Artisan – #14 Weekly: Dec 5 – 11

Solana staking outflows and FTX collapses, on-chain look of Ethereum liquid staking, Mass adoption of Web3 social, Ethereum’s Shanghai fork targeted to be March 2023, Chainlink staking v0.1 is live, Uniswap’s on-chain vote of “Fee Switch”, Synthetix Atomic Swaps V2, RWA analysis site, Ape staking is live, EU to impose crypto tax…

🤔 Analysis & Thoughts

Solana and FTX Collapse: What Staking Data Reveals (Read more)

• FTX/Alameda greatly affected Solana’s outsized decline relative to the crypto market. During the week of the FTX/Alameda collapse, Solana staking outflows erupted. 
• 29.5M SOL was unstaked in one day on Nov 10th, two days after the FTX/Alameda collapse. The previous month’s engaged balance fluctuated only 5M SOL.
• The engaged balance data shows immaterial changes in Solana staking flows until Nov 9th and 10th, making it unlikely that a significant number of investors took precautionary measures to unbond staked SOL and sell before or right when FTX/Alameda confirmed insolvency.

An on-chain look at Ethereum’s liquid staking landscape (Read more)

• 40.5% or 5.7M of the 14.5M ETH staked is being staked via Liquid Staked Derivatives (LSD) platforms such as Lido and Rocket Pool as of November 2022. That figure was 35.6% three months ago and 37.7% a month ago.
• Lido’s stETH is the dominant leader, with its current supply (79% of the total market) far exceeding its competitors. The newest entrant, cbETH is rapidly becoming a meaningful contender since it has surpassed all other assets except stETH in supply.
• Lido’s stETH and Rocket Pool’s rETH are the most sought alternatives by the holders of the other LSDs. In addition, 19% of the rETH holders also hold stETH meanwhile only 2.4% of the stETH holders also diversify into rETH.

How can PoPW networks win? (Read more)

• In an optimal scenario, these networks should operate similarly to a decentralized exchange, where service requests (asks) are automatically matched with the service provider offers (bids).
• The network’s service provider contribution should be as simple as possible, in order to increase the potential contributor pool and achieve the goal of faster scalability.
• The PoPW networks should have standardized work contributions, ensuring high-quality contributions, as well as oracles to prove contributions on-chain.
• They should remove all chances of centralization and have proper tokenomics that balance supply and demand.

Vitalik Buterin: What in the Ethereum application ecosystem excites me (Read more)

• This post covers these specific categories of applications: Money, Defi, the identity ecosystem (ENS, SIWE, PoH, POAPs, SBTs), DAOs and Hybrid applications.
• Decentralized stablecoins are, and probably forever will be, the most important Defi product, but there are a few others that have an important niche.
• “Identity” is a complicated concept that can mean many things. Some examples include:Basic authentication, Attestations, Names and Proof of personhood. The network effects of these different services combine to create an ecosystem that provides some very powerful options for users and applications.

Ethereum’s net supply growth means it is slightly unprofitable for unstaked holders (Read more)

• Fee burn (post EIP-1559) is a value accrual method where supply going down + marketcap flat means that price goes up.
• Staking-based inflation results in value transfer from nonstakers to stakers. Inflation is a ‘cost’ to nonstakers but a source of income to stakers.
• The “ultra sound money” meme of measuring pure supply change is actually a stricter condition for network profitability than what’s needed.
• It’s measuring the performance of owning Ethereum while letting staking transfer value away from non-stakers.

An exploration into a new user-protocol communication layer (Read more)

• Permissionless social graphs, verification, and token-gating are features of web3 messaging, not the core use of it.
• Convenience almost always wins over quality. The reason Web3 messaging protocols will be more convenient is they will unlock a whole new recipient of the message: the protocol itself.
• Every on-chain action is a message but the current tech siloes every action from the others. It makes the most sense if they were all aggregated into a continuous stream of messages, centralized in one place, without compromising user identity.
• The author believes the ability to talk directly to the protocol is the next innovation, bringing middleware to the frontend and leveling the playing field between people and protocols in the production of new media.

Binance: The mass adoption of Web3 Social (Read more)

• At its core, Web3 social provides three main unique utilities compared with Web2: asset creation & shared ownership, open data and identity, and composable system.
• The Web3 social ecosystem can be divided into the following sectors: infrastructure, middleware, applications, and tooling.
• Currently, Web3 social cannot directly compete with Web2 social in terms of user experience, and to succeed, it needs to provide unique and innovative utility in mobile applications, crypto-native innovations, and intersection with Web3 scenarios.

MEV driven centralization in Ethereum: Part 2 (Read more)

• For validator centralization, Lido has a 29.8% share of the validator set. If we break down Lido into it’s node operators instead of just regarding it a one single entity, Coinbase and Kraken together have over 21% of the validator set.
• For relay centralization, Flashbots’ Relay is processing approximately 80% of all mev-boost blocks, whereas BloXroute’s relays together process around 14% of all blocks.
• For block builder centralization, 50% of all mev-boost blocks are created by 2 builders: Flashbots and 0x69. There are roughly 8 or 9 active block builders, and a long tail of dozens of smaller builders, that together win less than 2% of all blocks proposed to the network.

🌍 Layer-1 / Layer-2/Infrastructure

Ethereum developers target March 2023 for release of staked Ether (Read more)

• Ethereum developers determined that the network’s next hard fork, called “Shanghai,” will have a target release time frame of March 2023. This upgrade will include code known as EIP 4895 that will allow Beacon Chain staked ether (ETH) withdrawals.
• Developers also agreed to address the implementation of the “EVM Object Format” (EOF) in Shanghai, which is a collection of EIPs that essentially upgrade the EVM.

Chainlink Staking v0.1 Early Access is now live on Ethereum mainnet (Read more)

• This initial implementation enables community members who meet at least one of the criteria on the Early Access Eligibility List to stake up to 7,000 LINK in the limited-size v0.1 staking pool.
• The capped Staking pool will open to General Access in two days on December 8, 2022 at 12PM ET.

Gnosis transitioned from its Proof-of-Authority legacy to PoS (Read more)

• Post-Merge Gnosis aims to become the most resilient and neutral network that anyone can use to build, transact, or communicate, without privilege or prejudice.
• The Gnosis Chain Merge is expected around Thu Dec 08 18:47 2022 UTC.

New attack vector through Excel targets the cryptocurrency industry (Read more)

• An excel file named OKX Binance & Huobi VIP fee comparision.xls was used to send malicious payloads to a cryptocurrency investment company.
• The threat actor used Telegram to identify the profile of interest, gained the target’s trust by discussing relevant topics, and finally sent a weaponized document that delivered a backdoor through multiple mechanisms.

Layer-2 all-time high gas spend (Read more)

• Some of the recent user activity on Arbitrum and Optimism can be attributed to protocol migration from L1 to L2.
• As the top L2 by TVL, Arbitrum has seen almost a 50% increase in transacting addresses per day since October 1.
• Arbitrum is working towards slowly decentralizing, starting with the introduction of new validators into the permissioned pool.

💰 DeFi / CeFi

Uniswap updates “Fee Switch” polit and the on-chain vote to go live in the next 14 days (Read more)

• This proposal is solely designed to test the impact of the “fee switch” on protocol usage. The proposal does not dictate how any tokens retained during this period are used (or if they ever will be used).
• This proposal is truly designed as a pilot program intended to evaluate the impact of turning on the fee switch on trade execution.
• The team anticipate the on-chain vote going live in the next 14 days. They are currently doing technical diligence to ensure the proposal itself is formatted correctly.

Synthetix Atomic Swaps V2 is live (Read more)

• The first two protocols to integrate with SNX Atomic Swaps are 1inch and Curve Finance, helping to deliver the best fills to DEX traders thanks to SNX’s deep liquidity and low fees.

RWA.xyz, analytics for real-world assets, has been released (Read more)

• RWA.xyz makes every RWA discoverable in one place, with standardized data so that assets can be filtered and compared against each other.

SushiSwap proposes to direct 100% of xSUSHI revenue to treasury wallet (Read more)

• SushiSwap wants all the revenue paid to xSushi to be redirected to its treasury.
• SushiSwap Head Chef Jared Grey stated the project was running out of funds.

The Alameda venture capital portfolio (Read more)

• According to a person familiar with the rescue effort, a document shows an Alameda Research private equity portfolio — with some FTX bets mixed in — that was being offered as collateral in an attempt to secure a new credit line for the stricken group.
• The disparate bundle of nearly 500 illiquid investments is split across 10 holding companies. The total investment value is given on the spreadsheet as in excess of $5.4bn.

Cosmos’ largest DEX Osmosis launches a stableswap (Read more)

• Osmosis has launched a new stablecoin trading exchange, known as a stableswap, for the Cosmos ecosystem.
• The solution aims to let traders swap large amounts of stablecoins with minimum price impact.

Orthogonal Trading defaults on $36 million of loans on Maple Finance (Read more)

• Orthogonal Trading has defaulted on eight loans totalling $36 million on lending protocol Maple Finance.
• The defaults represent about 30% of active loans across the entire protocol.
• Affected by the incident, Nexus Mutual should expect to take a loss of around 2,461 ETH on the Orthogonal Trading loans. This represents 1.6% of their assets.

🖼️ NFT / 🎮 Gaming / 🎭 Metaverse

ApeStake is now live (Read more)

• According to the official, Ape staking function is now online. The rewards start accruing on December 12th.

The performance of Uniswap NFT market platform since it launched (Read more)

• As of 14:30 pm (UTC+8) Dec.5th, the total trading volume is $726,148 and the number is 1,535.
• Uniswap NFT supports OpenSea, X2Y2, LooksRare, Sudoswap, Larva Labs, NFT20, and NFTX. And OpenSea account for a 57% share in volume and 79% in transactions.
• For the performance in the whole NFT aggregator market since its release, Uniswap NFT ranks 3 in trading volume and 4 in transactions. Blur remains in the leading position in the NFT aggregator with nearly 80% market share.

The decline of NFT creator royalties (Read more)

• OpenSea has lost 20% of total NFT trading volume market share since its competitors switched to optional royalties in October.
• Since the launch of OpenSea’s enforced royalty toolkit for new collections in November, most competitors have reverted their stance on royalties for new collection launches.
• The effective royalty rate for blue chip NFT collections has been a steep decline, as the majority of trading activity has migrated to platforms with opt-in royalties for preexisting collections.

ImmutableX gaming NFTs now available on Nifty Gateway (Read more)

• ImmutableX NFTs are now available on Nifty Gateway.
• That includes Gods Unchained NFTs, which was one of the top five most traded NFTs by volume in September.

Tensions erupt between Magic Eden and Metaplex over future of Solana NFTs (Read more)

• Solana NFT standard maker Metaplex and top marketplace Magic Eden are trading allegations and barbs on Twitter.
• The firms have been at odds before and are currently taking different paths regarding enforcement of NFT royalties.

🏢 Institutional Adoption / DAO

Alibaba Cloud has expanded support for Avalanche (Read more)

• The integration will allow Avalanche developers to use Alibaba Cloud’s plug-and-play infrastructure as a service to launch new validators.
• As part of the integration, Alibaba Cloud ran a special promotion by offering Avalanche developers credit toward any of their services.

Warner Music Group and Polygon team up on a new web3 music project (Read more)

• The platform, called LGND Music, will support digital collectibles from any blockchain even though it has Polygon as its main partner. The tie-up also includes a collaboration with Dutch electronic music record label Spinnin’ Records, according to a company release.

Starbucks opens up its web3 loyalty program and NFT community to first beta testers (Read more)

• Starbucks today is launching its blockchain-based loyalty program and NFT community, Starbucks Odyssey, to its first group of U.S. beta testers.
• The new initiative, which includes coffee-themed NFTs that translate to real-world experiences, is an extension of Starbucks’ existing loyalty program, Starbucks Rewards, but leverages web3 technology like the polygon blockchain and NFTs.

🧑🏻‍⚖️ Regulations

EU to ‘level playing field’ for crypto firms with uniform tax rules (Read more)

• A new directive aims to even up tax reporting in the EU for crypto operators, but some say the new requirements will burden many firms.

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