocols, Lock-and-mint bridges have also become popular among native L2 evm chains where tokens are locked on Ethereum and representation are minted on the rollup. This is a method of attracting liquidity into their newly created chains. It is likely that the new and hottest shiny chain is using this method to bridge in liquidity to the chain.

Examples of Lock and Mint Bridges: Most L2 Native bridges like Arbitrum, Optimism, zksync and WBTC, Ren etc

Disadvantages of Lock and Mint Bridge

• Fragmentation and little liquidity available in new chain when it comes to wrapped versions. As multiple chains mint their own wrapped versions, they become more and more fragmented.

• Vulnerability from hacks on the source chain given massive amount of liquidity is locked. Hacking the liquidity causes a major depeg of the wrapped/corresponding asset on the destination chain naturally.

• Lesser adoption among defi protocols as a precaution due to hack possibility and depeg could create an issue for defi protocols utilizing wrapped versions.

• Long withdrawal windows as these bridges need to burn corresponding tokens and verify any fraudulent transactions. E.g., Arbitrum’s bridge withdrawal takes 7 days.

The burn and mint method is a way to transfer tokens between different blockchains. When a token is moved from its original blockchain to another, it is first "burned," meaning it is destroyed on the source blockchain, effectively removing it from circulation. Subsequently, an equivalent token is "minted" on the target blockchain, creating a new token that represents the same value as the burned one.

A number of protocols utilise this to enable quick cross chain transfers such as Hop protocol and USDC issuer Circles new CCTP.

• Circle CCTP

  Circle, the issuer behind one of the most popularly used stablecoin USDC recently released its own proprietary cross chain transfer protocol. CCTP allows USDC flow natively cross chain in a capital efficient way across Arbitrum, Avalanche, Base, Ethereum, Noble, OP Mainnet, and Polygon PoS.

  On the source chain, a user deposits USDC to the smart contract which circle burns. The attestation/proof of the burn event is generated. This action provides authorization to mint the specified amount of USDC on the destination chain. CCTP is composable and works with dApps to embed the bridge for easier bridging for users.

• Hop Protocol

  Hop is a scalable rollup-to-rollup general token bridge which uses burn and mint along with liquidity networks. It allows users to send tokens from one rollup or sidechain to another almost immediately using bonders, liquidity pools and a burn and mint mechanism.

• Hop uses its own intermediary bridge token called the h token to bridge assets from L2s to each other and withdraw to L1. These h tokens (eg hETH, hDAI) are specialised tokens that can be transferred from rollup to rollup in batches.

  As a user bridges for example ETH from Arbitrum to Optimism, the ETH is converted into hETH on Arbitrum through an AMM and the hETH is burned on Arbitrum. Meanwhile, a bonder fronts capital and mints hETH on Optimism by posting 110% of the capital collateral. This hETH is converted into ETH in Optimism and available for the users.

  In the backend, Bonders receive compensation for fronting hETH minted. This compensation is derived from bridging fees and later receives the fronted capital in 24hrs. AMM pools also work through liquidity providers who earn some fees from the swaps.

Liquidity network bridges play a crucial role in enabling the transfer of assets across different blockchain networks. These bridges utilize liquidity pools available on both the source and destination chains to facilitate the movement of tokens.

Here's a simplified explanation:

When a user wishes to transfer a specific token (let's call it Token X) from one blockchain (Chain A) to another (Chain B), the liquidity network bridge facilitates this transfer by using a pool of Token X that already exists on Chain B.

This means that instead of waiting for a direct counterpart or undergoing complex processes, the token is readily released from the existing pool on Chain B to the user. This method requires the presence of external liquidity providers, who supply the pools with enough tokens on each chain to ensure there's always ample liquidity.

This setup allows for quick and efficient cross-chain transfers, making it a preferred option for users looking for speed and minimal capital slippage.

• Celer cBridge

  Celer cBridge is a versatile bridge that operates on a dual-model approach, employing both a liquidity pool-based model and a mint-and-burn model. The choice between these models depends on whether the tokens are already supported on the destination chain.

  The mint-and-burn model is akin to other protocols, providing services for decentralized applications (dApps) launching on new chains, where tokens are minted on the destination chain and burned on the source chain to preserve token supply integrity.

  Conversely, the liquidity pool-based model involves liquidity pools located both on the source chain and a mediating Proof-of-Stake (PoS) chain known as the State Guardian Network (SGN). This network plays a crucial role in enabling cross-chain transfers, where nodes within the SGN provide essential transaction details such as fees, liquidity availability, and other parameters. Liquidity Providers (LPs) contribute to pools across various chains, facilitating the transfer process.

  A typical cross chain transaction:

  • Initiation: A user wishing to perform a cross-chain transaction from Arbitrum to Ethereum first queries the SGN for information on transaction fees and liquidity. After reviewing the transfer parameters, the user initiates the transaction.

  • Locking of Funds: The user locks up funds in a Hashed Timelock Contract (HTLC) on Arbitrum, setting specific conditions for the release of these funds. The SGN monitors this HTLC and assigns a node to manage the transaction.

  • Verification and Release: The assigned node verifies the release conditions of the HTLC. Once verified, it facilitates the release of equivalent funds on Ethereum from the liquidity pool, completing the cross-chain transaction.

• Connext

  Connext serves as a robust platform aimed at developers, designed to facilitate the construction of cross-chain applications. It provides a dual-faceted solution: a developer-oriented API for integrating cross-chain functionality into decentralized applications (dApps), and a user-friendly bridging interface that leverages liquidity providers and routers. These routers, essential intermediaries in the Connext ecosystem, offer liquidity and front capital to ensure seamless cross-chain transactions.

  The process begins when a user submits a transaction intended to cross from one blockchain to another. Routers within the Connext network evaluate this transaction and, upon deciding to support it, issue a bid.

  Should their bid be successful, these routers then provide the necessary funds at the transaction's destination chain, effectively bridging the user's assets across chains. This upfront funding by routers accelerates the cross-chain transfer, offering users immediate access to their funds on the destination chain.

  The repayment to routers is facilitated through the utilization of native, secure bridges of the involved chains. Although this repayment process can be time-consuming, it ensures that the funds are returned safely to the router, thereby maintaining the integrity of the liquidity pool.

• Stargate Finance

  As many are aware, Stargate is a unified liquidity network bridge that utilizes layer zero technology. Unlike using fractured liquidity like other bridges, which is liquidity maintained across all the assets supported by the bridge among the chains, it uses a unified liquidity pool mechanism. This means that if chain A has a USDC liquidity pool, other chains can borrow and return USDC liquidity from chain A.

  Stargate employs a "resource balancing algorithm" to ensure liquidity is effectively distributed among different chains sharing the unified pool. This algorithm divides the pool into intervals, each managed separately for different chains.

• When a cross-chain request occurs, the algorithm checks liquidity in each interval and allocates user assets to those with insufficient liquidity, preventing transaction failures. It also allows borrowing and returning of liquidity between chains to balance volumes and assigns weights based on transaction frequency, directing excess liquidity to chains with higher demand, enhancing efficiency and reliability.

• Across Protocol

  The Across bridge is a unique bridge that utilises both liqudity networks and intents architecture. Intents are user specific objectives or request that they aim to achieve while solvers take care of the rest. Through this combination, across has become one of the fastest and cheapest ways to conduct cross chain swaps across chains.

  As user puts up an intent to send tokens from L2s to L1s. The users deposits the amount and instantly get their funds on the destination chain in less than 2 mins or faster. That’s the end of the user side of the transaction. Simple, quick and cheap.

• On the background, relayers look at the deposit on the source chain and use their capital to front capital on the destination chain. After executing a transaction, they submit evidence of their action and the original deposit's validity to an optimistic oracle for verification. This verification process ensures the transaction's integrity and triggers the reimbursement to the relayer.

  The reimbursement comes from a centralized liquidity pool. This mechanism ensures relayers are compensated for their fronted capital, maintaining the system's efficiency and security.

• Synapse Protocol

  Synapse protocol is one of the earliest cross chain solutions in the market. The protocol has its own communication network called the Synapse Interchain Network, along with the synapse bridge. The bridge is a hybrid type that supports canonical token bridging, liquidity-based bridging, and RFQ (Request for Quotation) bridging.

  Most of the bridge currently runs on the liquidity network with its unique stablecoin nUSD or nexus USD. The cross chain stablecoin is backed by DAI, USDC and USDT on ethereum through a pool, enabling a stable peg. Pools on destination chains also have nUSD pools which earn fees and SYN emissions.

  When stablecoins are bridged between Synapse-enabled chains, they're automatically converted to nUSD and locked in the contract on the source chain. New nUSD is minted on the destination chain and swapped for the native stablecoins of the destination chain using the local nUSD pool.

Given the amount of interest in the cross chain transactions, we can expect enormous amounts of tokens interchanging between L1s and L2s. This provides a key catalyst to invest in tokens that have the potential to bridge the most volumes.

• Monthly bridge volumes grew 112% YoY

• Notably, native bridges have emerged as significant contributors to this volume, accounting for an average of 56% of monthly volumes

• Key players such as Arbitrum, Optimism, and Polygon POS bridges have sustained their volumes, likely due to incentivization strategies, coupled with third-party bridges leveraging them for mainnet to rollup transfers

• The pursuit of airdrops has spurred increased bridge volumes, exemplified by platforms like zksync

Analysis of Third Party Bridges - A growing segment

Growth of Bridge Volumes

• The landscape of third-party bridges has undergone notable expansion

• The number of bridges reporting monthly volumes exceeding $50 million doubling over the last year.

• This growth signifies a heightened competitive environment, with more protocols vying for a share of the cross-chain transaction market

Dominance across Bridges

• Stargate has the highest volume share across third party bridges largely driven by the speculation surrounding the Layerzero airdrop. However, its volumes have sharply declined over the past six months, relinquishing dominance by over 50%.

• Across protocol has seen massive growth in volumes with quadrupled volumes in 6 months. Presently, the protocol accounts for 20% of daily volumes among third-party bridges.

• Synapse ranks third in terms of volumes and has witnessed an upward trajectory recently. However, it's crucial to note that a significant portion of recent volumes have been routed through Synapse CCTP, a native integration with Circles CCTP

*

• While Synapse exhibits impressive stats in 30-day volumes, it's essential to consider that the bulk of volumes are channeled through CCTP and not its native bridge, necessitating a cautious assessment of its capital efficiency

• Across emerges as the fastest and most capital-efficient means to transfer funds across chains. Given the paramount importance of capital efficiency for liquidity network bridges, the protocol emerges as a frontrunner in the evm bridge race

Upon delving into the latest data charts, it becomes evident that Across protocol stands at the forefront of the EVM bridging landscape.

Core Thesis on Across Protocol

The core thesis on Across protocol is founded on several key factors:

• Speed and Cost Efficiency: Across stands out as one of the fastest and most cost-effective methods to transfer funds across Layer 2 networks.

• Capital Efficiency: It is recognized as the most capital-efficient liquidity network bridge currently available in the market.

• Security: Relayers front capital, mitigating risk for users engaged in bridging activities, ensuring a secure transaction environment.

• Transaction Volume: Across processes the second-highest number of transactions, trailing only behind Stargate, which is heavily utilized by airdrop farmers.

• Recent Growth: Volumes and dominance have seen a notable uptick, particularly within the past year.

• Intent Architecture: Across employs an intent architecture narrative with relayers, enhancing the efficiency and effectiveness of cross-chain transactions.

• Bridging Aggregators: Bridging aggregators route a significant majority of transactions through Across, leveraging its speed, low fees, and security features.

• Tokenomics: Across boasts a low float with a substantial treasury, with over 50% of the token supply locked up. Additionally, investor tokens are subject to vesting until June 25th.

• Team Background: The core team behind Across is Risk Labs, renowned for their work on the UMA oracle and Oval projects.

• Upcoming V3: Across V3 is in development, which will utilize intents as its foundation, further enhancing its capabilities.

• Future Fee Switch: A significant catalyst anticipated for Across is the implementation of a future fee switch for the protocol. This switch would enable token holders to direct a portion of bridge fees towards $ACX holders, potentially resulting in increased revenue and token value.

One of the bigger catalysts I’m looking for in across has been a future fee switch for the protocol. The resulting scenario will bring in large amounts of revenue to the protocol and price go up. This is an option that token holders have to direct a portion of bridge fees towards $ACX holders.

Modelling ACX

Based on a hypothetical scenarios of Across turning on its fee switch, the following is a hypothetical business of the protocol. It is important to note that Across distributes 100% of the protocol fees to LPs with a future ambition to distribute to token holders.

Total EVM Bridging Volume: The current annualized EVM bridge volumes, including native and third-party bridges, amount to $79 billion.

Across Market Share: Across currently commands over 20% of the third-party bridge market and 9% of the total bridge market, including native bridges.

Base Case and Bullish Case: In the base case scenario, with an expected 345% growth in volumes to $350 billion, and a 20% revenue take rate, Across could see a 112% upside potential. In the bullish case, where volumes reach $475 billion and a 50% revenue take rate, the potential upside for Across stands at 1,245%.

These values are purely speculative and represent hypothetical forecasts for when Across activates its fee switch.

Sources

https://medium.com/@alexanazodo/how-bridges-bridge-exploring-the-mechanics-potential-of-lock-and-mint-bridges-4b7e2361d52a

https://blog.catalyst.exchange/catalyst-and-cross-chain-routers/

https://www.hiro.so/blog/understanding-blockchain-bridges-a-key-to-interoperability-in-web3

https://docs.optimism.io/builders/dapp-developers/bridging/standard-bridge

https://medium.com/amber-group/bridges-designs-trade-offs-and-opportunities-2196b8754e70 c

https://medium.com/@HotairballoonEN/stargate-stg-the-first-cross-chain-bridge-launched-by-layerzero-to-solve-the-bridge-trilemma-2c294ea01e07

https://docs.google.com/spreadsheets/d/1BTnTUsE0_U_MLHLid0xV1nXNcvIOYcHCwt4_x5_e6lI

Table of Contents

1. Introduction

2. Overview of the WOO Network Ecosystem

3. WOOX, the best execution Centralised Exchange

4. WOOFi, the DeFi Powerhouse

5. Tokenomics of WOO

6. The bullish case for WOO

7. Upcoming Catalysts for tokens and ecosystem

8. Risks - Things that would keep me up at night

9. Concluding Thoughts

10. Introduction

In the dynamic world of crypto, the relentless pursuit of two key objectives echoes through the minds of every crypto enthusiast and is considered a north star—increasing mainstream adoption and successfully onboarding institutions. This collective ambition propels the entire space forward.

When dissecting the landscape, one sector emerges as the crucial threshold for onboarding the investors into the crypto fold. This is none other than crypto exchanges. The past few bull markets have been pretty evidently showing a clear outperformance of tokens of top exchanges from the beginning of the bull markets. They tend to not outperform the shiny new narrative coins but they are a safe bet at the early innings of crypto cycles.

For those stepping into the crypto arena for the first time, popular exchange tokens often chart the course along the low to mid curve iq spectrum, along with BTC, ETH and undoubtedly meme coins. This is a phenomenon echoed in the success stories of tokens of decentralized exchanges like Uniswap, where user base and adoption take precedence over immediate revenue streams for token holders.

While overlooked in the initial phases of bull markets, exchange tokens tend to do extremely well just due to the sheer user traction, volumes and reputation. In that regard, I believe WOO network, an ecosystem consisting of innovative CEX and DEX products is set to do well over the long term.

I first wrote on WOO Network about 2 years ago in a short analysis here. WOO Network's vision was still crystallizing, and the team had only a handful of products to showcase. Over this bear market, the team has created an absolute behemoth of products across centralised and decentralised avenues and I find it a intriguing asymmetric bet on both domains.

Given the everchanging market conditions, I have recently found solace in articulating my investment thoughts in writing, to constantly reconsider positions every few months. It really keeps my head at the right place and keeps my thesis stronger than ever.

Considering WOO's role in my portfolio, I find value in sharing a comprehensive long-tail thesis publicly. This not only benefits those closely tracking WOO's trajectory but also serves as a valuable resource for those yet to discover this ecosystem play.

1. Overview of the WOO Network

At first glance, Woo Network looks like a normal tier 2 or tier 3 centralised exchange that is trying to stay relevant. But in reality, the project is a behemoth spanning across both CeFi and DeFi venues.

Starting with having the most liquid centralised exchange in comparison to its peers, WOOs CEX has one of the best superior trading venues for traders.

Meanwhile, WOO Network’s DeFi product has the most efficient pricing among DEXs, and constantly hits top 5 most used dapps in DappRadar with surpassing 280,000 monthly active users.

Woo Network was incubated in 2019 by Kronos Research, a lower profile but largely well known multi-strategy crypto trading firm that specializes in market making, arbitrage, CTA, and high-frequency trading (HFT). Kronos research does trade volumes of between $10-$15 billion daily. The team at Kronos started WOO Network to solve the issues of lack of liquidity in crypto markets.

Woo has two core products catering to diverse crypto audiences:

• WOOX, a centralised exchange with the best liquidity and execution at low fees

• WOOFi, a decentralised non-custodial cross chain DEX and omnichain perp order book

Since so much of the products being built is so innovative and revolutionary, this research piece will be focusing on the basics of the centralised exchange and the decentralised exchange, followed by the tokenomics and my catalysts for the next bull market.

1. WOOX, the Centralised Exchange

Woo network began with their centralised exchange WOOX in 2021.

WOOX is a spot and futures centralised KYC crypto exchange offering over **130 **trading pairs. The exchange has rapidly carved its niche in an ocean of thousands exchanges, achieving daily volumes exceeding $200 million.

WOOX however is not like your usual shitcoin trading/gambling exchanges like Binance, OKX, Kucoin offering spot and perps. It isnt also just another player in the market vying for a silver attention among all these giants.

WOOX has a major advantage across the Centralised Exchange landscape which makes it extremely attractive for crypto traders. WOOX excels in providing unparalleled liquidity, narrow spreads, and exceptionally competitive fees—in many pairs even offering zero fees.

WOOX was founded with a primary objective: to give traders edge in crypto markets. What exactly is edge in markets you may ask.

For traders, it mostly comes from having trading setups with proper experience in technical analysis and lots of year’s of just staring at charts till you get it.

Despite having these edge and no matter how good a traders setups are, traders need edge in their trading venues. Edge in trading venues is usually associated with 3 main factors: Execution, Transparency and Trading Tools.

**3.1. Execution of trades: **Good execution, low slippage when placing trades, low fees are all the indirect edge that a trader requires.

Through the large liquidity aggregation and zero fees zone, WOOX is able to provide the best execution among all exchanges.

At $1 million, the exchange is able to provide the best executions that competes with Binance and outperforms other exchanges easily as shown below.

WOOX Execution vs other Major Exchanges with volumes greater than $1 million

In simpler terms, traders are paying less fees, and getting the best prices for orders - making it the best venue if you are a regular trader and often trade with size.

WOOX is able to accomplish such good execution as its model operates on a mix of aggregated liquidity from top trading venues and exchanges through Kronos research and other Designated Market Makers that hedge positions in other exchanges.

**3.2. Transparancy: **WOOX is one of the more transparent exchanges out there in the CEX space. Centralised custody comes at a large cost when you are trading on exchanges in the form of risk.

Users have to take the word of the exchange that they have your funds and have not siphoned off funds to a terribly managed personal piggy bank.

WOOX was the first exchanges to fully integrate a live balance sheet and it is one of the few exchanges that uses merkle tree for proof of reserves.

3.3. Trading Tools: WOOX boasts unparalleled trading tool customizability within the market. Among the myriad exchanges available, it stands out as one of the select few that grants traders the unique ability to personalize their workstations, setting it apart as a platform that prioritizes and accommodates individual preferences.

WOOX’s Customizable Trading Interface for Professional Traders

All these factors place a major role in trading and by outperforming all the other exchanges WOOX is the go-to exchange for professional traders and institutions trading in size.

Crypto trading chads CryptoCred and Duck from technical roundup wrote an extensive piece on the benefits and superior trading avenue WOOX provides to traders and why the platform is worth the plunge for most traders. If you have been in the crypto trading space for a while, you know these guys are the most credible traders in the space. Highly recommended read if you would like to understand the platform from a traders perspective.

Lack of awareness about WOOX

I get it, you're probably wondering: if WOOX is supposedly the superior platform for trading, why isn't it the most popular, and why haven't I heard much about it?

A lot of it comes down to the business model WOOX operates in.

WOOXs model previously revolved mostly around zero fees, drastically impounding the exchange making large noises like other exchanges did. WOO was also utilising 50% of its revenues to buy back and burn the WOOX tokens. All of this combined meant very little outreach and little marketing to get the name out. This meant, a large part of the last bull market for WOO was spent building a great product instead of marketing.

It is unquestionable that having a great revenue stream and strong model really can get exchanges to places. Think lots of the marketing, trader partnerships and even slapping the exchanges branding on F1 cars and Basketball Stadiums. These are how exchanges increase their mindshare in the space.

WOOX since then has drastically changed its revenue model to enable a higher growth trajectory. Woo has shifted its approach, discontinuing the practice of using platform revenues for token buybacks and burns and has revamped its zero fee from all pairs to only 60+ pairs.

This extra revenue means more money for marketing, more partnerships and more mindshare for the exchange. With a solid platform that is the best in the market, i believe the WOOX name will be increasing its mind share among the trading community and institutions.

In fact, the team has already started partnering with the largest and most reputed traders in the space. In the last 4-5 months, over 100+ top traders have partnered with WOOX as the primary crypto exchange of choice.

Here’s a list of the biggest traders that you might recognize that WOOX is in partnerships with, out of the few hundreds.

Traders partnered with WOOX

These partnerships are only set to increase as we approach towards the bull market and with the solid offerings, i believe WOOX will become a highly recognisable exchange.

1. WOOFi, the DeFi Powerhouse

WOOFi is WOO network's decentralised offering that offers superior defi trading and cross chain swaps across over 11 evm chains. Since its inception in 2022, WOOFi has facilitated an impressive $7 billion in swapping volumes, establishing itself as a frontrunner in the DeFi realm.

WOOFi ranks among the top 15 DEXs by volume across all chains and clinches a spot in the top 4 DEXs spot on Optimism, Polygon, ZKsync, BSC, and Avalanche. Over the last few months WOOFi has been a generating over $200 million in volumes monthly.

WOOFi is also one of the most used DeFi protocols in the markets with close to 285,000 monthly unique active wallets interacting with the protocol.

Monthly Volumes (Source: DefiLlama)

Monthly UAW Rankings (Source: DappRadar)

WOOFi has the following products:

• Cross chain Swap

• Earn

• Stake

• WOOFi Pro - order book perps

Similar to its niche positioning as the best execution in CeFi with WOOX, WOOFi has its own niche in DeFi markets, which is the best execution with capital efficency and one click cross chain swaps across L1 and L2 EVM chains.

The current DEXs do not provide efficient execution and have multiple trade-offs with pricing, slippage and depth. WOOFi was built by the Woo team to improve the liquidity and capital efficiency on-chain for traders and make trades as close to CeFi execution as they can be.

Cross Chain Swap and Earn Product

Unlike all the major DEX players in the space, WOOFi uses a unique algorithm for pricing called the Synthetic Proactive Market Maker (sPMM). This is as opposed to the AMM models used by current generations of spot DEXs.

WOOFi has built its own on-chain oracles that allow market makers to stimulate price, spread and depth of orderbooks on-chain that replicates off-chain pricing data. Mimicking the liquidity of centralized avenues allows WOOFi to outperform execution of trades with low liquidity.

sPMM Model Matches CEX depth on-chain

Liquidity providers provide single sided liquidity in single sided vaults under WOOFi earn and not equal liquidity on both sides of the pair. This single sided liquidity is locked up and is either deployed into low risk yield farming strategies or borrowed by professional market makers (ie Kronos Research) to manage liquidity in the pool.

The sPMM provides a good source of yield for the liquidity providers of the DEX without exposing them to any impermanent loss of their positions or need to actively manage concentrated liquidity positions.

Pool managers are able to borrow 90% of the deposits to conduct hedging.

Here is a good example of how WOOFi operates behind the scenes:

1. Liquidity Provider deposits single sided (eg ETH or USDC) into the earn vault

2. Assets are deployed into third party protocols or borrowed by pool manager

3. Trader A conducts a trade to convert USDC to ARB

4. WOOFi’s sPMM algorithm with custom oracles checks the bid/ask price of ARB/USDC at centralised exchanges and mimics the mid price of the CEX orderbook data. The algorithm also simulate market depth and slippage of centralized exchanges.

5. Trader A gets the best execution across all of DeFi with the most closest pricing

6. Pool manager takes a ARB position with USDC to maintain market neutrality either through spot or perp positions

By utilising this model, WOOFi has the best capital efficiency with the amount of volumes and TVL locked.

With close to just $10 million locked on the protocol, WOOFi is able to conduct $201 million in volumes in 7D. Using this design, WOOFi just obliterates its competition in volume/TVL metrics as shown below with just fraction of TVL and provides the best pricing in the markets.

Higher Volume/TVL indicates better capital efficiency (Source: DefiLlama)

WOOFi is such a powerhouse for conducting swaps and for liquidity providers. WOOFi is also connected to multiple defi brokers which are connected to the sPMM offering.

WOOFis broker partners 1inch, Paraswap, Yield Yak, Firebird, Openocean, DODO, Bitkeep, and ONTO wallet direct orders to WOOFis sPMM for best pricing and execution.

With such a good model, WOOFi does not necessarily have to expect users to come through the frontend and can allow other aggregators and apps to route transactions to it. Brokers also receive 20% of the trading fees incentivizing more front facing apps to integrate into WooFi for superior execution.

WOOFi’s other advantage is also that it is a completely cross chain protocol. WOOFi uses stargate technology allowing users can seamlessly conduct one cross chain swaps between 11 evm chains.

With the integration of Stargate and 1Inch, users can swap any token from any chain to another token to another chain. This means you can swap from Jizz coin in Arbitrum to Grokshiba coin on Polygon all in one click and in one transaction.

WOOFi swap with their unique sPMM model along with cross chain swaps will continue to grow as a unified DEX layer for all swapping actions on-chain across all large evm chains.

WOOFi’s swap, earn and other features are exciting to me but not as exciting as WooFi Pro, their perp orderbook.

WOOFi Pro - Perp Orderbook DEX

A year ago, Woo Network and Near Protocol joined forces to incubate an order book perp DEX called Orderly Network. The mission behind the initiative was to create a decentralised orderbook liquidity infrastructure as a whitelabel solution that would perform largely like a CEX on-chain. Orderly network raised $20 million at a valuation of $200 million.

In simple terms, Orderly is a liquidity infra that allows projects and other dexes to build on top of professional trading infrastructure and deep liquidity. Orderly network uses a unique style of liquidity provisioning using an off chain matching engine. All the custody and settlement occurs on-chain while execution happens off chain.

Orderly network launched its perp version on Near which got some mild traction. The team has been working on an EVM Omnichain Centralised Limit orderbook (Clob) with V2 and launched on Arbitrum recently. The V2 version is an absolute gamechanger and will be the first omnichain orderbook. Here’s why the current market sucks and needs a solution like Orderly Network:

• Currently, dex’s all stick on to a particular chain and are siloed. Users have to go through hoops and bounds to get to the different chains and to trade on the best orderbook exchanges. Case in point, let us look at the top 5 orderbook dexs based on volumes and see the chains they are present in.

• Fragmented Liquidity and capital chasing rewards. We’ve all seen this before - a whole new perp dex hitting the top spot on defillama. Chance are that they are just attracting volumes with airdrop points and rewards. The problem of fragmented liquidity across chains remains a point that is hardly even solved currently. Orderly is creating a perp dex that is accessible from any evm chain with shared liquidity across chains.

• Current evolution of decentralised exchanges suck except for DYDX. Professional traders are not using GMX or any other current perps DEXs to make their trades. Execution matters significantly and an offchain orderbook and matching engines are the most effective model for professional traders.

Orderly is building the ultimate trading logo solving these issues mentioned above with a CeFi level experience. Their trading lego allows users to deposit and withdraw assets from EVM compatible blockchain such as Arbitrum, Optimism, Linea, Polygon, Scroll, and Avalanche.

The network uses a shared liquidity layer across all these chains. Meaning if you are a trader on Optimism, you can trade against traders on other connected chains like Linea, Arbitrum, Polygon and many other evm chains. All of this powered by LayerZero.

Orderly provides B2B services to any Dapp that needs access to the liquidity. Given the fact that Orderly was incubated by WOO, WOOFi will be the main interface and be the flagship product for Orderly network. Called WooFi Pro, the perp omnichain orderbook went live very recently.

WooFi pro will have:

• Omnichain access - across linea and all major EVM chains

• CeFi like experience in UI/UX and performance

• Perfect execution with little latency

My prediction is that WooFi Pro, utilizing the Orderly Stack, will closely compete with platforms such as DYDX and other widely-used decentralized exchange orderbooks.

More on how WOOFi Pro compares with other defi orderbook exchanges and valuations in my future research piece that I’m working on.

Token Distribution

Usually, even with fundamentals being extremely great, tokens don’t do much well in the market due to multiple reasons. One of the biggest that is definitely the FDV of the tokens compared to current mcap.

Depending on the circulating supply and remaining unlocks in the next few years, projects have to grow in multiple to maintain their prices or even to outgrow.

WOOs tokenomics is one of clear examples of a good tokenomics and the right time to invest. Over 78% of the total tokens are circulating, with the rest of the tokens allocated for the team and future funding rounds.

The team did a massive burn at the beginning of this year, bringing down the entire supply by 24%. Additionally, no large emission in the next few years just makes me extremely comfortable holding positions.

Token Utility

The WOO token is at the intersection of all the great products that the team pushes out. The platform places considerable emphasis on utility derived from token staking, employing a well-crafted strategy to enhance the volume of staked tokens

• Staking on WOOX for lower fees and other benefits

  Traders can stake tokens on their centralised exchange to get access for fee discounts to 0% maker and taker fees, one of the only exchanges that offers this feature. The staking component presents a ideal solution to high volume traders that are trading in the millions daily. Stakers also get free withdrawals, referral bonuses etc.

  WOO token staking tiers on WOOX

• Staking on WOOFi for real yield

  80% of the revenue the protocol receives from trading fees across swaps and perps are distributed to WOO stakers weekly. Unlike token inflation rewards, stakers are given real yield in the form of USDC weekly. The average yield on WooFi is around 5% and users can increase their staking multiplier points (similar to GMX MPs) to gain more yield.

Over 25% of the current circulation supply is staked on WOOX and WOOFi and I expect staked supply to all increase gradually as both venues sees more volumes. With some minor calculations for the future trader market that WOO will target, I anticipate this figure could easily surpass the** 50% mark **in a bull market given the cleverly thought of staking tiers on WOOX and real yield on WOOFi.

To me, the investment thesis behind WOO network is really a bet on the growth of the industry as a whole. WOO Network has a full suite of products for the onboarding normies.

A new user who would like to purchase crypto and doesn’t want to worry about self custody, Woos centralised product has the best execution across all CEXs. Users who want to explore blockchains and embraces decentralisation? Woo has cross chain swaps, staking and orderbook features.

The project is really an full suite having steadfast focus on both centralised and decentralised venues and making continuous progress. I anticipate Woo network will be one of the biggest platforms to gain traction.

The Woo token is also placed in the middle of the ecosystem and unlike other tokenomics, it stands to gain the most. Here are the things that are some key takeaways for me on why I believe WOO is best positioned for an exponential trajectory over the next cycle.

For WOOFi

1. Large User base and Audience

   The number of unique active wallets the application is able to attract across chains is really insane. Over 300k MAU at the depths of the bear market is truly extraordinary. Although a large portion of the activity comes from Layerzero airdrop hunters, the numbers cannot really be discounted. I believe in defi, users stick to what they are familiar with and after interacting with WOOFI to farm airdrops regularly, WOOFi would be a safe place for these users . Not to mention, numbers like these in a bull market will just push the price to valhalla even for tokens with little fundamentals.

2. Cross chain focus

   We are in for a cross chain future across evm chains. User will not stick to just one chain but a list of chains chasing opportunities. WooFis crosschain support across 11 EVM chains with stargate positions it well to receive a significant share of the volumes. Expecting billions in daily volumes being transferred through chains and WooFi capturing just a few percentages could be a massive fee generator.

3. Best in class swap algorithm

   WOOFis sPMM algorithm has one of the best execution and pricing among decentralised venues period. The capital efficiency it obtains with little TVL just is the living truth of how innovative the team is with the product. Apart from flow from WOOFis frontend, the connection with brokers like 1Inch, Paraswap etc puts the protocol at a very suitable position to get lots of volumes channeled through it.

4. Omnichain Orderbook Infra competing with likes of DyDx

   Powered by Orderly Network, WooFi pro stands strong as a big competitor to DyDX. The new V2 with omnichain across EVM chains just creates the orderbook an irresistable option for traders. Trade using the interface whether you are in BNB Chain, optimism and all other evm chain. Volumes should start picking up very soon with token rewards from orderly.

5. Real Yield guzzler

   WooFi is one of the most best platform to acquire the real world yield narrative with WOO tokens at the center. The entire narrative was so hot with GMX a couple months ago but has died down significantly. WOOFi redistributes 80% of revenues from its platform as USDC rewards. Not in native token rewards but in USDC stablecoin. See this as being a huge demand driver as the real yield narrative is back in full force.

   80% of fees are distributed to stakers of the token (Source: @thethreewords)

For WOOX

1. Best execution and trading interface

   WOOX provides the best interface for trading compared to all other exchanges. All traders ever need in terms of execution of trades. Generally, this will bring in lots of retail volumes which will bring more demand to the tokens.

2. Transparency and compliance

   WOOX is one of the select exchanges that is going through the compliant route unlike some large exchanges. The exchange operates only in compliant countries and has not launched products in the US. As much as it is enticing to hit the large US markets, this approach followed by WOOX will pay off in the long run.

• Increased Awareness with Large Partnerships

  More partnerships among trading communities result in more awareness and volumes on the platform at the end of the day. As we are heading into the bull market, i believe there will be strong partnerships which will bring more mindshare around crypto traders and circles. Mindshare > More Volumes > More Value to Token

• New product launches such as launchpad, social trading and more

  Lots of more products that would get value accrual to the token, especially the much awaited launchpad. Kronos Research and WOO participate in the cap table of multiple top protocols and the WOOX exchange presents an attractive avenue for projects to launch tokens. Social trading and copy trading is also on the way. Both of these will start to usher stronger utilities, with staking tokens becoming even more important in the ecosystem.

• Increase in Volumes across CeFi and DeFi

  Although it might not seem much, a general increase in volumes in both avenues are generally a major catalyst. More volumes will result in revenues that eventually results in positive price action for the WOO token. The real yield narrative will come back stronger as it is one that tradfi really understands especially on the WOOFi side.

• Airdrop Farming on WOOFi Pro

  Orderly network raised their seed round at a token valuation of a whopping $200 million. The Orderly token has been hinted and at such a high val, it’s pretty plausible that there will be an incentivised mainnet. The flagship product, WOOFi pro should see 9 figure volumes daily in this case. At a few bps of fees, the airdrop incentives could very well lead to over $50,000 of daily fees or $1.5mil of monthly revenue distributed to WOO stakers. All without any token inflation whatsoever.

• Token Burns possibly?

  WOO network used to burn tokens based on revenue generated but hit the brakes to focus on boosting revenue for product expansion. Once the products are mature, I believe a small % of the revenues could be used to burned tokens in the future. All other exchanges with tokens do conduct token burns regularly (Binance for instance does quarterly large burns). Although I’m just merely speculating here, the idea of token burns we all know will make numbuh go up.

• Smart contract and DeFi risks

  All DeFi products have this risk and WOOFi is not an exception. Smart contract vulnerabilities or exploits of the underlying cross chain technology could be a major blow for the DEX. The entire DEX along with its staking components is cross chain, making it a considerable risk. WOOFi has done over 8 audits over the past 2 years, most of which without major critical findings. As everyone should know, audits are no guarantee for no exploits. What’s comforting to me though is that the team has a Immunifi bug bounty of up to $100k.

• Centralization risk with Kronos Research as a market maker

  This used to be a huge deal to me for quite some time both on the centralised and decentralized products. Kronos Research used to be the sole liquidity provider at the exchange since the beginning. WOO network few months ago changed their business model to allow multiple market makers to provide liquidity on the exchange. Currently, the exchange has expanded to over 8 market makers, who collectively make up 50% of the maker volumes. Would still like to see a further increase across all market makers to have this ruled out.

  Steady increase in volume from new market makers since August 23

  On the WOOFi end, Kronos is still the only sPMM manager posing a risk in case of any mismanagement - still remains a big concern to me.

I’ve been following the team and the growth of the product line over the last few years and I gotta say they are the most stacked team around building. All through the bear market, the team has been heads down building innovative products and expanding the ecosystem. WOOX and WOOFi are now fully fledged products which are outstanding products in their own domains.

The stars are aligned now more than ever for exponential growth in volumes. Presently, WOOX and WOOFi command nearly 1% of the trading volumes observed on both centralized and decentralized exchanges. With strategic marketing initiatives underway, both products are poised to experience an uptick in trading volumes. I am confident that the WOO network will successfully capture a substantial portion of the trading volumes in both CeFi and DeFi. As volumes soar, the WOO token is strategically positioned for a large price appreciation.

• WooFi Research Report by ASXN

• WOO Q3 Quarterly Report

• WOO Q3 Twitter Spaces

• Ultimate Guide to WOO Network by TCE Labs

• WOO X — Deep Dive by Technical Roundup