Round Tripping

a weekly recap of the crypto ecosystem

as always, thanks for reading and follow me here

tl;dr: BLUR & zkSync tokens soon, Aptos launches to exit liquidity, Reddit “collectibles”, ETH continues burning, & Celestia highlights the modular future

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BTC dominance 38% | ETH dominance 17% | DeFi TVL $52B |

Total Crypto Market Cap $971B | Stablecoin Supply $146B

ETH’s supply change since the merge from ultrasound.money

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Musings:

Volatility continues to dampen across crypto majors as the S&P 500 is now currently more volatile BTC. While BTC/ETH continue to range, there’s always volatility to be found across the alt landscape highlighted this week by Aptos’ controversial (APT) launch, AAVE, LDO, SYN, XMON, CANTO, & OP. The majority of these tokens moved on recent announcements underscoring the importance of remaining informed. We also received confirmation of two upcoming token airdrops this week, BLUR & zkSYnc, which you can read about further in the below Tokens section.

Outside of the Aptos launch, the two biggest topics of the week were on-chain activity and Reddit NFTs. While prices currently remain in a downtrend, ETH gas fees have remain elevated. Most of the on-chain activity has come in the form of useless pump and dump shitcoins but the impact on ETH is agnostic to the inherit “value” of transactions.

Shitcoin or not, transactions are made, gas is paid, and ETH burnt. As a result, ETH’s supply growth since the merge currently sits at 0.01%, which you can track in real-time at ultrasound.money. As I wrote last week, eventually (one would think) ETH’s reduction in supply and potential net-negative issuance since the merge will create reflexive effects on ETH’s price in the mid to longterm.

icebergy ❄️ @icebergy_

one more shitcoin ticker from vitalik and eth net negative from merge

Reddit NFTs have taken CT by storm this week as the market cap of the recently released NFTs has crossed $100M. Your favorite influencers favorite influencer has now posited how Reddit NFTs are the future of Web3 despite being unaware of them as recently as two weeks ago. Despite that, Reddit has “onboarded” 3M people to interacting with crypto wallets and NFTs that are minted on Polygon.

While I’m firmly in the camp of skepticism on their staying power and overall impact, the important takeaways, to me, are around the verbiage Reddit is using. “Digital Collectibles” and “vaults” are used instead of “NFTs” and “wallets”, and when browsing the collectibles on Reddit, you’ll be hard pressed to find anything familiar to established crypto vocabulary.

While the experiment is just beginning, the hype is building and I look forward to watching it play out. I’m most interested in monitoring user retention, if users are interacting with other crypto applications since “onboarded”, and if Reddit can enable novel on-chain interactions of these users or if they remain siloed from the broad ecosystem at large.

(Also, s/o my partner covering NFTs @tervo, writing about Reddit NFTs before anyone in Page One #41 released September 28th)

AB @ABBBBBB_NFT

Reddit Avatars are the Trojan Horse of NFTs that are on boarding millions into Web3, and no one is talking about it 🧵

Modular Future

One of the biggest announcements this week came from Celestia as they announced new funding of $55M bringing their valuation to $1B+. In the accompanying blog post of their announcement, Celestia outlines their view saying,

“Celestia introduces modular blockchain architecture to solve the challenge of deploying and scaling blockchains. These specialized chains are less constrained and break the rigidity of monolithic chains into flexible components, promising greater scale, security, and decentralization.“

“These specialized chains” refers to the separation of blockchain architecture across the core functions of data availability, consensus, settlement, and execution. Celestia is just one protocol within the growing “Scaling Stack” but once again highlights the opaque outcome of blockchain scaling. Joining Celestia is a number of different approaches including ZK & Optimistic rollups, Polygon, AVAX subnets, Fuel Labs, Cosmos ICS, appchains, Eclipse, dYmension, Constellation, Nitro, etc..

I’ve written on the aforementioned uncertain future of scaling outcomes several times recently and plan to write at length about the entire sector soon in what I’m calling the “Scaling Stack”. In the meantime, you can read about one part of that stack, ZKRs, in the updated Zero-Knowledge Landscape I released this week.

The Zero-Knowledge Landscape: Part 2

Funding:

• Celestia, modular blockchain architecture, raises $55M @ $1B valuation

• Edge Capital raises $66.8M for two DeFi funds

• Stardust, popular crypto gaming infrastructure providers, raises $30M series A

• ChainSafe, blockchain dev tool & infrastructure provider, raises $18.8M series A

• Shardeum, new L1 blockchain in development, raises $18.2M seed through private token sale @ $200M valuation; plans to launch in Q1

• Mercury, college sports fan NFT platform, raises $7.5M seed

• Web3 Builders, security & anti-scam focused startup, raises $7M seed

• Spindl, measurement & attribution protocol, raises $7M seed

News:

• Plaid, fintech open banking API connection giant, launches its first crypto product, Wallet Onboard — instant integration of over 300 ETH wallet providers — “this is the start of Plaid’s journey of bridging web2 & web3 worlds”

• Fidelity to enable institutional investors to buy, sell, & transfer ETH on Oct. 28th while Fidelity Digital Assets plans to hire 100 additional staff members

• NFT representing ownership of South Carolina house sells for $175k

• Azuki, popular NFT collection, announces the Physical Backed Token (PBT) — a new Ethereum token standard that ties a physical object to a digital token

• SBF releases regulatory proposal punishing DeFi, receives extreme backlash

• N26, German neobank, launches crypto trading enabling customers in Austria to trade 100+ tokens; expansion to other countries coming soon

• Nubank, Brazilian digital bank, to launch native token on Polygon’s MATIC

• Tether’s USDT to expand availability to 24k+ ATMs across Brazil

• a16z launches new accelerator, Crypto Startup School

• DefiLlama team is always shipping, launches Delta Neutral Yields product

• Mastercard to help financial institutions offer crypto trading alongside Paxos

Tokens:

• zkSync — token confirmed with details coming the first week of November

• FXS — launching their ETH liquid staking token frxETH “within two weeks”

• APT — Aptos is live — completed retroactive airdrop for testnet users after backlash over abysmal tokenomics that weren’t slated to be available publicly before trading began until extreme pushback; vesting tokens were also available to stake before the token was live, allowing investors to dump rewards

• Optimism (OP) — announces the OP Stack — “With a shared message-passing format, these chains can easily communicate with each other without custom adapters for each and every chain”

• BLUR — NFT marketplace & aggregator announces token & outlines airdrop

• MKR — MakerDao on-track to deploy 33% ($1.1B) of USDC to Coinbase Custody resulting in ~$15M of annual revenue

• CANTO — mainnet upgrade 4.0.0 is successfully completed

• MPLX — Metaplex, NFT infra on SOL, building “a new asset class that will enable creators to enforce royalties at the protocol level by extending Token Metadata"

• AXL — Axelar partners with Circle on cross-chain initiative for native USDC

• AVAX — Avalanche’s subnet validators can now stake with their native token

• AUDIO — crypto music platform acquires virtual music company SoundStage

• Aera — automated, self-custodial DAO treasury management protocol announced

Reading:

“Product-driven Protocols” — shawki

As the industry (hopefully) continues to learn and adapt during the downturn of another cycle, shawki posits some thoughts on how protocols should embrace a different form of building; a product centric one.

“A product-driven protocol is…you launch fast, iterate fast, both enabled by being sufficiently decentralized, with an extra step to achieve developers-protocol fit along the way…focusing on having an early community of builders that really love/care what you’re building is going to be crucial for an open and decentralized ecosystem later on.“

One of the core problems with the majority of projects and protocols released last cycle was the enormous battle for attention. NFTs, protocols, and products alike were all incentivized to do everything possible *upon launch* to gain marketshare in a space that was pulling users in hundreds of different directions to purchase or the new shiny thing.

The result of this dynamic was the inability for iteration, feedback, and product improvement. Everything with a token (fungible or not) enhanced their short-term ability to gain users by emitting tokens through liquidity incentives (fungible) or airdrops (non-fungible) to ensure that they reward users and retain attention. The downside of this, and what the market is working through currently, is that protocols have nothing left when the rising tide evaporates. Instead, protocols should adhere closer to a product-centric roadmap where they’re sufficiently decentralized, focus on gaining a core audience, and iterate to improve the protocol through user feedback.

Around the Ecosystem:

• @Zeneca_33’s thoughts on “How We Onboard Billions to Web3”

• Joel John compiles ~120 charts for “The State of Web3” as of Q4 2022

• Dmitriy Berenzon on all things Application Specific Blockchains

• Soona on what to expect from crypto when markets turn apathetic