Things are happening in the derivatives DEX landscape. Paradigm, the institutional liquidity network, is planning to launch a derivatives exchange on Starknet. The exchange is called Paradex and will be built on the recently announced Starknet appchain stack. Paradex is being marketed as "a hybrid derivatives exchange that combines CeFi liquidity and performance with DeFi's transparency, trustlessness and self-custody." The exchange will leverage Paradigm's liquidity network, which presently connects prominent market makers to each other, and it'll be interesting to see if this creates a robust competitive advantage in the long run. Nevertheless, Paradex isn't the first derivatives DEX to combine onchain and offchain components—most notably, the largest perps DEX dYdX and the most prominent options DEX Ribbon utilize a similar architecture, where trade execution happens offchain, with settlement being taken care of onchain. It's currently unclear whether or not Paradex's product offering includes options. A closed beta is planned to launch in August. Rollups keep rolling. Optimism is advancing with two proposals to add zero-knowledge proofs to the stack. The proofs will "enable secure and low latency cross-chain communication between L2 and L1, as well as directly between OP Chains." One of the proposals, created by RISC Zero, advocates upgrading Optimism's current fault mechanism to use zk-proofs, which would reduce the time to achieve finality. The other proposal, set forward by O(1) Labs, suggests creating a new fault-proof solution utilizing Kimchi, a zk-proof system presently employed within the Mina Protocol. The solution's purpose is to prove the accurate execution of transactions efficiently. Lastly, on Friday, Wormhole introduced the Wormhole Gateway—an app-specific blockchain powered by the Cosmos SDK. Gateway's primary objective is to establish connections between multiple Cosmos chains and apps through a unified cross-chain liquidity router. During the initial phase, the app-chain will establish connections between 23 blockchains on Cosmos. Plans to integrate more chains are currently ongoing, all of which would leverage the inter-blockchain communication protocol, which is Cosmos' native messaging solution. Gateway isn't Wormhole's first product. Some of you may remember the Wormhole bridge exploit that took place in February 2022, which led to 120K wETH, valued at ~$325M, being stolen. Jump Crypto, Wormhole's incubator, replaced the stolen capital and, around a year later, managed to recover the funds in a coordinated effort with Oasis by counter-exploiting an upgradable Oasis contract securing the stolen funds. Lots of stuff going on in the space—hope you have a productive Monday! – Brick |
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Okay ladies and gents—Permissionless II is coming up in mid-September. We would love to see you all join the Blockworks family in Austin, TX, for the world's largest DeFi event of the year! Don't FOMO in before it's too late. FOMO in now.
More information and tickets can be found here.
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In April and May 2023, the aggregate OI on Synthetix was relatively stable at ~$60M. Recently, it has grown notably, almost two and a half times larger at ~$140M. DeFi 1.0 tokens have skyrocketed in the past month and SNX includes this group, the price being up almost 50% in the last 30 days. In addition to growing OI, the project has several tailwinds going for it, which could partly explain the price ticking upwards. Some of these tailwinds include the launch of Infinex, a decreasing inflation rate, and the launch of v3. The upgrade will change the protocol to a generalized liquidity layer. Competition in the vertical is sparse, and Synthetix has been working on the update for a while now, which should make the protocol well-positioned to dominate the market section. One of Synthetix's strengths is the balance between stakeholders, these being token holders, traders, and market makers / LPs. No individual group gets a bad deal on the platform, which is the opposite of some larger competitors. For example, token holders on dYdX face over 50% yearly inflation and don't receive any revenue from the platform. Meanwhile, 100% of SNX fees are redirected to stakers. Although the SNX price has increased quite substantially, the token is still trading at "only" a ~27x price-to-fees multiple. Onchain perps have historically faced the problem of offering a subpar UX compared to CEXs. However, projects are getting better, and it isn't far-fetched that they'll soonish start rivaling centralized entities from this point of view. The perps DEX vertical is also set to expand, with more and more jurisdictions banning crypto perps trading on CEXs (excluding CME). With all of the upcoming protocol improvements and market potential, Synthetix could be an interesting opportunity at a P/F multiple below 30x. |
The active proposal aims to adjust the fee split parameters for core and non-core pools to foster a growth-oriented path. Presently, 65% of fees are allocated to veBAL voting incentives, while 35% goes to the treasury. However, with a substantial reserve of stablecoins in the treasury, it's now being proposed that the treasury fee is decreased to 17.5% across pools. The intention is to redirect funds towards bolstering voting incentives and passive veBAL fees. The proposal suggests the following split: L1 core pools & L2s: 50% voting incentives, 32.5% passive veBAL fees, and 17.5% treasury L1 non-core pools: 82.5% passive veBAL fees and 17.5% treasury Furthermore, governance is actively exploring a strategy to utilize treasury funds as incentives for deploying Balancer on non-Ethereum networks. This step is crucial for gaining a competitive foothold on other chains. Voting on this proposal ends today at 2 PM (EST). Currently, the proposal has only received ~245K votes, of which ~100% is accounted for by yes votes. The quorum is set at 2M votes. This proposal was first highlighted on GovHub for Blockworks Research subscribers. Be sure to check it out if you haven't already! |
Sommelier is a decentralized asset management PoS appchain built with the Cosmos SDK that provides strategists with the tools required to deploy dynamic yield strategies. |
Instadapp, as a wallet service provider with account abstraction functionality and an abstraction/aggregator layer with additional value-added services, has the potential to topple conventional thinking and be the dominant interface of the future instead of pure wallets. |
SEC lawyers said Judge Torres' ruling about XRP sold on secondary markets was "wrongly decided" and may soon call for a review. |
The 30-day estimate for the world's largest digital asset has fallen to just 0.74%, Bitcoin's lowest realized reading since Jan. 16. |
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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm's Financial Disclosures. |
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