There’s no money flowing into Crypto now. Everyone’s angry on Twitter – even the nerds are fighting with each other.
In Crypto, you gotta do the opposite of the crowds. When everyone’s Euphoric that’s when you should exit. When no one’s interested, that’s when you should be buying.
I’ve been in a few bear markets before and know this is the time to double down. Cathie Wood’s ARK invest just filed for the 1st Ethereum ETF a few hours ago.
Here’s what we got today:
- The Betrayal. MakerDao could be its own blockchain by forking Solana.
- The 80/20 of L2s. What you need to know about the rollup ecosystem.
- Around the Web. Frax is considering a savings rate for holders, Raft v2 is coming, Aave on Gnosis, and more.
Here’s your Edge 🗡️!
Maker’s Switching Sides?
The founder of MakerDao and Dai, Rune Christensen, wants to transition MakerDao into its own native chain.
This is becoming a trend for Apps to gain more control. Appschains tend to be L2 or L3s on Ethereum. Examples include Lens Protocol, DeBank, Aevo, etc.
So you’re probably wondering which Ethereum Layer 2 he wants to choose.
Plot twist: None.
He wants to go with Ethereum’s rival Solana and fork their code.
This has sent shockwaves to the Ethereum community since Rune is an OG ETH builder.
Many people in the ETH community aren’t happy – even Vitalik dumped his $MKR stack.
Let’s answer some of your burning questions:
- What will NewChain look like? User-facing products, such as DAI, will remain on Ethereum and L2s. NewChain (a temporary name) will mainly serve as a back-end to the Endgame governance system. It will also be bridged to both Ethereum and Solana.
- Why an Alt-L1? Rune is pushing for Endgame, which is his plan to restructure the MakerDAO completely. NewChain forms a part of the planned final phase of Endgame. It’ll capture the maximum value for MKR.
- Why not a rollup? Rune claims rollups cannot be hardforked. (Though many claim that they can be hardforked.) Imagine if NewChain is hacked. MakerDao could create a new version where the hack never occurs. This gives them more power and control.
Why Choose Solana?
- Code quality: Solana is optimized for running a highly efficient monolithic chain.
- Resilience: Even after the FTX disaster, their Dev community hasn’t lost its spark!
- Successful examples: Projects like Pyth have already forked and used Solana for their back-ends.
This isn’t directly bullish for $SOL prices (since we’re in such a crappy market). It just says that the Solana Tech stack is fantastic.
And this is just one of several catalyst for Solana lately:
- Maple Finance returned to Solana.
- Shopify integrated Solana into their platform.
- Visa added stablecoin settlement on Solana.
- Membrane Finance introduced the Euro stablecoin on Solana.
It does look like Solana’s starting to make a comeback in DeFi. I don’t think they’ll ever reach their ATH prices again.
But they are an ecosystem worth paying attention to. Saying they’re dead is a mistake.
80/20 of Ethereum L2s
DeFi has moved on from L1s.
Now everyone is swiping right on L2s, aka rollups. There’s an announcement of a new L2 virtually every other week and it’s hard to keep up.
We’ve created a quick cheat sheet to catch you up.
These rollups don’t immediately prove that all their submitted transactions are valid. Ethereum sort of assumes it. But anyone can challenge these transactions. The rollups then check if they are, in fact, valid. And if they are invalid, then they are reverted.
All major Optimistic rollups use the Ethereum Virtual Machine to execute transactions.
This type of rollup is dominant now. Some examples include:
Arbitrum One: This started the rollup season. It is also the most successful rollup. Its TVL is over $5B, more than all the other rollups combined!
OP mainnet: The rollup from the Optimism Collective. Instead of building the biggest L2, they have also focused on creating an ecosystem of L2s (Superchain). OP Chain is the tool that enables the creation of L2s that are part of this superchain.
Base: This rollup from Coinbase was created using OP Chain, forming part of the OP Superchain. Despite being only a few weeks old, it’s already the third biggest L2 by TVL.
Mantle: This L2 is from BitDAO, which has the largest DAO treasury. And despite having a $200M ecosystem fund, they haven’t captured as much traction as Base.
Zk stands for Zero-knowledge proofs. These rollups guarantee that all transactions written onto a blockchain are valid. Therefore, they are considered to be better than Optimistic rollups.
Zk-rollups that use the Ethereum Virtual Machine to execute transactions are called zkEVMs. Not all zk-rollups aren’t zkEVMs.
But this narrative hasn’t taken off yet, compared to its potential. Remember, Optimistic rollups have the 1st mover advantage.
zkSync Era: The leading zk-rollup and a zkEVM. Its peak TVL was ~735M. However, since then its TVL has decreased significantly to ~405M.
StarkNet: This zk-rollup from StarkWare isn’t a zkEVM. It uses StarkWare’s own programming language called Cairo. Its peak TVL was around ~200M.
Polygon zkEVM: This rollup is part of Polygon 2.0, an ecosystem of zk-rollups. They are converting existing Polygon PoS into a zk-validium as well. But adoption by the community has been relatively lukewarm: Its TVL is only ~44M.
Linea: Another recently released zkEVM. This one is by Consensys, the team behind many well-known Web3 software applications such as Infura and MetaMask. They debuted alongside Base but haven’t performed as well.
Technical Maturity: Rollups haven’t fully matured yet. Much of the L2 narrative constitutes theories and promises. Optimism doesn’t even have a working proof system. The next few years will be focused on making these theories practical.
L3s and Appchains: Larger dApps might choose to deploy their own chains. These chains can be L2s or L3s. L3s are chains built on top of L2s. Aevo, an appchain, is already live. Lens and DeBank have also made announcements.
Interoperable Ecosystems: Until now, L2 wars have been seen as PvP battles, with individual rollups like Arbitrum and OP Mainnet battling each other.
However, this isn’t the case anymore. Most major rollup players are also providing L2-as-a-service. And they are trying to create their own ecosystem of rollups in which they can interact with each other’s dApps.
It’ll take a while before we see who the winners are.
How Did Base Grow?
Base chain launched around a month ago.
It’s interesting to note how killer dapps cause TVL increases and adoption.
As you can see, there were three periods of rapid growth in TVL. These periods, of course, aren’t entirely random.
July 30th: This happened before the official launch due to the $BALD memecoin. It was associated with Brian Armstrong, founder of Coinbase. It 30,000xd in the first 24 hours and attracted degens to the chain.
Even though BALD ended up a rug, it established Base as a center of degen activity. And the TVL continued to climb steadily afterward.
Aug 10th: Base officially launched on the 9th. Friend.tech launched the following day. And it became the super app of Base. It allowed users to speculate on Twitter accounts and gave them access to a private chat with them.
It grew beyond the crypto community – even OnlyFans creators started using it. Even though it is now in decline, it has driven a lot of users to Base.
Aug 30th: Aerdrome went live on Aug 28th. And they crushed it. There were several reasons for their success:
- Liquidity incentives
- Support from Velodrome
- ve(3,3) tokenomics model
- “Top DEX on Base” narrative
All these factors led to users bridging over to Base. And that is behind the third spike you can see in the chart.
The day before yesterday, Base went offline for ~1 hour. But it hasn’t halted Base’s momentum.
The issue was quickly resolved. And Base is still going strong.
🚀 DeFi Catalysts
Frax Finance is discussing the release of $sFRAX. It’ll allow users to deposit FRAX and earn interest (in FRAX) on their holdings.
Uniswap v4 will be live after the Duncan upgrade of Ethereum. Permissionless innovation of DEX pools is the most important upgrade in v4.
Gearbox protocol allows users to add leverage to their Curve and Convex positions. Now you can earn over 100% APY on a few of these pools.
Raft announced the launch of their V2. It introduces two new features: R Savings Rate & Peg Stability Module.
Aave decided to deploy v3 pools on the Gnosis chain. It will have many synergies with GnosisPay and GnosisCard.
Arbitrum DAO is discussing a one-time, community-created program to distribute up to 75 million $ARB. Bullish for Arbitrum protocols.
Celdra, a rollup-as-service firm, introduced the first three dedicated Arbitrum Orbit Chains. Like OP Chains, we might see a lot of Arbitrum L3s coming.
Akash Network adds Nvidia GPUs to its decentralized marketplace for computing. It’s part of the mainnet 6 upgrade.
Polygon zkEVM scheduled their first major upgrade, the Dragon fruit upgrade, for September 11th.
KTX Finance will deploy on Mantle soon, you can get around ~130% APR, with ~30% paid in BNB. (They use the GLP model).
Arbitrum released a testnet for Arbitrum Stylus. Devs will be able to write smart contracts in languages such as C++ while retaining the benefits of the EVM. ecosystem.
📰 Industry News
Krafton, the company behind PUBG, is launching its own Cosmos chain. PUBG has around 294 monthly active players.
Stake, a crypto casino, appears to be hacked. They’ve lost around 41 million dollars. In 2022, they’d made around $2.6 billion in revenue.
MetaMask added another feature to its wallet: Sell. The users will now be able to cash out their crypto for fiat currency easily.
Coinbase has created a new crypto lending service in the U.S. for institutional clients. This will fill the void left by now-bankrupt firms like Gensis & BlockFi.
London Exchange Group plans to offer a Blockchain-powered market for Traditional Assets. If successful, this will be the biggest catalyst for the RWA narrative.