Round Tripping
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tl;dr: Base announced, the growing DeFi/regulated DeFi divide, Goerli ETH somehow was a thing (seek help), the need for L2 interoperability, SOL downtime & YFI LSDs
BTC dominance 40% | ETH dominance 16% | DeFi TVL $49B |
Total Crypto Market Cap $1.13T | Stablecoin Supply $135B |
As everyone knows by now, the biggest story the week was the announcement of Base from Coinbase. Base is a secure, low-cost, developer friendly ETH L2 built on Optimism’s stack. While the announcement spurred excitement and bullish propaganda throughout the TL it will likely, as with most all announcements in crypto, follow the forever relevant, “we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
Despite my perceived lack of excitement, the announcement was unquestionably great for the entire ecosystem at large but I think it’s always important to always be realistic (e.g. we may finally have L2 summer after the nomenclature began in 2021). With that being said, some of the less talked, most interesting details of the announcement to me include Coinbase & Optimism’s focus on:
Account Abstraction (AA) — Coinbase says Base will enable developers to, “set up gasless transactions for your dapps with easy developer APIs for account abstraction” — while a deep dive on account abstraction is recommended to comprehend everything it can enable, the take my word for it tl;dr of AA is that it improves the UI, UX, and security of interacting with crypto by orders of magnitude.
Superchain — Optimism’s announcement of the Superchain: “a project that seeks to maximize interoperability and composability between different chains using the OP Stack, and integrate siloed L2s into a single cohesive layer…a shared optimistic rollup bridge with a path towards native cross-chain communications & data availability” .
DeFi’s Divide — While not nearly as crypto native or exciting to think about as account abstraction or Optimism’s superchain, Coinbase’s comprehensive AML/KYC policy will undoubtedly enable compliant RWA access/experimentation with the possibility of tokenized stocks and more. Of course, this is largely net positive for the growth of crypto as Coinbase alone has 110M users, but the cost is an increase in the growing fissure between compliant DeFi and the uncensorable DeFi that has been built from the ground up.
In an ETH L2 ecosystem that is consistently expanding resulting in fractured liquidity and a UX nightmare, interoperability and the fluidity of capital becomes increasingly important. To that note, Optimism’s Superchain “aims to create an ecosystem of aligned chains, united in a single network…with a path towards native cross-chain communications & data availability.”
While Optimism is far from the only protocol working to address interoperability issues of L2s/RollApps (Hyperlane, Celestia, EigenLayer, Stargate etc.) questions about the interoperability of these protocols will only become more pressing as the long-awaited ZKRs begin to launch and incentivize users throughout the year. What Coinbase and Optimism announced this week was undoubtedly exciting, but the race to win the scaling and interoperability wars has only just begun.
In the February 9th edition of Round Tripping, I questioned the sustainability of the ongoing altcoin “narrative” rotations with the compressing length of the “narrative” being a red flag. Back then, the en vogue “narrative” was AI and the trend lasted around a week, if that. Well, the on-chain degens have once again outdid themselves, this time with Goerli testnet ETH.
After touching copious amounts of grass Saturday, I opened Twitter and a few chats Saturday night to be inundated with people trading, trying to find GETH, and punting mints of Goerli testnet NFT collections. While I’ve thought that the altcoin rotations were becoming weary for weeks, and am all for rotating to where the risk/opportunity presents itself, an essentially one day, Saturday night, scramble to capitalize on Goerli testnet ETH screams narrative and alt exhaustion to me.
Speaking of narratives, one of the only sustained “narratives” I see over the coming weeks, outside of potential ETHDenver announcement catalysts, is a rotation back to the LSD sector ahead of ETH’s Shanghai upgrade. Deposits, TVL, and revenue, along with traders front-running that, for LSD staking protocols should continue upwards as a result of the long-awaited ETH withdrawals being enabled in late March or the first week of April.
Lastly, one of the under the radar news items this week came in the form of some actually good regulatory news as eToro secured a New York BitLicense and money transmitter license to provide crypto services. While once again not immediately impactful, it’s a big deal as the last New York BitLicense to provide crypto services was granted to PayPal in June of 2022. The license is a hot topic in crypto regulatory circles as numerous companies have applied only to face overly restrictive measures, high compliance costs and unnecessarily long wait times.
Looking ahead, next week should be one filled with token catalysts, product updates and announcements as ETHDenver kicks off and runs from March 2nd-5th.
This edition of Round Tripping is sponsored by Sorare. Sorare is the best fantasy sports platform and is powered by NFTs! Users own their cards (NFTs) forever while using them to create lineups and compete for new card rewards, crypto powered prizes & tickets to sporting events. The inaugural Sorare NBA season is underway while Sorare also announced a four year partnership with the Premier League.
Myself, Moon, and numerous people in The One have been playing Sorare NBA since their launch in October so join the discord to come hangout where you’ll find dedicated Sorare NBA and Soccer channels. and thing about buy 5 limited etc.
funding:
Dan Tapiero is launching a crypto private equity fund with a target raise of $1B
Sei Network raising series A that would value the upcoming token @ $400M
BCB Group, crypto financial services company, raising series B @ $200M val
OneKey, open source crypto wallet, closes series A+ with $85M valuation
Chain Reaction, semiconducter’s for blockchain/privacy hardware, raises $70M
HNT Labs, protocol building “better digital town squares”, raises $25M series A
Kratos Studios, Indian crypto gaming startup, raises $20M seed @ $150M val
Chaos Labs, risk and security platform for DeFi, raises $20M seed
Blocto, multichain wallet startup, raises undisclosed series A @ $80M valuation
Polyhedra Network, ZK infrastructure startup, raises $10M strategic round
Worldwide Webb, MMORPG allowing NFTs as avatars, raises $10M series A
Huma Finance, DeFi borrowing against future income protocol, raises $8.3M seed
TipLink, SOL-based payments enabling crypto sent w/ link only, raises $6M seed
Strider, collaborative story-driven gaming platform, raises $5.5M seed
Kaito AI, Ai-powered search engine for crypto data/info, raises $5.3M
Gateway.fm, decentralized infrastructure tooling, raises $4.6M seed
Superchain, blockchain indexing startup, raises $4M seed
Renegade, ZK & MPC dark pool startup, raises $3.4M seed
Curio, creative studio developing on-chain games, raises $2.9M seed
Den, multi-party computation (MPC) wallet, raises $2.8M seed
Polybase, privacy-focused deentralized database, raises $2M pre-seed
news:
Coinbase launches Base, an ETH L2 built on Optimism (OP)
Jump counter-exploits the Wormhole hacker and retrieves stolen 120,000 ETH
Immersve partners with Mastercard to enable users in Australia & New Zealand to spend crypto wherever Mastercard is accepted online
Google Cloud partners with Tezos (XTZ) to become chain validator
Obol Technologies to launch distributed validators on ETH in second half of year
eToro secures New York BitLicense to provide crypto services along with money transmitter license from NYDFS; first BitLicense issued since PayPal (June 2022)
Coinbase expands institutional trading/access to USDC in 70 additional countries
ETH’s second testnet Shanghai upgrade is scheduled for February 28th
Spotify piloting NFT-gated playlists/access to specific songs on their platform
ConsenSys acquires blockchain notification platform Hal
Arbitrum surpasses ETH in daily transactions, becomes first L2 to accomplish feat
Microsoft partners with decentralized infra provider ANKR to offer blockchain node service for enterprise clients
tokens & protocols:
SOL — experiences major outage resulting in liveness failure for ~19 hours
OP — announces Base building on OP & introduces the Superchain: maximizes composability of OP stack and integrates siloed L2s into a single, cohesive layer
UNI — enables buying of NFTs with any ERC-20 token on their NFT platform
BLUR — outlines details on season 2 airdrop, will see 300M tokens distributed
YFI — introduces yETH & the ability to earn exposure to a basket of LSD tokens
ATOM — details Replicated Security & the ability of ATOM stakers to earn tokens
FRAX — votes to fully collateralize protocol’s native stablecoin
SNX — officially launches v3 on ETH mainnet
AVAX — introduces HyperSDK enabling custom virtual machine development
SUSHI — plans to launch derivatives exchange on Sei in Q2
ANKR — rallies 30+% on the back of partnerships with Microsoft & Tencent
LDO — registers largest daily stake inflow after Justin Sun stakes 150k ETH
Celestia — introduces Rollkit, “a modular framework for rollups”
EigenLayer — highly anticipated restaking protocol releases their whitepaper
Eclipse — to release SOL-compatible rollup built for MATIC
Arbitrum — becomes the first rollup to process more daily transactions than ETH
around the ecosystem:
Lido outlines what users can expect after withdrawals of staked ETH are enabled
Rennick Palley with Modular Blockchain Economies: Where will value accrue?
Cato Institute’s Don’t Push Crypto Offshore, Don’t Outlaw Disruptive Innovation
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