One of the most prominent themes in the cryptocurrency market was the increasing adoption of decentralized social media or DeSoc as well as DeFi perps and leverage trading by both institutional and retail investors with the latter sparked by the implosion of FTX in 2022. In terms of market performance, 2023 witnessed a significant surge in the overall cryptocurrency market capitalization, primarily driven by the continued demand for Bitcoin and Ethereum, the two leading cryptocurrencies. Bitcoin experienced a substantial price appreciation from its January 2023 lows in the 16k-17k range to just over $42,000 now. Meanwhile Ethereum largely followed suit and rebounded from its January lows in the $1,200-1,300 range to over $2,200 now as it benefited from the growing interest in decentralized finance (DeFi) applications and layer 2 rollups built upon their Ethereum Mainnet settlement layer.

2023 Crypto Snapshot

The regulatory landscape for cryptocurrency evolved significantly in 2023. Governments and financial regulators around the world began implementing clearer guidelines for the industry. This increased regulatory certainty helped to improve investor confidence, leading to further institutional adoption of cryptocurrencies. More clarity was later provided via the punishments and fines issued to Sam Bankman Fried and CZ respectively with the former facing a maximum sentence of 115 years for fraud and co-mingling customer funds with the trading group Alameda Research and the latter paying a $4.3B fine and having to step down from Binance for failing to comply with know-your-customer (KYC) guidelines in addition to money laundering charges that stemmed from that failure.

Furthermore, the rise of central bank digital currencies (CBDCs) gained traction in a variety of governments in 2023. Several countries, including major economies, started exploring the development and implementation of their own digital currencies. This development added a new layer of competition to the cryptocurrency space but also provided an indirect endorsement of the underlying blockchain technology. The tail end of 2023 saw increasing interest in Bitcoin as buzz built about a BlackRock push for a Bitcoin ETF. Many analysts have predicted that such an ETF could see an approval from US regulators as early as Q1 of 2024 and speculation on the entire crypto market subsequently mounted with Ethereum seemingly the next asset that could later see ETF approval. All of this took place against the backdrop of a Federal Reserve that has halted interest rate hikes amidst a stagnant US economy after raising the rates earlier in the year in an effort to nerf inflation. Ultimately, the Fed has signaled that greater interest rate hikes are not forthcoming, and the market has responded with bullishness for volatile assets like cryptocurrency.

In terms of technological advancements, 2023 witnessed the continued innovation in blockchain technology, with the development of new protocols and decentralized applications. The introduction of Layer 2 scaling solutions came in two flavors, optimistic rollups like Arbitrum and Optimism and zero-knowledge proof based blockchains like ZK Sync and Polygon’s ZK EVM which aimed to address the scalability issues of existing blockchain networks like Ethereum, enabling faster and cheaper transactions. These novel breakthroughs meant that leveraged traders who’d previously used CEXs like FTX flocked to perp protocols like Perpetual, GMX and DYDX on chains like Arbitrum and Optimism. The end of 2022 and the beginning of 2023 saw innovations take place on the Bitcoin network including the inscription of the first Ordinal NFTs on Bitcoin blocks and the emergence of another new asset class in BRC-20’s, new tokens issued directly on the Bitcoin network. Controversy arose amongst Bitcoin developers who proclaimed that the Bitcoin network was not meant for such activities, but this only further sparked the movement to embrace the newly controversial digital assets. Overall, 2023 was a year of rapid growth and maturation for the cryptocurrency industry.  Increasing adoption, regulatory developments, and technological advancements all contributed to the continued expansion and mainstream acceptance of crypto.

Major DeSoc Trends

In 2023, the decentralized social media space witnessed several major trends that truly shook things up. One significant trend was the rise of blockchain-based social media platforms like Nostr, DeSo, Lens Protocol and Farcaster Network. These decentralized social graphs and their corresponding clients allowed users to have complete control over their data and identity, thanks to the distributed nature of blockchain technology. Users could securely interact, share content, and maintain ownership of their data without relying on centralized entities and data storage methods to facilitate such actions. This underscored a significant trend toward user privacy and data security that erupted amidst issues with concerns over censorship, demonetization and opaque algorithms in the traditional social media space. With growing concerns about data breaches and privacy violations, decentralized social media platforms took center stage by prioritizing user privacy on crypto’s open and transparent payment rails. They championed strong encryption protocols and offered enhanced security measures, ensuring user information remained private and protected so that the platforms themselves could not profit from selling user data to third parties.

Additionally, content moderation became a hot topic in the decentralized social media space in 2023. To address concerns of spreading misinformation and harmful content, these platforms adopted innovative approaches to content moderation such as community-driven moderation processes, allowing users to play an active role in flagging and reviewing content, and using NFT technology to prevent bots from attacking their users. Furthermore, the concept of decentralized governance gained traction in 2023. These platforms introduced transparent and inclusive decision-making processes through community governance models. Users were given the power to vote on platform policies, feature updates, and even the allocation of platform resources. This approach ensured that decision-making power was distributed among the users, rather than being concentrated in the hands of a centralized, unchecked authority. Overall, 2023 was a transformative year for decentralized social media. It witnessed the growth of blockchain-based platforms, increased focus on privacy and data security, innovative content moderation approaches, and the rise of decentralized governance models.

DeSoc Investment Briefing

From Aave-backed Lens Protocol raising $15M in their seed round in June of 2023 to Lens-based apps like Orb and Phaver raising $2.3M and $7M in their seed rounds in September and October respectively, 2023 saw no shortage of speculation on the crossroads of decentralized social media and crypto. Lenster and Lenstube both rebranded in October 2023 to ‘Hey’ and ‘Tape’ respectively. Such an action made it clear that the social graph didn’t have any general apps associated with it, meaning that all apps would build and compete on a shared social network. Tako Protocol, which brands itself as the social monetization layer of Web 3 social, raised $2M in a pre-seed round from big players like Mask Network and DWF Ventures in August of 2023. Tako then made a strategic investment in Jam, the 2nd largest client of Farcaster’s DeSoc graph, and similarly rebranded to JamFrens signaling their intent to grow with the wider space. CyberConnect even got their $CYBER token listed on Binance in August of 2023 on the heels of hype for social media applications that have significant crypto exposure. Indeed, these foundational projects and their communities are all building momentum in advance of what many anticipate to be a 2024 crypto bull run, but the competition is getting more fierce as both Farcaster Network V3 and Lens Protocol V2 arrive and onboard more users permissionlessly in an effort to keep their decentralized social graphs optimally positioned for network-effect driven growth. Let’s dive into some of the innovations of each of these stalwarts of the DeSoc space.

Lens Protocol & Farcaster Network

Delving into the DeSoc segment of SocialFi requires deeper examination of both Lens Protocol and Farcaster Network as they’re at the forefront of the creation of open and decentralized social graphs that any developers can build application layers upon. Essentially what that means is that a user can have one account for any number of decentralized applications. That means that they could log into new decentralized Youtubes, Twitters, Facebooks, Instagrams and even Pinterests from one wallet id. Their relationships and online interactions; however, would all be sent and stored in one social graph; however, that ensures data privacy and likely a decentralized autonomous organization that makes choices about moderation of the social graph while allowing dapps the freedom to experiment and build what they want on top of it without much restriction.

Lens, for instance has many different applications layers built on top of its social graph that prioritize different types of content. Phaver, for instance, is quite similar to Instagram but has a points system and staking function. JamFrens and Hey, meanwhile look more like decentralized versions of Twitter; however, JamFrens allows you to invest in your favorite Lens creators by trading their profile keys. Tape prioritizes the video format much like a Youtube or a Vimeo and there are many others built upon the Lens social graph to optimize anything from meming, making friends, or gathering crypto alpha. Warpcast and Flink, the two dapps used by this author that are built on the Farcaster network are more reminiscent of Reddit, but there’s really no limitation to what can be built here meaning that the account I used for Warpcast can be used for Flink and vice veras. Other Farcaster-based platforms will also allow me to login via the account I created for Flink.

Both Lens and Farcaster make ample use of NFT technology to ensure that you can take your account to any of these dapps and still interact with their social graphs seamlessly. In both ecosystems, your account’s linked to an NFT located within your crypto wallet, so using it on a new platform just means connecting that wallet to their front-end and signing a transaction, but once you send content and interact with users there, it’s all sent to the Farcaster Network or Lens Protocol social graph depending upon which one you’re using. That’s a major innovation because it means using one account in your crypto wallet for the new Youtubes, Reddits, Twitters, and Instagrams within Web 3 instead of constantly logging in, forgetting passwords, and resetting in your email.  That’s just one innovation of DeSoc though. The story of DeSoc is still just now unfolding.

Farcaster Innovations

Early on, Farcaster and later Lens introduced the idea of on-chain identity linked to your crypto wallet or, in some cases, multiple wallets, which made access to all the applications running on the social graph permissionless. With that said, they’d both built barriers to immediate entry to prevent bot attacks and airdrop hunters from spamming their respective creations by requiring an invite in Farcaster’s case and by requiring a Lens handle NFT in Lens’ case. These defense mechanisms somewhat handicapped growth as the team’s encouraged organic content as they built. Nowadays that’s changing and with Farcaster V3, the team has already opened up their gates to any user who’d like to join their network without any palpable impact on the quality of their content, something they’d privately feared due to crypto users’ tendency to hunt airdrops with bot accounts. New users simply have to pay a 1-time fee of $7, plus the on-chain transaction fee and they can use any number of dapps built on the Farcaster network from Warpcast to Flink to JamFrens. With their opening up has come a rise in users with more than 6,807 having registered in a permissionless way compared to the 1,402 users who registered in a trusted way according to this Dune dashboard. That’s nearly a 4.85:1 ratio of trustless to trusted accounts from the small sample size which signifies what Farcaster’s core users are interested in.

Farcaster V3 also saw its leading client, Warpcast, implement a feature called ‘warps’ for their users to earn and share with one another on the Dapp. It’s specific to their application rather than available for all users on their social graph. Warps are ‘an easy way to perform onchain actions—from adding new Farcaster apps or minting certain NFTs—directly within the Warpcast app.’ Warps, unlike Lens’ open actions that we’ll dive into in the next segment, are specific to the Warpcast dapp and are centralized and offchain. Warps are akin to customer rewards for regulars at your favorite coffee shop whereby the more you use Warpcast, the more ‘warps’ you can earn. Users with warps can connect a Farcaster app, pay for a friend’s Farcaster onboarding fee, or gift 100 warps to another person once per day. Because of fluctuating gas fees though, the amount of warps needed for a given onchain action will vary based on the network’s gas fees; however, fees on Farcaster’s network, Optimism, are extremely low.

As of the time of this writing, total users of Farcaster network have jumped to over 46k.

Lens Innovations

Lens meanwhile has yet to open up their platform to everybody and remains accessible only to those who’ve purchased a Lens handle NFT or have received an invite from those who already have a handle. Stani, the founder of Lens Protocol, has signaled that Lens too will be opening up very soon though.

As of today, Lens has 125,964 profiles and Lens’ V2 has already been launched and pushed to all of their corresponding Dapps. Lens V2 is special because it introduced several innovations that improve upon the current paradigm for social media content creators, welcoming creators and developers alike to gamify social media with smart contract technology, a completely new paradigm in both blockchain and social media. Before V2, Lens broke in the concept of collecting posts on their social graph via a button on application layers like Hey. With more than 400k posts collected and users having minted more than 3.5M NFTs in total, this underscored a grand success for their DeSoc paradigm. Now, they’ve iterated upon and updated this functionality to ‘open actions’ whereby developers can build custom operations linked to a post or publication. They’re calling this new user action ‘publication actions’ and they are executed by Lens profiles. The innovation here is the chain of actions being linked to users and content alike instead of an anonymous tip that content creators can’t associate with their work or quantitatively assess.

Instead of nebulous anonymity, using a tipping publication action allows indexers to link the ERC-20 transfer to the Lens post where the action was executed. This permits creators like Lenny to track how many tips each of his publications has received or he can track which handles are his top tippers, and that’s just one utility. Publication actions can also accommodate rewards through a referral system whereby Lenny sets up the tipping action to compensate users that interact with or distribute his publications by giving them a percentage of the tip if they helped him get tipped. So, if Jeff quotes Lenny's post, and Jan ends up seeing Lenny’s publication because of Jeff’s quote, then when Jan tips Lenny, Jeff receives a cut of it as his commission. This not only applies to quotes, but other user actions that help to share a publication like mirrors and comments too. These innovations on Lens really help to bring the potential for the gamification of social media into clear focus. One other innovation worth mentioning was achieved by the Lens-based Dapp Orb which enabled shared sub-community wallets should they choose to create them.

Tako Protocol, seeing the writing on the wall for the DeSoc and SocialFi movements came out of the gate quite quickly in 2023, dubbing itself as the monetization layer for Web 3 Social. Tako’s stated purpose is to provide foundational smart contract capabilities for a variety of social applications regardless of their blockchain, social graph, or gamification needs because its interoperable and open sourced, so all developers can build upon it in a permissionless way. It’s modular and interoperable approach lends itself to use amongst a wide variety of social graphs and their client dapps. Tako’s also made a strategic investment in Jam, rebranded to JamFrens, launched on Lens Protocol, introduced tradable profile keys and plans to launch on Farcaster Network before year’s end to differentiate itself from the other client Dapps and showcase its interoperable gamification technology. After all, a decentralized social graph is nothing without the gamification that the blockchain can provide in tandem with social activities. Middleware like Tako is important because it allows developers on both the front-end and back-end to focus heavily on their specialty while integrating with Tako’s SDK or API only once their user base is ready for smart contract based gamification methodologies. To that end, Tako’s co-organized a capstone yearlong online Hackathon with Lens called the DeSoc Codex in 2024 to welcome developers from all parts of the world to build on their foundational DeSoc gamification technology with some of the biggest players in the space as mentors including Polygon Labs, Mask Network, Phaver and Consensys just to name a few.

SoFi So Good

These trends are necessary to get acquainted with because they pave the way for a more user-centric and democratic social media landscape that works in tandem with the blockchain’s tokenization and gamification abilities. It should be noted though that these proprietors of privacy and data sovereignty are still sleeping giants and far from the biggest winners in the crypto social media space that’s still everchanging and yet to reach a clear, decisive consensus on what the future holds. That leading pedestal is reserved for the less decentralized, but still blockchain based, Dapps that connect directly to legacy social media like Twitter, thus giving users with huge followings and audiences a new way to monetize their existing social media presence.

Specifically, I’m referring to applications like Friend Tech and Stars Arena among others who used Twitter’s API to connect to layer 2 blockchains like Base and Avalanche respectively.  Friend tech, specifically, was an overnight phenomenon and a hit with users and creators alike reaching hundreds of millions of dollars in Eth trading volume because creator keys or shares in a creator’s Twitter profile could be bought, sold and speculated upon for the first time. In fact, after launching on August 10th, 2023 Friend tech exploded and acquired over 250k unique traders who generated more than $9.76M in protocol fees in just over a month’s time for the platform. Both creators and fans were able to earn via friend tech’s unique bonding curve functionality, whereby 5% of the trading volume went directly to the creators’ keys that were being traded, and 5% went to the Friend Tech protocol. Anybody could be a creator and anybody could invest in a creator key early in this scenario, thus speculation upon Twitter accounts activating on Friend Tech reached climbed  to peaks very quickly and a whole economy of Ethereum from bots, speculators and real fans alike surrounded the new activations and the gamification methods used by creators whose keys were held.

Friend Tech inspired a newfound interest in a link between social media and the blockchain by quickly bringing crypto to the mainstream by turning the consumptive behavior of fans into investment behavior whereby creators could interact directly with their fans who were now key holders in a pay to play chat room. The other feature of Friend Tech that was unique was that it bypassed the Google play, and Apple App Store by creating an progressive web app (PWA) that they could iterate upon more quickly while cutting the middleman and gatekeepers out of their revenue streams, thus embodying the ethos of crypto. Many builders in the space noted the overnight success of Friend Tech and copycats emerged but ultimately Friend Tech remains the sole winner of this unique SocialFi market at present. Despite its success, its growth has seemingly come to a standstill partially because of the price of creator keys reaching their ceiling in Ethereum, thus creating a barrier to entry to newcomers to their platform.

This model of linking traditional social media platforms like Twitter via an API has shown promising results in another Dapp, an Arbitrum-based Twitter plug-in game called XPet The Dapp occupies a unique niche in the crypto space previously dominated by Base Chain-based FrenPets, the e-pets sector. Users just link their Twitter account to receive a pet directly on Twitter interface that roams the bottom left of your feed. Users enter a new window directly on Twitter to feed and care for your pet. The game’s site urges users to take good care of their pet and earn crypto profits.

Total revenue for XPet has climbed to nearly $13 million with 6,823 unique users having transacted more than 77 thousand times on their platform in just over a month’s time. This rolling snowball of XPet’s success strongly indicates that the lane for experimenting with existing social media platforms while giving users, creators, and curators novel actions to help them earn monetary rewards has untapped potential.

Our 2024 DeSoc Narratives To Watch

With that said, here are our primary narrative based predictions with regard to the SocialFi and DeSoc sectors for 2024:

Interoperability

The project teams that are most successful in breaking down the barriers between the largest existing crypto communities that currently exist on blockchain constricting silos will be the biggest winners here. From a user perspective, chain maxis miss out on emerging ecosystems and airdrops meant to bootstrap DeFi communities with liquidity and sticky user bases. It works the same from a project perspective and social media channels cannot exist in a silo. It’s a big reason why Lens Protocol and Tako Protocol’s chain agnostic approach makes a lot of sense.

Modularity

“Be flexible or die trying.” Modularity refers to a project's ability to fit snugly within the existing stack of another project with minimal development time or upstart costs and that’s where Tako Protocol, as a middleware that’s both chain and social graph agnostic wins the race. That’s not to say that un-modular projects won’t be successes, but it is to say that the more modular a project is, the more it embodies the Web 3 ethos which opposes monoliths and supports working together with other Web 3 players in harmony.

Censorship

Censorship has emerged as one of, if not the most prevalent problem in today’s traditional social media landscape. Platforms can nerf or otherwise demonetize creators at the drop of a hat and this generally sews distrust amongst influencer bases. The movement to platforms like Rumble is very real in the traditional landscape, so censorship resistant DeSoc platforms will eventually win over a good share of users if they prioritize the creation of a fair and transparent creator economy that effectively reduces censorship dramatically.

Security

Dapps and protocols will cease to exist or otherwise cease to obtain a substantive user base if they’re not secure from hackers or have single points of failure. DeSoc is particularly insulated from security risks because of its decentralized nature, but the same cannot be said for some SocialFi protocols like Stars Arena which have shown to be prone to exploits or otherwise corruption amongst its centralized leadership.

Being early to the greatest trends in the DeSoc and SocialFi space will bear the juiciest of fruits for users, no matter who you are. To date, not a single DeSoc or SocialFi project has dropped a token for its users though almost all have intimated or else created a point’s system for there platforms. In the simplest terms, that just means that it pays to be early!

Lastly, I’d like to thank Mask Network and Hashbrown Labs for helping make this article possible. A special shoutout to Tako Protocol too for shedding light on the importance of modularity too. That’s a wrap on 2023, so let’s put a bow on it! Happy New Year to all of our cherished readers!

1. Introduction to Avalanche

2. Why Avalanche? 2.1 The Primary Network 2.2 Avalanche Consensus Protocol 2.3 High speed and TPS 2.4 Subnets

3. Avalanche Stats 3.1 TVL 3.2 Daily Transactions and Unique Addresses 3.3 Other Notable stats

4. Ecosystem 4.1 Gaming Narrative 4.2 Avalanche Incentives 4.2.1 Avalanche Rush 4.2.2 Avalanche Multiverse 4.2.3 NFT and OpenSea

5. Funding

6. Summary

   1. Introduction to Avalanche

Avalanche (AVAX) is a layer 1 blockchain that was founded back in 2018 and the mainnet went live on 21 Sept 2020. Technically, Avalanche is still currently in development but all core functions are currently live.

Avalanche was conceptualized to be fast and extremely scalable. It is the first decentralized smart contract platform built for the scale of global finance with almost near-instant transaction finality.

The Avalanche blockchain is built around its unique consensus protocol and the platform token, AVAX is used as gas fees within the platform.

Avalanche promises to fulfill what some of the Layer 1s are unable to: Providing speed, scalability, Security and smart contract support all at the same time. Some may also argue that Avalanche might be the first Layer 1 to truly solve the blockchain trilemma.

2. Why Avalanche?

2.1 The Primary Network

With so many Layer 1s competitors out there, each of the Layer 1s needs to bring something different to the tables in order to differentiate themselves and that is what Avalanche did.

One of the biggest differentiator Avalanche has over its competitions is how the blockchain is structured. Avalanche is essentially made up of at least 3 blockchains, the C chain, the X chain and the P chain. These chains are split to manage different functions, thus allowing the avalanche blockchain to achieve very high Transaction Per Second (TPS).

These 3 chains are all secured by Avalanche validators in a special Subnet called the Primary Network which members need to stake at least 2,000 AVAX to be part of the network.

Below is a short description of the chains and what they do:

X-Chain: This is the chain responsible for the management, creation and to facilitate the transactions of the tokens

C-Chain - Built to support smart contracts and is EVM compatible, which means anything written for ETH mainnet can be ported over easily.

P-Chain - Called the platform chain, which manages all the validators and the staking of of the tokens.

2.2 Avalanche Consensus Protocol

Different blockchains have different ways on how they determine if the transaction posted should be accepted or rejected. Some uses proof of history, some uses proof of work, proof of stake, while some uses cryptographic validity proofs. In the case of Avalanche, it uses the Avalanche Consensus Protocol, which is essentially a Directed Acyclic Graph (DAG).

In layman terms, the transaction is issued to a validator, the validator “ask” a small random subset of validators for their take on if the transaction should be validated. As long as the confidence threshold is met (large subset of validators sampled agrees that the transaction is valid), it will be accepted.

Due to the mechanics of Avalanche being unique, it does hold several benefits that does not apply to other Layer 1 chains. For example, an attack on a Nakamoto Consensus Protocol (Proof of Work) Network will need 51% control over the network or an attack on a Proof of Stake Network may need 51% control of the total tokens. In the case of Avalanche, an attack will need up to 60% of the network being malicious in order to get through.

Source: https://cryptoseq.medium.com/

2.3 High speed and TPS

** **Another benefit of Avalanche as a Layer 1 is that it’s blazing fast with the X chain able to get to 4,500 TPS while the P chain and the X chain can get up to 1,500 TPS.

Not only just providing high TPS, transaction data finality on Avalanche can be reached in less than 3 seconds!

2.4 Subnets

Subnets are defined as a sovereign network which has its own rules regarding membership and token economics.

One of the key main differentiators of Avalanche is that it allows anyone to deploy a subnet and in turn allows them to create and run their own blockchain networks. These subnets are entirely independent, do not share any execution thread, storage or networking with other subnets (including the primary network).

A user creates a subnet by taking these steps:

1. User must be running at least 1 (or more) validator node on the primary Network

2. Subnet is created.

3. Primary network is notified that a subnet is created

4. User assigns their validator node to the subnet

5. Subnet is now being validated

The possibilities are endless with Avalanche subnets and many Gamefi projects that are well-known within the Crypto-verse have jumped on the subnet bandwagon. Some examples include:

• Defi Kingdoms Crstalvale

• Crabada Swimmer Network

• Ascenders Subnet

Subnets can also be private and thus may not publicized their creation. As of now, there are 36 subnets, 28 blockchains and a total of 1219 validators on the Avalanche subnet (data as of 7 Nov 2022).

3. Avalanche Stats

3.1 TVL

After covering the technicals of Avalanche, it is no surprise that it is a Layer 1 blockchain that has a lot to offer. A check on defillama shows that amongst all the EVM chains, Avalanche is top 3 in terms of TVL at a total of $1.66B, outstripping both Polygon and Arbitrum.

Most of the TVL in Avalanche are currently in the usual protocols for a relatively new and bidding blockchain. Protocols such as AAVE, Benqi, Traderjoe – AVAX’s native Dex, etc.

One thing to note is that GMX, an up-and-coming derivatives protocol that is initially launched on Arbitrum is also currently live on AVAX.

3.2 Daily Transactions and Unique Addresses

In order to track the activities on the blockchain to determine its health, daily transaction data and unique address data can be an indicator to that.

A quick check on snowtrace, AVAX block explorer also shows significant increase in daily transactions since mid 2021. Although there has been a huge drop during May 2022, that may likely be also due to the general sentiments on crypto during the Luna/UST crash in May.

The number of unique addresses on Avalanche also looks pretty healthy with data showing that it has been growing steadily since the chain went live. Interestingly, there was a huge increase in unique addresses just a month back with daily new addresses at 303,899.

A healthy comparison will be to compare Avalanche daily transaction with that of other top EVM chains. Despite the decline in C-chain transactions, it is noted that the entirety of Avalanche infrastructure and consensus is still processing more transactions than ETH (including subnets).

However, in my opinion, the general health of the blockchain lies with Avalanche C-Chain and Avalanche will still need to push adoption to its platform to start growing bigger.

It is also to be noted that referencing the data presented earlier, the TVL on Avalanche is top 3 within the top EVM chains but the daily transactions on C-Chain do not quite reflect the same situation.

3.3 Other Notable stats

4. Ecosystem

4.1 Gaming Narrative

It is evident just by looking at the Avalanche Ecosystem (dated 11th Oct 2022) that Avalanche wishes to push the Gamefi narrative on its platform. It makes absolute sense since it provides all the necessary elements for Gamefi projects to succeed – Faster and cheap transactions, ability to support high TPS and the ability to create customized subnets.

Most of the games project available on Avalanche was also launched on Avalanche’s native launchpads like Avalaunch.

While GameFi projects are of abundance within Avalanche ecosystem, the usual suspects within the crypto-verse are also live within the ecosystem, ranging from dexes (1inch, Sushi, Curve), to lending protocols (Aave, Benqi) to bridges (Synapse, Stargate).

4.2 Avalanche Incentives

One of the main key reasons why there are a lot of protocols current on the Avalanche platform is that they are very apt at attracting protocols. From the Avalanche Rush in 2021 to the current Avalanche Multiverse, the Avalanche Foundation is no stranger from pushing out incentive programs in hopes of acquiring new users.

4.2.1 Avalanche Rush

Avalanche Rush (2021) was a $180M liquidity mining incentive program aimed to bring AAVE and Curve into its ecosystem. This was a calculated move to push Avalanche’s Defi Adoption. By attracting both of these projects, Avalanche aims to further its Defi ecosystem maturity in hope of gaining more users.

4.2.2 Avalanche Multiverse

In March 2022, Avalanche announced a new incentive program called Avalanche Multiverse, aimed to accelerate growth of its subnet functionality. This program is focused on supporting new ecosystems such as blockchain-enabled gaming. Defi Kingdoms is also one of the few projects that worked together with Avalanche on this.

4.2.3 NFT and OpenSea

Other than being big on Gamefi projects, Avalanche also seeks partnership with OpenSea (Oct 2022) to support OpenSea natively on Avalanche network. This is actually in line with the GameFi narrative as most GameFi protocol uses some form of NFT. With the integration of Avalanche and OpeaSea, users on Avalanche can enjoy fast transaction finality for NFT trades and OpenSea can gain more users through Avalanche.

5. Funding

Till date, Ava Labs, the company behind Avalanche has raised a total of $290.1M over 7 rounds of funding with Polychain Capital as their lead investor.

6. Summary

Is Avalanche viable as a Layer 1?

With its unique infrastructure, Avalanche stands out from the rest of the Layer 1s as having “solved” scalability concerns which plagues most Layer 1s. The subnet mechanism allows the network to scale without limits and is definitely a game changer. However, even as Avalanche’s unique addresses have been growing at a steady pace, the network still needs stronger use cases in order to drive its user adoption.

Perhaps GameFi would be the solution, but until the next GameFi season comes along, what Avalanche can do is to continue building strong partnerships and continue with innovative ways to boost user adoption of their network.

What makes a “Good” Stablecoin?

1. “Battle History”

2. Utilization based on Chains

3. Utilization Rate 3.1. Stablecoins Utilization on Centralized Exchanges 3.2. Stablecoins Utilization on Decentralized Exchanges 3.3. Total Stablecoins Utilization on Centralized & Decentralized Exchanges

4. Stablecoins Decentralization Breakdown

5. Stablecoins Peg Analysis Food for Thought

What makes a “Good” Stablecoin?

User Confidence is undeniably important, especially seeing the recent collapse of protocols (LUNA/UST) and the most recent FTX collapse, in just matters of days.

Some of it is due to fundamental reasons or speculated breaches, we do feel that a huge part is also the confidence in customers/users in the protocol/exchange itself, and we feel this also applies to Stablecoins.

We have seen exchanges quickly coming out to let users know that they are doing Merkle-Tree Proof of Reserves around the time FTX was said to be insolvent.

In Stablecoins, some due diligence must be done by users themselves to identify what they consider a good, yet safe Stablecoin to use.

Hence, we have put together a few key points and analysis of what we think you should take note of to identify confidence in the Stablecoin and also help in reducing the odds of you getting “rugged”.

1. “Battle History”

Those who have been in the Crypto Space for a few years will know that “battle-tested” tokens which have survived various conditions of the Crypto Market and are still “surviving” normally means they are doing something right.

In such a volatile environment, if a Stablecoin has yet to collapse (Hint!: UST is not one of them!) and still holds its peg, normally means that there is confidence in that Stablecoin which suggests that it might be a “better” Stablecoin.

We think that the longer a Stablecoin stays in this space without collapsing, the more credibility they have.

Therefore we can see that we have a clear winner, which is USDT.

It has been the longest standing stablecoin, and has been through various market conditions but is still trading at peg, which shows that there is user confidence in the stablecoin.

2. Utilization based on Chains

Having some substantial amount of flow into various chains could also be a good way to see how utilized these tokens really are. Generally we want to see these tokens on more chains rather than just solely on one chain.

We have mainly referred to the data on DefiLlama.

Source: https://defillama.com/stablecoins

“Why isn’t anybody talking about this?!”

In the data below, we have only included chains with more than $1,000,000 worth of Stablecoin flows.

3. Utilization Rate

The idea behind the Utilization Rate is to see the usage of each Stablecoin in comparison to its Market Capitalization.

A Stablecoin with a higher Utilization Rate when compared to others is generally a good sign that the Stablecoin is being “used”.

A Stablecoin being actively “used” especially during periods of uncertainty, generally shows confidence in the Stablecoin.

Therefore to calculate the Utilization Rate, we will simply take the 24H Volume / Market Capitalization.

The Utilization Rate will be higher than usual, as due to the recent insolvency of FTX/Alameda as well as possibly many entities not revealed yet, the fear in the market will increase the demand for Stablecoins.

We think that this is a good time to compare these Stablecoins, as in periods of stress, we can see which Stablecoins users truly feel is “safe” to transact in.

Higher Utilization means higher liquidity, and also suggests that users are actually using that Stablecoin to do transactions.

Therefore if you are trading more on Centralized Exchanges, you might want to place more importance in the consideration of a higher utilized stablecoin on Centralized Exchanges, and likewise the same case for Decentralized Exchanges.

However, we also put together a combination of the Utilization Rate on Centralized + Decentralized Exchanges to get a good overview of the whole picture.

We will be referencing the volume from CoinMarketCap.

Source: https://coinmarketcap.com/view/stablecoin/

All figures are approximate.

3.1 Stablecoins Utilization on Centralized Exchanges

There are some Stablecoins such as FRAX which has too low of a Utilization Rate which is why it's not included in the table, as it is clear that it is not being utilized much on centralized exchanges.

It is quite clear that USDT is the clear winner in terms of utilization on Centralized Exchanges, with the runner up being BUSD.

3.2 Stablecoins Utilization on Decentralized Exchanges

For Decentralized Exchanges, DAI appears to have the highest Utilization Rate and this is followed by USDC.

3.3 Total Stablecoins Utilization on Centralized & Decentralized Exchanges

In general, it seems that the Top 4 Market Capitalization tokens also has the highest utilization rate for CEX + DEX combined.

Hence, as mentioned above, it would depend on whether you trade more on CEX or DEX and assess which Stablecoin has a higher utilization rate there.

We can see that in general the utilization rate for stablecoins is generally higher in CEXs, and although another factor could be due to the native token being commonly used within trading pairs for each network/chain for DEXs.

However, these are the top 3 Stablecoins for CEX and DEX (depending where you trade on) to be considered as “better” Stablecoins in terms of just looking at Utilization Rate.

“Why isn’t anybody talking about this?!”

4. Stablecoins Decentralization Breakdown

Did you know that Stablecoins issuers can freeze your Stablecoins even if it is in your own wallet? “Your keys, your coins” does not apply in this case!

Although some of it is due to legitimate reasons, generally this shows the stablecoin is not exactly “Decentralized”.

Hence, to get a good idea of how Decentralized a Stablecoin is, we are going to look at whether the issuing entity has any past history of freezing funds/wallets.

Hence, in this case although we do not have a clear winner, we feel that DAI, when compared to the rest, is a good option for users who would prefer to have full custody of their Stablecoins. 

Do note that Decentralization covers a wide range of areas besides the freezing of funds, and this is just one way to look at it.

“Why isn’t anybody talking about this?!”

5. Stablecoins Peg Analysis

Please note that the data below is from Defillama. If you trade on centralized exchanges, or any protocol that relies on its own price feeds, it is recommended you also take a look at that exchange/protocol you are trading on to look for the peg history. (Source: https://defillama.com/stablecoins)

When we state it is sorted by Most to Least “Safest”, we take the assumption that being closer to Peg is generally “safer”. Being above peg might not exactly be favorable to users, depending on which side of the trade you are on.

Food for Thought

** **More Decentralized Stablecoins has historically shown greater instability, and has a higher chance of crashing in a black swan event. 

Centralized Stablecoins are supposedly “safer” in terms of keeping its dollar value, but there is always the probability that the issuing entity can freeze the funds. 

For us at HashBrown Research, we would prefer to use DEXs over CEXs, hence what we would consider a “good” Stablecoin  based on the Utilization Ratio on DEXs. 

We also would be more inclined to use DAI, although the collateralization is a concern, we believe that with future innovation, maybe DAI can come up with a different collateralization system so as to minimize the dependency of a centralized stablecoin such as USDC. 

**

**

Do you look at any data when choosing to use a Stablecoin? 

Feel free to connect with us on our Socials as we would like to hear your thoughts!

1.Introductions to Layer 2s

1.1 Considerations of a Layer 2

1.2 Optimistic Rollup VS Zero-Knowledge(ZK) Rollup

1.2.1 Optimistic Rollup

1.2.2 Zero-knowledge Rollup

2.Zksync

2.1 Roadmap

2.2 ZkSync VS others (Technical Criterias)

2.3 Transaction per Second

2.4 ZKPorter

3.TVL and Activities on ZkSync

3.1 L2 Bridge and Depositors Stats

3.2 Layer 2 costs

4.Ecosystem

4.1 ZkSync

4.2 Arbitrum

4.3 Optimism

4.4 Funding

5. Summary

• 1. Introductions to Layer 2s Ever since the Satoshi Nakamoto created the first blockchain in 2008, there has been a lot of work done into trying to solve issues of the legacy blockchains. One of such problems that arise from blockchain technologies is called the blockchain scalability trilemma, which argues that blockchain technology can only fulfill two out of three of the features, namely Scalability, Security and Decentralization.

Layer 2s are first conceptualized to help address the blockchain scalability trilemma. It is often argued that the scalability limitation of early blockchain exists because they are tasked with too much work. This is inevitable with the growing popularity of the blockchain – as more users adopt the use of the blockchain, more and more transactions / data will be processed, thus clogging up the entire blockchain.

Hence, Layer 2 solutions are built to help with scaling limitations.

1.1 Considerations of a Layer 2

So, what characteristic does a protocol need to have to be labelled as a layer 2?

One of the main requirements to be considered as a layer 2 is that a layer 2 protocol inherits the security of the blockchain it is built on top of. Transaction data integrity is upheld as it must be verified by the underlying blockchain. These means side chains such as Polygon (MATIC) or Aurora (Near ecosystem) cannot be considered as Layer 2 since they rely on their own security and use their own methods in processing transactions.

1.2 Optimistic Rollup VS Zero-Knowledge(ZK) Rollup

For us to understand layer 2s, it is important for us to know how each of these works.

Rollups basically move transaction processing off chain but still ensure transaction data is stored on the main layer 1 chain. This also means there is no compromise on security. Rollups are done by bundling the transaction data in batches, compressing and delivers the data to main chain (ETH).

Rollups are differentiated into 2 forms – Optimistic and Zero Knowledge Rollups.

1.2.1 Optimistic Rollup

As the name implies, Optimistic rollup assumes that the transaction data sent is legitimate until a dispute is made. The dispute resolution mechanism is crafted such that both parties within the dispute - the party that submitted the disputed transaction and the party who is disputing the transaction, will need to have ETH bonded. The party who is found to have any wrong-doing will have their bonded ETH reduced.

This ensures that everyone has “skin in the game” and discourages bad actors from clogging the network by either submitting fraudulent transactions or wrong fraud proofs.

1.2.2 Zero-knowledge Rollup

ZK rollup approaches the transaction data by producing validity proofs. The validity proofs provide cryptographic evidence that the proposed changes to Ethereum main chain’s state are the true end-results after executing all the transactions in the batch. Validity proofs in the form of ZK-SNARK or ZK-STARK are used to allow parties to prove the correctness of the statement without revealing the statement itself.

In short, validity proofs are done in 2-steps – Proof generation and Proof verification.

Proof generation:

· Checks on sender/receiver are part of state tree

· Checks on sender having enough funds to perform the transaction

· Checks on transaction is correct and matches sender’s public key

· Checks on the sender nonce being correct

Proof Verification

· Checks on Pre-state root – Before the batched transactions were published

· Checks on Post-state root – After the batched transactions were published

· Checks on Batch root – Merkle root of the batch – derived by merklizing transactions in the batch and hashing the tree’s root.

· Checks on Transactions Inputs – Transaction data executed as part of the submitted batch

Source: https://ethereum.org/en/developers/docs/scaling/zk-rollups/ 

Now that we are aware of how each of the rollup works, let’s dive deeper into protocols that utilizes these technologies, focusing primarily on ZKsync, it’s ecosystem and comparison between its competition.

2. Zksync

2.1 Roadmap

ZkSync is a Layer 2 scaling solution aiming to help solve the scalability feature within the blockchain trilemma. It offers low gas and fast transaction and utilizes ZK rollup.

ZkSync 2.0 Mainnet (Baby Alpha) launched last week on 28th Oct and aims to solve several pain points from its 1.0 version. However, Baby Alpha will only be open to ZkSync’s team for now with public access planned to be sometime end of year.

The single biggest upside 2.0 brings is official support for smart contracts as well as a complier for EVM compatibility (also coined as zkEVM).

Why is this important?

This is game-changing since any existing smart contract written on solidity (which is majority of the Dapps on ETH) can start deployment on ZkSync with very little changes necessary to their codes.

With the barrier of entry lowered, protocols can utilize ZkSync to lower gas fees and provide faster finality for transaction speed. Further ease of adoption of a layer 2 scaling solution will in turn help with scalability of ETH mainnet.

2.2 ZkSync VS others (Technical Criterias)

A technical comparison between ZkSync and its competition can also be argued that it should be a comparison between the different rollups. As such, it’s not much of ZkSync against others but more of a comparison between Optimistic rollup VS ZK rollups.

The comparison from 101 blockchains sums up pretty much the differences between the technical differences between the 2 different rollups. However, it should be noted that with ZkSync 2.0 already live (but not open to public yet), there will be improvements to the DeFi readiness of ZK rollups.

Another important note is that optimistic rollups take 7 says to achieve transaction finality (due to the challenge window) while ZK roll ups do not have delays in transaction finality.

2.3 Transaction per Second

Since Layer 2 solutions exist to help scale ETH mainnet, one of the most important aspects of scaling is the amount of transactions Layer 2 solutions are able to process per second. ZkSync (ZK rollups) can process up to 2000 TPS at its peak for now but with the help of ZkPorter, it is theorized that ZK rollups can 10X the TPS to a whopping 20,000 TPS!

2.4 ZKPorter

In its essence, ZkPorter users’ data are stored off-chain rather than on ETH network. Instead of publishing state updates as calldata onto the ETH network, ZkPorter root hash will be published onto the ETH network. This ensure that no matter what changes is done on the zkPorter accounts, the users of Zk Rollup will be able to reconstruct the merkle proof for their account. I have also linked an article on how merkle proofs are used here.

The data of ZkPorter accounts will be published to a side-chain-like network comprised of Guardians who are ZkSync holders with staked ZkSync tokens. Guardians are required to sign blocks to confirm data availability of the zkPorter accounts and will be rewarded with fees.

While some may argue that it is less secure, ZkPorter circumvent this by ensuring that a supermajority (2/3 of the stakers) must sign a block in order for it to be published onto the ETH network. Moreover, Guardians are essentially powerless as they can only freeze the ZkPorter state. This also means any malicious actors who tries to hold the Guardian staking network hostage will also freeze their own funds in doing so.

Users are free to choose between ZK rollups or ZKPorter, trading a little security risk for way cheaper transaction fees (Zk rollups around 1/100th of L1, Zk Porter around $0.01).

It is also important to note that this kind of scaling is only unique to ZK rollups due to cryptography of zero-knowledge proofs. That means optimistic rollups are unable to achieve the same magnitude of scaling.

3. TVL and Activities on ZkSync

According to L2 tracker site, l2beat.com, ZkSync current sits at 7th in total TVL (62.14M) and has a total of 1.22% of the total TVL across all layer 2s.

The total market share does seem low but that is primarily because ZkSync 1.0 does not support smart contract compatibility and is only mainly used for token transfer, minting NFTs and/or make swaps (on ZigZag Exchange).

The daily TPS will continue to remain low until when ZkSync 2.0 is released to public sometime late 2022.

3.1 L2 Bridge and Depositors Stats

Measuring the activities on the different L2 protocols will need us to take a look at the activities and interactions on the different chains. This can also be shown by taking a look at the total number of bridgers into the different protocols.

It is interesting to note that while the total value bridged (TVB) is the least on ZkSync, the total number of bridgers is higher than that of Arbitrum and Optimism. This is likely also due to the fact that rumours of a ZkSync token airdrop is around the corners and attracted a high number of airdrop farmers to interact with ZkSync.

On another dune report by user @biteye, we can also see the same trend (across 30 days) that there is a strong uptick in daily and cumulative depositors for ZkSync. This is again, likely due to rumours of the airdrop of ZkSync tokens, attracting airdrop farmers to interacting with ZkSync.

3.2 Layer 2 costs

L2fees.info is a website which tracks the cost each layer 2 protocol charges to send ETH and to Swap tokens. A quick check on the website reveals that ZK rollups do have lesser cost than their optimistic rivals with both Loopring and ZkSync (both ZK Rollups) reflecting lower costs than Arbitrum or Optimism (Both Optimistic Rollups).

4. Ecosystem

4.1 ZkSync

With the mainnet launched only 1 week ago, ZkSync still has a pretty impressive list of partners they are working with within their Ecosystem. Though most of the protocols within their ecosystem are the usual suspects (1inch, Curve, Yearn, etc), with the launch of ZkSync 2.0, it is almost certain that the ecosystem of ZkSync will grow exponentially within the next few months. Recent announced partners of ZkSync includes AAVE (announced Nov 3), MEXC (CEX), SpaceFi (DEX, launchpad), Mute.io (Dex/farming/bond) Uniswap, Sushi and many more!

As a comparison, I have also included both Arbitrum and Optimism’s ecosystem chart below. These ecosystem charts are all dated within 2022 (Between April to June) and are still relatively updated.

4.2 Arbitrum

4.3 Optimism

![Source: https://twitter.com/Coin98Analytics/status/1531182204713218048/photo/1 

](https://images.mirror-media.xyz/publication-images/W3rfwpzw4SmzWSxNi5ddW.png?height=530&width=954)

4.4 Funding

Till date, ZkSync has raised a total of $50M and is currently in Series B with a16z as their lead investor.

5. Summary

Although ZkSync is still very early and has only just launched their mainnet, ZkSync 2.0 offers endless possibilities for a protocol so new. Referencing the snapshot taken above, even founder of Ethereum, Vitalik commented that ZK rollups will win in all use cases in the medium to long term.

It is our opinion that ZkSync cannot be ignored as a strong contender for the king of Layer 2 once the kinks of Baby Alpha (Mainnet launch) has been sorted out and when the mainnet is released to general public.

1. The Need & Importance of Infrastructure Why Infrastructure is Important Credential Data Network The Current State of Credential Data Examples of Credentials

2. Some Key Points of Galxe Galxe Curators & Data Sources Socials Integration Galxe ID Galxe Profile Galxe Passport

3. Galxe Token (GAL) & OATs Galxe Token (GAL) OATS; Possibly Bringing Utility to NFTs

4. A Look at Some Data & Case Studies Historical Activity Wallets Supported Food For Thought Some Case Studies of Galxe’s Infrastructure How to Web3 on BNB Chain Galxe x Optimism: Optimism Quests

1. The Need & Importance of Infrastructure

Why Infrastructure is Important

According to Crunchbase, in 2021, there are 8,785 Web3 companies with over $27 billlion of funding raised. As more companies and protocols start to innovate products in Web3, the need for good and reliable infrastructure becomes more evident. Infrastructure for the protocols/products to function better, scale, as well as improve the experience for users.

Cross platform and product user access remains cumbersome, as each user needs to login or authorize access per platform. There is a clear market gap for Web3 Developers to be able to leverage credential data to build better communities and products. Hence, there are projects like Galxe who are working on building an infrastructure to power an open and collaborative Credential Data Network. 

Source: https://docs.galxe.com/#our-mission

Credential Data Network

Credentials are part of our daily life, and having credentials on-chain serves as a “record” for blockchain users. 

Below are some use cases in Web2/TradFi. We list the corresponding possible use cases in Web3. 

The Current State of Credential Data

Credential data is not easily available/accessible for individuals who should own the data, and applications that need it.

Galxe aims to solve this problem using an open and collaborative credential data network, which will help improve the Web3 experience. 

Examples of Credentials

Hence, you can see why projects who are successful in building an infrastructure for Credential Data would be widely used in the future. 

“Why isn’t anybody talking about this?!”

2. Some Key Points of Galxe

Galxe Curators & Data Sources

Galxe goal is to build an open and collaborative Credential Data Network that is accessible to all Developers in Web3, by providing the infrastructure for community members to curate and contribute digital credentials to the Data Network.

We think an important, but often overlooked point, is having a sustainable way to attract many community members who are willing to build on it. 

This will make it more decentralized, which is a key concept of Web3. 

To Note: 

• It should not be too complicated to contribute as a Curator (E.g. The platform should be user friendly.) 

• There must be some incentives to be a Curator (Curators are rewarded when credentials are used in Galxe’s Application Modules, Credential Oracle Engine, and Credential API.)

Currently it is GAL Token, however, the type of rewards are not fixed and could vary!

• Currently, the utilization of the data is free, but in the future developers who utilize Galxe’s Credential Data are paying a fee in the form of GAL, which majority of it are rewarded to Curators, and this incentivizes more users to come curate for Galxe’s data network.

You can learn how to Curate Credentials here:

https://docs.galxe.com/guide/dashboard-tutorial/step-2-curate-credentials/

Socials Integration

It is important to note that some of these social platforms are still in Web2 mode such as Discord. E.g. Some NFTs can only be claimed with an email entry.

Galxe ID

Galxe ID or otherwise known as the future “Web3 LinkedIn” consists of Galxe Profile and Galxe Passport. You can think of it as a Web3 Identity Suite which includes your on-chain and off-chain identity, or in simpler terms you can think of it as a record of your “reputation”.  Galxe ID SDK also enables developers to easily access identity information on users after acquiring their permission. 

Galxe Profile

Consisting of:

• NFTs

• OATs 

• Credentials

Galxe Passport

True to its name, it is similar to a normal passport where your identity information is stored. Galxe Passport stores identity information securely and anonymously. Galxe can only access this data with the user’s permission.

It was developed for sybil prevention and compliance purposes to provide further confidence to partners when launching their campaigns. 

To view the full technical documentation on how the data is secured please view:

https://docs.galxe.com/into-the-galxe/galxe-passport/

After doing the necessary verification (KYC), to verify you as an individual, you will get a Galxe Passport Soulbound Token which will be tied to your wallet address. 

Soulbound tokens are just permanent, non-transferable NFTs.

3. Galxe Token (GAL) & OATs

Galxe Token (GAL)

GAL Token Distribution

OATS; Possibly Bringing Utility to NFTs

Galxe OATs (On-Chain Achievement Tokens) are a way to distribute NFT badges to communities as a record of participation. 

Galxe’s infrastructure can be used by projects to create their own personalized OATs to reward their users.

In addition, Galxe is trying to improve the user experience for partners/projects. Recently, they launched a new OAT Template Creation Feature which allows partners/projects to generate their OATs with ease. This user-friendly template feature not only enables teams to quickly generate OATs, but also provides a wide selection of layouts and background styles. 

In the image from Dune above, though we noticed that OAT claims are not exactly consistent, we do note that it is an interesting concept which is also one of the largest collections on Opensea. 

https://opensea.io/collection/galxe-oat

** **

Did you know that on 22 Nov 2022, a message on-chain was left for @avi_eisen who was known for the controversial “highly profitable trading strategy” on Mango Markets? 

4. A Look at Some Data & Case Studies

One way to look at User Adoption is looking at Historical Data showing whether actual users are using Galxe. With more User Adoption, there would be more users building on Galxe as there would be a demand for it. 

Historical Activity

The Historical Activity of Galxe as at 2022-12-15 06:01:00. 

Wallets Supported

Currently supports 7 wallets, and we note that it is quick to support newer blockchain wallets such as Aptos;Petra Wallet (UTC 2022-11-24).

Food For Thought

Credentials are documentation of activities, reputation, and accomplishments that make up your digital identity and hence are an important part of Web3. 

Some Case Studies of Galxe’s Infrastructure

Below are two examples of Case Studies in regards to the usage of Galxe Infrastructure. 

How to Web3 on BNB Chain

Hosted by BNB Chain, presented by CoinMarketCap, and powered by Galxe, this campaign allows users to “Learn and Earn” by rewarding users  who did their “homework” with OATs (which will then unlock rewards worth $180,000) on Galxe!

You can read more about it here:

How To Web3 on BNB Chain. CoinMarketCap Earn and Galxe Campaign!

Galxe x Optimism: Optimism Quests

Galxe has partnered with Optimism to allow users to learn and explore the Optimism Ecosystem risk free. 

Users will start out by reading educational content by Optimism and be required to complete certain tasks, which would then enable them to be eligible to mint the project’s special Optimism Quest NFT on the Galxe campaign page, which may or may not yield additional utility/rewards in the future.

You can read more about it here:

Galxe x Optimism: Optimism Quests | by Galxe | Medium

With over 1000 partners in the space, there are certainly some hints of the potential of Galxe, as well as real use cases of projects utilizing its infrastructure, therefore, we think that Galxe is certainly proceeding in the right direction.

What are your thoughts about Web3 Infrastructure, and which Platform do you think will be widely used in the future? 

Feel free to connect with us on our Socials as we would like to hear your thoughts!

** **

1. A Short Introduction to Domain Names

2. Web2 vs Web3 Domain Name Systems

3. Data on Web3 Domains 3.1 On Chain Data 3.2 Off Chain Data

4. A Look into each Web3 Domain Name Systems

5. Some Insights into Some Web3 Domains 5.1 Ethereum Name Service (ENS) 5.2 Space ID 5.3 Unstoppable Domains

6. Food For Thought

   1.  A Short Introduction to Domain Names

To understand Blockchain Domain Name Systems, first, we have to know the basics of Domain Names.

A domain name is a human-readable name that is associated with a machine-readable IP address. Domain name was created because IP addresses (a string of numeric characters) are hard to read and remember. For instance, the domain name pizza.com might translate to the IP address 198.102.434.8.

Blockchain Domain name is a similar concept where the domain name is an easy-to-remember address used to replace the complicated long crypto address. For example, HashBrown.eth is used to replace 0x37a…BCG9.

2. Web2 vs Web3 Domain Name Systems

While in essence Web2 and Web3 Domain Names serve the same purpose, there are many unique differences.

The main difference would be that, unlike Web2 which is centralized, Web3 is decentralized where there’s no one central entity controlling the system. The same applies to the domain name where Web2 domain names are held in a server and Web3 domain names are kept in the user’s wallet.

Most users would be confused with the similar terminology being used in different contexts, mainly in which it is being used to describe your identity in web3. A common misconception would be another similar used term, the “Decentralized Identity” or otherwise known as “DID”.

Hence, we have broken down the concepts for you in which we used these terminology.

** **It is important to note that we only consider a web3 domain to have achieved some form of adoption when it is supported in which users are able to do transactions by using the domain name to send transactions, or searching it on a blockchain explorer.

Furthermore, some web3 domains allows you to build a decentralized website using the web3 domains, although most only with the supported browsers or extensions.

Why Own a Web3 Domain?

✅Convenience for others to easily find you on the block explorer

✅Conduct transactions through supported wallets

✅Various features such as being able to build a decentralized website

✅Better user experiences on supported dApps

❌Name Squatting

❌Impersonation by giving users a false sense of security)

3. Data on Web3 Domains

3.1 On Chain Data

3.2 Off Chain Data

4. A Look into each Web3 Domain Name Systems

We look at a quick summary of the domain name systems projects as well as its unique aspects.

5. Some Insights into Some Web3 Domains

5.1 Ethereum Name Service (ENS)

ENS is pretty widely used, based just on anecdotal evidence from interacting with Crypto Native people on Social Platforms such as Twitter. This could be due to many people being involved with the Ethereum Blockchain, considering it as an entry to the Decentralized World.

However, as at UTC 2023-04-17, ENS seems to have seen a reduction in registrations.

ENS does seem to support multiple chains, many off-chain identities, features and thus making it a Decentralized Identity (DID).

ENS makes it easy for new users within the Crypto Space, using a popular wallet such as Metamask to send transactions on the blockchain. This is because some users might be confused by the long addresses if they are not using a domain name, and increases the chance of human errors. 

Thus, integration with popular wallets could be a way to boost the popularity of these domain names services.

5.2 Space ID

Space ID allows you to trade multiple Domains such as .ETH, .ARB and .BNB.

We can see that .bnb is notably more popular as compared to .arb. As at 2023-04-17, with just a quick look from searching on the block explorer we can note that .bnb is supported while .arb does not seem to be supported (yet).

In addition, there is less attractiveness in owning a domain on a layer 2 as compared to a layer 1, as it is not the “main chain” after all.

![Source:  https://space.id/name/ARB/75747767415942937339036922747816999606886116650754170420579947293848647114187 https://arbiscan.io/search?f=0&q=taitai.arb

](https://images.mirror-media.xyz/publication-images/II52WKWBjClBjnC9bsMD8.png?height=554&width=956)

5.3 Unstoppable Domains

Unstoppable Domains seem to have built up quite a reasonable reputation in the web3 domain market, and featured in various well known organizations.

With its various different types of top level domains/endings, it offers more customization to the user in choosing a “name” they like.

In addition, while most popular domain names are on a renewable plan, we can see that unstoppable domains have differentiated themselves from those in the market by making their pricing model into a one time purchase, permanent plan. This could be a key aspect to why it is the most popular dns currently.

However, this comes at a cost. The one time purchase makes name squatting a huge problem. It makes it hard to sustain growth and attract more well known users into the crypto space. We note that there does not seem to be consistency in terms of protection from name squatting.

6. Food For Thought

We can spot several insights and understandings in the current state of Web3 Domain Projects.

The general adoption of the underlying blockchain is important to the success of the Web3 domain name systems. A project solely focused on a single blockchain has to be a “first-mover” or project “endorsed/supported” by the team behind that chain, and its success is heavily reliant on the underlying chain it is built on.

Whereas a more generalized project more towards an blockchain agnostic approach, although harder to be adopted as the underlying chain would most likely have a native domain project, is approaching the market in a way in which they spread out their bets on different chains.

It is also important to note that these heavily endorsed projects have been built by or have heavy connections to the original team behind the chain, and in which, the domain may not be as decentralized as we think.

In addition, Web3 Domain Names based on layer 1s seem to be the more popular choice as compared to layer 2s. This could be due to the psychological effect of wanting to own an identity on the “Main” Chain, which does make sense.

In terms of decentralized websites using domains, relying on peer to peer solutions such as IPFS makes your typical website truly decentralized. However, we need to note down several pros and cons.

Furthermore, besides more popular ones like ENS, there have been too many domain projects being built on the hype of a new chain and eventually slowly losing momentum and totally abandoned.

Judging the adoption solely based on the NFT Mints might not be a good idea, because we can see that some of these domain names are being used as a way by some users to “flip” it for a profit.

Hence, we think that the Web3 Domains still have a long way to go in terms of development for better adoption among Web3 Users. A part of the reason might be because of the different chains coming out everyday, and being quick to offer multi-chain support for the newest and trendy chains for domains could be the key to succeed, at least in the short to medium term.

** **

Have you ever bought a domain name, and would you consider using the Web3 domain name systems? ** **

Feel free to connect with us on our Socials as we would like to hear your thoughts!

** **

1. An Overview of Zero Knowledge Technology

1.1 What is Zero Knowledge?

1.2 On-Chain Data on Zero Knowledge Technology

1.3 Off-Chain Data on Zero Knowledge Technology

1.4 Social Data/Engagement on Zero Knowledge Technology

1.5 A Brief Comparison of Optimistic vs ZK-Rollups

1. A Deeper Dive into the Development of Zk Technology

2.1 zkSnark vs zkStark

2.2 Starkware

2.2.1 StarkNet

2.2.2 StarkEx

2.3 Scroll

2.4 Polygon zkEVM

2.5 ConsenSys zkEVM

2.6 Zcash

2.7 Loopring

2.8 Taiko

1. zkSync

2.1 A Brief Description on zkSync

2.2 The Current State of zkSync

2.3 zkSync Era Ecosystem & Some Data

2.4 zkSync Era Applications

2.4.1 UniDex

2.4.2 SyncSwap

2.4.3 Mute.io

2.4.4 Mint Square

2.4.5 Nexon Finance

Food For Thought

1. An Overview of Zero Knowledge Technology

There are a few Layer 2 Solutions to scale Ethereum's network, mainly being Zero Knowledge and Optimistic Rollups.

1.1 What is Zero Knowledge?

To put it simply, Zero Knowledge Proofs is a way of proving the validity of a statement without revealing the statement itself. The ‘prover’ is the party trying to prove a claim, while the ‘verifier’ is responsible for validating the claim. No other additional information other than the fact that statement is true, is revealed.

1.2 On-Chain Data on Zero Knowledge Technology

We present an overview of the on-chain and off-chain data for Zero-Knowledge System.

We note that zkSync and StarkEx is by far the leader in terms of utilization of the chain for Zero-Knowledge Technology.

1.3  Off-Chain Data on Zero Knowledge Technology

1.4 Social Data/Engagement on Zero Knowledge Technology

1.5 A Brief Comparison of Optimistic vs ZK-Rollups

Let us express the key differences of ZK Rollups and Optimistic Rollups, without going into too much technical detail.

2. A Deeper Dive into the Development of Zk Technology

Let us have a quick overview of the different types of ZK Technology and their key differences.

2.1 zkSnark vs zkStark

zkSNARKs is by far more efficient and cheaper than zkSTARKs but that all come at a cost that many are not willing to risk. 

zkSNARKs relies on a trusted setup ceremony where private keys that will be used to create proof required for private transactions and the verification of those proofs are created. If the secrets used to create the keys are not destroyed, it could be used to forge transactions and essentially mint tokens out of thin air. Because of the privacy feature of zkSNARKs, there is no way to verify if the tokens are legitimate or created out of thin air. There are security measures in place to prevent this from happening. 

Another big issue of zkSNARKs is that it is not quantum-resistant. But then again many argued that if quantum computing is widely available we will have bigger problems on our hands. 

Invented by Starkware, zk-STARKs is an advanced cryptographic-proof technology that is more transparent, scalable and secure for blockchains than zk-SNARKs.

zk-STARKs technology allows blockchain to move storage and computation off-chain. STARK proof can also be done by off-chain services and then posted on-chain so that anybody can verify it. These significantly improve scalability as transactions can be batched together and use a single STARK proof to confirm the transactions’ validity on-chain. 

2.2 Starkware

Starkware is the company behind the layer two scaling solution StarkNet and StarkEx. StarkNet is a smart contract layer 2 network whereas StarkEx is an application-specific scaling engine. 

Invented by Starkware, zk-STARKs (Zero-Knowledge Scalable Transparent Arguments of Knowledge) which is different from zk-SNARKs is an advanced cryptographic-proof technology that is more transparent, scalable and secure for blockchains than zk-SNARKs.

zk-STARKs technology allows blockchain to move storage and computation off-chain. STARK proof can also be done by off-chain services and then posted on-chain so that anybody can verify it. These significantly improve scalability as transactions can be batched together and use a single STARK proof to confirm the transactions’ validity on-chain. 

2.2.1 StarkNet

StarkNet is a layer 2 network that harnesses STARK-based scaling solutions to provide scalability, low gas costs and security. The Starknet token is live on mainnet but is still unavailable to the public. 

StarkNet will eventually become a fully decentralized rollup where permissionless layer of sequencers and provers ensures the network will be censorship-resistant and anybody can be able to verify the StarkNet chain without the need to trust a third party. 

One downside is that it uses Cairo but those who are familiar with Rust shouldn't have an issue as Cairo 1.0 is the upgraded Rust-inspired version of Cairo. 

2.2.2 StarkEx

StarkEx is an app specific layer 2 scaling engine built on the Ethereum blockchain. The beauty of StarkEx is the ability to dramatically improve Ethereum scalability without compromising on security.

Some popular protocol like dYdX and Sorare integrate with StarkEx to reduce gas fee and increase transaction speed. ImmutableX a layer 2 scaling solution also leverages on StarkEx to provide lightning fast transaction speed and gas free NFT minting and trading. 

2.3 Scroll

Scroll is a zkEVM-based zkRollup that enables native compatibility for Ethereum applications and tools. It aims to build a fully EVM-compatible zk-Rollup and support direct verification of an Ethereum block through one succinct proof. 

It is using ZK Snark, and its priority is in security. 

Its ultimate goal is to advance the end goal of Ethereum scaling, which is to "zk-SNARK everything".

The Integrity of Layer 2 Transactions are guaranteed by succinct zero-knowledge proofs verified in a smart contract on the Ethereum base layer, making it as secure as transactions on Ethereum itself.

There are several key aspects of Scroll.

• Full layer 1 security

Remove security reliance on Layer 2 nodes, even when transacting on layer 2. The integrity of Layer 2 Transactions are guaranteed by succinct zero-knowledge proofs verified in a smart contract on the Ethereum base layer, making it as secure as transactions on Ethereum itself.

• EVM-equivalent, not simply EVM-Compatible.

An EVM-equivalent environment behaves exactly the same as the Ethereum Virtual Machine specification.

• Efficiency & Low Transaction Fees

Cheaper transaction fees than base layer, and instant pre-confirmation on layer 2 with fast finality on Ethereum. 

• Decentralization

Decentralization in all aspects of Scroll. This includes node operators, provers, and the community of developers and users

Sources:

https://scroll.mirror.xyz/N7cAie4ul0PdSxNdv2FTqgMV2JEkhOJocsxfeqe4SFE

![Sources: https://scroll.io/blog/technicalPrinciples https://scroll-zkp.medium.com/scroll-a-layer-2-ecosystem-based-on-zk-rollup-186ff0d764c

](https://images.mirror-media.xyz/publication-images/XQ4oWRICEVQZZxjUS4T0K.png?height=426&width=920)

2.4  Polygon zkEVM

Polygon zkEVM Beta was launched on 27 March 2023. Polygon claims that its Zero technology is the fastest ZK proof in the world. Polygon zkEVM is built around the four main pillars - low cost, high performance, EVM equivalence and security. 

The network will be fast and low-cost because it harnesses the power of ZK proofs to reduce transaction costs and increase network finality. The network will support the vast majority of existing tools and developers can deploy them onto EVM without changes in code. It will come with Ethereum security and layer 2 benefits. 

2.5 ConsenSys zkEVM

ConsenSys zkEVM is built with three key pillars in mind - zero switching costs, easy onboarding and best-in-class performance.

Zero switching cost allows existing dapps to migrate with no code changes or smart contract rewrites. It is easy to onboard as there’s native integration with industry-leading tools like Infura and MetaMask. The R&D team spent four years perfecting its very own recursion-friendly, lattice-based zkSNARK prover. The prover is built with award-winning zkSNARK libraries and is able to deliver ultra-low gas fees. 

The public testnet is expected to launch on 28 March 2023. 

2.6 Zcash

Those who have been in crypto since the early days should have heard of ZCash. Started in 2016, Zcash (ZEC) is a fork of Bitcoin but with added features like enhanced user security and anonymity. 

It uses zk-SNARK technology to encrypt information so that it cannot be tracked. This technology also allow users to shield their transactions such that the sender, recipient and amount are encrypted. 

It still uses the POW (proof-of-work) system and new coins are produced through mining. Theres a hard cap of 21 million coins and about 10 million is in circulation. 

The privacy coin have seen better days. With the crack down on Tornado Cash, privacy related tools and crypto also took a hit. US can easily sanction these tools for facilitating money laundering and it will start to lose their user base. 

2.7 Loopring

Loopring is Ethereum’s first zkRollup Layer 2, using ZK-Snarks.

As at 31 March 2023, it has almost $117.44m of TVL. 

Loopring ensures there is no misappropriation of users' crypto-assets deposited to an exchange. In certain circumstances, such as the exchange's UI stopped functioning, or the exchange's operators are out of reach, users can still claim their rightful assets by providing valid Merkle proofs that are derivable from data on Ethereum.

It is important to note that the Loopring Exchange's relayer system was developed as a closed source project, and its application offers swaps, staking, liquidity providing and even NFTs. 

Loopring relayer is a closed source zkRollup relayer, and it is the backend (operator) that does all the off-chain duties to make a zkRollup roll.

To operate a decentralized exchange on Loopring, the exchange owner needs to stake LRC for reputation & extra safety.

• Stake up > 250,000 LRC, enabling the operator to run an exchange that uses its on-chain data proofs. 

• An operator must stake 1 million LRC to run an exchange without data availability

Source:

https://docs.loopring.io/en/

https://loopring.io/#/trade/lite/LRC-ETH

https://blogs.loopring.org/on-what-loopring-is-and-isnt/

https://blogs.loopring.org/lrc-utility-in-loopring-3-0/

2.8 Taiko

Taiko is the newest kid on the block. It aims to be Ethereum-equivalent type 1 zkEVM. It is currently in Alpha testnet with Beta testnet coming out in Q3/4 of 2023 and Mainnet launching on early 2024. 

Taiko uses zkSNARK for their rollup and it prioritizes EVM-equvilance over speed. This make Taiko slower than other ZK rollups as it takes a longer time to achieve finality. 

3. zkSync

3.1 A Brief Description on zkSync

Matter Labs just launched zkSync Era Mainnet Alpha, the very first zkEVM on mainnet that is available for the wider public. Ethereum devs can now easily port over applications to zkSync and enjoy the benefit of zero-knowledge technology. 

Security was one of the focal points. The team spent a total of $3.8M on zkSync Era audit which include 7 independent audits by Tier 1 auditors (OpenZeppelin, code4rena, Immunefi), 3 internal audits, 2 public security contests, bug bounty program and open sourcing the codes. 

Important things to note. Because it is still in Alpha stage, security measures like withdrawal delay will be in place. Withdrawal delay is implemented to prevent quick drain of the protocol if it was exploited. The time lock will give the team time to verify the transaction before the block is finalized. There will be a 24-hour delay and it will gradually decrease as the system matures.

We also note that there are several big protocols that have been confirmed to launch on zkSync Era: 

3.2 The Current State of zkSync

We can view a short timeline of zkSync.  

** **zkSync Era v2 (We are here, as at time of writing, 2023-03-30)

** **The nonce is basically the number of transactions (starts from 0). 

2.3 zkSync Era Ecosystem & Some Data

At the time of writing (UTC 2023-03-28), there are over 250 different applications in the zkSync ecosystem but only about 15 applications live in the zkSync Era.

Do note that because zkSync Era has only recently gone live, these “trending” or “most popular” applications could change soon!

3.4 zkSync Era Applications

Let's take a deeper dive into some trending applications on zkSync Era. Take note that some of the quantitative data such as the APY are subject to volatile changes because many apps on Era are still new.  

3.4.1 UniDex

UniDex is the first leverage perpetual futures DEX on zkSync. It is not only a prep DEX but a meta-aggregator of everything from option aggregation to cross-chain trading. 

** **Currently, it supports 14 different chains and 11 different hot wallets. Traders can choose from 14 crypto trading pairs with max leverage of 100x. It also offers Forex, TradFi, Indices which offers much higher leverage.  

Looking at the LP pool, the APY of Unidex is quite volatile. 

This is because the yield calculated from the losses of traders on Unidex, fee revenue from trades, and liquidations. 

Therefore, it is important to note that profitable trades that are closed will be taken out of the pool and paid to traders. This means the pool is subject to negative APR if traders are net positive in PnL.

UniDex just launched its zkSync chain support on 26 March and in 2 days it garner over 700k in volume with over 1000 trades. The traders lost 1,354 USDC and paid over 1k in fees. 

There are two modes on UniDex: Instant mode and Gasless mode. As the name suggests, the instant mode will swap normally but the gasless mode will use the new V3 swap aggregator where orders will be submitted on the shared cross-chain orderbook rather than broadcasted to the public mempool. The gasless mode also protects the trade from MEV bots. 

Another key function of UniDex is that it allows traders to use limit orders when swapping. This function is not widely seen on other DEXs out there and it is good for traders that do not want to swap at market price. The trading interface is similar to popular aggregators like DefiLlama Swap where traders can choose which aggregator they want to use. 

3.4.2 SyncSwap

SyncSwap is a decentralized exchange that aims to be an easy to use DeFi hub. The mission is to be a community-centric project where the community gets to vote on the future of SyncSwap. 

At the core, it's a multi-pool AMM model that is efficient, flexible and composable. There are three different pools: Classic pool, stable pool and concentrated pool. The classic pool uses the normal AMM x*y=k model. The stable pool is optimized for pegged assets and uses the x+y=k model and will fall back to AMM x*y=k when the price de-peg. The concentrated pool is similar to the stable pool but supports dynamic prices. This pool will be introduced at a later date. 

SyncSwap currently charges a 0.1% trading fee on classic pools. The LP holders will receive 70% of the fees and the protocol will collect the other 30%. There’s no need to manually claim fees as it is automatically auto-compounded to the LP position. 

3.4.3 Mute.io

Mute.io is the first zkDEX on zkSync. It is similar to SyncSwap but it is more established with more functions. The team behind Mute has a proven track record with zero-knowledge products as they created the first zk Atomic Swap protocol between BTC and UTXO-based chains. It started out as NIX - A privacy tool for BTC & altcoins but rebranded as a new project, MUTE - zkRollup DeFi platform.

The pool fee on Mute is dynamic and can be adjusted by anyone that owns at least 50% of the LP vote weight. Currently, the pool fee of USDC/WETH is 0.5% which is 0.4% more than SyncSwap.  

There are a few items on the roadmap that the team is trying to implement on Mute - Limit order, amplifier program, porter additions and NFT support. 

3.4.4 Mint Square

Mint Square is an NFT marketplace for zk-rollups. Its on both StarkNet and zkSync Era. Not only just an NFT marketplace, but it also allows users to mint their own NFT. 

The NFT market is not regulated and it is flooded by a lot of random NFT projects by the community. But some of the bigger NFTs like zkRocks and zkAnimals are very liquid and there’s a transaction every few minutes. 

3.4.5 Nexon Finance

Nexon Finance which recently went live on 28 March 2023, let us compare the rates with other similar platforms, such as AAVE 

Do note that the total supply has been capped at $1m currently and the only market available is USDC, but it seems that they have recently added ETH too at the time of writing (31 March 2023). 

Therefore, if you are just looking to borrow, it seems that it would still be better to take the AAVE’s 3.03% borrow APY as compared to 4.26% borrow APY on Nexon Finance  for the USDC Market. 

As a lender, it would still be better to be on AAVE as it offers 1.88% APY as compared to Nexon’s 0.59%. 

The liquidity on AAVE is more too, but do note that this is subject to change as Nexon Finance is still new. 

Food For Thought

It seems that most of the recent current surge of users using zk-related apps are more than likely not to be genuine users, because of the surge in users right after the $ARB airdrop from Arbitrum. 

The users there are probably trying to farm the potential airdrop. 

One way to identify organic users is to see if these users have been users of other chains with airdrops before.

As at UTC 2023-03-28, 

We can see that 35.6% (43,840) of zkSync Era users have not used Arbitrum before, and 52.4% (63,780) of Optimism Users have not used Optimism before. 

Therefore a good estimation is (43,840 + 63,780) / 2 = 

53,810 “Real Users” on zkSync Era.

Do note that this might not be the best metric to determine organic users as it does not take into account new wallets. 

zkSync Era Notable Live Applications

We look at some notable applications that are live on Era, and naturally, the applications that do not have a token yet would attract certain users to their platform to “farm” the airdrop. 

** **

What are your thoughts on Zero Knowledge Technology, and have you tried out the multiple apps that are live so far?

Feel free to connect with us on our Socials as we would like to hear your thoughts!

1.1 Food for Thought

oth projects are still considered early-stage, compared to more established projects like Chainflix and Theta.

Between the two selected projects in Gummys.io and Lenstube.xyz, it seems that Gummys.io is further along in the developmental stage where more considerations have been taken to enhance user experience and to gain traction. Gummys.io seems to be trying to create a whole economy around the platform which may eventually venture out of video and streaming, whereas there seems to be no such plans for Lenstube.xyz.

Creating decentralized platforms for watching and streaming may be a step in the right direction but there may be huge financial and non-financial switching costs for users to move across from Web2.0 to Web3.0 for the product team to consider.

1.2 User Mindset from Web2.0 to Web3.0

Consumers have gotten used to free-to-use platforms where paying for content may require a shift in mindset.

While many may be agnostic, a portion of consumers may be more sensitive to having their data collected and monetized to benefit the Big Tech companies

They may not be totally resistant to having their data collected and monetized, but they may want to have a say on how their data is being monetized, and what benefits they can derive.

The Brave browser method of monetization could be an interesting way to allow content consumers earn by opting in to privacy-preserving ads while applied to video streaming platforms, tiering user experiences.

To continue providing free services to content consumers, a product development insight would be to use an ads-based revenue model over a subscription-based revenue model.

1.3 Technical Obstacles

One main technical obstacle to overcome would be to figure out a decentralized way to facilitate moderation and censorship. Methods include going through a moderation and censorship DAO, using staked governance token through majority consensus or a randomly-selected council of a number of members.

Another technical obstacle to overcome would be to improve download speeds for content consumers while storing data in peer-to-peer storage systems without downtime, even as nodes malfunctions

The last  technical obstacle to overcome would be to select a sustainable monetization model that incentivizes both content creators and consumers to keep them engaged on the platform

2. Sector Analysis

2.1 Total Addressable Market

People are changing their mode of entertainment from text and image-based formats to quick video illustrations.

With the tremendous growth of video streaming, the demand for network bandwidth and storage is huge. The storage, data transmission and streaming have been done by centralized cloud servers till now.

According to Statista, revenue in the Video Streaming (SVoD) segment is projected to reach US$93.52bn in 2023. Annual growth rate is expected to hit (CAGR 2023-2027) 9.77%, resulting in a projected market volume of US$132.90bn by 2027.

Currently, there are two main models of monetization, ads-based & subscription-based. An example of a Web2.0 ads-based model video platform would be Youtube, and a Web2.0 subscription-based model would be Netflix.

2.2 Potential for Disruption

Due to the centralized nature of these platforms, there is a lack of transparency for algorithms, data privacy & censorship.

Decentralized solutions allow for implementation of blockchain technology for prevention of censorship or control of the entire network by a single entity.

The video streaming industry can be revolutionized through the use of blockchain technology that enables ownership within the platform and a basis for decentralization, adding an extra layer of democracy and giving decision-making to the community.

Each blockchain video streaming infrastructure will usually consist of: 1) smart contract, 2) file storage, 3) content transcoder, and 4) an API layer.

2.3 Challenges to blockchain application to video & streaming

Currently it is challenging for blockchains to store complex data sources like videos or images efficiently, off-chain solutions like IPFS or simple peer-to-peer storage makes the data available.

Peer-to-peer storage systems may run into the problem of file availability when certain peers are disconnected, and resorting to a central relay node to provide missing files would lead to the original centralization problem.

The necessity of protecting copyright materials and content encryption may require solutions to encode the content by splitting it into smaller chunks and encrypting and storing these chunks in separate servers

Strong incentives to monetize both the content storage and content transcoding process, using proof-of-stake consensus mechanisms and rewards slashing as penalties may be required, along with incentives for creators to upload good content while also giving users a free-to-use content platform.

** **

3. Project Introduction: Lenstube.xyz

3.1 Features

Lenstube.xyz is a Web3.0 video-sharing social media platform built on top of Lens protocol, a composable and decentralized social graph protocol that has gone live on Polygon mainnet since July 2022.

The platform has a similar layout to Youtube with Web3 native features including connecting crypto wallets, minting favorite content as NFTs, tipping creators with MATIC coins.

Video features include create channels, publish any video content or NFTs, collect video as NFT, mirror and share videos across Lens Dapps, set membership fees to your channel, notifications about new members, comments, mirrors, and mints, customize who can collect your video and associated fees, support any creator by sending a Tip, like and comment on videos, short videos called Bytes, watch later and recently watched videos library, video categories etc.

Lenstube.xyz uses Lens Protocol for its on-chain metadata and social graph, Arweave, a decentralized file storage system, for video storage, and Livepeer to process and playback the videos. Data is permanently stored on Polygon mainnet, capitalizing on the low gas fees.

3.2 Founding team

Project founder Sasidharan K, is a frontend engineer with Aave & Lenstube (Portfolio, Linkedin, Twitter), who has participated in hackathons and web3cons on Polygon, IPFS, and Filecoin

3.3 Tokenomics

The platform has no native token, Polygon MATIC is used for transactions 

3.4 Performance Metrics

Followership & Engagement

3.6 Investments

• Project founder Sasi has expressed that the project is not looking for funding at the moment.

  4. Project Introduction: Gummys.io

4.1 Features

Gummys.io is a Web 3.0 peer-to-peer streaming service powered by blockchain technology that allows user interaction, content sharing and income generation.

The project is currently under Public Beta Phase, public access is closed for now until early access is available on through the waitlist airdrop campaign

The platform uses its own token (GUMMYS), and for each transaction made on the platform, a fee is charged to support the ecosystem. The treasury is managed to keep the ecosystem running smoothly.

A Watch-to-Earn and Stream-to-Earn model provides decentralized features, privacy, ownership of content, instant transactions, low fees, incentives and free speech

The platform has Web3 native features include connecting crypto wallets (E.g. Trust, Metamask, Unstoppable Domains), creating, minting and trading tokenised media content as NFTs, tipping creators with native GUMMY coins, generating income by watching videos and engaging within the community, and censorship regulated by the Community

Application features include publishing videos, live-streaming, AMA sessions, and short-form videos.

Gummys.io uses Lens Protocol for its on-chain metadata and social graph framework, IPFS, a decentralized file storage system, for video storage, and Livepeer to process and playback the videos. Data is permanently stored on Polygon mainnet, capitalizing on the low gas fees.

For moderation of content, there is a plan to appoint and reward moderators to facilitate this function

4.2 Founding team

Pasquale Sorrentino, CEO, ex-RaboBank, FedEx, & Accenture

Eunice Wong, COO, ex-Microsoft & Shell

Team includes experience from Cardano, Tezos, Cognizant, Polkadot, ABN Amro, Hyundai and Y-Combinator

Advisors includes executives at Google, Filecoin, and Protocol Labs

4.3 Tokenomics

A presale exercise started 16 Jan 2023, USD 100,000 at 0.0166 per token, but an announcement was made to pause the exercise, possibly because of the lack of demand.

The initial plan was for the tokens to be minted at the Token Generation Event, with a total of 1,000,000,000, with an allocation for Initial Fan Offering airdrops of 1,000,000

Token utility includes marketing boosts, user-tiering, tipping, advertising, NFTs minting, governance, and DeFi AMM.

4.4 Performance Metrics

Followership & Engagement

4.5 Recent News

Recent achievements include receiving a development grant from Lens Protocol in June 2022, and attaining 1st place in the Chainlink Spring Hackathon, Filecoin — Storage Wizard category

Developmental partnerships for the project include Attrace, the trustless Referral Protocol for Web3, Polygon Studios for NFT minting and transactions, Unstoppable Domains for digital identity management, Livepeer, Chainlink,, Aave for DeFi activities, Protocol Labs for R&D, Dolby.io for sight and sound technology, Certik for Web3.0 security, Synaps for identity verification, Gotbit for liquidity, Filecoin for decentralized storage management ** **

4.6 Investments

The project has previously raised funds with CVVC in pre-seed round for unknown amount

5. Project Comparisons: Gummys.io

5.1 Similarities

5.1.1 Lens Protocol

Both projects are plugged into the Lens Protocol social graph infrastructure where content creators may find it convenient to build a following without having to juggle different platforms at the same time.

5.1.2 Early Stages

Lens Protocol is still in an early-stage where the Lens Handle required for content creators and consumers is only available for a select group currently. User metrics, though unreported, may not be accurately reflective of demand for such a product.

5.1.3 Lack of User Metrics

Source code and contract addresses for both projects are not revealed yet, user metrics are unavailable for comparison.

5.2 Differences

5.2.1 Team

Lenstube.xyz’s team seems to only consist of the founder, and may be too lean to scale up operations. Gummys.io seems to have a larger and more experienced team that can take the project further, with professional experience in-and-outside of tech.

5.2.2 Funding

Gummys.io has VC backing for a pre-seed funding round with incubation support, whereas Lenstube.xyz may not have the financial muscle and supporting network to help the project grow in the near-term until it gets more funding.

5.2.3 Reward System

While both projects have clear incentives for the content creators, Gummys.io has a clearer incentive for content consumers through watching content and engaging in the community. It is important to think through the incentives for content consumers since a big part of monetization for content creators comes from consumer activities.

5.2.4 Marketing & PR

Gummys.io has garnered more traction on Discord, Twitter, Telegram and Medium, which could also be related to funding where marketing dollars can be spent on content creation and community management.

5.2.5 Token Economy

While NFT trading and liquidity providence yields may be a draw for participants, the use of a native coin for Gummys.io may lead to resources being diverted to treasury management and defending against speculative trading activity which may cause fluctuation in earnings for content creators. Other than the 6% tokens for IDO, it is also unclear how the public can participate in the project.

5.2.6 Governance

Gummys.io has a governance model for moderation and censorship of content managed by the community, though it is unclear exactly how these community moderators will be selected.

**

**

1. The Current State of Decentralized Stablecoins

2. All About Floating Stables

3. RAI 3.1 An Overview of RAI 3.1 Into the Mechanism of RAI

4. A Study on Similar Concepts 4.1 Float 4.1.1 An Overview Of Float 4.1.2 How the Protocol Works 4.1.3 Utility of BANK Token

5. Data on Floating Stables 5.1 Data on Floating Stables 5.1.1 On Chain Related Data 5.1.2 Social and Funding Data

6. Food For Thought 6.1 OHM 6.2 AMPL

   1. The Current State of Decentralized Stablecoins

Recent events like the USDC depeg has made us realized that we are still heavily reliant on the traditional finance system.

In the past years, many have talked about the blockchain scalability trilemma and the issue it faces which birthed many solutions like layer 2 and ZK technology.

But recent incidents have shown that the stablecoin trilemma is something everyone should focus on as stablecoins are the bedrock of DeFi.

The stablecoin trilemma outlines three features needed for a stablecoin to gain global adoption. The features are:

• Price Stability - The price needs to be stable so that it can be treated as cash equivalent

• Decentralization - It should be decentralized to mitigate centralized single point of failure and risks

• Capital Efficiency - High capital efficiency is needed to scale the demand

Currently, none of the stablecoins in the market embodies all three of these features.

$DAI by MakerDAO used to be a stablecoin that is in between price stability and decentralization.

But after multiple incidents and the famed Black Thursday, MakerDAO implemented other price stability strategies like the peg stability module (PSM) that made $DAI less decentralized but stable.

MakerDAO recently passed a proposal where it will move $DAI into the endgame where it plans to make $DAI fully decentralized while sacrificing price stability.

You can read more about the proposal here: https://vote.makerdao.com/polling/Qmbndmkr#poll-detail

2. All About Floating Stables

Floating stables as the name suggests, are a less-volatile asset with no “real” target price. The value of the asset is not pegged to anything, unlike stablecoins which many are pegged to the dollar and would do anything to maintain the peg.

There are many floating stables in the market and one of the most prominent stables is RAI. RAI is recently back in the spotlight because Ethereum founder Vitalik Buterin sent 500 Ether to mint RAI and used it to buy USDC during the USDC depeg.

Previously he also wrote about RAI in a blog and thinks it’s the “ideal type” of a collateralized automated stablecoin, backed by ETH only

3. RAI

3.1 An Overview of RAI

$RAI (Reflex Index) is a decentralized non-pegged stable asset that is solely collateralized by Ether. Unlike typical stablecoins, the value of $RAI in terms of USD is determined by supply and demand where the stabilization aspect of it comes from devaluing or revaluing $RAI.

The mechanism used by Reflexer Protocol is similar to the one used by the old MakerDAO. It dynamically adjusts the circulating supply through its monetary policy.

3.1  Into the Mechanism of RAI

The protocol uses a feedback mechanism called Proportional-Integral-Derivative (PID) controller to periodically output a new redemption price based on changes in the market price.

There are two parties in the Supply-Demand System:

1. RAI Holders

2. Safe Users

The main advantage of $RAI is that it allows some degree of volatility which is why it is more resilient to market shocks compared to other collateral-backed stablecoins.

4. A Study on Similar Concepts

Do note that many of these stablecoins have too low, or almost no volume and many seem to have no further development by the team.  Please carefully assess the risks before using these stablecoins.

4.1 Float

4.1.1 An Overview Of Float

Basically, Float wants to bring Stability to DeFi, but not through the dollar. It is attempting to change the system by tracking a basket of digital assets, which will not be equivalent to 1 USD. The value would constantly change based on the digital purchasing power.

At the initial mint, FLOAT has an arbitrary price, which will be $1.618, which is the Golden Ratio in Mathematics.

The target price is updated before every auction via the monetary policy contract. The target price only changes if market sentiment and "basket" sentiment are in alignment.

The Basket factor which is the ratio between the value of the assets held in the basket and the value of all the FLOAT in circulation at target price. Before the auction, the ETH-USD feed on Chainlink will be used to calculate the Basket Factor of the Protocol and the New Target Price.

4.1.2  How the Protocol Works

The Float Protocol consists of 3 important tokens currently.

It is important to note that while TWAP Oracles are being used for convenience as they can be created for any token, they are generally less accurate as compared to Chainlink Oracles.

Every period (initially 24 hours), the FLOAT TWAP will be calculated, and if it differs from the Target Price, we do an expansion/contraction of the FLOAT supply as necessary.

4.1.3 Utility of BANK Token

Besides Governance, the BANK Token is also utilized during the auction phase.

5. Data on Floating Stables

5.1 Data on Floating Stables

5.1.1 On Chain Related Data

5.1.2 Social and Funding Data

6. Food For Thought

6.1 OHM

Another similar concept that has been tried before - OHM:

Olympus is a decentralized reserve currency protocol that is governed by a decentralized autonomous organization (DAO). OHM is the protocol’s digital asset-backed free-floating currency.

OHM’s floor price is pegged to DAI. When OHM < DAI, the protocol will buy bonds from the users and start burning OHM to reduce the supply. But when OHM > DAI, the treasury will continuously mint OHM as staking reward and sell them through the bonding process. This essentially creates a flywheel as the situation encourages users to stake OHM to enjoy the high APY and token rewards.

Over time, users started to realise that it is all a big Ponzi scheme that uses new deposits from investors to pay older investors. Many started to withdraw from it and the house of cards came crashing down.

6.2 AMPL

AMPL is similar to an algorithmic stablecoin but is not considered a stablecoin because the value is not pegged to the dollar. The protocol aims to keep AMPL price relatively stable at around the target of $1.15 (CPI adjusted 2019 US dollar) through the use of its elastic supply policy to adjust the supply of the coin.

The elastic supply policy will:

• Expand supply if AMPL > Target price

• Reduce supply if AMPL < Target price

It expands and contracts the supply every day at 2:00 UTC. AMPL holder will see their wallet balance change in response to the supply adjustment.

The formula for the daily adjustment is (Oracle Price – Target Price) / 10. Using the price on the dashboard, ($1.11 - $1.15) / 10 = -0.04 which means the protocol will contract the supply by 4%. ** **

Stablecoins are an important topic but are floating stablecoins really needed? A common discussion and sentiment is that we should simplify it and most tokens should just go back to being paired with majors like BTC or ETH.

**

**

What are your thoughts on Floating Peg Stablecoins, and do you care if you are using a fully decentralized stablecoin?

Feel free to connect with us on our Socials as we would like to hear your thoughts!

1. Introduction to Derivatives

2. Introduction to Decentralized Exchanges

3. Comparison of DEXs offering Perpetual Future Contracts

3.1. Users & Liquidity

3.2. Fees

3.3. Tokens & Leverage Offered

3.4. Values and Emphasis on Decentralization

3.5. Security

Food For Thought

1. Introduction to Derivatives

Derivatives typically mean financial contracts in which its value is derived from the underlying; in this case, Crypto Tokens. Derivatives are usually used to hedge/manage risk, speculate or leverage on the underlying. 

Within the crypto sphere the most common derivatives we hear about are the Perpetual Futures Contract aka the “Perpetual Swap” and Options Contracts. There are many other innovative derivatives, however, in this article we will be covering mainly on Perpetual Future Contracts.

A Futures Contract and a Perpetual Contract allow the holder to take a “Long” or “Short” position on the underlying. The fundamental difference between them is that a Futures Contract has an expiry date while a Perpetual Contract does not. 

Do take note that you can “receive” or “pay” funding depending on the direction you place the trade and it will be determined by the current funding rate at that point in time. This opens up many more opportunities and strategies for traders to attempt to profit from. 

We also have Options, and currently at this point of time, Deribit is the most popular place to trade Crypto Options and they offer BTC, ETH and SOL Option Contracts. Do take note that Deribit only offers European Options; which can only be exercised at expiration, as compared to American Options which can be exercised anytime prior to expiration. 

“Why isn’t anybody talking about this?!”

 Did you know that BitMEX (Centralized Exchange) was the first to introduce the perpetual swap contract in 2016? 

2. Introduction to Decentralized Exchanges

The word “Decentralization” could have a different meaning to each individual. 

In this article when we talk about Decentralized Exchanges, it is mainly going to refer to platforms whereby users can conduct a peer-to-peer transaction using the power of smart contracts, by connecting their wallet to the DEX. 

One of the ideas behind developing/using a DEX is the removal of an intermediary, such as a Centralized Exchange. 

Therefore, a Decentralized Derivatives Exchange just simply refers to a Decentralized Platform offering Derivatives Contracts for Traders to conduct peer to peer transactions. 

“Why isn’t anybody talking about this?!”

 Did you know not all DEXs offer derivatives? 

An extremely popular DEX (Uniswap) only offers Spot Trading!

3. Comparison of DEXs offering Perpetual Future Contracts

There are quite a number of DEXs offering perpetual future contracts (and more on the way!). 

We are attempting to present an unbiased view of each protocol, so we encourage these protocols to connect with us if you feel that this is not an accurate description, or you would like us to further highlight certain points!

Each DEX has its strengths (and also weaknesses!), therefore, in accessing which DEX to trade perpetual future contracts on, we have narrowed down some points for discussion.:

• Users & Liquidity

Are there sufficient users trading on the platform?
We can have an attractive unrealized PnL,  but if we can’t exit our existing positions at a favorable price, are our “profits” really profits?

• Fees Lower fees means more profits!

• Tokens & Leverage Offered

Are there a wide variety of trading pairs?
Is the leverage offered sufficient?

• Values and Emphasis on Decentralization

How does the team address concerns regarding Decentralization?

• Security Are we confident that the protocol has taken the necessary measures to keep our funds safe?

It is also important to acknowledge that each individual has their own perceptions and preferences in regards to these key points. There is no “One Size Fits All” and we do recommend giving multiple protocols a try to decide which suits your needs.

After all, it is not uncommon that some users might choose to use a protocol based solely on its User Interface, as an easy and straightforward platform to use allows users to start trading immediately!

3.1 Users & Liquidity

Generally, what we are looking for is a consistency of users trading on the platform. We have noticed certain protocols/apps having a surge in popularity but have failed to keep its users.

We want to see consistency in which users actually stay and use the protocol, because there is something that sets it apart from the many other DEXs offering perpetual future contracts.

In regards to the Unique Traders for the Last 30 Days on the image by HashBrown Research shown below, we can see that although GMX and SynFutures have each peaked around 2000 Unique Traders each day for the last 30 days, SynFutures have remained slightly more consistent, in comparison to GMX.

For the long term sustainability of the protocol, we want to see new traders coming on the protocol. But naturally, the trading volume does play a huge role in this too; after all, what is the use if there are many traders but none are putting on “size” to fulfill the liquidity needs of other traders?

This brings us to our next point. Besides the bid and ask spread, volume is another way to assess liquidity. In the image below we can see the Last 30 Days Perpetual Volume of various protocols. GMX easily takes the top spot in terms of total liquidity for the last 30 days.

However, in accessing the daily volume for the Last 30 Days, SynFutures yet again wins in terms of consistency as compared to the other 3 Protocols for the Trading Volume during the Last 30 Days. 

Therefore it depends on what each user regards as most important when selecting a protocol to trade on. E.g. Are you looking to trade with size? Then volume is probably an important factor for you.

Do remember that we are not limited on which protocols we can use, we can switch around whenever we find another protocol which suits our needs better; E.g. Do they offer a token pair which meets your needs?

This is also the beauty of DEXs, it is usually a simple step of connecting your wallet and you can start trading immediately.

It is interesting to note that some popular protocols such as dYdX easily does much more volume than these DEXs but of course there are Pros and Cons, which we will touch on later in this article. 

![Source: 24H Trading Volume on dYdX  [UTC 2022-10-26 07:32:00]https://trade.dydx.exchange/portfolio/overview

](https://images.mirror-media.xyz/publication-images/a8ew15m5fGhL71knrVs52.png?height=370&width=830)

3.2 Fees

The fees we pay for trading are undeniably one of the most important aspects we need to consider when choosing where to trade decentralized perpetual contracts. 

This is especially important as most traders who are active scalpers will mostly agree that fees are a huge factor in determining their PnL. 

Therefore if you are a new user and not looking to trade much, the choice of DEX would definitely be dYdX or Cap Finance if you are concerned about fees.

3.3 Tokens & Leverage Offered

Tokens Offered

We feel that a very big deciding (probably the most important) factor in where a user goes to trade is whether the platform offers their desired trading pair.

Hence, a simple way to look at it is whether the platform offers a wide variety of tokens available for perpetual futures contract trading. With more variety of tokens offered, the higher the probability in the sense that the platform would offer the desired token pair you wish to trade.

Leverage Offered

What we noticed is some protocols are not exactly transparent/do not display the leverage offered clearly. 

We feel that this is a basic requirement and users should be able to tell how much leverage they are able to use easily without jumping through hoops to find it.

A common frustration would be users trying to trade on the protocol and realizing mid trade that the protocol did not offer sufficient leverage on the platform to meet their requirements. 

When we state “higher risk” it just means that the protocol allows users to take on more risk to size up and vice versa for “lower risk”. 

It does not mean that there is a higher/lower risk when trading on the platform per se.

3.4 Values and Emphasis on Decentralization

We feel that the basis of choosing to use a decentralized exchange over a centralized exchange is being able to trade in an anonymous and trustless manner.

If we call ourselves a decentralized exchange, our most important values should be prioritizing decentralization.

Taking reference from a recent incident; the blacklisting of Tornado Cash by the US Treasury. dYdX then started blocking accounts that received any amount from Tornado Cash. 

It is known that several users did not even know they received funds and were surprised when they were locked out from dYdX. This was the end of it all, as shortly after, dYdX introduced a “liveness check” which identified users from their webcams, as part of a “deposit promotion”. Although this “deposit promotion” was removed due to “extremely overwhelming demand”, we felt the damage had been done. 

Admittedly, to be fair to them, they did state from their FAQs (Has been removed) that the liveness check was not mandatory, and who knows what pressure they could be facing to comply with certain regulations, we felt that they could certainly have handled these issues in a better way. There definitely could have been better communication, and being more upfront with users. 

However that being said, we still do feel that dYdX is definitely one of the top decentralized exchanges to trade perpetual future contracts on and the platform does have its strengths (Security and Transparency of a DEX, with the Speed and Usability of a CEX) , which is reflected upon its daily volume surpassing even many popular centralized exchanges.** **

3.5 Security

Although Crypto/DeFi has been around for a few years, and many builders and those passionate about the space have dedicated immense time and effort such as @zachxbt on Twitter to expose, inform, and recommend what could be done to protect users, exploits and hacks are still happening all the time. 

Some recent examples are the Mango Markets Exploit, GMX Exploit and many more. However, some of these exploits are through the exploiter having an in-depth understanding of how the protocol works and “using it as intended”.  

There is controversy on it, with some arguing regulators should step in and some arguing that this is the very nature of DeFi, where users have accepted and understood the risks before using it.

We feel that in this case, we need to go back and think of the reasons on why we want to push Crypto adoption. We believe the majority of the community should have the final say rather than arguing whether this is fundamentally right or wrong. 

Hence, it is more of how the protocol handles the exploits, the preventative measures as well as how often such exploits happen.

“Why isn’t anybody talking about this?!”

 Did you know that many DEXs rely heavily on Oracles such as Chainlink to provide price feeds? 

** **There are many protocols exploring different ways to attract users to trade the perpetual swap contract on its platform.

Another good example would be Opyn (Squeeth) which offers a totally new way of merging options concepts into a mechanism similar to a perpetual swap. 

Squeeth is the first Power Perpetual and gives traders perpetual exposure to ETH².

• No longside liquidation 

• Greater profits compared to a 2x leveraged position

Source: https://opyn.gitbook.io/squeeth/resources/squeeth-faq

We are in awe of the talented minds within the crypto space in pushing boundaries to innovate new products, which in this case is incorporating options greeks concepts into a product similar to a decentralized perpetual contract and thus creating a totally new financial derivative.  

To summarize, we feel that in general, most protocols face minimal (if any) downtime, and are operating based on layer 2 solutions or a network with low fees in general, hence, we think that the deciding factor for most users would be more of the concept of the trading platform and the tokens they offer for trading.  

At HashBrown Research, we value the concept of Decentralization, so we would be more inclined to use protocols who are very firm in upholding the same values as us!

** **

What do you feel is most important while trading Perpetual Future Contracts on Decentralized Derivatives Exchanges?

Feel free to connect with us on our Socials as we would like to hear your thoughts!

**

**

This article will give an introduction to decentralized finance (DeFi), and on-chain data analytic tools that can be used to assess DeFi projects. We will take an in-depth look at Defillama, and also other alternatives. 0. Food for Thought As the DeFi market grows, there is a strong requirement for data analytic and visualizations tools to provide valuable insights into the ecosystem.

Current available tools provide real-time information on a wide range of blockchains and projects with varying degrees of analytical depth catering for a spectrum of users, from beginners to professional investors.

However, such tools require users to have varying degrees of financial literacy and coding language literacy. Depending on the user requirement, these tools may only be customizable to a certain extent.

On accuracy, these tools are not immune to errors since software developers, community or paid, are the human input behind these queries, and humans are not beyond making errors.

The focus on Total-Value-Locked (TVL) as a performance metric may be misleading as this would be a strong indicator of interest in the project, possibly on the yield generation aspects, but not on the security aspects of the smart contract. Most would assume that if there is such a huge amount of TVL in a project, someone would have audited the smart contract and have certified it to be safe, a herd mentality at best. This mentality of leaving the heavy lifting to “others” has caused many to lose assets through hacks of DeFi protocols in the past year, making many lose confidence in the space.

Platforms may also use a slightly different methodology in their calculations of TVL, which may not be a huge problem as long as there is legitimacy in the differences. Using the example of Lido Finance, investigative work may have to be done to make sense of differing figures.

Overall, on-chain data analytics and visualization tools are valuable DeFi insights and analysis, but users should be aware of its limitations and always exercise caution when making investment decisions based on the insights it provides, DYOR.

1. State of the Current Market

1.1 Total Addressable Market

Financial services play an important role in our global economy, facilitating transactions, loans, insurance, investments and cash flow management. These financial services become increasingly pivotal in financing global trade through cross-border payments in a connected global economy. Consumers tap into the financial system through our everyday activities, from taking out a mortgage loan for a housing loan, to receiving salary payments and paying for a meal. According to the Business Research Company, the global financial services market size has expanded from $23.31 trillion in 2021 to $25.83 trillion in 2022 at a compounded annual growth rate (CAGR) of 10.8%, and is expected to reach $37.34 trillion in 2026 at a CAGR of 9.6%.

1.2 Challenges to the Current Market

Historically, these essential functions have been facilitated by financial intermediaries, with strict oversight by banks, regulatory authorities and governments. With the authority that these intermediaries and regulatory entities can wield, there exists a centralized control over the financial markets that require market participants to place trust in these entities for the financial system to function properly.

However, there is a growing sentiment that such a centralized traditional financial (TradFi) system has negatively impacted market participants, including a lack of transparency with internal processes, limited accessibility to the banking system for those in the developing world, inefficient processes with high transaction costs and slow transaction times, and vulnerability to corruption and fraud due to the concentration of power and control in the hands of a handful of entities. 

This has severely undermined trust in the current TradFi system, and has led to a growing demand for an alternative that is more secure, transparent, and accessible.

1.3 Growth of Decentralized Finance (DeFi)

The perils of the TradFi system has fueled the growth of decentralized finance (DeFi), an alternative financial system built on blockchain technology. 

The vision of DeFi is to create open, transparent, and accessible financial systems by using smart contracts to automate financial transactions and provide users with greater control over their assets and data without the use of intermediaries. The DeFi ecosystem aims to replicate the functions of the TradFi services using decentralized exchanges, lending and borrowing platforms, stablecoins, and insurance protocols, among others.

According to Emergen Research, the decentralized finance market size is expected to expand at a compound annual growth rate (CAGR) of 43.8% from 2023 to 2028 to reach 507.82 billion in 2028.

1.4 Requirements for DeFi Analysis Tools

While blockchain technology has huge potential to disrupt the current TradFi systems, the exponential growth of DeFi projects and their decentralized nature has made it difficult for market participants to track each project efficiently to keep up.

There is a strong requirement for data analytic tools to capitalize the transparent nature to collect,  process, and analyze on-chain data related to DeFi activities. Such information include user activity, transaction volumes, network usage, token prices, and various other metrics that provide insights into the health and usage of DeFi platforms and protocols.

The goal of using such tools is to provide investors, traders and developers valuable insights into the current DeFi ecosystem, identifying trends, tracking adoption and evaluating performance of projects and protocols, as well as to monitor the health and stability of the DeFi market as a whole.

1.5 Total Value Locked (TVL)

One of the most commonly used metrics used to assess DeFi projects is Total Value Locked (TVL), which measures the total amount of crypto assets deposited into the DeFi project. TVL is usually computed based on the amount of assets locked in smart contracts such as proof-of-stake pools, lending pools, and liquidity mining pools.

TVL measured at any one time may not give much insight to the DeFi project, the growth in the TVL, especially compared with alternative projects, can indicate strong user interest and activity in the project.

2. DefiLlama

2.1 Introduction

DefiLlama is one of the most widely-used analytics dashboards that aggregates the TVL for DeFi projects across multiple blockchains. The platform started with a commitment to maintain non-biased accurate data, transparency and independence without monetization through advertisements and sponsored content. DefiLlama aims to be a one-stop platform, providing free-to-use analytics for the users. 

According to official documentation, DefiLlama expresses to “pride ourselves in producing inclusive, non-biased, and community driven statistics for the decentralised finance industry. We do our best to treat all projects equally with regards to what is and isn't included in TVL, how long it takes to list or update a project's TVL, and everything else.”

2.2 Data

The data presented on the dashboard is maintained by a team from their respective communities and coordinated through the DefiLlama Adapters and Github repository.

DefiLlama collects data on a protocol by the use of API endpoints and through making blockchain queries, and has made these available for the projects to use.

The team has also developed a SDK to assist DeFi projects write adapters to list their projects on DefiLlama. An adapter is basically code that takes in a UNIX timestamp and chain block heights, and returns the balances of assets locked in a protocol, including all the decimals The SDK will convert all raw asset balances into their USD equivalent and sum to obtain total TVL, which is presented in the dashboard.

2.3 Methodology

In their documentation, DefiLlama lays out clearly their methodology of calculating what should go into the TVL, including the use of Coingecko’s API for live prices, not counting locked tokens, not double-counting within the same protocol, not counting native token staked, and not attributing TVL into for cross-chain bridge projects.

For APY methodology, DefiLlama dives into more details in Github, where the calculations take a conservative route by “minimum attainable yield values for all listed projects” by omitting pre-mined and locked rewards, omitting yields that is dependent on locking up other tokens, using lower bound rates, resetting values when experiencing rewards slashing for early withdrawals, 

2.4 Features

DefiLlama currently provides data on 2,158 projects on 169 blockchains.

On the homepage, DefiLlama displays an aggregator dashboard showing the constituents of all TVL across all chains, categorized by their native chains in a pie-chart format. Going into each option on the sidebar, more information is displayed about the specific category, for example as shown below for “DeFi”.

Interesting sections to explore include:

1. Yields, tracking 7993 lending pools over 248 protocols on 56 chains, which allow users to filter for suitable pools with preferred strategies

2. DEX-aggregator, suggesting the best route to perform a swap based on net output after gas fees

3. Raises, tracking investment rounds for DeFi projects, categorized by funding amounts and VC investors

4. Hacks, tracking hacking breaches DeFi projects, categorized by hacked amounts

5. CEX Transparency, ranking TVL of centralized exchanges

3. Alternatives: Dune Analytics & Token Terminal

There are other on-chain data analysis tools in the market like DefiLlama, we will go briefly into two of such platforms, Dune Analytics and Token Terminal.

3.1 Project Introduction: Dune Analytics

Dune Analytics is a widely-used data visualization and analytics platform that lets users create, publish and access data dashboards driven by blockchain data. The platform is mainly community-driven, with popular user-created dashboards to track anything from the most trending yield farms on Ethereum and the non-fungible token (NFT) collections traded by top OpenSea marketplace traders.

Dune is currently free-to-use to create dashboards and publish your own datasets or view the work produced by others at no additional cost. The platform pulls the blockchain data produced by the Structured Query Language (SQL) query, and displays the data visually through the use of charts and tables.

3.2 Project Introduction: Token Terminal

Token Terminal is a data analytics platform for crypto assets, providing tools to analyze crypto assets through the application of traditional financial and business metrics.

The platform is developed through the belief that blockchains and projects are fundamentally similar to traditional companies, using an-internet-native business model to generate value to benefit users and owners. Most blockchain projects are programmed, owned and operated by global communities through token ownership, the platform believes that such projects can be valued and assessed in the same way stock in a traditional company gives its owner access to economic incentives and governance rights.

3.3 Case Study: Lido Finance

Let’s take a look at how DefiLlama, Dune Analytics and Token Terminal present the same project, Lido Finance for example.

3.3.1 DefiLlama

This is how DefiLlama presents the TVL and tokenomics of Lido Finance.

3.3.2 Dune Analytics

There are 16 user-generated dashboards referenced to Lido Finance, and one official dashboard generated by the Lido Finance project under username @LidoAnalytical.

This is the official dashboard developed by @LidoAnalytical.

This is a user-generated dashboard developed by @k06a.

3.3.3 Token Terminal

This is how the Lido Finance project is presented on the Token Terminal platform.

3.3.4 Reported TVL

For comparison, these are the reported TVL figures across the three platforms, compared to reported figures on the official Lido Finance website.

If the official Lido Finance website TVL figure is taken to be accurate, Token Terminal reports the closest figures.

The deviation for Dune could come from the fact that the platform does not support the Polkadot chains for Polkadot and Moonbeam staking, and that the query does not include assets deposited into the Polygon chain. Another potential reason for the deviation is that the Dune query only includes addresses where assets are deposited into the ETH staking pool, which does not include the staking rewards generated (~36 M). Taking these possibilities into account, the TVL figures would be bumped up to ~8.38 B, exactly what the official website is reporting.

The reported figures on DefiLlama aggregates the TVL for ETH and MATIC, where “stMATIC is counted as Ethereum TVL since MATIC is staked in Ethereum and the liquidity token is also issued on Ethereum.” Still, the figure is deviating almost 1.0%, which is substantial. One possibility could be attributed to double-counting of MATIC (~83 M). If that is accurate, the TVL figures would be adjusted up to ~8.38 B, exactly what the official website is reporting. Another possibility could be that there are unstaked ~32,000 ETH tokens that are deposited into Lido Finance, adjusting for these the TVL figure would be bumped up to ~8.40 B, closer to the official reported figures. 

4. Comparison

4.1 Similarities

All three platforms provide data analytics and visualization tools to make it remarkably easy for users to analyze project performance, gain insights on tokenomics and TVL.

These platforms have versions that are free-to-use, and mostly intuitive in user interface.

The methodology of calculations are clearly stated in the project pages for each platform.

The development team for the projects are active in responding to requests from users to list new projects.

4.2 Differences

4.2.1 Metrics & Insights

All three platforms express that user metrics are not available for public use. Website traffic is used as a measure of traffic, as all three platforms are not on-chain application platforms where user metrics and activity can be queried from the blockchains. 

4.2.2 User Traffic

DefiLlama seems to be the most popular platform amongst the three with 1.6 million visits in January 2023, with users averaging almost 4 visits a month, spending an average 13 minutes on the platform.

Dune users spend about an average 23 minutes on the platform, almost twice as much as the other two platforms. This makes sense as a portion of the users are SQL developers using the platform to query the blockchains for data, and creating visualization dashboards.

Token Terminal logged the lowest numbers for user traffic, which may make sense because given the nature of their paid subscription. On the official website, it states that the platform has over 10,000 active users

4.2.3 Social Media Engagement

Dune has the most members in its Discord group, which makes sense since a portion of their users are developers requiring support as they write queries for their dashboards.

DefiLlama has the most following on Twitter, where users can be kept updated on new protocols listed on the platform.

4.2.4 Data Customization

Dune provides the widest range of customization for data analytics and visualization, especially for SQL developers familiar with querying datasets directly from the blockchains. The possibilities are almost endless, as long as the code works.

On the paid account, Token Terminal allows for creation of custom charts comparing projects, using preset parameters and without having to access the data directly from the blockchain.

DefiLlama dashboards are mostly preset, without much road for customization other than filtering for projects according to desired parameters. This would make sense because the users they are targeting tend to be more beginners into the space.

4.2.5 Features

The features presented by all three platforms are mostly similar, other than some key ones that would be highlighted in this section.

Token Terminal includes daily user activity, active developers and code commits for the projects. These are helpful metrics that indicate the strength of the community and traction amongst users and developers.

DefiLlama is constantly rolling out new features on their platform, one of which is the CEX transparency feature where doxxed CEX wallet addresses are queried for their balance of assets. The analysis goes one step further to subtract away tokens issued by the CEX from the balance, in the column “Clean Assets”. 

While this goes a long way to establish health and transparency, there is a possibility where a CEX would have other wallet addresses which may hold leveraged positions, participate in DeFi lending protocols, or hold a large amount of issued tokens that bring the “Clean Assets” ratio down.

Another feature worth highlighting is the Raise feature, where the recent venture capital (VC) funding deals for projects are listed on the dashboard. Projects can be filtered by their native chains, investors, and funding amounts. 

This seems to be more of a qualitative approach at establishing the credibility of new projects backed by different tiers of VCs, where many of these projects are early-stage, not yet listed on DefiLlama and without much DeFi quantitative data to draw insights from yet.

4.2.6 Chain Support

4.2.7 Vision

From the analysis of these three platforms, it is clear that the target audience and direction of the projects greatly differs.

Beyond on-chain quantitative data analytics and visualization, DefiLlama has expanded into other DeFi products and services notably like swap aggregator, reporting on funding and hacking, an media outlet in DL News, and operating validator nodes through LlamaNodes. Being able to analyze on-chain data, it seems that DefiLlama is deriving insights to develop new products and services, venturing out of purely DeFi analytics into aggregating information and building base layer infrastructure. Google, anyone?

For Dune Analytics, the direction seems to be developing the company in the mold of Github, a popular freemium software development platform, where a community of developers can build together. While the public dashboards are available for all user access, the ability to create dashboards requires an intermediate to advanced level of SQL coding skills.

For Token Terminal, the product interface seems to be targeting investors and market participants from the traditional finance space, venturing into the crypto assets space. The platform seems to be developing in the mold of Bloomberg, designed to deliver data and news across market sectors in a single one system to empower decision making.

1. Why do we need cross-chain NFT?

2. Mint DAO 2.1 NFT bridge Product 2.2 Latest updates

3. XP network 3.1 XP.NETWORK Bridge 3.2 XP.NETWORK Token

4. Chainswap

5. Comparison and Summary

1. Why do we need cross-chain NFT?

Artists and NFT holders want to have more freedom to choose a chain, to transfer artwork, collections between the platforms just like what they do using other assets.

Not only does more chains mean more exposure and a larger exchange platform, but it also means that users are able to lend their NFTs, use them as collateral, or redeem them for DAO assets, thus releasing more liquidity. Through NFT cross-chain, users can ensure access to the best opportunities and markets.

The main projects that can support NFT cross-chain are mainly Multichain, wormhole, Polynetwork, cBridge, Chainswap, Crosschainbridge, XP network, pNetwork and MintDAO. And most of them support whitelisted collections except Chainswap. 

We will look deep into Chainswap, XP network and MintDAO in this report.

2. Mint DAO

2.1 NFT bridge Product

MintDAO is a NFT Cross-Chain Launchpad. We can create NFT collections for partners, including all graphics and dev stuff. They just launched a new service—— NFT bridge powered by Axelar on 4th Feb.

Only 5 collections are supported now and some upcoming collections can be found on the official website.

2.2 Latest updates

The team announced several highlights they intend to deliver this year: 

• A cross-chain NFT Marketplace -  they want to build their own marketplace to make their projects complete, hoping to create a NFT ecosystem full of usability.

• MintDAO Avatars and Tokens -  a NFT collection in which each avatar will have its own Mint Power to participate in the rewards from MintDAO. To increase Mint Power will need to use $MINT tokens.

However, when you are passionate about this new tokenmonics, please remember to consider three points: where the profit comes from, ratio of input and output and time period between burning and rewarding.

More details can be found at:https://medium.com/@mintdao/the-new-mintdao-tokenomics-28d0eb5127a4

3. XP network

XP.network is working on unifying the NFT ecosystem, with two interoperability protocols:

XP.NETWORK Bridge

XP.NETWORK Token

3.1 XP.NETWORK Bridge

XP.NETWORK Bridge is the key component of the XP.NETWORK ecosystem. It has two key elements: smart contracts and relay validators. It allows users to send NFTs minted on one chain to any other of the connected chains. 

The contracts serve the following functions: 

• Mint native or wrapped NFTs;

• Freeze a NFT before it is transferred to the target chain; 

• Release the NFT to the designated address on the hosting blockchain; 

• Broadcast bridge-related events to the relay validators; 

• Collect Byzantine Fault-tolerant multi signatures.

Wrapped NFT metadata holds the same values as the original one, namely the following crucial information:

1. The smart contract address

2. The ID the original NFT had in its native chain.

3. Original chain nonce (the internal bridge ID of the chain, BSC is #4)

4. The original URL linking to the original metadata

In order to unwrap the NFT it must be sent to the native blockchain using the XP.NETWORK bridge. 

Once the signature has been accepted the bridge will display the Transaction screen. And we found the wrapped NFT on Element.market.

These are the departure hash and destination hash below:

https://polygonscan.com/tx/0x029ae3ec7b4ad997709d72f5151d4eff7a51fa9c8dac05cfd9d95c078935d34a

https://bscscan.com/tx/0x4037f22b61c6048c7f7ad294da804b52745ebbab7e7e56e332152a3e9229acc6

In February 2023, they upgraded to version 3.0 of the NFT Bridge.

1. Automated NFT contracts scanning for potentially malicious code that could harm the bridge or its users.

2. Automated contract whitelisting - after a contract's source code has been verified by the Automated malware scanner, its address is added to the list of trusted, allowing the bridge to interact with it.

3. Automated Target Contract Deployment - If a destination contract does not exist, the bridge can automatically deploy it.

Any NFT owner can bridge without waiting for the NFT collection team to contact XP.NETWORK team. Once you find a contract of your interest is not whitelisted, you can click the button. The source code of the contract will be scanned, and if found trustworthy, it will be whitelisted within minutes after clicking.

When we test it, we don’t know why our NFT is not trustworthy.

The total transactions on XP are 10,264, and we can find users come to use it almost everyday, so it is active.

3.2 XP.NETWORK Token

$XPNET is the native token running on BSC. It is used for transaction fee payment, staking, as well as to encourage further development of XP.network.  

For paying fees, users don’t need to buy $XPNET, they just pay main assets on the origin blockchain, take BNB to Polygon for example, the BNB coins are automatically converted partially into MATIC  (to pay the destination  blockchain fee) and partly into $XPNET to pay the validators. 

$XPNET price is $0.0029 with a 24-hour trading volume of $72,380. It has a circulating supply of 554 Million coins and a total supply of 1 Billion. The holders are 6,511. The all-time high price is $0.098 on Nov 03, 2021 . (2323/2/23)

$XPNET token holders can stake the token for 3, 6, 9, or 12 months, and earn an APY of 45%, 75%, 100%, or 125%, respectively.  Every staker will be able to mint an NFT representing their stake. In other words, the right to claim staking rewards lies with the holder of the NFT. 

Source: https://docs.xp.network/docs/Whitepaper2.0/xp-tokenomics

4. Chainswap

Chainswap is very easy to operate, for users would be able to bridge their NFTs to other chains without any approval from the NFT issuer or the destination chain. Even the NFT does not need to be listed since users can import manually by just copying and pasting the [Token Contract Address] and [Token ID].

Then you can choose a destination chain and an address to bridge.

After approving, users should confirm both on the departure chain and the destination chain, meaning that users need to pay twice. And the fees are a little expensive（0.05BNB）.

https://bscscan.com/tx/0xe5d83cc744d90634ad47e9d8b505f2f34d08d5c997cf3b7910f05efaf457259f

We found that the last transaction before our testing is over a hundred days.

When we withdrew from ETH, it said insufficient gas, then after we added for $100, new problems came out as below. So we lost our testing NFT and 0.05BNB.

According to the official website, there will be a NFT marketplace supported by this NFT bridge in the future.

5. Comparison and Summary

We make a table to compare the popular projects on the numbers of chains supported and collections.

You can read more about comparison on 10 NFT bridges in aspects like whether EVM, what wallets and what NFT standards supported.

Source: https://docs.xp.network/docs/Multibridge2.0/multibridge_vs_others

Almost all projects use the “lock and mint” model to bridge NFT at present, will there be a new mechanism coming out to push the market? 

For now, we can say that XP network has occupied a forefront place of the field, however, no blue-chip NFT collections are transferred on all current projects. The questions are do blue-chip NFTs need a NFT bridge? In what situation does this become necessary?

When these blue-chip NFTs come to use the NFT bridge, the full competition just begins. At that time, the more security, the smoother products will win more market share.  

4 Internal suggestions:

1. For the wrapped NFT, the buyer or the NFTFi platforms on the destination chain need to verify their authenticity.（wormhole did this NFT Origin tool）

            https://docs.wormhole.com/wormhole/tutorial-nft-origin-tool

2. For the NFTs unsuccessfully bridged just like what we lost, there should be a place for users to get them back.

3. For the bridging result, XP has a  transaction screen to display the process and hash.

4. For the fees, XP only needs to pay once on the departure chain,  while Chainswap needs to pay twice, both on the departure chain and destination chain.

**

**

1、Overview

2、Critical Statistics

3、Latest news

3.1 Treasury

3.2 Bad Debt Repayment

3.3 Team restructure

4、Token

5、Summary

1、Overview

Abracadabra is a multichain lending protocol that utilizes interest-bearing tokens as collateral to mint a USD-pegged stablecoin - Magic Internet Money (MIM) that can be used as any other traditional stablecoin. (Interest bearing tokens are tokens whose balance changes over time due to interest accrual and have a pegged exchange rate to the underlying asset.)

The project consists of the following four major components:

• Lending Market: Users can deposit various types of collateral to mint MIM.

• Leverage farm: Automatically helps users convert the borrowed MIM into USDT, and deposit these USDT into the Yearn Vault to obtain yvUSDT,which will be deposited back to Abracadabra as collateral.

That is to say: Users actually only lock in partial value of assets but can get full value APY income, and the remaining assets can be spent or made by other investments. A little bit like credit card. Of course, the liquidation risk also increases accordingly.

• Farm: Using LP tokens to farm.

• Two staking methods:

• sSPELL - stake SPELL tokens and earn more SPELL

• mSPELL - stake SPELL tokens and earn stablecoin income through $MIM

For users, in addition to interest, the cost of borrowing needs to be paid, and there is also a one-time loan fee paid when borrowing.

At present, most of the collaterals supported by Abracadabra are still mainly interest-bearing assets, and the following tokens are also supported:

ETH/wETH/wBNB/AGLD/Cake/wBTC

2、Critical Statistics

We first have a look at the TVL. Due to the bear market caused by UST and FTT, the TVL of Abracadabra fell over 57% this month. Before that the peak is $6.42B. At present, the TVL is $159.17m, among which 97% are on ETH chain.

Total supply of MIM is 688,417,710 and the holders are 5,348 now, but 66.4819% of the token are locked in one address, which is an anyMIM contract.

As for the liquidity on Ethereum mainnet, we find that in Uniswap V3 MIM-USDC pool, Sushiswap MIM-wETH pool and MIM/3Crv pool, the proportion of MIM is 12.4%, 50% and 67% respectively. All MIM in these pools are 59,115,342, so the proportion is 64% of the circulating supply. 

Warning! The risks of depegging still exist.

Depegging history of MIM

Most of the time, MIM is depegged from $1.00 as shown in the chart.

At last is another important point: capital utilization. we usually use ratio of volume and circulating market cap to stands for utilization, and the utilization of MIM is just 1.07%, while USDC is 8%. Also we can see the daily transactions are not much. 

So we can say that MIM is definitely overissued just like UST.

3、Latest news

On November 22nd, 2022, the team announced the current status of operations and future plans for Abracadabra! Read more about it in the mirror article below:

https://mirror.xyz/0x5744b051845B62D6f5B6Db095cc428bCbBBAc6F9/XXWjgtHEnGqEAuhAOvso3MeReLFNG26RHUhyB-xQGzc

We would like to select a few of points for analysis：

3.1 Treasury

The current treasury consists of:

• 6,213,784.085371 USDT

• 3,300,000.00 yveCRV-DAO (Which will be used to collect bribes and incentivize liquidity)

• 975,274.26576848 unlocked CRV tokens

• 371,233.839528 USDC

• 446,941,713 SPELL (Coming from Yearn bribes)

• 96.5 ETH

• Another approximately 120k in other stablecoins

The total treasury value, at the time of writing this article, is $9,572,789.85.

The current treasury does not consist of MIM because they just used $4m MIM to repay the bad debt.

3.2 Bad Debt Repayment

The first tranche of bad debt repayment happened a few weeks back. They paid with protocol revenue and treasury funds. The bad debt has been reduced from an initial $12.5m MIM to less than $8.5m, actually is $8.16M(because of UST). There is still 30k MIM backed by FTT.

We get the debt ratio of Abracadabra is 85% now, which is not a healthy one.

$61.45M MIM was backed by stable assets, which is 66.45% of the total MIM borrowed. Other $31.03M guarantees are non-stable assets including WETH, BNB and BTC. It is worth noting that there are $2.1M MIM mortgaged by sSPELL. 

So under what situation will the occurrence of insolvency happen? 

Well, putting aside the failure of the strategy of Yearn, it depends on the difference between the value of these interest-bearing collateral and the current value. Take WETH for example, suppose the price at the time of staking was $1800 and the APY on Yearn vault is 8%. Then the user borrowed max MIM which is 90% LTV, so he got 1620 MIM. The current price of ETH is $1200, if he used these MIM to buy ETH he can get 1.35 ETH. He doesn’t want to repay. A outstanding bad debt happened. Solend and BendDAO have encountered similar situation. We think it is a good hedging strategy.

On the first day of each month, the treasury will repay approximately 5% of the bad debt, 425k MIM, to the UST cauldron. They have also increased the percentage of treasury protocol fees from 25% to 50%.Finally, the debt ratio will gradually decrease ideally.

Then we see the fees earned by the protocol. Last week they got total fees of $23.91k. The total fees they earned is $97.75M, which is more than the total circulated MIM.

The picture below is the information about the debt repaid.

3.3 Team restructure

Abracadabra has recently undergone a restructuring of the team. Founder, Daniele is no longer an active member. Following this restructuring, the first actual change to the protocol operations will be a reduction in the emissions across the board. In a word, reducing emissions in the short-term will also reduce selling pressure on SPELL.

4、Token

SPELL is the native token of the project. The current use cases for SPELL include:

Staking: Users can stake SPELL to receive sSPELL for a share of the protocol revenue distribution. Protocol revenue is used to fund SPELL token buybacks at the market price, which are then distributed to the stakers.

Liquidity Mining: Users can provide MIM or SPELL to liquidity pools on DEXs such as Curve Finance and Sushiswap to earn SPELL and a share of the transaction fees.

Governance: sers will need to stake SPELL in return for sSPELL to vote on governance proposals.

You can stake and lock your SPELL to get sSPELL and earn more SPELL

As for AIP #10, 50% of the protocol revenue will be used to buyback SPELL tokens or distributed through mSPELL staking contracts, while 50% will be used to build up a treasury.

SPELL is launched on ETH, AVAX,FTM and Arbi now and the holders on each chain are almost the same. But the holders of sSPELL are just 28% of those of SPELL on ETH mainnet, so SPELL farming is not attractive to users.

At last, we see the token information:

5、Summary

The project has the following characteristics：

• For Product: 

  -The target customer group is relatively unique

  -There are few competitors

  -Interactive applications such as Yearn and Curve are relatively well-known

  -Leverage farming is friendly to users

• For Market:

  -They have adopted effective and timely strategies every time the crisis comes

  -They are committed to paying off the debt, which helps build customer loyalty

At last, what we can learn from Abracadabra team are:

• For the liquidity:

  -There are two reasons why users choose to hold MIM instead of putting them in the pool

  -The pool is too shallow, they are worried that they won't be able to get out the token

  -They are not motivated enough

• For the bad debt:

  -No matter what kind of assets are facing the risk of bad debts

  -The value of main assets can be preserved using MIM

When you decide whether MIM and SPELL are good investment assets, please take the risks talked above into consideration.

**

**

1. What is the Metaverse

2. Metaverse Statistics

3. Metaverse project

3.1 The Sandbox

3.2 Decentraland

3.3 Axie infinity

4. Metaverse token

4.1 Market Cap

4.2 Price

5. Summary

1. What is the Metaverse

Metaverse originated from the science fiction Avalanche in 1992, which depicts a huge virtual reality world in which all people in the real world can work, play and live in this virtual three-dimensional world space through the image of digital avatars. Metaverse refers to the virtual world that people build with digital technology and can interact with the real world. Similar to the Internet-based and permanently online digital space depicted in the movie “Ready Player One”, the virtual and real worlds are linked together, and users can complete various activities in it. Metaverse is actually the process of virtualizing and digitizing the real world. It has the following core technologies: the first is extended reality technology, namely VR and AR, which provides immersive user experience; the second is digital twin, which mirrors the real world into the virtual world; the last is to use blockchain to build an economic system , users can use this system to spend or earn money in the metaverse.

2. Metaverse Statistics

At present, the market size of Metaverse exceeds $47 billion, and the spending on virtual estate exceeds $501M, and has reached an all-time high of 400 million monthly active users, the number of applications on SteamVR exceeds 5k, ranking first, far surpass its competitors. According to statistics, Oculus ranks second in the VR space with about 1,400 applications.

It can be seen from the above data that the current users of Metaverse are generally younger, with users aged 13 and below accounting for 51%, and users aged 18 and below accounting for 83.5% of the total users. Due to the relatively low age of Metaverse users, it can also be seen that Metaverse still has a wide range of user groups to be expanded. With the development and maturity of related technologies, a steady increase in the number of users of Metaverse is achievable.

3. Metaverse project

3.1 The Sandbox

• Overall

One of the leading projects in Metaverse, The Sandbox, released in August 2020, is a community-driven gaming ecosystem. The Sandbox is a platform for creating and managing assets in a virtual world. Any user can create 3D assets such as buildings, game items and so on, and use these assets for diverse experiences, including games, music, fashion Events, social events, art exhibitions and competitions and other content. 

• Statistics

Currently, The Sandbox has 22.13k landowners, the number of transactions in 1D and 7D are 258 and 3.46k, respectively, and the volume in 1D and 7D is $910.97k and $5.49M, respectively. On March 16 this year, the volume reached the highest single-day volume, which was $94.8M.

• Token

The token issued by The Sandbox is SAND, with a market cap of $1.18B, ranking 45th.

The current price of SAND token is $0.77, it reached an all-time high price of $8.4 in November 2021, and it has since been volatile. Compared to the highest price, the current price has dropped by more than 90%. The current market cap of SAND token is $1.18B, the highest market cap in history is $6.8B, and the market cap has decreased by about 80%.

3.2 Decentraland

• Overall

Decentraland is a VR virtual reality platform built on the Ethereum blockchain. On this platform, users can browse and discover content, interact with others, have ownership of virtual land, and even earn money by developing platform content and programs.  

Statistics

At present, Decentraland has 7.65k landowners, the number of transactions in 1D and 7D are 2.79k and 27.1k respectively, and the volume in 1D and 7D is $9.66k and $37.39k respectively. On February 3 this year, the volume reached the highest single-day volume, which was $19.82M.

• Token

The token issued by Decentraland is MANA, with a market cap of $1.14B, ranking 48th.

The current price of the MANA token is $0.63, it reached an all-time high price of $5.85 in November 2021, and has since been volatile. Compared to the highest price, the current price has dropped by nearly 90%. The current market cap of MANA tokens is $1.14B, and the all-time high market cap is $6.8B. The market cap has decreased by more than 80%.

3.3 Axie infinity

• Overall

Axie infinity is a decentralized game in the form of a digital pet world. Players buy three Axies through virtual currency (Axies exist as NFTs), use them to breed new Axies to fight with other players, or sell Axies for profit.

Lunacia is a land in Axie Infinity. Players can use various resources and crafting materials to upgrade their land, explore their land to have the opportunity to get AXS tokens, or use their Axies NFT to occupy the land in the public area and it is also possible to obtain AXS tokens. The land value dimension includes two parts: the distance from the central area and the distance from the resource point.

• Statistics

Currently Axie Infinity has 45.28k landowners, the number of transactions in 1D and 7D are 56.7k and 414.01k respectively, and the volume in 1D and 7D is $3.74M and $22.18M respectively, On September 30, 2021, the volume reached the highest single-day volume of $574.4M.

• Token

The tokens issued by Axie Infinity are AXS and SLP. The uses of the two tokens are as follows:

SLP: Pays for breeding between two Axies. Axies can spawn up to 7 times, each time consuming more SLP; anyone can earn tokens by participating in the game and contributing; players can earn SLP through PvE Adventure Mode as well as PvP Arena.

AXS: First, it has a governance function, that is, AXS token holders can participate in governance voting; second, it can be pledged, that is, players can pledge their AXS tokens to get weekly rewards, and the pledge rewards in early 2021 will be locked for one year freed.

The AXS token is currently priced at $9.22, reaching an all-time high price of $164.90 in November 2021, and has since been volatile. Compared to the highest price, the current price has dropped by more than 90%. The current market cap of AXS token is $1.01B, ranking 54th, and the highest market cap in history is $10.49B, and the market cap has decreased by more than 90%.

4. Metaverse token

This article selects representative tokens in Metaverse for analysis, including MANA, SAND, and APE for comparative analysis.

4.1 Market Cap

![Data Sources: https://dune.com/21shares_research/metaverse-overview

](https://images.mirror-media.xyz/publication-images/p7L_MNB889o5bI7Hz6lbv.png?height=412&width=1018)

As shown in the above two figures, before the issuance of APE tokens, both MANA and SAND have reached the highest market cap in history. After the APE token was issued and briefly broke out, the market cap of the three gradually became similar. The current market cap of APE tokens is $1.20B, which is slightly higher than that of MANA and SAND.

The market cap of MANA, SAND, and APE dropped sharply in the Q2 quarter of this year, and then rose slowly in the following two months, and the increase of APE token was larger. In November this year, the market cap of MANA and SAND were both has seen an increase.

4.2 Price

As can be seen from the above two figures, the current price of APE token is $3.79, which is higher than the price of MANA and SAND tokens, and the price changes of the three tokens are in a downward trend as a whole.

5. Summary

 Metaverse is a virtual world parallel to the real world, and the presentation form of the next-generation digital world. Professor Shenyang of Tsinghua University defines Metaverse: "Metaverse is a new Internet application and social form that integrates a variety of new technologies. It provides an immersive experience based on extended reality technology, and digital twin technology generates a mirror of the real world. To build an economic system through blockchain technology, the virtual world and the real world are closely integrated in the economic system, social system, and identity system, and each user is allowed to produce and edit content." 

This article introduces the decentralized Metaverse projects of The Sandbox, Decentraland, and Axie Infinity, and compares the tokens of the heads in Metaverse. But in fact, centralized projects have been exploring and showing diversified characteristics in Metaverse. For example, in the social field, there is the "Horizon Workroom" VR conference platform that Facebook has launched before changing its name to Meta, etc. In the game field, there is Roblox and other platforms, in film and television , there is "Ready Player One", etc.

At present, Metaverse is in the initial stage of industry development. Whether it is the underlying technology or application scenarios, there is still a big gap compared with the mature form in the future. Therefore, both the decentralized projects just introduced and the centralized projects are in the initial stage of practice. However, with the continuous maturity and improvement of related technical systems, the formulation of norms such as social governance guidelines, and the empowerment of Metaverse in various fields, it is a trend for people to enter a virtual world parallel to the real world, and it is a journey that requires a long trek to achieve.

1. Odos

2. Bebop

3. Sunflower land

4. Summary

1. Odos

• Overall

** **Odos is an aggregation trading protocol, which uses the automatic market maker (AMM) pathfinding algorithm to find the best route for token exchange by aggregating decentralized exchanges, that is, connecting the liquidity pools of mainstream DEXs on the chain together. Providing users with a trading environment with optimal rates and speed.

Currently Odos supports Ethereum, Polygon, Arbitrum and Optimism chains. It has aggregated 77 liquidity sources on Ethereum, 65 liquidity sources on Polygon, 23 liquidity sources on Arbitrum, and on Optimism, at least 18 liquidity sources are aggregated. Such an aggregation exchange provides services for users by aggregating the token flow pool built by third-party DEX, uses algorithms to traverse a wider range of possible token combinations and non-linear paths, and selects the optimal path after comparing the handling fees.

Order Route Plan

** **As shown in the figure above, in the process of using Odos to exchange 100 MATIC tokens for AAVE tokens, Odos gave at least 9 paths and selected the optimal path for users, and 100 MATIC tokens can be exchanged to 1.5774 AAVE tokens in the end. While using other DEXs, such as Dodo and Balancer, you can only exchange 1.5738 AAVE tokens. Compared to other DEXs, Odos provides users with the best exchange rate.

• Features

  Odos supports multi-asset input swap, supports input of up to six assets, and exchanges for one asset.

Odos supports cross-chain arbitrage. Calculate the best arbitrage of more than 30 million paths in real time through the arbitrage tracker, such as exchanging 0.2021 BTCB tokens on the BSC chain for WETH tokens, and converting WETH to 0.2023 WBTC tokens on Ethereum, which can be used for arbitrage about $4.82.

2. Bebop

• Overall

Bebop is a new DEX aggregator released by the global cryptocurrency trading company Wintermute in June 2021, and launched on the Polygon chain in November this year. Currently supports transactions on both Ethereum and Polygon chains. Bebop is a decentralized trading platform that supports trading multiple tokens at one time, making DeFi transactions simple and efficient.

• Features

Support one-to-many or many-to-one transactions, helping users save time and costs. Among them, multi-token transactions support a combination of up to 5 tokens.

The price calculation method is transparent and includes all network fees. And no platform fees are charged.

Offers no-slippage trading. Bebop uses private market makers and RFQ models to reserve quotes for users for 10 seconds, so the quotes users see on the trading platform are the prices at which transactions are executed, making transactions more efficient.

• Statistics

• Volume

Currently, the volume of Bebop within 24 hours is $321k, the volume within 7 days is $2.2M, and the total volume is $11.98M. Since mid-October this year, the volume has gradually increased. On November 4, the volume generated by one-to-one token exchange accounted for more than 98%.

•  Transaction

 At present, the number of transactions of Bebop within 24 hours is 152, the number of transactions within 7 days is 4.67k, and the total number of transactions is 42.36k. In November this year, Bebop was launched on the Polygon chain, and the number of transactions began to increase rapidly. On the day Bebop announced its expansion to the Polygon chain, the number of transactions reached 1.56k.

• Users

The figure above shows the daily number of new users and the changing trend of the total number of users. As of midnight on November 15th, the total number of Bebop users was 6,513, and the trend of the total number of users was a continuous growth stage. After experiencing an explosive growth in the number of users at the end of October, the growth rate slowed down.

The figure above shows the proportion of daily transactions between new users and old users on the Bebop platform. After going through the user expansion stage, the proportion of transactions of old users gradually increases, becoming the main force of token exchange on the Bebop platform.

The figure above shows the current Top Traders on the Bebop platform. The volume of the top four Traders all exceeds $300k, and the total volume and average volume per transaction of the top two users far exceed other users. It is also very important to cultivate large customers of the platform.

3. Sunflower land

Overall

Launched in April 2022, Sunflower Land is a Metaverse game launched on the Polygon chain and currently ranks fourth on the Polygon chain.

The goal of Sunflower Land is to create crypto games in Play-to-Own (P2O) mode, that is, players own the items they collect. Different from the P2E model, P2O does not motivate users to participate with economic value, but focuses on the fun of gameplay, the sustainability of the economic model, and the cultivation of users' sense of belonging to in-game assets.

The gameplay of Sunflower Land is similar to "Happy Farm". Players can build their own agricultural empire in this game, supporting players in farming, harvesting, felling, mining, fishing, making new items, etc. Every item that players collect or craft can be owned on the Polygon blockchain and they can be listed on trading platforms like OpenSea.

Economic Model

The token issued by Sunflower Land is SFL. The fastest way to earn SFL is to plant crops and sell them after harvest to obtain income. Different crops have different income. The following figure shows the economic cycle model of crop cultivation:

Players can use SFL and other in-game resources to mint NFTs. They can mint NFTs that can increase the productivity of land or crops. They can also mint NFTs as decorations. These NFTs can be extracted and sold on OpenSea.

At the same time, when the total supply of SFL tokens in the game accumulates to a certain amount, a production reduction event will be triggered, which is manifested by halving the cost of seeds and halving the selling price of crops. For example, when the total supply of SFL is between 10w and 50w, you will get 0.01SFL for selling per sunflower, and when the total supply of SFL is between 50w and 100w, you will get 0.004SFL for selling per sunflower. This production reduction mechanism increases the difficulty of planting for latecomers, resulting in diminishing overall marginal returns.

• Statistics 

• Sunflower Land Statistics

The figure above shows the number of active wallets, number of transactions, volume and historical activity data of Sunflower Land in 7D. In 7D, the number of active wallets in Sunflower Land was 17.72k, the number of transactions was 37.92k, and the volume was $5.11k. On May 9 this year, the highest volume in a single day was $3.15k. At the end of October, UAW began to grow rapidly. The highest number of active wallets reached 10.78k.

At present, the price of SFL tokens is close to $0.1, and the volume in 24 hours has reached $22.9k. The overall price trend is to stabilize after a short-term decline. The historical highest price of SFL tokens is $0.55. Compared with the highest price, the current price of tokens has dropped by more than 80%.

The above figure shows the main exchanges of SFL tokens. Quickswap and CoinEx are the main places for SFL token exchange. Currently, the exchange with the largest volume of trading SFL tokens is Quickswap, of which volume accounts for 58.24%, more than CoinEx up 16.47%.

4. Summary

At present, the Polygon chain can be described as a dark horse in the encryption market. For example, Instagram launched the NFT market on the Polygon chain; at the end of August this year, Reddit announced the launch of NFT released on the Polygon chain, which may bring nearly 2.7 million new users to the Polygon ecosystem. It is enough to show the market's support and recognition of the Polygon ecology. I believe that with the maturity and improvement of the Polygon chain, more and more projects will enter the Polygon ecosystem, so I think that the Polygon chain has great potential, and new projects in the ecosystem are also worth looking forward to.

** **

1. Overall

2. Klaytn Statistics 2.1 TVL 2.2 Volume

3. Klaytn token 3.1 distribution and use 3.2 Token Statistics

4. Klaytn Ecology 4.1 DeFi 4.2 GameFi 4.3 NFT 4.4 DApp/BApp

5. Summary

1. Overall

Klaytn is a public chain launched by Ground X in June 2019. Ground X is a blockchain subsidiary of South Korean Internet giant Kakao. The Klaytn public chain is an extension of Kakao in the blockchain field. Klaytn was initially positioned as a service-centric enterprise-level platform. In March 2019, it completed a seed round of financing of $90 million, and cooperated with many well-known companies around the world. And signed a central bank digital currency project with the Bank of Korea. In September 2021, Klaytn acquired a new positioning of "Metaverse Blockchain", which opened the era of Klaytn 2.0, and the service target changed from enterprises to everyone, aiming to become a platform for NFT and decentralized finance in Asia.

2. Klaytn Statistics

2.1 TVL

 The current TVL of Klaytn is $326.06M, ranking 13th, far lower than the TVL of the first-ranked Ethereum ($32.12 billion), accounting for about 1% of the TVL of Ethereum. It can also be seen from the changes of TVL in 7D and 30D that Klaytn is currently in a stage of slow rise. With Mcap/TVL of 2.62, the Market Cap is $854.28M.

The above figure shows the TVL data of Klaytn in one year. The highest TVL reached by Klaytn in one year was 1.34 billion US dollars, which began to decline in the Q2 quarter of this year. The current TVL is $326.06M, which has dropped to 25% of the original. There is also a slow upward trend.

2.2 Volume

At present, the number of transactions on Klaytn in 24 hours is 296.9k, the volume of Klaytn within 24 hours is $19.81M, and the volume within 7 days is $176.02M, and the volume has doubled from the previous month. As can be seen from the above figure, on October 21 this year, the Klaytn chain reached the highest single-day volume of $84.24M, and the volume has fluctuated and increased since September this year.

3. Klaytn token

The token issued by Klaytn is KLAY, and it has launched a cryptocurrency wallet Klip embedded in Kakaotalk, a domestic chat tool in Korea, for better user connectivity. The total number of registered users of Kakaotalk is 62 million, and 95% of the users who own smartphones in Korea are Kakaotalk users. Users can manage KLAY by installing the Klip wallet in Kakaotalk, and the app has a daily download volume of about 100,000 users on the first day of release.

3.1 distribution and use

The current distribution of KLAY is as follows: the Klaytn governance committee gets 34% of the tokens, the community incentives distribute 54% of the tokens, and the remaining 12% of the tokens are used for Klaytn improvements. KLAY tokens are mainly used for the following purposes:

a. On-chain transactions: Users need KLAY tokens to trade on the Klaytn chain.

b. Participate in decentralized financial activities: Users can provide liquidity through various DeFi protocols (such as Klayswap, Klaystation) to obtain tokens of other projects, or mortgage KLAY tokens to obtain KLAY mortgage rewards, and the mortgaged KLAY tokens can be used for liquidity mining.

c.  Minting NFTs: Users can mint NFTs on the Klaytn network. At the same time, Klaytn is the second public chain integrated on OpenSea, and cooperates with OpenSea to launch NFTs minted through the Klaytn network.

3.2 Token Statistics

KLAY's current market cap ranking is 58th, the current price is $0.2757, and the market cap of the past 7 days has been slowly rising. As shown in the chart above, the price of KLAY peaked on April 30, 2021 at $4.34. After the explosive growth of the currency price in February last year, KLAY has fallen by more than 90% compared to the highest point due to market conditions, panic and other reasons. Although it has been rising slowly recently, the increase is not large.

As shown in the figure above, KLAY's market cap reached its highest value on March 29, 2021, at $10.43B, and then began to fluctuate and fall. The current market value has dropped by more than 90% compared to the highest point and has recently risen briefly.

4. Klaytn Ecology

4.1 DeFi

• KLAYswap

KLAYswap is an AMM-based instant swap protocol and the largest DEX on the Klaytn chain. Through KLAYswap, users can freely exchange KLAY tokens and other tokens based on Klaytn ecology, and can obtain a certain percentage of transaction fee rewards and KLAY pledge rewards and other additional benefits. KLAYswap can be used directly in the chat software Kakaotalk, which simplifies the process of user participation in DeFi.

KLAYswap statistics

The figure above shows the number of active wallets, transactions, volume and historical activity data of KLAYswap within 7D. Within 7D, the UAW of KLAYswap is 9.1k, the number of transactions is 27.72k, and the volume is $87.37M. The volume of KLAYswap peaked at $3.24 billion on March 12 this year and has since fallen sharply.

• Orbit Bridge

Orbit Bridge is a cross-chain protocol for linking and interacting with the Klaytn network and other public chains. It is also an application running on the Orbit chain that can transfer tokens from layer1 blockchains like Ethereum to the Klaytn network. Therefore, Orbit Bridge can connect the Klaytn network with external blockchains to support cross-chain liquidity supply. Currently KLAYswap is also utilizing assets imported into the Klaytn network from other chains via the Orbit Bridge.

• Orbit Bridge statistics

The figure above shows the number of active wallets, transactions, volume and historical activity data of Orbit Bridge in 7D. Within 7D, the UAW of Orbit Bridge is 889, the number of transactions is 1.39k, and the volume is $86.04k. The volume of Orbit Bridge peaked at $20.53M on March 3 this year and has since fallen.

4.2 GameFi

•  Klaycity

Klaycity is a land management project built on the Klaytn chain. It was launched in March this year. It is Klaytn's first attempt in the field of chain games. Players can expand their virtual world in the ecosystem that combines NFT games and DeFi. 

Klaycity is a P2E virtual world. Players enjoy the game based on exploration, cleaning, and trading. The background of the game is that in 2080, the earth is polluted and cannot survive. The survivors need to purify the pollution, collect resources, rebuild the population, and expand the territory.

• Economic Model

• Klaycity statistics

At present, Klaycity’s TVL is $1.01M, and the market cap of ORB and LAY tokens are $2.76M and $670K respectively. The price of ORB token has been in a downward phase after a brief outbreak and is currently far below the opening price of the token. It is about 6 times less than the initial price.

4.3 NFT

• KLAYTNMAP

The KLAYTNMAP project was created in October 2021 and contains 5,200 NFTs with 863 owners. KLAYTNMAP is the first NFT project to store image data directly on the Klaytn chain, helping users add value by decorating and planning their land. 

• KLAYTNMAP statistics

At present, the total volume of KLAYTNMAP is 349k KLAY, the floor price is 40 KLAY, and there is no transaction within 30 days. It can also be seen from the Twitter of this project that the early users are basically Korean local users. And how to carry out user expansion may be a more important problem faced by the project.

4.4 DApp/BApp

Klaytn supports DApps in various fields such as digital assets, art collection, game development, and trading. Since most DApps are currently based on mobile phones, they can be linked with Kakaotalk, which also expands the scope of KLAY's use and accelerates the popularization of KLAY and become an important part of the Klaytn ecosystem.

At the same time, Klaytn also started the research and development of blockchain applications - BApps. Since DApps only consider a decentralized model, but in fact blockchain provides a wider range of functions such as transparency, traceability, and irreversible transaction processing, etc. By applying these advantages to applications, therefore, such an application is called a Blockchain App (BApp). DApps can be seen as BApps focused on decentralization. At present, Cosmo Chain, Wemix, Carry Protocol and many other companies are participating in the research and development of blockchain application BApps.

5. Summary

Klaytn relies on the South Korean communication giant Kakao as an endorsement. It not only obtains a lot of resources and capital support, but also relies on Kakaotalk to have a large number of native users. The popularity of its token KLAY in South Korea is also rapid. At the same time, the South Korean government has a high degree of acceptance in the field of encryption, and has introduced some support and regulatory policies. Therefore, with the support of the Korean government, banks and partners in the encryption field, as a public chain with both resources and users, and the ecosystem is constantly improving, Klaytn has the potential to become a project with a very high market share in the Korean market. 

However, projects in the Klaytn ecosystem still have a big gap compared to projects on top chains like Ethereum. And with the KLAY token plummeting in price and market cap, how many users will continue to have confidence in KLAY? Although Klaytn has announced a global expansion plan in 2022, Klaytn is not well-known outside of South Korea. Whether it can truly embrace the global market and get rid of the label of "Korean public chain" remains to be seen. Therefore, I think currently the development form of Klaytn is not as optimistic as expected, and it is unknown whether it can become the leading public chain in Asia as the team expects.

1. Compared with traditional venture capitals, venture DAO has several distinctive characteristics. 

2. BitDAO with ＄2.2B has the highest treasury at the time, the total treasury of other DAOs are ＄43.62M.（Counted by DeepDAO）

3. The investments BitDAO has made till now: EduDAO, zkDAO, Game7.

4. The Own.fund is an investment vehicle that funds community-led and Social Token projects, whose treasury assets keep growing from April this year.** **

Table of contents

1、The characteristics of Venture DAO

2、The state of Venture DAO

3、BitDAO

4、Own.fund

5、Summary

1、The characteristics of Venture DAO

Venture DAO is a community-governed group that aims to invest in the shared capital of the community. These are DAO-based investment groups that truly represent the interests of the members.

Compared with traditional venture capitals, venture DAO has several distinctive characteristics, such as:

• Can usage the wisdom of the community to make strategic investment decisions, they provide diversified background investigation

• Move the investment fund to the chain, improving the transparency of investment decisions

• More flexible "in and out" of members

2、The state of Venture DAO

There are 26 available investment DAOs on DeepDAO. They are ranked by treasury, token holders, proposals and votes. BitDAO with ＄2.2B has the highest treasury at the time, the total treasury of other DAOs are ＄43.62M.

Focusing on the primary market, this article organizes 4 Venture DAOs, and introduces each organization from the aspects of member entry and treasury and governance mechanism.

We will conduct an in-depth research analysis on BitDAO(the richest one) and Own.fund(the growing one).

3、BitDAO

BitDAO is a DAO with billions in existing assets and billions in forecasted contributions, according to its whitepaper. It was created by Bybit, a derivatives exchange in Singapore.

The BitDAO treasury size is $2.2B currently, only second to Uniswap’s. BitDAO aims to grow the treasury through liquid, short term, and long term opportunities including:

1.pledged contributions from Bybit. Bybit has pledged to contribute 2.5bps of futures trading volume to the BitDAO treasury. Note that the 2.5bps was based on 50% of nominal fees. 

2.specialized Autonomous Entities (such as Game7, zkDAO, EduDAO)

3.R&D labs

4.token swaps and venture deals

5.yield strategies

Prior to its launch, BitDAO had raised $230 million in private funding. BitDAO is governed by $BIT token holders. The DAO later raised $365 million when it launched BIT. BIT has a fixed supply of 10,000,000,000, and the distribution is as follows:

According to the data of coingecko, 24h trading volume of Bybit is reported to be at $4,995,716,146.41, then the donation amount will be $312, which means that the total fund is about $114k a year.

Assets in the BitDAO treasury are mainly BIT, which has a percentage of 60.8%.

source: https://stg.deepdao.io/organization/30d12da9-5fd5-411a-8ca8-1422a4ce1373/organization_data/finance

The investments BitDAO has made till now:

• Partnering with Mirana Ventures to allocate $33 million in three years to EduDAO, funding University ecosystems through funding faculty, research, projects, and events.

• Provide zkDAO with $200 million worth of crypto assets to help expand exhibition zkSync's ecosystem.

• $400 million in seed investment to create Game7, boosting the development of blockchain games.

4、Own.fund

The Own.fund is a collaboratively-owned investment vehicle that funds community-led and Social Token projects, as well as the tools and infrastructure that support them. 

At launch, prospective members are able to contribute funds in DAI or USDC during a deposit period. Once this deposit period ends, the first capital raise is considered complete. Members of the Own.fund will be required to complete KYC requirements for the purpose of anti-money laundering and sign an Own Fund Agreement. 

The OWN token acts as a voting token of the Own.fund. The percentage of the total supply of OWN tokens that need to participate in a vote for it to be considered valid is dependent upon the amount of the investment. For example: A 50,000 DAI investment proposal might require 30% of OWN tokens to be committed to a vote, with 51% in favor being sufficient to pass it.

In order to incentivize active engagement and motivate members to carry out tasks on behalf of the fund, an NFT/POAP-based Referral and Reward Program has been implemented.

source: https://own.fund/#/hom

The total treasury is $5.1M now. The top currencies on treasury are USDC, WETH. And we found that the treasury assets keep growing from April this year, at which the bear market started.

For this treasury, Gnosis Safes have been created on Ethereum mainnet and on Polygon. These safes can be monitored at the following addresses:

mainnet:0x97b5bCfeA315D68f8007cA93bf6020a78dd26D49 

polygon:0xFfF1d15AdecbF4e5c2Cf789D69472b80D0fFdc10

We can find the assets from three platforms, which cross-certified the total assets value.

5、Summary

Since the BitDAO treasury size is only second to Uniswap’s with little gap, we can see the attractiveness of venture DAO. We've seen similar traction with personal social tokens-WHALE. And it can be said that Own.fund bets on the social track. If this track develops and grows in the future, this DAO will also become famous.

But in writer’s opinion, there are still two problems to be solved:

Firstly, We can see that BitDAO has 18.8k members, but the voters are only 91. It is very likely that there will be a portion of the paddling members, all they want to do is get a piece of the pie without providing truly valuable contributions to the DAO. Maybe when the amount and income of each investment are counted according to the voting ratio. That is to say, who votes who can invest.

Then, decision-making efficiency may be decreased by the voting process, leading to missed investment opportunities.

**

**

Table of contents

1、Background

1.1 Liquid Staking

1.2 Liquid Staking TVL Rankings

1.3 Ethereum liquid staking

2、Lido

3、ANKR Staking

4、StakeWise

5、Persistence-pSTAKE

5.1 Persistence

5.2 pSTAKE

6、Summary

1、Background

1.1 Liquid Staking

We all know that in the proof-of-stake (PoS) consensus, validators secure the network by staking digital assets. Once staked, the assets cannot be used for other purposes such as borrowing or lending anymore. Yields for staking assets are relatively lower compared to those of DeFi protocols. Furthermore, those that stake their assets on the network do not get immediate access to these assets when they remove their locked up capital.

The problems above are solved due to Liquid Staking. It allows investors to stake their assets while also allowing them to use those assets in other projects during lock-up.

1.2 Liquid Staking TVL Rankings

According to DefiLlama, there are about $8.7b in liquid staking protocols across many blockchains. With $6.05b of TVL, Lido Finance makes up more than 70% of the liquid staking market, almost all of which comes from their Ethereum pool.

1.3 Ethereum liquid staking

Ethereum is the blockchain with the most value in both staking and liquid staking. Lido Finance makes up the dominant share of Ethereum’s liquid staking. The chart below shows the distribution of various liquid staking providers.

2、Lido

We once introduced Lido in our article: Catch the tail of ETH 2.0 You can jump into it for details. We will update some data in this report.

First we see the assets staked on Lido. Now DOT has the highest APR which is 12.6%, and ETH has the most staked amount followed by MATIC, but the stakers of MATIC is the least. Most of the stTokens have less value than staked tokens, except DOT.[2022.11.15]

The total stETH is 4,729,215, over 50% of it is held by less than 5 holders. Among them Lido is the second one following Aave.

Lido has also built a liquidity pool for stETH on the Curve platform, with over $885 million worth of stETH locked in Curve’s stETH-ETH pool.

Perspectives: when will holders of stETH would like to sell the stETH, and how? The first situation is that holders need to cash out when they need money. They can go Curve to swap stETH to get ETH in return. Another situation is that they want to improve capital utilization, then they go to Aave to borrow money and trade with leverage. The max LTV on Aave is 72%, so this is a nice choice.

Will stETH de-peg? Once stETH whales sell off at a low price or holders sell in panic, then the price of stETH falls to a certain level. It will trigger AAVE's leveraged liquidation line, causing further sel-offl. The amount of ETH is much less than stETH, so the liquidity can be used up soon. Finally, the price of stETH falls into a death spiral.

However, the above assumptions have a very low chance to happen. Other events like FTX, leading to depegging, provide arbitrage opportunities instead.

Depegging history of stETH=Arbitrage opportunities

The price of liquid staking tokens is not “pegged” to the price of ETH - they trade freely in the market. As a result, in bear market the price of Ethereum liquid staking tokens begin trading at a discount to Ethereum.

In June of 2022, as overleveraged market participants hurried to sell their stETH, the price of stETH moved down to a 7% discount below the price of ETH, as shown in the chart.

At last, we compare the the token information:

3、ANKR Staking

Ankr Liquid Staking supports two types of tokens: reward earning tokens and reward bearing tokens.

Reward earning tokens represent the staked asset. Rewards occur through the rebasing process where more tokens are issued to the stakers' wallet, increasing the number of tokens without changing their price. For example, if you stake 1 ETH, you are issued 1 aETHb. Every 24 hours your aETHb balance increases — a portion of aETHb is added to your wallet, according to your stake amount and the current yield value.

Reward bearing tokens represent the staked asset plus all future staking rewards. They don't grow in number but grow in value. For example, the fair value of 1 aETHc token vs. ETH increases over time as staking rewards accumulate.

Currently Ankr Liquid Staking is available on 8 platforms, namely Avalanche/ Binance/ Polkadot/ Ethereum Mainnet/ Fantom/ Kusama/ Polygon and SSV (Ethereum Goerli). The total TVL is $164m, and 57% is from BNB stake.

Now DOT has the highest APR which is 13.73%, and BNB has the most staked value followed by ETH, but the stakers of ETH are the most. [2022.11.16]

We find that the holders of aBNBb and aBNBc are totally not similar. They are 2,842 and 2,315 respectively, but the distribution is much different. Holders of aBNBb are very scattered, while over 92% of aBNBc are held in one protocol which is Helio. Helio Protocol is an open-source liquidity protocol for borrowing and earning yield on HAY —a new BNB backed over-collateralized destablecoin. The TVL is $83.95m.

Like Lido, Ankr has also built liquidity pools for staked representative tokens on the DeFi platforms, including Pancakeswap, Uniswap, Curve.

** **At last, we see the token information:

4、StakeWise

StakeWise tokenizes both deposits and rewards earned by those staking in the Pool. sETH2 (staking ETH) is a token that represents users' deposits in StakeWise Pool in a 1:1 ratio. rETH2 (reward ETH) is a token that represents users' ETH rewards in StakeWise Pool in a 1:1 ratio. As long as you hold sETH2 that represents your deposit, rETH2 will accrue on your address as a reward from staking.

Holders can use protocols like Uniswap, Sushi or Curve to exchange sETH2 and rETH2 into other assets.

Vital Data: There are 67,315.21 ETH staked in the pool, so 67,315.21 sETH2 were minted and the holders of sETH2 are 4234. However, only 3,826.07 rETH2 were minted now, and holders are just 409.(According to Etherscan)

Why? There can be 2 reasons for this: One is stakers don’t want to wait for the staking rewards, so they sell them. Another reason is that holders didn’t claim for it after they put sETH2 into some contract.

Let’s see the liquidity situation: Liquidity and rewards for rETH2 is much less than those of sETH2.

![source: https://app.stakewise.io/farm

](https://images.mirror-media.xyz/publication-images/XC_ga8vxk2M5491f0NohX.png?height=504&width=936)

At last, we put the token information as below:

5、Persistence-pSTAKE

5.1 Persistence

Persistence is a Tendermint consensus-based Layer-1 network that focuses on decentralized finance (DeFi) applications that help drive adoption and utility for PoS liquid-staking assets.

First, note that the native asset of the Persistence network is called $XPRT, it carries a variety of use cases within the ecosystem, including governance, staking, and its role as a work token. XPRT is a deflationary token with a genesis supply of 100,000,000 XPRT and a maximum supply of 403,308,352 XPRT. Initial inflation will range from 25-45% with the target of 35% achieved at 66.7% bonding ratio. Inflation halving happens every two years and the maximum supply cap is expected to be reached by the year 2035.

100 million XPRT will be minted at genesis and will be gradually released over the course of 42 months. The distribution is as follows:

There are 26 dAPPs on the Persistence network, and they are most wallet and DEX that are Cosmos native products.

5.2 pSTAKE

pSTAKE is a product of Persistence, which is a liquid staking protocol. On staking with pSTAKE, users earn staking rewards and also receive staked representative tokens (stkASSETs) which can be used in DeFi. pSTAKE currently supports liquid staking for Cosmos, Persistence, Ethereum and BNB chains.

In August, pSTAKE went live with its liquid staking system for BNB Chain. Users holding stkBNB can participate in DeFi protocols to generate additional yield on top of their staking rewards. Currently, there are 7 protocols supporting stkBNB. Holders of stkBNB are 830.

We put the information of Midas and OpenLeverage here, and we can see that the utilization of stkBNB is not very high.

stkETH on Uniswap V3 has a pool whose liquidity is $30.34k with no trading volume and the price difference is 16%.

The total users of pStake are 4858, and the TVL is $4m now. pStake also has stkATOM/ETH and stkXPRT/ETH pools on Sushi. Below is the analytics from pStake.

6、Summary

It is true that Liquid Staking has many advantages both to POS and stakers.

Current results from stETH show that Lido makes the system more and more centralized, bringing some arbitrage opportunities to users, as well as some risks.

Networks such as BNB chain, the strategic investment in pSTAKE Finance has brought more DeFi innovations to the BNB chain ecosystem.

However, besides ETH, people who stake other assets are not very much, resulting in the staked representative tokens not receiving much liquidity and volume. So there is still a long way to go for liquid staking protocols.

** **

1. Why Decentralized Data Storage

2. Some Data Regarding Decentralized Storage Solutions

3. Types of Decentralized Storage Solutions

4. IPFS, Pinata & Filecoin 4.1 Filecoin Fees, Storage Process & Interface 4.2 Deals; The Core of Filecoin Storage 4.2.1 Proof-of-Replication: 4.2.2 Proof-of-Storage: 4.2.3 Proof-of-Spacetime:

5. Arweave 5.1 The Blockweave 5.2 Arweave Interface 5.3 The “Backbone” of Arweave; Storage Endowment 5.4 Arweave Fees 5.5 Summary of Key Features of Arweave

6. Adoption of Decentralized Storage Platforms

7. Food For Thought 7.1 Filecoin Sentiment 7.2 Arweave Sentiment

1. Why Decentralized Data Storage

Having complete control over your data is something that is often overlooked, but important. There have been many who have been hurt by placing too much trust on Centralized Entities.

Of course, Decentralized Platforms has its own problems… such as smart contracts exploits etc., but we rather entrust our data to immutable code which we can verify if it is malicious, with the code being open source, rather than centralized entities which can go rogue anytime.

An example would be the recent 3Commas API Key Leak // 

Anonymous Twitter User Leaks 3Commas API Database

2. Some Data Regarding Decentralized Storage Solutions

https://spacegap.github.io/#/

https://filfox.info/en

https://filscan.io/#/tipset/chain

https://dashboard.starboard.ventures/market-deals

https://siastats.info/index

https://storjstats.info/d/storj/storj-network-statistics?orgId=1

3. Types of Decentralized Storage Solutions

4. IPFS, Pinata & Filecoin

Built by Protocol Labs, Filecoin and IPFS are separate protocols. 

InterPlanetary File System or otherwise more commonly known as IPFS, is a file sharing technology, when you add a file to IPFS you will get a CID (Content Identifier). 

Although IPFS is free, there is no guarantee it's hosted on some node forever. Eventually, the node cache becomes full, and then garbage collection happens. This means that the node empties its cache to make room for more content which could cause your file to “disappear” if they are not accessed for a while.

Other than hosting your own node, people use Pinata to "pin" a file on IPFS, or use Filecoin to incentivise people to host files.  

Pinning means that you are telling the node that the file is important and to store it. Pinata is a pinning service, they will keep your files pinned and anyone with the CID can obtain the file.

4.1 Filecoin Fees, Storage Process & Interface

To store data, we need to find “Storage Providers” to make a deal.

The Filecoin network allows storage providers to compete by offering different terms for pricing, acceptable data sizes, and other important deal parameters. 

It’s also important to consider the storage provider’s location; the closer the storage provider is to you, the faster the storage and retrieval process will be.

Source: Store data - Filecoin Docs

4.2 Deals; The Core of Filecoin Storage

Before going into deals, we will introduce some concepts of Filecoin. 

4.2.1 Proof-of-Replication 

A novel Proof-of-Storage which allows a server (i.e. the prover P) to convince a user (i.e. the verifier V) that some data D has been replicated to its own uniquely dedicated physical storage. 

4.2.2 Proof-of-Storage

Proof-of-Storage schemes allow a user to check if a storage provider is storing the outsourced data at the time of the challenge.

4.2.3 Proof-of-Spacetime

Where a verifier can check if a prover is storing her/his outsourced data for a range of time. 

Sources:

Filecoin: A Decentralized Storage Network, Protocol Labs, July 19, 2017

Below is a simplified explanation of Storage Deals and Retrieval Deals.

5. Arweave

5.1 The Blockweave

The Blockweave is ran by miners who are providing disk space and replicating the data stored in the network. They are incentivised by earning AR Tokens. 

Up till Block 633720, Arweave was on the Proof of Access Consensus Mechanism, but since then have changed to Succinct Proofs of Random Access to align mining profitability with speed of data access, and to reduce the energy required to maintain the network.

Proof of Access was until Block 633719: 

Basically Proof of Access: Proof of Work + Includes Reference to past data. 

PoA achieved Arweave’s primary goal of permanent storage and data access, but it imposed no significant incentives for miners to retrieve data quickly. Without a competitive edge to data retrieval, miners found an opportunity to benefit from using a remote storage pool rather than maintaining separate, decentralized nodes.

Source:

https://arweave.medium.com/the-arweave-network-is-now-running-succinct-random-proofs-of-access-spora-e2732cbcbb46

Succinct Proofs of Random Access (SPoRA) started from Block 633720 approx Feb 24 2021: 

SPoRA doesn’t depend on the previous block to validate transactions but rather uses the previous block and a random block in the chain as the challenge to miners.

Source:

https://arweave.news/arweave-glossary/#:~:text=Succinct%20Proofs%20of%20Random%20Access,as%20the%20challenge%20to%20miners.

SPoRA requires that they include a random byte of data from a past block with each hash cycle. If they don't have the byte they have to retrieve it from other nodes on the network and potentially miss out on mining the block to a node that has the data stored. This incentivizes miners to store as many replicas of the data as they can and keep them close to the CPU.

Source: Arweave Dev Discord

The SPoRA consensus algorithm swaps much of the compute that used to be needed for mining blocks for disk reads. This means miners will be incentivised to keep many more replicas of data in the network, and it will consume less electricity.

Because it is "random" miners will be incentivised to keep many more replicas of data in the network, and it will consume less electricity. 

// The protocol generates random challenges for chunks of data from the entire Arweave data set.

// The more of the dataset the miners store the better their mining performance

the randomly selected "chunks" are 256kb chunks of pictures/videos/encrypted content etc. 

The more you store = the better the mining performance. 

Furthermore, with the Blockshadowing System, which decouples transactions from blocks, and only sending a minimal ’blockshadow’ between nodes which allows peers to reconstruct a full block, rather than transmitting the full block itself, allows transactions to be mined into a block as fast as they can be distributed around the network, and consensus about blocks to be achieved at near network speed.  

Source: Arweave Yellow Paper

5.2 Arweave Interface

5.3 The “Backbone” of Arweave; Storage Endowment

Users pay a one time payment initial cost to upload data to the Arweave network, which covers the first 200 years of storage. 

The idea is based on the assumed decreasing storage prices over time. 

Over the past 50 years, data storage has seen its costs decrease by an average of 30.5% per year.

Source: https://ardrive.io/topic/arweave-economics/

Most of the transaction fee is contributed towards a storage endowment, which is distributed to the wallets of miners over time to incentivise this perpetual storage.

Miners earn tokens by replicating the data in the network and constantly testing its validity. 

You can read more in detail about the Endowment Simulation here:  https://arwiki.wiki/#/en/endowment-simulation

As at: UTC 2023-01-13 05:06:00, an estimated amount of 0.1346% of the current circulating supply is in the endowment.

5.4 rweave Fees

Dataas at: // UTC 2023-01-13 05:06:00 //

You can view the real time fees to store data permanently on Arweave here: 

Arweave Fees

5.5 Summary of Key Features of Arweave

6. Adoption of Decentralized Storage Platforms

7. Food For Thought

7.1 Filecoin Sentiment

Filecoin also has an initiative known as Filecoin Green, which aims to measure the environmental impacts of Filecoin and verifiably drive them below zero, building infrastructure along the way that allows anyone to make transparent and substantive environmental claims. 

(Source: https://green.filecoin.io/)

You can view the energy consumption rate here: Filecoin Energy

As at 11 Jan 2023, we can see that the energy consumption rate has been steady since Q3 of 2021, with no sustainable increase. We feel that this attempt at trying to acknowledge the concerns of users who might be concerned about the environmental impacts shows that they have a clear and well thought out plan.

The customization with Filecoin Deals also enables users with access to more competitive rates to store their data.

7.2 Arweave Sentiment

However, we note that Arweave is more suited for Web3 Platforms, in the sense that it is based on a blockchain “model”, rather than based on a decentralized “hard disk”, such as Filecoin. 

Due to the permanent nature of Arweave, it also works as a double-edged sword, in the sense that illegal content could be hosted there and could cause regulators to “take necessary actions” to shut it down if it becomes too rampant. 

However, Arweave seems to have come up with a way to address this issue quite effectively.** **Arweave's blockweave data structure ensures that miners are not required to store the entire dataset, and miners are able to run arbitrary computation (from simple keyword searches, to computer vision image and video analysis) upon all data they store, so that they can remove content they are not comfortable with hosting.

Source: https://arwiki.wiki/#/en/content-policies

Hence, we at HashBrown Research feel that Arweave has a good edge for Web3 Projects who are in it for the long term, to build on. 

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Have you thought about which platform you would choose to store your data?

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Feel free to connect with us on our Socials as we would like to hear your thoughts!

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1. Why Decentralized Socials? Pros & Cons of Decentralized Socials

2. An Introduction to Lens Protocol Key Points of Lens Protocol

3. Features of Lens Protocol 3.1. Profiles 3.2. Publications 3.3. Collect 3.4. Follow

4. Users & Profile Analytics User Analytics Profile Analytics

5. Some Data on Transactions & Activity/Engagements Transaction Data Activity/Engagement Data

6. Observation on Lens Influencers, aka KOLs Food For Thought Comparison of Decentralized Social Platforms Challenges faced when migrating Web2 Socials to Web3 Socials Sentiment at HashBrown Research

1. Why Decentralized Socials?

There are multiple reasons in which we feel Decentralized Social Platforms have an advantage over more Centralized Social Platforms, however, we will list out only a few of the more relevant points.

A key point for us is Censorship, and since Social Media is such a powerful tool which enables people around the world to connect easily, we should not place too much trust on Centralized Social Platforms.

An interesting fact to note is that AAVE is the same team behind Lens Protocol and Aave founder Stani Kulechov was temporarily suspended from Twitter for tweeting a joke that he was the new interim CEO of Twitter. 

2. An Introduction to Lens Protocol

A Web-3 Social Graph which allows developers to easily build their own Decentralized Social Platforms on it. 

By bringing all applications built on it to “collaborate” with each other to grow the whole ecosystem, social media creators do not have to worry about “losing” their audience if they choose to use another application built on Lens.

Built by a reputable team and designed with the idea in mind to grow the whole ecosystem together, it has a good chance of succeeding as it attempts to capture various users’ attention on the whole ecosystem as a whole.

3. Features of Lens Protocol

Below is a list of some Key Features on Lens Protocol.

3.1 Profiles

Profiles are basically NFTs, and it is the main object on Lens Protocol. Ownership of this NFT that gives you control of your content.

3.2 Publications

• Posts 

• Comments

• Mirrors Mirrors are basically reposting existing content.

3.3 Collect

A feature which allows creators to monetize their content, when a user posts a publication to their Profile NFT they have the option to set a Collect Module. This module will allow other users to mint NFTs that link to that publication. 

Source: https://docs.lens.xyz/docs/collect

3.4 Follow

When users follow a profile on Lens Protocol, they are given a Follow NFT, which creators and communities can encode with additional value.

Source: https://docs.lens.xyz/docs/follow

4. Users & Profile Analytics

User Analytics

![Source: Dune as at UTC 2023-01-05 06:48:00 // https://dune.com/hashbrown_research/a-look-into-lens-protocol

](https://images.mirror-media.xyz/publication-images/xeD-Zoe8HgtaTSumVjRkv.png?height=290&width=990)

As of UTC 2023-01-05 06:48:00, we have a total of 162,299 Unique Users.

In the Dune Analytics Bar Chart, we can clearly see users being most active around November 2022. 

Active Users are defined by interaction with the Lens Protocol Profile (LPP).

LPP Contract Address: 0xDb46d1Dc155634FbC732f92E853b10B288AD5a1d 

Profile Analytics

In regards to Profiles, as of UTC 2023-01-05 06:48:00 we have a total of 107,946 Profiles Minted. The Daily Minted Profiles seem to have a significant increase from the end of September 2022 to the end of November 2022, whereas in the past month on Dec 2022, it did not seem to have much profiles minted. 

It is important to note that not everyone can mint a profile. 

Profiles can only be minted by addresses that have been whitelisted by governance to ensure the namespace is not reserved by squatters. 

Source: https://docs.lens.xyz/docs/profile

An address can contain multiple ProfileNFTs, and as of UTC 2023-01-05 06:48:00, we have 2.9% addresses owning more than 1 Profile. ** **

5. Some Data on Transactions & Activity/Engagements

Transaction Data

As at UTC 2023-01-05 08:00:00, we can clearly see an increase in daily transactions from the end of October 2022. 

The Transactions breakdown are as shown below, with the majority coming from Posts. 

Similar to Active Users, Transactions are defined by interaction with the Lens Protocol Profile (LPP).

LPP Contract Address: 0xDb46d1Dc155634FbC732f92E853b10B288AD5a1d 

Activity/Engagement Data

A huge part in the success of a Social Media Platform is depending on the users. Engagement here is defined by Profiles who have made a Post, Comment or Mirror on that particular day. 

We can see that Daily Profile Engagements and Activity in general have increased significantly from early November 2022.

6. Observation on Lens Influencers, aka KOLs

As at UTC 2023-01-05 08:28:00, the Total Collection Revenue is estimated to be about $28,533.

We observe the most profitable collector is by @bigint, who is the creator of Lenster. (https://lenster.xyz/u/bigint).

However, this is by the creator, hence, it may not be too accurate to use as a metric to determine the profitability of the user. The second ranked in revenue has only ~$690.11 in revenue. 

This poor performance in terms of revenue for current Profiles may be due to Profile NFTs not available for the average user to mint.

As at UTC 2023-01-05 08:28:00, we can actually see that 32.6% which is the majority out of all the Profiles Sorted by Follower Count, have more than 10+ Followers.

Food For Thought

There is some comparison on other Decentralized Social Platforms such as DeSo.

Challenges faced when migrating Web2 Socials to Web3 Socials

Take it that you have built up your audience on a Social Platform for years, and your audience are all based on that platform. Migrating to a totally different platform is not exactly something Content Creators might be keen on. 

As we mentioned that the audience/users of Social Media are the basis of what makes the platform successful, if an existing platform (E.g. Twitter - Since most Crypto Interaction is based on Twitter) decides to launch their own Decentralized Socials one day, it could mean the death of these projects currently building Decentralized Socials. 

This is because Twitter already has the existing audience, and it would be easier to onboard these audiences to the new Decentralized Platform. Judging from Elon Musk’s ambition (Current CEO of Twitter 6 Jan 2023), it is not unlikely that he might have plans to consider moving to a Decentralized Social Platform. 

Sentiment at HashBrown Research

At HashBrown Research, we are confident that Decentralized Social Platforms will slowly but surely take over the current Centralized Social Platforms, and thus we are excited to see the upcoming innovations of builders for such Platforms. We could start with onboarding Crypto Native people to the new platform first, since the Crypto Community does not really have an “Official” Social Platform other than Twitter, or for their respective communities, Discord and Telegram. 

We also feel that the Network chosen and Team behind it is arguably more important than the features the platforms offer. We acknowledge that nothing can be said to be 100% Decentralized, but we must make an attempt to do so. 

We can see many cases in which “decentralized” platforms are still too Centralized, as seen by the blockchain/network being able to be “turned off” anytime by the team.

Also, some teams have a history of being quick to forgo the values of Decentralization when faced with pressure from powerful individuals, or for their own selfish benefits. 

Web3 Companies should focus on Decentralizing their platforms to the best of their ability, or else it is no different from a Web2 Company + Crypto Token representing it.

You can also view our Dune Dashboard on Lens Protocol that we have came up with, with some help from the existing community there, here: A Look Into Lens Protocol

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What are your thoughts about Decentralized Social Platforms, and which of those do you think would have mass adoption in the future?

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Feel free to connect with us on our Socials as we would like to hear your thoughts!

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