Artisan – #19 Weekly: Feb 13-19

Adoption in Web3 gaming, Cosmos to launch interchain NFTs, Polygon to launch zkEVM, BNB targeting ZK tooling in 2023, HK’s first tokenized green bond, Playtpus attacked via flash loans, 684 million BUSD burned……

🤔 Analysis & Thoughts

“Fat Protocols” or “Fat Apps?” (Read more)

• Ethereum has a large lead today in terms of its network effect when compared to alternative L1s. They dominate in terms of users, developers, revenues, total value locked, etc.
• Every single transaction at the top layer of the tech stack must flow through each layer below, ultimately funneling down to Ethereum at the base layer. The “Fat Protocol” thesis observes this and assumes that Ethereum will accrue the most value.
• There are trade-offs for apps to build their own app-chain. However, in the future, the value could move up the tech stack. Applications that gain a sticky relationship with users could look to port them over to their own app chains, thereby vertically integrating while capturing more of the value chain.

Web3 gamers tend to be hardcore gamers (Read more)

• A Web3 gamers survey conducted by a16z Games shows that 87% of gamers have traded digital items in games before, 72% are male (comp. to survey avg. 59%) and 2x more likely to love MOBAs.
• In the existing gamers they sampled, crypto usage is becoming more widespread amongst US gamers. But web3 games are still relatively nascent among them, with only 6% of gamers having played. Among those players, a small minority were opposed to crypto.
• The ones in their sample tend to be hardcore gamers with higher player patterns across all platforms. They also liked traditionally more “hardcore” genres. First-person shooters, BRs, and action games were popular as per usual, but MOBAs and MMOs ranked higher among the web3 gamers surveyed and puzzle and life sim games lower.

OFTs might play a big role in cross-chain DeFi (Read more)

• x-chain primitives are launched every week but only few see enough adoption. LayerZero_Labs’ omnichain fungible tokens (OFTs) might be one such primitive that looks set to play a big role in cross-chain DeFi.
• Bridges can mint their own assets. Different bridges have different wrapped assets, but they are not fungible with each other.
• OFTs are a type of token contract, just like an ERC-20. It allows tokens to be composed in any type of dApp on any chain. OFTs are currently used by Avalanche’s BTC.b, Pancake, TraderJoe, etc.

3-step game plan to maximize this opportunity (Read more)

• Based on the previous cases such as ENS, SOS, and LOOKS, we could find token prices all trend downward long term and hit peak a few days after the airdrop.
• But the NFT volume 1 week after each airdrop were increasing compared with that 1 week before each airdrop.
• Therefore, don’t sell right away and don’t hold long term. Profits are rotated into NFTs, so buy NFTs with upcoming catalysts.

🌍 Layer 1/2s

Conflux token jumps over 40% following partnership with China Telecom (Read more)

• China’s second-largest telecommunications firm is piloting blockchain-enabled SIM cards in partnership with Conflux Network.
• The project is also partnered with Little Red Book, China’s answer to Instagram.

Cosmos ecosystem to launch interchain NFTs via $270K incentivized testnet (Read more)

• Interchain NFTs, powered by the ICS-721 update to the IBC protocol, will be the fourth publicly incentivized testnet for the Cosmos Hub as registration opened on Feb. 15 with a 20,000 ATOM prize pool.
• Validators and developers will be testing Interchain NFTs across multiple IBC-compatible chains, including IRISnet, Stargaze, Juno, OmniFlix, and Uptick.

Polygon plans to launch zkEVM on mainnet beta on Mar. 27 (Read more)

• Polygon Labs is pleased to announce the launch of Polygon zkEVM Mainnet Beta. March 27, the journey to the future begins.
• Polygon claims its zkEVM will be equivalent to Ethereum’s Virtual Machine, which means that the network is expected to support the same code as Ethereum.

BNB Chain aims to double transaction speed, targets ZK tooling in 2023 road map (Read more)

• Scalability will be the long term target. BNB Chain will work with the Ethereum community together to build the best performant EVM compatible client for BSC, and it will also leverage emerging technologies, such as ZKP and Optimistic Rollups and modular blockchains, to provide cheaper, scalable and secure solutions for decentralized applications that targets millions of users.
• BNB Chain will not stop further decentralization, expanding validators from 40 to 100.

💰 DeFi / CeFi

DeFi protocol Clearpool will deploy its institutional credit platform Prime exclusively on Polygon network (Read more)

• Prime will act as an institutional-grade capital marketplace, where borrowers can create credit pools, and liquidity providers can invest to earn yield.

Platypus was attacked via flash loans on AVAX resulting in total losses of $8.5M worth of assets (Read more)

• The attacker took advantage of a flaw in our USP solvency check mechanism. They used a flashloan to exploit a logic error in the USP solvency check mechanism in the contract holding the collateral.
• There were losses totaling 8.5M from the main pool. Right now deposits from users are covered up to 35% of their deposits. Funds in other pool are unaffected.

Lido Finance kicks off yield farming event on Optimism (Read more)

• Lido Finance and Optimism are rolling out a new incentive program to get liquid stakers migrated over to the layer-2 network.
• These tokens will provide an added OP reward for users who stake their Ethereum with Lido, move that staked Ethereum to Optimism, and provide liquidity for select token pairs.

Lido DAO mulls proposals to sell or stake $30 million worth of ether (Read more)

• Lido DAO delegates are considering proposals to sell or stake its treasury ether tokens. The DAO currently holds 20,304 ETH tokens worth $30 million.

SushiSwap launches Sushi Studios, a decentralized brand licensing & incubator framework (Read more)

• Sushi Studios will help create an inclusive product ecosystem that brings value to all Sushi stakeholders. It will also authorize independent token economies, allowing for the bootstrapping of liquidity, fundraising, & distribution of new product launches.

Flashbots transparency report Dec 2022 & Jan 2023 (Read more)

• The adoption of MEV-Boost by Ethereum validators crossed 90% in November and has remained steady ever since. As of publishing this report, approximately 95% of newly proposed blocks are relayed through MEV-Boost.
• As the builder markets continue to mature we see an increase in both the number of participants and the diversity of market share. Even though the block-building market is still bootstrapping and the competition is fierce a growing number of builders are able to capture profits.
• A similar trend of diversification can be seen in the relay market with a greater mix of relay market share over the last months, the current number of relays reaches to 11.
• The percentage of proposed blocks sourced from OFAC compliance relays continues to gradually decrease. This percentage has now decreased to 58% compared with 66% of the previous report.

🖼 NFT / 🎮 Gaming / 🎭 Metaverse

Blur updates its royalty policy, and recommends creators to block competitors (Read more)

• Blur walks through the options that creators have and how they can enable full royalty enforcement on both OpenSea and Blur.
• Blur enforces full royalties on collections that block trading on OpenSea.

RabbitHole unveils RabbitHole V2 with a new Quest Protocol (Read more)

• With this new Quest Protocol, users can use the Quest Receipt to claim the quest reward. If users don’t want the quest reward, they can sell their Quest Receipt on a secondary marketplace like OpenSea.

Final Fantasy maker Square Enix to launch NFT game on Polygon (Read more)

• Square Enix—the storied Japanese video game publisher behind franchises like Final Fantasy, Dragon Quest, and Kingdom Hearts—announced that it will launch its upcoming NFT-based game Symbiogensis on Polygon.
• The game will apparently be built around 10,000 character NFTs tied to strategic game mechanics, although there will be other NFTs used in the game as well.

🏢 Institutional Adoption / DAO / RWA

Hong Kong scores first HK$800M issuance of tokenized green bonds (Read more)

• The government of Hong Kong has announced the successful sale of the world’s first tokenized green bonds worth roughly HK$800 million ($102 million).
• The Hong Kong Monetary Authority (HKMA) launched the government green bond program and leveraged the Goldman Sachs tokenization platform (GSDAP) to tokenize the assets on a private blockchain.

🧑🏻‍⚖️ Regulations

684 million BUSD burned for redemptions amid US regulatory scrutiny (Read more)

• After Paxos said it would cease issuing BUSD but continue honoring redemptions, at least 684 million BUSD was burned in exchange for U.S. dollar redemptions, on-chain data show.

Galaxy Digital gets approval for Bahamas subsidiary amid rising US regulatory uncertainty (Read more)

• Galaxy Bahamas received approval from the Securities Commission of The Bahamas in December for registration as a digital asset business under the Digital Assets and Registered Exchanges Act of 2020.

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