Weekly Editor's Picks (0831-0906)
Investment and Entrepreneurship
Projects with longer financing processes will have longer intervals before the next round of financing and will receive less funding. After a month of a significant market surge, a large number of investments and financing will emerge. This year, token issuance through public sales has dominated, accounting for 81% of all token issuances from the beginning of the year to the present. Not a single project in private placement can surpass public sale projects.
XEX Research Institute Trading Review: 7 Common Mistakes in Technical Analysis (TA)
Not setting stop-loss orders, overtrading, revenge trading, stubbornness, ignoring extreme market conditions, forgetting that technical analysis is a game of probability, blindly following other traders.
Conversation with Pacman: First Principles of Build; Dilemma of Incentives and Solutions
The problem with OpenSea and other NFT markets is that they position their customers as consumers, believing that NFTs are products you like to buy, hold, and purchase. Pacman believes that a large portion of users should be defined as traders. The incentive system is difficult to design because it is difficult to avoid manipulation (referring to large-scale witch attacks). Conventional retrospective airdrops lead users to perform a lot of random operations, which Pacman believes is a huge waste. Liquidity cannot be forged like the number of addresses, and regardless of whether Farmers exist, they provide liquidity for the overall ecosystem, so Blur only incentivizes one thing, which is liquidity. The significance of the points program is that the project can directly guide users (avoiding users' random operations) and accurately track user performance. Blast still targets the market's blank space: passive whispers of underlying assets and developer gas income. The big cycle of the crypto market has not yet begun, still waiting for a fundamental innovation.
L2, Solana, or Appchain? Who is the Best Choice for Deploying Applications?
Although general L2 and Solana each provide compelling advantages, application-specific chains provide builders with an opportunity to achieve profitability, specialization, and compete in scale and composability with general L2, Solana, and other L1s. As the modular ecosystem expands, application-specific chains will play a crucial role in the growth of popular applications. However, this vision strictly depends on establishing an interoperability solution standard as soon as possible.
Meme
Developer Earns $30,000 a Day, What is EtherVista, the "New Standard" for DEX?
VISTA comes from EtherVista, a DEX that has just started running on Ethereum for 1 day, claiming to be a "challenge to Uniswap's DEX" and being referred to as "Pump.fun on Ethereum" by some token holders. Several tokens have already been deployed and issued on EtherVista.
The article introduces EtherVista and provides a user experience tutorial.
The article introduces EtherVista, the Ethereum version of "pump.fun killer," SunPump in the TRON ecosystem, "Joint Curve Controller" Burve Protocol spanning the Base and BNB dual-chain ecosystems, Ticket.fans of pump.fun in the Bitcoin ecosystem, Dexlab and Whales.meme on Solana, and Makenow.meme.
Bitcoin Ecosystem
Fractal, OP_NET, AVM, BRC100, Programmable Runes, What Other Expansion Solutions Does BTC Have?
The article introduces the highly anticipated Fractal Bitcoin and programmable solutions for BTC metadata protocols such as BRC 20, CBRC, and ARC 20.
Inventory of Eight Babylon Ecosystem Liquidity Staking Protocols, Who is the TVL Leader?
Also recommended: "BTC Stablecoin Research Report: Exploring the New Value of Bitcoin".
Ethereum and Scalability
Multicoin on Ethereum: Where is ETH Going Wrong?
Ethereum's $300 billion market value faces "gravity effects" in its growth, and the lack of clarity in its value capture mechanism further hampers its performance. It advocates for dispersing value into productive assets rather than relying on non-productive assets such as Bitcoin or gold. It emphasizes that Ethereum and other blockchains' global and permissionless consensus enable them to provide a unified API to manage various assets. The interoperability issues between Ethereum Layer 2 solutions and independent standards weaken the value capture capability of L1. Ethereum outsourcing MEV and execution to L2 is a wrong decision.
Ryan believes that decentralization is crucial for censorship resistance and anti-inflation, thus supporting a Rollup-centric approach. Kyle, on the other hand, believes that Ethereum should focus on building a permissionless financial system, and over-optimizing node decentralization is not the best strategy, especially when stablecoin issuers and centralized exchanges play a crucial role in connecting crypto with traditional finance.
Solana aims to become the world's largest financial exchange, prioritizing user experience and permissionless access, while Ethereum focuses more on decentralization and validator distribution. Although Ethereum has advantages in regulatory status and human capital, system design limitations may hinder the realization of these advantages.
The author does not agree with judging the success or failure of Ethereum solely from the perspective of market value; they acknowledge Ethereum as a social experiment and hope to create a vision of a decentralized, authoritative, and even trustless "cyber immigrant country," as well as its scalability direction based on Rollup L2.
The real problem Ethereum faces is the competitive relationship between Restaking and L2 scalability solutions, which dilutes the resources for ecosystem development and reduces Ethereum's value capture capability. Key opinion leaders in the Ethereum ecosystem are becoming aristocratic and lack enthusiasm for ecosystem development due to their cautiousness.
Ethereum Scalability Economics: Is it Worth Giving the Bulk of Sorting Income to L2?
The core business of blockchain is selling block space. Since block space is difficult to exchange between different chains, they have almost formed a monopoly. However, not all monopolies can earn excess profits. The key is whether they can differentiate prices for consumers. Although sorters can profit from it, the DA layer cannot participate because it lacks the ability to differentiate prices. This makes it almost impossible for rollup to expand without affecting Ethereum network revenue.
The Rollup-centric roadmap is fundamentally flawed because it abandons the valuable part of the network (sorting) and mistakenly believes that it can be compensated for by the worthless part (DA).
If you believe that the long-term value of ETH lies in being a monetary asset, then this may still be feasible. By getting more people to hold ETH, it becomes a persistent form of currency. Subsidizing L2 rather than accumulating value at the base layer may promote this.
But if you believe that the long-term value of ETH lies in being a network equity in a widely used protocol (which I think is more likely than ETH as a currency), then value accumulation needs to be achieved. Obviously, we have made mistakes at this point due to incorrect economic assumptions.
How to Objectively Evaluate Ethereum's Layer2 Strategy?
Blobs' space utilization rate (about 80%) is not saturated enough, which prevents the blob's fee market from FOMO. The usage fee rate and the DA cost of Layer 2 projects currently account for only 0.3% of their total revenue, which is not high. The successful reduction in fees, however, cannot transfer value from L1 to Ethereum Layer 2 in terms of user and transaction volume. All the contradictions point to the urgent need for growth in users and ecosystem scale for Layer 2.
Also recommended: "L2 Value Reinvestment Capability Debate: Can ETH Reverse the Inflation Trend?" "Why Did Ethereum L1 Network Revenue Plummet?" "In-depth Study of ETH Staking Economics: How Should the Staking Yield Curve be Designed?".
EigenDA: Reshaping Rollup Economics
The article delves into EigenDA, exploring the unique mechanisms that make up its design, while studying the competitive landscape to analyze how it may play a role in the market. EigenDA occupies a favorable position in the market share of data availability service providers.
Multi-Ecosystem
The recent surface reasons for the two block production interruptions on the TON network were caused by the stagnation of block production due to the surge in DOGS transactions; the deeper reasons are the design limitations of the TON network (complex sharded chain architecture), limitations of the consensus mechanism, and insufficient number of validators.
For readers with a basic understanding, it is recommended to directly read the fourth part "How Much Success and Failure Experience Can the TON Ecosystem Draw from WeChat".
DeFi
OKX Ventures: A Detailed Explanation of the Six Core Asset Markets in the RWA Track
RWA is one of the fastest-growing areas in DeFi, with TVL doubling in 2023 and on-chain asset value growing by 50% from the beginning of 2024, reaching as high as $12 billion (excluding stablecoins). The fastest-growing and largest proportion are private credit markets (76%) and US bond products (17%), with other significant proportions being precious metal stablecoins led by gold, real estate tokens, etc.
Currently, nearly 15 mainstream issuers offer over 32 tokenized US bond-related products, with total assets exceeding $2 billion, a 1627% increase from the beginning of the year. The total active loan amount of six mainstream on-chain credit protocols Figure, Centrifuge, Maple, Goldfinch, TrueFi, Credix is $8.88 billion, a 43% increase from the beginning of the year.
The next stage of RWA evolution will be driven by the issuance of tokenized US government bonds. In this process, token holders obtain the largest share of net interest by directly investing in short-term, highly liquid, and US government-backed real-world assets.
The on-chain private credit lending market is facing significant challenges after the collapse of centralized financial bad debts, but is now experiencing a revival under the impetus of the RWA narrative. Although the total on-chain credit amount currently accounts for less than 0.5% of the traditional $15 trillion private credit market, the significant upward trend indicates the huge potential for further expansion in the on-chain credit field.
The tokenization of real-world assets involves a large number of asset issuance, trading, and other operations in traditional financial fields. For financial institutions that control core assets, compliance and security are the main demands. RWA needs to exist in "trusted finance" or "verifiable finance" and needs to be "regulated cryptocurrency". Especially in the context of stablecoins, they still require a significant amount of participation from off-chain intermediaries for auditing, compliance, and asset management, all of which require trust foundations.
Is the Booming Polymarket a Good Prediction Tool?
Polymarket is still an inefficient emerging market that cannot predict small changes in event probabilities (5%). The accuracy issue can be addressed through better liquidity and the use of prediction tokens.
NFT, GameFi, SocialFi
Web3 Social Misconceptions: Confusion between Social and Community, Disastrous X to Earn Model
Social interaction is the most basic social behavior, and the most basic function of achieving social interaction is communication. Even the most complex social products are fundamentally based on communication, and new services are continuously integrated to evolve into community products.
The complex organic entity formed by the social behaviors of many individuals and groups is considered a community. Social network services centered on relationships are actually "communication products driven by finding the right people." Only when the product is truly treated as a communication list can it be considered a social network in the true sense.
The root cause of the confusion about social products is that people only focus on the superficial functions of the products and cannot reconstruct the true driving force and evolutionary context of the products. Perhaps we should set aside the dogmatism and take a fresh look at the vitality of Web2.5 products like Farcaster, which ultimately comes down to the ability to do social and community, beyond just technology.
The essence of monetization is a point mall, except the points are not exchanged for goods bought with real money, but for the market value expectations of the secondary market. Monetization shifts the user's motivation from the product itself to incentives, so when the incentives weaken, the user's motivation to use the product disappears. Monetizing user behavior only applies to rigid payment scenarios.
There are two paths for the establishment of Web3 Social: either like Farcaster and Telegram, first cultivate a product similar to an encrypted community, then support some Web3 functions in the form of plugins, and the encrypted community will naturally give rise to various wealth effects; or like ENS and Lens Protocol, continue to explore innovative middleware at the protocol level, which may seem less useful at the current stage, but can serve as technical reserves and may be integrated into large Web2 social applications in the future in the form of plugins, bringing new interaction models and possibly giving rise to new application scenarios (such as new credit assessment mechanisms derived from ENS).
Security
Web3 Security Beginner's Guide to Avoiding Pitfalls: Fake Mining Pool Scams
Beware of unrealistic profit promises: If an investment opportunity promises overly tempting returns, it is often a scam.
Do not authorize casually: Avoid clicking on unknown links and performing authorization operations.
Maintain a skeptical attitude: Carefully verify the authenticity of the group and do not judge its credibility solely based on the number of group members. Maintain a skeptical attitude towards operations involving fund transfers and confirm the authenticity of activities from multiple sources.
Weekly Hot Topics Recap
In the past week, in terms of opinions and voices, Pavel Durov: Telegram is preparing to withdraw from markets incompatible with the platform; "We are not here to make money, but to defend people's basic rights"; Coinbase CEO: Witnessed the first encrypted transaction between AIs, the AI economy market is huge; Vitalik: DEX is more convenient than CEX, users are not subject to account and deposit/withdrawal restrictions; Has not sold Ethereum since 2018 for personal profit purposes, and does not plan to invest in L2 or other token projects in the future, only donations to valuable projects; The current budget strategy of the Ethereum Foundation is to spend 15% of the remaining funds each year; Binance CEO confirms: CZ has been permanently banned from managing or operating Binance; Matrixport: Under the uncertainty of the election and the economy, Bitcoin price fluctuations bring opportunities, favorable for Bitcoin; Grayscale: If the US dollar weakens and interest rates continue to decline, it will be positive for Bitcoin; Arthur Hayes: Expects Bitcoin to fall below $50,000 this weekend, has taken a short position;
In terms of institutions, large companies, and leading projects, the Coinbase team is currently building an SDK that can empower bots/AI agents with staking and market prediction betting functions; Scroll hints at an upcoming airdrop; Grass launches an airdrop query; Aleo announces incentive plan details, incentive distribution targets include ambassador programs, testnets, and zkML incentives;
In terms of data, Vitalik's ETH holdings have decreased by 85,000 coins compared to three years ago, still holding ETH worth $592 million; Ethereum exchange reserves have dropped to the lowest level since 2016; Telegram's 40% of revenue is related to cryptocurrencies;
In terms of security, Penpie hackers have stolen assets and converted them into over 11,000 ETH, some of which have been transferred to Tornado Cash; Pendle: Effectively protected about $105 million after the Penpie incident, and the platform has now resumed normal operations… Well, it's been another eventful week.
Attached is the series of "Editor's Picks of the Week" link.
Until next time~
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