Artisan – #27 Weekly: Apr 10 – 17 | Web3 Narratives

NFT compression on Solana, How Shanghai upgrade will benefit LSD providers, current DeFi landscape on Solana, the middleware thesis, Arbitrum messy governance proposal……

🤔 Analysis & Thoughts

Important takeways from a16z 2023 state of crypto report (Read more)

• Blockchains have more active users, and more ways to engage. Active addresses hit an all-time high last month – 15 million, as a growing variety of apps and services offer people new ways to engage
• DeFi and NFT activity appear to be rising again as promising new uses and applications emerge. More people seem to be buying NFTs in recent months. For DEXs, more than 100B traded last month, marking the third consecutive month of positive growth in trading volume
• The number of active developers in the crypto industry has held steady. Builders drawn in by the 2020 bull run are sticking around. Almost 30K developers contributed to crypto projects last month, steadily increasing over 60% in the last three years
• Blockchains are scaling through promising new paths. Many protocols are working to scale blockchains. Last year, L2 solutions accounted for 1.5% of the total fees paid on Ethereum. Today the number is 7%

The current landscape and competition strategies of crypto wallets (Read more)

• Wallets are lucrative, but they need to improve significantly on UX in order to cross the adoption chasm. The four elements of the wallet stack wallets compete on are key management, blockchain connectivity, user interface, and application logic
• Smart contract (SC) wallets allow for greater customizability in key management and user interfaces while also enabling programmable application logic at the wallet level
• Multi-Party Computation (MPC) wallets enable customizable key management schemes, allowing for more robust security tools with greater accessibility
• Maintaining existing and growing new advantages in user acquisition and distribution will be key to winning the wallet space

Consumer brief: NFT lending, marketplaces and institutional adoption (Read more)

• The financialization of NFTs has become a prominent trend as their use cases continue to expand beyond digital art and collectibles. Across all platforms, borrowing volume is up to nearly 3x from mid-2022 lows, with ParaSpace, NFTfi, and x2y2 leading the way with 47%, 16%, and 17 volume share, respectively
• The NFT market has experienced moderate growth in trading volume over the past few months, with Blur playing a significant role. While Polygon and Solana have gained popularity as lower-cost alternatives to Ethereum
• Recently, there has been a noticeable trend of tech companies stepping away from the Web3 space. Ultimately, the successful incorporation of NFTs requires a strategic approach that aligns with a company’s objectives and delivers value to its customer base

Current state and solutions of MEV (Read more)

• The perfect MEV solution should avoid centralization, minimize bad MEV, and return MEV to the protocol. The main principle to reduce MEV is competition, privacy, and redistribution MEV to users
• Order flow auctions can shift blockspace auctions closer to the user and wallet layer. Currently, this happens mostly at the validator layer
• MEV in L1 is extracted by validators, searchers, and other participants. MEV in the modular world will be accrued to the execution layer. When L2s switch to decentralized sequencers, they will struggle with inefficient MEV extraction problems like the early days of Ethereum
• MEV on Solana is too centralizing and with low latency, which are advantages for validators and bad for users. MEV on Cosmos are innovative: Osmosis and Skip provide innovative approaches to MEV capturing. Anoma and Penumbra have intent-based transaction framework which is similar to SUAVE

5 crypto sectors flashing bullish signs (Read more)

• Liquid staking. The impact of the upgrade on the price of ETH in the short-term is unclear, but the upgrade is likely to initiate a “staking supercycle” which refers to a multi-year period in which the ETH staking rate is set to rise. The governance tokens of LSD issuers and the assets providing infrastructure are benefiting from the growth of LSDs
• NFT-Fi. The NFT marketplace landscape has changed dramatically in 2023 following the rise of Blur. Lending has been another sub-sector of NFT-Fi that has experienced significant growth. NFT-Fi should continue to grow as interest in JPEGs, and alternative use cases like gaming, returns
• Peroertuals DEXs. These DEXs appear set to continue to grow over the coming months should prices continue to stabilize – and as liquidity flows back into the markets. In addition, GMX, GNS, and KWENTA in particular should benefit from the increased adoption of Layer 2s
• Gaming. There are numerous positive catalysts within the gaming sector that have likely contributed to this outperformance and they are set to continue to build on the positive momentum. On-chain treasuries. Now, DeFi faces the opposite problem with interest rates on US Treasuries in meatspace now exceeding (on a risk-adjusted basis) the yields. Several solutions have emerged to attempt to solve this problem, such as Ondo Finance

MEV maximizing strategies for searchers and traders about the Shanghai upgrade on LSD (Read more)

• The Shanghai-Capella upgrade will significantly impact Liquid Staking Derivatives (LSD). This analysis shows the recent trends and predicts the future of Ethereum MEV landscape
• Here are some highlights regarding the LSD MEV market from May 2022 to February 2023: The total revenue generated from MEV surpassed $4.84 million; The rising frequency of arbitrage trades and declining average arbitrage revenue demonstrate the market’s improving efficacy; There was a reduction in the revenue-to-cost ratio, indicating increased competitiveness in the LSD MEV market
• After the upgrade, the validators are expected to be able to withdraw staked ETH from Beacon Chain. There might be some significant change that affects the LSD MEV market: 1) The price fluctuation of ETH; 2) The LSD arbitrage opportunity between staking protocols and the markets in the short term; 3) There is expected to significant increase in LSD-related MEVs; 4) Some new trading strategies will emerge

Thoughts on the three-token model (Read more)

• The essence of the three-token model is that many existing tokens mix governance functions, income rights, and utility functions, but these functions need to be separated systematically
• Equity tokens are mainly for VCs and teams, and their value comes from the pumping of the economic system.
• Utility tokens are mainly for users, and the price is affected by supply and demand, so it is determined by the prosperity of the economic system
• NFT tokens mainly meet the part of the needs that Utility Tokens cannot meet, and realise the scarcity and irreplaceable functions that the first two tokens are unable to perform

🌍 Layer 1/2s

Solana’s crypto-ready ‘Saga’ smartphone goes on sale May 8 (Read more)

• First teased ten months ago, the smartphone will feature the Solana Mobile Stack, a lineup of custom add-ons that integrate crypto usefulness into the phone’s hardware and software
• Saga’s secure element is also customised with a “seed vault” that stores a crypto user’s private keys separate from the rest of the phone’s data, amongst other features like a crypto-focused dapp store

Ethereum Shanghai upgrade is complete (Read more)

• The upgrade was triggered at 22:27 UTC, and finalized at about 22:42 UTC
• Roughly half an hour after the Shanghai upgrade was activated, some 285 withdrawals in epoch 194,408 had been processed, for about 5.4K ETH ($10 million worth), according to beaconcha.in

💰 DeFi / CeFi / NFTFi

Uniswap iOS mobile wallet live on the App Store (Read more)

• After months of waiting for Apple’s approval for the application, the mobile wallet is now live on the App Store and available for download in several countries
• The mobile wallet’s features include digital asset trades, wallet activity tracking and NFT data

FTX’s lead attorney says FTX could reopen (Read more)

• FTX is considering reopening at some point in the future as it navigates bankruptcy, its attorneys from Sullivan & Cromwell said in a court hearing on Wednesday
• One potential option discussed was to let FTX’s creditors convert a portion of their holdings to a stake in a reopened exchange
• However, the attorney stressed that the possibility of re-starting FTX is one of many, and any decisions are far from final.”There are as many opinions on this, I think, as there are professionals involved in this case,” Dietderich said. “And that’s a lot”

Lending platform Maple to introduce U.S. Treasury pool (Read more)

• The upcoming pool will allow accredited investors and corporate treasuries based outside of the U.S. to invest their stablecoin holdings in U.S. Treasury bonds and earn a yield
• Maple is also expected to be holding a community vote later this year about new tokenomics and utility for its native token MPL

Metamask launches new fiat purchase function for cryptocurrency (Read more)

• Cryptocurrency wallet and dapp provider MetaMask has announced the launch of a new feature that will allow users to purchase crypto with fiat currency directly from its Portfolio Dapp
• The feature allows users to purchase a wide range of crypto using various payment methods, including debit or credit cards, PayPal, bank transfers, and instant ACH (Automated Clearing House)

SushiSwap approval contract exploited for $3.3M (Read more)

• The exploit specifically involved the ‘RouterProcessor2’ contract, which was used to conduct trade routing on the SushiSwap exchange, leading to the loss
• DefiLlama developer 0xngmi said on Sunday that the exploit only seemed to impact users who approved Sushiswap contracts in the past 4 days

Parallel launches on Injective (Read more)

• The DEX enables users to trade in anonymity on its multiple spot and perpetual markets, with integration of forex markets in the coming future

🖼 NFT / 🎮 Gaming / 🎭 Metaverse

Gaming tech company Razer introduces Web3 venture fund (Read more)

• The fund, called zVentures Web3 Incubator (ZW3I), will leverage its expertise to grow early-stage projects building blockchain-based gaming infrastructure
• ZW3I-funded companies will be able to access Razer’s marketing and partnership resources, as well as Web3 partners including leading gaming investment firms Animoca Brands and Griffin Gaming Partners, software company Amazon Web Services, and more

Shiba Inu’s metaverse to partially open by end of 2023 (Read more)

• The metaverse will feature 100,595 plots of land that will be minted by users, generating passive income and collecting in-game resources for landowners of the plots
• Additionally, the developers plan to introduce a way to earn and ensure players have a personal space where they can build and manage their projects, in addition to being able to create their own avatars

Unstoppable Games to launch Web3 sci-fi MMO Influence on Starknet (Read more)

• The sale of launch NFT assets for Influence will start on April 11, and the space strategy MMO, where humanity dwells among the asteroids and factions battle for resources itself, will launch this summer
• The decision to build Influence on Starknet was driven by the platform’s scalability, which allows for the complex computations required to accurately model the orbital trajectories of ships as they navigate between the vast array of asteroids

NFT collective Proof launches new Moonbirds collection with Beeple, other artists (Read more)

• Non-fungible token (NFT) collective Proof is launching a new, 10,000-piece digital art collection with a roster of 22 artists including Beeple, Summer Wagner and Terrell Jones
• Titled “Moonbirds: Diamond Exhibition,” the collection is available exclusively to Moonbirds holders that reached “Diamond Nest” status by staking their NFTs

Digital collectibles on Facebook are winding down (Read more)

• Meta announced when both Facebook and Instagram apps will stop supporting digital collections. According to the official help center, these changes will begin taking effect starting April 11, 2023

LooksRare beginning transition to v2 (Read more)

• The marketplace’s v2 will introduce features that allow users to save 75% on marketplace fees, enjoy lower gas fees, receive ETH instead of WETH from sales, perform native bulk buys and listings, and more
• The first milestone in the depreciation of the protocol’s v1 will begin on April 12 with users being unable to post any new v1 orders, with further milestones such as the disabling of the v1 marketplace smart contracts coming the next day

Polygon becomes the second largest gaming blockchain following the launch of Hunters On-Chain (Read more)

• Surging user activity on Polygon in March saw the network become the second-largest blockchain gaming network in terms of unique active wallets, making an increase of 53% from February
• Overtaking Hive for the second spot last month, Polygon’s 138K unique active wallets only fall behind Wax’s 314K

🏢 Institutional Adoption / DAO / RWA

eToro to offer crypto trading directly to Twitter users (Read more)

• The new partnership will see the social investing firm provide Twitter users with real-time prices for crypto, stocks and other assets while directing them to the eToro platform to invest
• This $Cashtags feature will be available to all users worldwide and will allow for viewing of live price charts of supported assets

Binance.US unable to find bank partners in the U.S. (Read more)

• The U.S. arm of Binance has been facing challenges in establishing a new bank partner to serve as a fiat on-ramp and off-ramp for its clients in the country, according to a Wall Street Journal report on April 8
• This comes after the recent failures of Silvergate and Signature Bank which left Binance.US without banking services, depending on middleman banks to store funds on its behalf

TokenInsight launches TokenWiki (Read more)

• TokenWiki is a community-driven platform simplifying Web3 education, offering courses, quests, and tasks to help users learn and earn crypto

🤖️ AI

AI-focused blockchain CryptoGPT raises $10M in Series A funding (Read more)

• The round was led by DWF Labs at a $250M valuation, and will be used to grow the project’s developer team globally and build on its regional presence in the Asian markets
• Recently rolling out its Web3-focused AI assistant ‘Alex’, CryptoGPT is developing its ZK rollup L2 blockchain and a data-to-AI engine which collects, encrypts and transfers data for commercial applications
• Recently rolling out its Web3-focused AI assistant ‘Alex’, CryptoGPT is developing its ZK rollup L2 blockchain and a data-to-AI engine which collects, encrypts and transfers data for commercial applications

🧑🏻‍⚖️ Regulations

• The joint task force featuring investigators from the Calgary police department and analysis from blockchain data firm Chainalysis aims to enable law enforcement action to protect Canadians and build trust in digital assets
• Chainalysis intends to scale this concept globally, working with law enforcement personnel around the world to offer bespoke, customised offerings depending on the unique needs of the region at hand

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The Artisan Narrative is an educational resource intended for informational purposes only. It covers all things Web3 and may discuss assets that the Artisan Collective, ArtisanDAO or writers have financial exposure to. Views are on ours own. None of Artisan Collective, ArtisanDAO, its registered entity or any of its affiliated personnel are licensed to provide any type of financial advice, and nothing on newsletter, website and social media should be construed as financial advice. Artisan Collective, ArtisanDAO, writers might also receives compensation from its sponsor; sponsorship messages do not constitute financial advice or endorsement.