BLAST L2: The NFT Perps and Native Yield Super Chain? | Analyst Round Table

Transcript

absolute make or break moment for the cosmos like 100% because you've got Adam just now reducing inflation you got Noble usdc and you've got dydx incentives kicking off if this isn't enough to get people over to that God forsaken ecosystem like I literally don't know what will what's up everyone welcome back to another episode of zerx research if you're listening to this podcast there's a good chance that like Dan and I you believe the future of Finance is on the blockchain and we're excited that London is becoming a global hub for Block Innovation and institutional adoption of digital assets that's why we're pumped to host the 2024 digital asset Summit in London this March don't miss your chance to get ahead of the curve later in this episode we'll tell you how you can save 20% off on your ticket what's up

everyone welcome back to another episode of zerx research we have an awesome interview lined up today with a couple members from the blockworks research team Ren and zerox pibbles but quick reminders these will be in the share notes get your ticket to the digital asset Summit in London in March of next year and also be sure to check out blockworks research.com where you can use codee 0x research10 for 10% off of your annual subscription uh Dan do you want to kick off the episode this week with some movers and losers yeah yeah for sure so got some interesting movers this week we'll start with makerd who actually has a revenue alltime High according to the stats collected by defi llama uh so according to this data they're doing about 500k in daily revenue which is which is pretty insane

uh and again in the heat of a bare Market that seems a little bit crazy to think on the surface but when you look into what maker Dow's been doing over the C past few months you know you start to uncover that they've spent a lot of time in rwa there really no surprise to any listeners of this podcast and then given the expansion of that you know that that kind of makes sense but one interesting thing I I found was at the peak of the last Bull Run maker Dow's die outstanding or the amount of borrowed die was at an all-time high around n n n and a half billion and right now that's only around four and a half billion so it's like a 40% lower than what it was at the peak yet it's making more Revenue uh so that's a kind

of an interesting takeaway and honestly I want to dig a little deeper into that because if that's true then that's the it really is kind of like maker down doing more with less um you know I think a lot of that can be powered by just the the 5% yield that's coming through these rwa so that's that's definitely an interesting Takeaway on the surface level and because of that I think the actual token itself has had this really interesting negative correlation to the rest of the market where it's almost been this like flight to Quality and it's like oh you know we see a market pullback everyone's like ah okay back into maker like this is the safe rwa yield play and then you know some we get some positive Catalyst and everybody wants to pile back into the uh the next major token running yeah I think it's really nice

seeing a protocol's revenue at alltime high in the dep of the bare Market one thing I'd be cognizant of is that eventually hopefully as interest rates start coming down again and maybe all of us might be able to buy a house on a mortgage sometime in the future maker DS rwa yields really sickly probably come down to and I just be worried that in terms of their rwa portfolio they don't start sort of going out further on the risk curve to sort of like Chase High UN in order to like sort of maintain because I think a lot of people are bit I'm not sure spoiled is a good word but I think it's an after word to use here by like this like guaranteed like 5% yield that's being funded by us treasuries but once interest rate comes

down right if you want to find like the same 5% gu you're going to need to go a lot further out on the risk curve and generally that doesn't end well for people who chases yield so yeah just be cognizant of that yeah and defi Lama of course absolutely goed but uh it is notoriously hard to calculate the rwa yield just given the offchain onchain elements and using different service providers like each vault is like its own Beast uh so I do need to look a little deeper into exactly how they're calculating it but again the zero X and GMI and the rest of the crew over at defama always does a kick-ass job so would expect this to be definitely close to right um moving on we got another mover this week actually have three so the second one is going to be vertex the token uh launched a couple

weeks ago and then did an LBA to kind of find a natural market price with a without the true market volatility um and the trading has been live for about a week now so it's been interesting to watch that kind of develop and the LBA seems to have worked super well for the protocol right so they launched at about 30 cents fell down to about 20 or so cents and now it's up to about 50 cents which seems to be working well um I think the Sam you're kind of our in-house uh vertex expert so I don't want to start rambling too much here I'll kind of throw things over to you to talk a bit about vertex and uh where they're at right now yeah yeah absolutely I mean we talked about it a little bit on last week's episode so if you want like a

more in-depth overview I'd definitely go go back to that one and give it a listen but I was just mostly surprised to see volume over the weekend which is typically lower volume periods basically 3 to 4X from anywhere from 200 to 400 million a day all the way up to you know one and a half billion on Monday November 27th as we're recording so that's just wild I mean especially considering the amount of open interest it's only like 10 to 15 million versus you know1 and a half billion dollars of of settled volume so I don't really know what to make of this I don't know if it's market makers kind of you know juicing the volume numbers uh but nevertheless 30 to 50% of those fees paid are going to be going to stakers

every single week so I expect this to pretty much continue and it's honestly a very reflexive system in the sense that as the vrtx token price goes up so does the Val dollar value of the incentives and then people want to pay more in fees so that it increases yield but it also goes reflexive the other way around as well so we're about to see that with dydx which I'm sure we'll talk about briefly a little bit later but nevertheless that was definitely a a very good play for those who traded on vertex in the early days yeah just to add on a bit there in terms of sort of volume divided by open interest someone posted a table on Twitter for vertex 24hour volume divided by 24-hour open interest is at 129x um for dydx it's at 2. 33x um for

GMX it's at 0.77 X so you know it's like a it's a pretty big difference compared to like of these other per Texas and as Sam mentioned right there's like a lot of catalysts going for it um I think tomorrow Tuesday the staking APR will start displaying on the protocol um you have the r sort of fee rebates right now but yeah I think on paper it looks good for now just because like you being being able to say that you have more volume than U DX is like a pretty big move but it just doesn't look that organic to me for now yeah I think vertex is awesome and I think it's going to continue to eat GMX as lunch and then another really neat

thing with it is the Elixir integration so I just think the model is going to be a lot more interesting and reflexive to the upside definitely one to keep an eye on but uh we'll kick things over to our third and final mover of the week which is honestly just gaming tokens as a whole that's been a a hot narrative for a while now uh all of your favorite VCS have been making their marketing push about it and honestly the games are trending in the right direction we did a segment uh in Hot Seat cool Throne last week kind of covering some of the interesting games so again refering referring back to uh last week was a great episode check it out but uh as far as movers go you know Prime has been killing it or has been killing it ilv um has been

killing it as well and those games are getting a little interesting and I feel like gaming crypto gaming kind of segments people into two camps where it's either this is the worst idea I've ever seen in my life or this is going to be like you know the second coming of Christ in the in for the crypto market and so I'm curious to get everyone's take on it we had a a nice Sunday night debate uh in our in our group chat um the other day so I'm curious to get your take on you know are you do you think crypto gaming is here to stay is going to work or is this just like the next narrative that needs to get chased I like the gaming tokens I think something that's pretty interesting about all three of the ones we're talking about is they're all essentially

up like 3x of the bottom in the past few months and this has coincided with the actual games going live so like alivium is going live on the epic games store tomorrow aoy also got listed on the Epic gam store and that game went live I think last week and then you have Prime showing off all this Colony stuff and they've had the trading card game live um so I think these tokens can really be bare Market proof If they find a sticky enough user base and what will be more interesting to track on these tokens is what the actual usage metrics look like and you know the average play time per gamer and how the momentum carries

on yeah um I'll say that I think traditionally there's been like two sort of large type of game developers one is like the large like Triple A Studios that are able to shut out like 10 million or like 100 million on like one AAA title and on the other hand you have sort of like these indie game developers who are able to launch like super fun stud more Niche games probably the most prominent example is like stard v he's just one man grinding for like six years on building an incredible game I feel like crypto gaming gaming on blockchain whatever the term is kind of enables that Indie side of developers a lot more in terms of like with shapping like their game economy or like the game

network effects more so for like games with like assets that have tangible valuee or like game with like multiplayer modes just from sort of like the token incentive perspective but also I think mobile games are like a huge thing in Asia like it's honestly probably as big as gambling the number of like degenerate like 18y olds who like spend half their lives in like a PC cafe or like a land it's like pretty incredible in China and the government has had to go to like pretty drasic means to cut down on a gaming activity so honestly I I I wouldn't fade gaming like even if it doesn't make any sense to like put on the blockchain and if you

see like zero reason for it to be on the blockchain I think overall it still does really really well yeah I definitely agree with that I think the tokens are going to perform really well I don't think we'll get a game that's like widespread and you know hits the mainstream to the point to where like Mom and Dad are playing it but I do think the token will do well because we don't really need that much you know new demand in order to make tokens go up so bullish on the tokens not really bullish on the quality of games I did see something interesting earlier today with Prime and I haven't looked into it super deeply but it looked like they're planning on doing something that ties token emissions to the amount of prime that's actually sunk on like different Cosmetics Collectibles

Etc I think that's a really great idea to not have a fixed Supply schedule for a game and actually tie it to the amount of token demand that you're seeing at that given moment in time versus trying to just you know hard set the the inflation rate and just hoping that everything times up well like I think it makes a lot of sense to to tie that stuff to new players yeah I love the idea of like Dynamic incentives and not just saying like a thousand tokens each month here you go whatever happens happens I think that was very like a gen one defi you know strategy because it was easy to code and like that's kind of the where you start and then you build things and it um kind of just uh you know build on top of and and rework these different things and just keep

iterating so definitely excited on that Dynamic inflation idea as well the other thing you know we mentioned Prime and and their colony game this is like this interesting intersection of AI and gaming which I don't know if this will be interesting at all but like I could see like a game where you like control AI agents to like go do things like I don't know that that definitely seems like it has potential and they're saying that colony is going to be a fully multiplayer game which is really really cool there's even been Clips or quotes from some of the developers saying you know we're going to try to like leave some of the code to be written by the AI engine which is like okay like a self- progressing game with AI agents like that's definitely interesting and um you know axi Infinity was kind of the first

game to popularize the play to earn model which you know has since been proven to be a little bit gimmicky and you know quite frankly a bit silly uh but I think that you could kind of see that same narrative that same style of narrative forming with this Ai and gaming overlap like having a game where you're controlling different agents like it sounds a little gimmicky as well but it could I could see it being ending up being something kind of fun honestly um and kind of like creating this little colony and and uh I don't know like the clips I was calling them like you get these little AI ants you get to control and like being in a colony like I don't know it starts to make sense to me I think my bet there with like autonomous AI agents in games is that human

loneliness is like an alltime High across like all age ranges and I think like a very natural extension of like or a very natural use of AI is sort of like having a buddy you can talk to right um but I think rather than having a buddy that you can talk to in like like Siri or like Google Voice on your phone I think it makes a lot more sense in a gamified setting and so that's kind of my thesis around gaming Andi like humans are lonely you'll be able to like not be so lonely in a gamified settings with AI agents and maybe like some actual real our friends I mean gaming is social too right like the only games I play nowadays is strictly to talk to my

friends like it's just fun to hang out online on a a Sunday afternoon or something so I can definitely see that forming um that's a good flag R it's a little bit depressing when you start to kind of back up and think about it but um for The Biggest Loser this week we have a tornado Cash's native token it was Dlisted from binance I'm sure this is some I I don't know but I would think this is some Fallout from the whole CZ lawsuit and the settlement of about4 billion um you know I think delisting what is probably the US government's least favorite asset is was probably somewhere on the on the fine print there but I don't know if you guys have any more thoughts here nah let's move over to hot SE cool Throne uh all right let's do a little hot SE cool Throne then and

before we jump into that I'll give a quick shout out to das London here uh it's definitely going to be a super exciting conference we have a great speaker lineup listed with names uh like some of the some of the compan companies like Onyx and which is JP Morgan's crypto arm Morgan Creek framework Ventures winter mute Stony from a is coming and now that they've rebranded I'm pretty excited to see kind of what their new vision is and how that ties into this Narrative of inst institutionalizing the industry so it's going to be at London this March be sure to come join us uh some people from our team will be there some people from the rest of the block blockworks crew will be there as well would love to grab a pint with you so be sure to shoot Samurai at DM if that is going to be you

uh but moving on to a little hot seat cool Throne Ren I'll kick it over to you to kick us off yeah sure so I got cctp in the cool Throne this week on November 28th which is tomorrow uh for us but it's going to be yesterday when you're listening to this podcast cctp will be going live on noo uh for those who are not too familiar noo is a general asset issuance chain within the cosmos ecosystem and it will allow individuals to sort of mint uscc and you utilize IBC to transfer that IB uh that uscc across like the cosmos ecosystem one of the largest beneficiaries of cctp and Noble will be dydx um since dydx is an app

chain users will basically be able to Mint native usdc directly on dydx and more importantly transfer that from various uh ethereum based chain such as ethereum itself arbitrum base and optimism um cctp is also live on salana death net right now and I think there's an increasing like narrative taking place around the death of liquidity based Bridges we're starting to see that already even at the start of this year um Bridges such as like Stargate had their volumes like sharply fall off up it was like pretty influenced by a potential air drop farming opportunity um synapse has definitely not been doing so well but just cctp and sort of intent

based Bridges have been taking liquidity based Bridges market share so for example on socket which is a bridge aggregator cctp share has been steadily increasing from like zero a few months ago to 25% today and across is also a bridge whose volume has been absolutely rocketing I think they just overtook Stargate volume stet Bridge volume um today actually and so how an intense Bridge work is basically someone submits and intent I want to bridge a th000 usdc from chain a to chain B some filler or relayer comes in and fonts the liquidity and then after a while they'll get paid once like you verify that you receive the tokens on the source chain instead

of like a liquidity based model where the V sort of acts as like a cross chain deck amm and sure you get like kind of like instant liquidity but a lot of time you get a lot worse execution and so what a lot of these intense space brid soers or Rel lasers are probably going to do is they'll fund the liquidity and then they'll probably use cctp to sort of transfer that risk on the back and to like to refill their inventory and I think that's just just a very natural progression people are really sick of like Bridges getting hacked probably like top five of the crypto hacks are bridges today billions and billions of dollars have been lost and so intense based Bridges as much as like I hate the

buzz word like intense are probably going to be the future especially when combined with cctp and if you're saying like cctp is like a centralized service piece of infrastructure I I really don't think that's the worst thing in the world to be honest what does this mean for all non-intense based bridging models I think you're going to get cucked like the only real Bridges with like real liquidity will probably be like smart contract like the smart contract bridge for rovs um those will actually have a large amount of TBL like if you are a liquidity based Bridge you better be like integrating cctp ASAP or

sort of developing a product that's sort of like an RFQ like intense based model just because over time intense based models are probably going to provide you with a better execution and B faster execution and so there's like literally no reason not to use an intense space [ __ ] for a user is there increased latency associated with us using an intense bace Bridge or is that what you're saying by like market makers inventory managers kind of facilitating this with instant settlement for you when they kind of like settle on the back back end I guess yeah I think if anything there's probably like decrease latency and it's a lot more gas efficient um just because there's a lot

less calculations involved so and yeah the the latency comes the latency risk or the additional latency is on the silver and Rel layers and like a user bridging does not have to care about that so perhaps like uh a server will fund the liquidity and only after like one or two hours they will get like the bridge funds on the source chain and then they will like manage that inventory however they want but I think you're likely either a market maker who has an inventory already or you're probably probably borrowing those funds on the destination chain for like a really really small fee like 0.01% of like one bips or something you know for

like one or two hours yeah that that was great R I appreciate the insight there it's definitely be something to watch with the rise of cctp I'm most interested uh to see how that kind of impacts dydx now with like the easy access bridging to get there no excuses to not really see V4 volume pick up and kind of eat V3 I need to check in on what those stats look like I would also add in terms of cctp I think today like bridging across like ecosystems from like it's to Cosmos or ethereum to salana or vice versa especially salana back to ethereum is not that present of an experience like it's hard to find a bridge sometimes like there's a lot of slippage on that bridge so I do think cctp could sort of

be the key unlock especially for like ethereum salana salana ethereum or like ethereum Cosmos Cosmos ethereum volume just because like for your average user today is a pain in the ass to like try to find the correct V from like ethereum to other ecosystem but with CCTV the most fun end will just integrated and it would just be like your normal bridging experience you know cck you click I want to transfer a th000 usdc from ethereum to salana and like cctp just does it sure there there may be like a bit more like additional latency but it just works you know uh so I do think CCTV is like a bit of a game changer and I wouldn't be surprised to see that the market share or the bridging volume driven by cctp continue to increase just like forever to be honest

I agree with that Ren last thing I'll say about this I sent a spreadsheet that like had a bunch of different Bridges and routes to go from different chains and it was from the last bull market and I one of my buddies was like Hey I was trying to get over to salana using that bridge sheet that you sent me you know two years ago and I'm like dude like half those bridges are are hacked no longer active have zero liquidity like I was like I I don't know what you're doing like this cctp just makes that user experience so much better there's no reason someone should have to find the newest bridge that actually has liquidity if you're coming back into crypto after a long Hiatus but that's just my take so definitely agree with you Ren all right zerox research listeners we're calling on you to join

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by hitting the link in the description and using promo code 0x20 to save 20% on your tickets see you in London the land of tasty pastries and be sure to hit up Dan and I for a beer pibbles you want to take the next hot seater cool thron yeah so I have a hot seat and it's Justin Sun who has been exposed to a little over $200 million worth of hacks in the past two months and um I think it's really sus and I I don't necessarily think these are real hacks I kind of feel like they're inside jobs and my like tinf foil hats says that these hacks are like him shuffling around money to take care of something and maybe that relates to

CZ maybe it doesn't um but one thing that is super odd is with the the bridge hack last week and the ponics if that's how you pronounce it hack a few weeks ago both of those immediately preceeded a huge like billion doll or like yeah probably a billion dollar TW on E Futures prices and perss and so like it's like super inorganic like the pers just happen to like put in a god candle the next day for both of these hacks and then so like I'm I'm curious if like he's actually hacking these himself then pushing price up with perss and then

offloading his stolen spot funds but um it it's just a weird development and like there's no concrete evidence to support either way it's just if you're in crypto this long and you have that much money how are you exposed to this many hacks all back to back I think we're also been like conditioned to think you know where there's smoke there's fire and if anything can't be malicious it will be so it's like definitely something to that's worth considering you flagged that chart of the the East Futures T [ __ ] which I thought was crazy like I the timing is definitely interesting and the size is certainly there uh but I have no basis to say whether or not he did or

did not do these things but it it's definitely a suspect and I'm glad you kind of flagged that because that that well the reason why I found it interesting was like oh well you know we've been on a nice little Ripper here but if it's just from you know one person pumping the market and we all like to rely on The Narrative of no it's because the Bitcoin ETF is coming it's like uh maybe maybe there's something a little deeper here on the topic of like Justin son obviously tra is kind of his baby I think one interesting thing that you could look for is before the start of the previous bull market like what were people holding usct on Tron doing you know were they like bidding e on Tron were they uh bridging that usct on Chan

to like other ecosystems to like buy like other things because there's like a very sizable amount of usct on Chan these days if I'm not wrong it's like I want to say 67 billion and you know like the same like Cycles like play out and like the same like user Behavior plays out it definitely could be something interesting to watch because I I'm of the opinion that like no one has any clue what goes on on Chon and I still kind of believe it's just like a lot of of Chinese people escaping Capital controls but yeah it just be an interesting thing to like check out yeah to your point ran I just everyone always talks about like the usdc market cap is down only in usdt is

up only like that's really sketchy to me I think there's something more there that we'll probably see looking back you know in a couple years like what was actually going on here but I guess that probably won't happen until we get another another Doomsday moment similar to the ones we had in the past so I guess I'll just sit on my hands until then yeah no that's a good flag as well I think the usdc market cap has finally bottomed but I guess I'm biased since I already publicly tried to make a call and I think I'm I think I'm down few hundred million on since that but uh Sam why don't you give us your hot seat cool Throne this week yeah this one's easy everyone's talking a lot of [ __ ] on crypto Twitter about uh the new L2 Blast from the blur

team there's $570 million locked in that deposit contract controlled by a 30 of5 multisig and they don't actually have an L2 live and they will not be unlocking those funds until February at the earliest I believe I mean this is just complete comedy in my opinion if you look at all of the different l2s that have launch launched over the past year you've got you know op stack l2s Linea polygon ZK evm ZK syn era scroll you can combine the tvl of all of those new l2s and you're sitting at around the same tvl as what's in this you know deposit contract controlled by a 35 multisig with no product like I get the hype Pacman's a great founder and uh they've got great Ambitions with like nft perss

and an nft focused L2 kind of similar to a mutable but more targeted at the more General purpose nft landscape as opposed to gaming but I don't know man I just I don't really see why people are depositing into this at this rate you're hardly getting any airdrop or points or whatever with 570 mil unless you're like a giant whale so as a retail participant I just don't see that as positive EV um Dan Robinson from Paradigm who backed blur came out condemning the strategy it's basically just a game ofi L2 experiment experiment with like native yield generating tokens by like taking stuff locked in the bridge contract and applying staked eth yield as well as like usdc yield from other spots so I don't know about this one I I'll

definitely try out blast once it comes out but I'm not depositing in the near term I think like definitely like the marketing is a little city and I think like the whole like points and referral thing is also like a bit over done but I think there's two points I want to make first is that I think the r of like yield bearing tokens are inevitable in crypto like everything that has a yield bearing version will become like a yield bearing version and So eventually I think like the amount of stake defusing D5 or like s over like normal that will just continue to increase so I don't think it's like the worst thing in the world to take the E for like the die or

stable coins locked in like the role of like contract and depositing that for some yield since it's probably something that like crypto as a whole will drift towards too over the long term obviously like there's very questionable things surrounding like that bridge contract um the two5 multi four of them are like funed by the same wallet but I think that's the first point I wanted to make and the second point is that on the whole like points and referral thing like sure it's very like Pony like but I don't think I blame Pac-Man for doing it you know it's kind of what you have to do to stay competitive and lean into the fact that like crypto participants are

just complete agents like if you were launching any protocol and you had like a competitor protocol you would definitely be running like a points and referral programs just because of like the benefit that gets you sure like there's probably like an extra boost because like this is like a paradigm invested L2 I don't think blast TB would be that high if Paradigm did not invest in it um but yeah I think it's just kind of like the Natural Evolution of things and I do think that it's possible that blasts open like a Pandora box like because like individuals from arbitr and optimism did did come out before saying that like this is something that they had thought about and explored um now you're letting like some sucker make the

first move let the community backlash like wash over and then sooner or later when everybody wants like a yield generating token of everything it kind of sets like a baseline for these alternative or these like other l2c event you say hey okay look like flash has been doing it for like six months one year you know like we can generate I don't know an extra like 100 million a year for the Dow um we're gonna do this I I honestly wouldn't be too surprised to see like one more large L2 do this in 2024 I think that's my take yeah yeah know those are great points Randon uh on the multi risk like I that just doesn't bother me from a

risk standpoint uh like you know personally like I'm like you Sam I won't be going over there until there's like apps over there that are interesting and fun to use um but you know you can't say that like the multisig has you bent out of shape and then go use arbitrum which has a safe Security Council yesu they're Docks but is that really the makes make or break for you or optimism that has an anonymous multisig that has Bridge control it's the exact same thing it is a deposit contract it is not just you're not just giving funds to multi it's a deposit contract is owned by a multisig that is the same setup as a bridge contract owned by a multisig but there's other like the thing I'm most bothered by is is certainly the the regulation and or the the marketing which is going

to bring the regulation Canon Canon further pointed towards us like there's $500 million to this thing so it's already on the radar and then like on your website you have things that say like you're pre-rich right you like click the wallet page it's like you're pre-rich you have to connect a different wallet you don't have any airdrop points yet like calling people pre-rich horri idea how the invites work that page like really just made it look like a Ponzi scheme but I I also really hate our industry's usage of the term Ponzi scheme like there's a very clear definition of a Ponzi scheme and like this is not that you're not paying the new guy with the old guy's money um but it is still malicious marketing and that that just like really grinds my gears

because we already have you know people in half of Congress hates us the SEC hates us and it's like do we really need to just give them more Firepower like I would prefer not to and I I do think that l2s if they want to meet these high valuations that they have are going to have to figure out a way to bring in more Revenue um because somebody's going to slam the free their margin on on transaction fees to zero and when that happens like you're going to have to see if users care if they pay one cent or 50 cents for a transactions personally don't think they will but that's definitely a possibility and if that if it does occur that users do care and they will use the cheapest chain then like you as an L2 you can't be charging 50 cents so you have to slam your

margins to zero as well on transaction fees so how else are you going to make revenue and like this could be a way um but one thing I saw like kind of under disgusted was they're going to use rebasing tokens to deliver the yield from the bridge to the Token rebasing tokens like they don't play well with most of defi there's a reason why Lio Stak eth created wrapped stake de to have more of that um exchange rate model where the value of the token increases as opposed to your uh the amount of tokens that you own and hold in your wallet right with a rebasing token you just hold the token if I have one and I earned 5% over a year and now I have 1.05 in my wallet without any transactions and those don't play well with with many dexes or lending Market's

a little more so but um like that creates extra development work uh and so that's not necessarily great if you want to see Blue Chip defi protocols just forked on your protocol then again doesn't seem like that's what they're going for they want to create their own little Casino world and you know if that like casinos exist in the real world and there's no reason for them not to exist in these these economies as well so net net for me it's just like disgusting marketing but at the end of the day like it's really not the risk assumptions aren't drastically different from other l2s today and it's just uh it's kind of a cool model like use depositing the underlyings that's going to open up a whole new world of risk and how they go about managing that will be very

interesting to watch because you'd have to think there was some intent based architecture not only to uh queue in on the buzzwords and pump that valuation but also because there's going to be some sort of uh liquidity Gap right if everybody wants to exit their or withdraw their eth immediately and it's all deposited a stake eth and then there's this like withdrawal Gap where you have to wait through so I imagine they'll put some market makers on the back end to kind of meet that meet that Gap and um you know obviously they have to take a cut as well so it'll be interesting to see how that model develops for sure the only other thing I wanted to add here was the valuation numbers so Avo launched their pre Futures and it's currently trading uh at 4.5 billion fdv uh which is kind of

ballpark for what you'd expect really because uh if you compare that to some of the l2s that exist today arbitrum is at a 10.1 billion optimism is at a 7.3 billion uh and madic or polygon is at a 6.6 billion so it's like it's kind of ballpark up there maybe some risk adjustment downwards as well as well as like you know the fact that the the L2 doesn't actually exist uh so all in all it's pretty insane number but I don't know I guess if you were just going off of comparative valuations it's at least ballpark where you'd expect it to be For Better or For Worse do you all know if uh blast is going to be ZK or optimistic now as far as I know they haven't rolled out any any information

about their execution environment at all like it's which is also scary right because it's like there's there's literally nothing that we know and there's somehow 500 million in this in this contract that's mind-blowing it really really is they're going to pull a play out of the synapse Playbook and pretend like they're innovating on the uh the design of the L2 and then they're just going to one click deploy a conduit at L2 on lunch day I think that's actually a good take but I don't know again oft just have not worked on l2s like simply they have not like if you look at the mutable X volume if you look at arbitrum optimism volume like they're non fungible tokens getting those things bridged over is tough

getting oracles that actually work is extremely tough maybe because blur has this blend product in the nft marketplace there's more that they can do from an oracle design standpoint but I don't know they're definitely embarking on an extremely ambitious journey I also feel like they got to worry about the whole two token thing right now that there's blast and blur it's like are they going to try to keep those separate or are they going to affect kind of meld into the same thing in the long term and if so it's kind of hard to say well you probably should have just used one token um because now you have like your Equity split between two different protocols that are ultimately the same protocol I don't know it seems a little that's a question mark for me I would like to see a little bit more about how those two tokens

really align because if you think about uh another recent two token project which was Vel drone then launching aerod drone aerod drone hasn't done great hasn't done terrible um and Vel Jump's honestly kind of in the same ballpark there it's not it's definitely not a onetoone comparison here but it is kind of something to consider like instead of if you're gonna launch something new like when do you have to draw the line between using the same token and and launching a new token well that's probably a good jumping over point to switch over to my cool throne and then we'll end the uh episode on some governance updates uh but in my cool Throne this week I've got jeto aka the Lio and the Flash bots of Solana which is a great tagline but they announced their air drop so it broke down to 10%

of the total Supply will be used for the airdrop and that is uh to in total they're going to have 34% of the total Supply as community and then the other 24% of that 34% is going to be for the Dow treasury uh so net net it's 66% for the team 34% for the community Which is higher than you would hope if you were like a Community allocation maximalist but to me personally I'm I'm pretty excited about this like if you just like zoom out and think about this they' have built this great product people love it people are using it you know a large portion of Salon of validators are running the goo client uh the staking uh liquid staking protocol or excuse me the

liquid staking token jto Soul has exploded in exponential growth up to like 6.7 million soul in TBL uh and they're just saying hey we're going to slice off 34 34% of our business and just hand it to strangers uh so you know largely like that is already insane uh and so to me like the 66 34 split doesn't really bother me um that that 64% is split up between about 40% for teamate investors it's going to vest over a certain vesting period we don't really have specifics around the the the lock period there and then 25% of that is going to a foundation for like long-term ecosystem development basically um also kind of like this as well to me this looks a lot like the arbitrum token launch like it's uh they did about a % air drop and a large

allocation to the foundation a large allocation to the Dow and then teamate investors vest over four years to me like it's honestly not too dissimilar um I think net net this could has a good potential to lead to salana users getting a couple Grand air drop to them and that's on top of the pith and the Bon aird drops as well you're starting to get a little bit of this wealth effect going on uh from these aird drops over in the salana ecosystem now you can't really bring this up without mentioning that I'm sure the FTV on this thing is going to be bat [ __ ] insane uh and that's kind of similar pointing back to arbitrum right they launch with this like 0.1 uh or 10% of total Supply circulating and you know they have the highest fdv of an L2 today and like You'

have to imagine over the long term as they issue new tokens that those are going to kind of bleed somewhere towards the middle of of market cap and fdv uh but curious if you guys have any takes on goo and their new airdrop yeah um I would start off to say that the narrative is like definitely there Li plus flashs is a pretty killer tagline and in addition to that jto so charges like an annual management fee equal to 4% of total reports um and so that fee is applied to both staking rewards and also me revenue and if you told someone that there was a flash bot token where like 4% of like R data tips that goes to like the MV boost relay is

driven back to like the flash St or the company I think that token would just come completely said granted Sal muv on salana is much much smaller than ethereum um I think like there was like a 300 Soul tip the other day in one of the blocks and like people were rejoicing that like one of the largest validator tips um but that that narrative is definitely still there and I think another thing to keep note of in terms of like the token allocation and how 25% is being held by the foundation for what I would presume would be like long-term Partnerships and I think 24.

3% is going to be held in the Dow treasury um for Dow to do dow things for lack of a better term um I think you kind of need so much and you should only be giving 10% of it to the community today because liquid staking is still so small on salana on salana I think liquid staking is like 2% of total Soul State whereas you compare that to ethereum I think that number is closer to like I want to say 60 to 70 % so there's like a lot more room for this like liquid staking war on salana to play out and so you really do kind of need that um sizable treasury in order to compete in that war

granted like it's a bit easier these days with Lio I'm not sure if they pulled out already or are debating pulling out but for all intents and purposes Lido might as well be dead on Solana there like completely aligning with the but yeah like with other valid clients coming out marinade like still being the largest TV protocol in Sal I do think you kind of need a lot of those incentives in order to remain competitive in the still good staking War I'm pretty bearish on this to be honest love jto Soul the team I've met them personally I love like what they're doing and they've been super Innovative love the the meme of flash Bots press Lio but I think ultimately people look

to ethereum tokens to get a sense of How High things can go like if you own Bon you're looking at Pepe and shib if you're looking at margin fi you're looking at a and compound like that's just naturally how it goes um so I expect the same here in lid's fdv is two and a half billion so I expect this thing to launch at a ridiculously high fdv and I honestly think down only is more likely than up only um that's just my surface level take I also think that with fire dancer coming out we have no idea how that like impacts uh jto Soul's business model and I think this token's going to and no one's going to think about that they're just going to click buy or sell um but that'll be like a serious head moving forward yeah I agree with you there like

I I also love the Judo team I think they're awesome I think their product is great but if I'm looking at this strictly as a speculative investor I have no interest in buying this token because it's low float just like all the other Cur Salon tokens I think the best chart you can look to for any hint at jeta Price action is to look at marinade which has very similar token allocation and uh if you look at that chart it's not awesome um but then like if you consider like the other tokens like oxy Maps serum even pith like none of these are really great for people to buy in secondary markets they're great deals

for Kyle salami and the rest of the VCS and they can get their bag and that's fine but me as a secondary Market participant I'm I'm not going to play this but I will collect an air drop that's fun and thank you for that but I have no interest in doing anything else besides that like K kadami sitting at 91 million points the next uh the person second on the leaderboard has like 20 million points for context I have like 21,000 points so you know like there there's like a pretty big like difference between me and kman um I'm not sure what their air job distribution will look like but for my sake in a selfish way I hope it's like

not just like depending on how many points you have and I think another another thing that Sam brought up was actually fire Downer client at first I was thinking in terms of like will fire dancers like client be like more competitive with like uh jto so's client but another thing is that fire dancer should theoretically allow the salana network to C is like a shitload more TPS um and how goo works is that like it introduces like this additional latency through the Jito relayer I think um off the top of my head that additional latency I honestly like 200 microc seconds don't quote me on that but I wouldn't be too surprised if salana is

able to support like a much higher TPS then jeto also needs to sort of lengthen like or increase the latency in order to like run their like like me solution effectively I don't know whether that's like going to be a problem or not but just something to think about while like a fire dancers being worked on but that's not going to be a problem until H2 2024 um and then in H1 2024 we're going to get like a baby version of fire dancer which has a really weird name that I don't remember I think it's like Franken dancer or something yeah the only like the only other thing I want to add there is I

don't know if it's totally fair I definitely get your sentiment with the the token distribution and how that's negatively impacted Salon of projects but I don't know if it's fair to compare the business model of of jeto to like oxy or maps that were like just purely FBF manipulated toys basically um but I I definitely get your sentiment there and like honestly my I bring it back to arbitrum like the token distribution like isn't too too different I think the major difference was a larger allocation went to the arbitrum Dow um which is sort of like a meaningless thing in a lot of ways but it's also you know that's just kind of like a way to appease the community but like you could kind of argue the same thing right like uh let's just round it off and say

there's about a billion arbs circulating today and 10 billion that can be emitted over time a large chunk of that is going to be the team and investor uh allocations that invest uh Over a four-year period with a one month cliff and then another chunk of that is going to be about about three or three and half billion of that is is the dowo treasury so like as the Dow is spending money it is increasing the circulating Supply and bringing that circulating Supply value closer to the fdv probably pulling them both towards the middle there and so like that would lend me to believe that if you're your basis is the distribution in the allocation like are you excited about arbitrum as a token at all or are you thinking kind of the same thing applies there yeah I'm also not interested in

arbitrum token so that's where I sit yeah fair enough fair enough definitely a good point there but um maybe a good time to jump over to governance updates Sam what do you think yeah let's do it you want to kick it off yeah I'll get us mov in there so uh on governance Updates this week you know we always got to talk about some of these things we've been following for a little bit of time now but I think it's important just to kind of see them out to their completion so prop 848 over in the cosmos Hub ecosystem cut issuance by about 30% by lowering the max inflation rate now it's about it's uh set set at 10% so definitely a uh an interesting development here you know effort capital

on our team is is our local Cosmos Hub expert and uh you know he was really vocal about this being in that positive for the ecosystem just because if you're overpaying for security at some point you have to say like what is the point of this like what is the I don't know maybe if minimum viable issuance is is the right word there of like finding that sweet spot of how can I get Economic Security without kind of overcompensating for that and just you know inflating away the the token of course there's obviously the whole discussion around is token issue into a cost and there's even a new one around this uh not really new Toy's been saying this for a while but Anna toy is a proving to be a firm believer that Economic Security as a whole is a meme and we can always just rely on social

consensus uh around node operators that have a business reason to care about the truth um so there's kind of like this whole en fooling conversation here but net net prop 848 has cut Adam issuance the market seemed to like it um when the prop was officially passed of course you know we've kind of retraced the market as a whole since then uh so it's hard to really see how that shapes out but it will be interesting to watch the Market's reaction to uh the newly the new atom with lower infl inflation and I'm also really curious to see if this will kind of inspire any sort of chain reaction to other Cosmos chains saying hey maybe we are over ISU and we actually don't need this you know when we talk to uh the aosh founder Greg AI not too long ago on the podcast he was

actually being like I I thought he had great takes he was like yeah as a business like we have to think about the am like our security cost and our security budget and um that's definitely something that's on the Forefront of his mind so I'd love to actually get them back on and kind of have that conversation but curious if you guys think anything about the atom uh inflation cut I think one interesting point of this vote was that it was like by far the most contentious vote in Cosmos like history I think there was a larger voter turnout for this prop than the Adam 2.0 fa and I've never seen so much Adam drama on Twitter both from like validators all operators within the cosmos ecosystem but also like just

normal CT profiles that like just normally don't give a [ __ ] about Adam so there was definitely like a lot of like buzz on the Tim and it really did come down to the wire right I think like probably like a day before the vote was going to close it was like still like no by like a pretty wide margin and last minut like a lot of people came through and then it was like maybe like 39% for like 36 gains and then like 6% veto um so yeah I I I do agree on the point of that I feel like there's going to be positive like cascading effects for the rest of the ecosystem just because most Cosmos tokens have traditionally had pretty high inflation and maybe they have been using like Adam inflation as like a benchmark for their own tokens

inflation and now they don't have to be as competitive given that Adam's issuance or like inflation is lowered and so they themselves can lower the token emissions too so yeah I think we'll just see how it goes I know Jon's Wilding a bit and he's proposing to spit the chain um and then launch like a new token card Adam one but that guy's a bit of a Nutter I good with that I can actually roll this one into a another governance update so dydx is launching the incentives program uh $20 million over six months it's going to be a closed Source system with chops Labs kind of like retroactively rewarding different actions and then like the community will be able to pass uh the analysis that

chaos Labs conducted and then those tokens get distributed but nevertheless it's fixed at $20 million USD so the token price is variable that'll be decided at the time of the uh the distribution of the incentives I think this is like absolute make or break moment for the cosmos like 100% because you've got Adam just now reducing inflation you got Noble usdc and you've got dydx incentives kicking off if this isn't enough to get people over to that godforsaken ecosystem like I literally don't know what will so I am uh porn went out for David after you know two three weeks from now sorry eort Capital if if this doesn't pan out well but definitely rooting for the cosmos folks but it's uh it's been a tough tough Journey

yeah I think it's uh because they have Great Tech and there's no doubt about that and I think it's a dyx moving over there speaks volumes to that it's really just a thesis for me is I think it's becoming more and more obvious now that app chains are a great end State and just not a great place to start right there's a lot of other complications that you have to deal with if you just want to build an app just go build it on a generalized smart contract chain um just go build yourself a a smart contract system on a one single guard over in salana and take it from there but even like the app chain thesis as a mature product you know what I mean like dydx as mature As It Gets In terms of app specific stuff goes so if they're not able to pull this one off

and I I just think the app chain thesis is dead but producer please don't shortclip that one I don't know man uh your favorite da layer just launched that promised me a world of a million chains so we shall see uh but moving on in the governance update section the arbitrum stip back fund has passed so this is a vote to so we rewind a little bit there was a $50 million uh short-term intive program or stip uh proposal that got passed and funded and that is going to run through the end of the year there was a lot of good candidates on there that had like just the way the voting worked they were like approved but didn't receive funding basically and so all of those summed up to another 20 million in incentives and

the Dow has approved a snapshot vote to uh have a back Fund in fund them with these tokens as well and it is up on tally being voted on chain right now uh generally if it passes on Snapshot it will also pass on um tally as well and move on chain and actually be executed so the is interesting for me I think blocker research as a whole here we are delegates so full disclosure we voted no on this one and sometimes I agree sometimes I disagree on a personal level with our decisions as as we all do that's on this team um and personally this one I I was for it it's I think we needed to to kind of just take a step back here and say all right you know we just blasted out 50 million incentives like let's take a step back uh and

actually look at at how these are being used right like if it's just a short-term incentive game then like I just like really struggle to think that that's like good use of funds like even at the end of the day you know it's 50 million ARB like that's not a huge number um but it's also not nothing either right that's just blasting $50 million of sell pressure if everybody is just going to farm and dump these um which admittedly is probably what's going to happen and if it was like gun to gun to gun to your head make a decision about what's going to happen with people that are farming um you know these re like essentially fee rebates it's probably going to get farmed and dumped and it's a question of like what happens after that like do those users stick around arbitrum and continue um

you know continue participating in the ecosystem how many net new users did that bring in personally I think I would have like to see an analysis around that before you go funding more protocols and more projects um then I've also like seen some posts in the forums about how people are already accusing projects of like not using funds the way they said that they were going to use funds I have I haven't looked into the legitimacy of any of these claims but if you increase the number of protocols you get that you're going to fund with with incentives like the likelihood of that happening obviously increases as well and if that is happening like that is you know that's kind of another thing to have to deal with when it comes to funding stips in this manner but net net at the end of the day like stips are

probably just like user like another round of user airdrops going about it in kind of a weird way we weird way because at the end of the day you know you're just Distributing out more tokens to people that are using the chain so I don't know net net don't love it but curious if you you guys have any different thoughts there uh I think just some random things to add like some of the largest winner of this backround forol are gains they're going to receive 4.5 billion hours Stargate is going to receive 2 million uh wormhost going to receive 1.8 million uh I think one thing that I like to see in such future like incentive programs is for it to be a lot more skewed towards helping like the smaller protocols I still feel like a bit iffy

on weather like say GMX should have received 7 million out of like the 50 million are been like the initial STI funding and I feel like all of this all of these grants will be much better suited to sort of like incentivize and grow on a smaller than like large established protocols I'm not sure what the best mechanism to do that is whether that's like limiting like each protocol to like 5% of like the total like arm that's being allocated to this program or like some like weighted thing like depending on what type of protocol you are but yeah in general I I think it would make sense for the next time any like L2 does something

similar yeah I'd like to see more lock tokens um I don't really know the best design either Ren but it I just feel like it makes a lot of sense to like give people a number on their screen that's like all right this is how much RB you just got over the three months and now if you're active over the next three months these things vest linearly until you're not active or something along those lines that's not just like take these tokens and dump them on some decks and then leave our ecosystem when the the steps dry up so it's going to take a lot longer obviously when need to like look at the data and actually analyze it like Dan you you actually put something in slack earlier today that was pretty interesting on like unique users versus addresses I'm not sure if you can kind

of give us a tldr what you found there I thought that was pretty interesting yeah I tweeted that chart out earlier today as well so just looking at uh bass ZK sync optimism and arbitrum uh and looking at their total user accounts and kind of seeing how those have progressed and sorry they're not I should be a little more clear here when I say user I specifically referring ref to like the total unique number of active addresses within a given period um so on a weekly basis ZK sync right now is seeing about a million unique addresses um and for the other l2s it kind of varies uh recently arbitrum has kind of had a runup in total number of active addresses and it's right at that same number about a million per week and this largely probably the timeline's

line up with um with the incentive program so there is some Credence say okay this is like one data point that's you know Pro steps like all right bringing users back onto the chain uh is definitely kind of the whole point of this you know hopefully they don't farm and dump them I feel like that's like phase two but Step One is get get them back on chain um and the other piece of that is like okay active addresses alone can be very easily gamed uh it's a bit of a gimmicky metric especially when you start comparing across different execution environments so like an evm compared to uh salana compared to a like uh UT txo model like bin very hard to compare a number of active addresses because they all kind of mean different

things there's only one message. sender on an evm chain whereas salana you can have multiple signers of a single transaction so you'd have like two active addresses attached to a single transaction not really what you want when you're trying to get this like number of users at the end of the day uh and and utxo models are quite similar you can have like a thousand utxo being used to send by one person so it's really hard to like cross compare these but because these are all evm based l2s it makes it a little bit easier um and so another like metric you can kind of layer on to saying all right well we see this huge runup in total unique active addresses but what is the percentage of new addresses within that total user set so a new address is just an address

where their first transaction occurred in the period you're looking at and so just taking that as a percentage of the total addresses so ZK sync is a heavily aird dropped chain that's like not really up for debate to be honest that's that's very much what's happening over there um and because of that you're seeing a ton of active addresses but each week they've just had down only percentages of new addresses and so right now they about 5% of their weekly addresses are new addresses that have not previously used the chain and so when you zoom out and kind of put some qualitative analysis around that and kind of look what's happening on chain it start to make sense right like you have this highly uh aird dropped chain where the top eight daps by tvl are all dexes right they're they all do the same

thing they're probably all Forks of each other um and so there's really no net new apps that are doing things like even based with friendtech that was like a net new app that brought in a bunch of users um you really so it kind of like starts to make sense in the context of you have a ton of users on a heavily aird drop chain where there's really no net new apps and then you see this the the data behind that where you're not you're only bringing on about 5 per of net new users it's like okay you know that starts to all line up and again this is this can definitely be a gamed metric just because users is a very strong word that's like kind of relates to a person where an address like one user one person can have infinite number of addresses and then there's a very low

switching cost to using a new address so it's kind of why these can be easily gamed but to bring it back to arbitrum so arbitrum seen that run up into about a million weekly uh active addresses and the percentage of new users of that set is about 20 so about four times higher than what you're seeing on ZK sync which is kind of like our base case of a heavily air dropped far uh chain with no net new apps so it is kind of a good thing to see uh active addresses running up and the number of net new addresses still kind of being at a that 20% Mark and just for context that that 20% Mark is where arbitrum optimism and base all kind of sit uh so ZK sync is really the outlier here at at that lower 5% so I think there is like some steps that that

kind of or some data points that proed to like steps are net positive um it's just the question of for for how long right I mean they're designed to be shortterm but like if you get some extra long-term incentive and and increased activity then that's really the the ultimate win here I think yeah definitely agree I'm thanks for sharing that too that was like very helpful and I like that data point just because yeah it's it's going to be tough and interesting too to like look back in like three four five weeks after January 31st or whenever the incentives go through and like seeing whether or not activity falls off because I do know optimism's had problem with that you know like when op incentives are live on synthetics everyone trade on synthetics and then as soon as they stop it's like all right let's go over to the next farm

so I guess I guess we'll just have to wait and see but I think that's a pretty good place to call it I don't know if anyone else has any closing thoughts Ren Dan pibbles all good thanks again for coming on guys all right cool cool uh thanks for coming on guys really appreciate it uh always nice when you guys take like an hour hour and a half out of your day to do these it's always a lot of fun so I guess we will see everyone back here next week hey everyone thanks so much much for tuning into today's episode we hope you really enjoyed it wanted to take one more moment to remind you guys about our upcoming 2024 digital asset Summit in London this March seats are limited so be sure to hit the link in the description and use promo code 0x20

to save 20% off on your ticket we'll see you in London be sure to hit us up if you plan on [Music] attending