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Welcome back to 0xResearch. Here's what we've got for you today: |
L1s are converging Metabased Taiko TVL WBTC alternatives
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L1s are converging |
Ethereum's rollup-centric roadmap sought to solve the scalability problem by offloading the computational burden of execution onto L2s. That roadmap is going pretty well, except for the fact that it has resulted in another complaint — a lack of value accrual to ETH — that is now forming a renewed pushback against Ethereum's whole scaling approach. |
Ethereum researchers have a deceptively simple answer to this value accrual problem: To bring value back to the execution layer of Ethereum, stop obsessing over L2s, and make the L1 better — in short, MEGA (Make Ethereum Great Again). |
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One proposal around L1 optimization that has gained traction is "multiple concurrent proposers," or MCP. The most prominent MCP effort is BRAID, proposed by Max Resnick of Special Mech and supported by Paradigm fund. |
As its name suggests, MCP would decentralize today's relatively centralized block proposer market, allowing multiple block proposers (or leaders in Solana terminology) to run sub-chains in parallel to reach consensus and settle on Ethereum. Simply put, take the Ethereum consensus layer today and parallelize it into multiple layers. |
The MCP design would thwart the status quo today where a single block proposer decides block ordering, thereby improving censorship resistance. MEV capture is shifted from proposers to dapps, and Ethereum recaptures value on the execution layer. |
MCPs are not an approach exclusive to Ethereum. Anatoly Yakovenko has stated that MCPs were part of Solana's roadmap. Both Sui and Aptos use a similar leaderless form of consensus mechanism, the directed acyclic graph (DAG), a technical term that peppers the technical white papers of older L1s like Avalanche, Zilliqa, Hedera, IOTA and more. |
There is an L1 convergence toward the same design, though for different reasons. For Ethereum researchers, MCP is seen as a way to break the block proposer monopoly and accrue value to the execution layer of the L1 again while, for Solana, it's seen as a way to further reduce its slot time requirements, as summarized by Blockworks co-founder Michael Ippolito on a recent Bell Curve podcast. |
Despite its apparent simplicity, MCPs are fairly radical and for that reason that it may be challenging to get the buy-in of Ethereum core devs. MCPs would render the hodgepodge of piecemeal improvements by the Ethereum Foundation somewhat irrelevant, namely inclusion lists (FOCIL), protocol enforced proposer commitments (PEPC), vote extensions, pre-confirmations — sometimes collectively referred to as "Mechan-stein." |
For more on the discussion, see The L1 Convergence by magicdhz on Blockworks Research. |
— Donovan Choy (X: @donovanchoy | Farcaster: @donovan) |
Getting Metabased |
Syndicate has introduced a new approach to decentralizing layer-3 (L3) networks through "metabased rollups," addressing what they view as "the most important existential problem for rollups, particularly L3s." |
Over the last three years, Syndicate has built infrastructure for decentralized autonomous organizations (DAOs) and engaged in projects such as Constitution DAO, Nike .SWOOSH, and the Base L3 Degen Chain. Through this work, Syndicate identified that L3 networks, like DAOs, require true community ownership and control, but current technologies do not fully support this decentralization. |
Metabased rollups provide a solution by moving sequencing — how transactions are ordered — onchain via smart contracts on the L2. This allows networks to decentralize more effectively while aligning economically with their communities. The method also lowers operational costs significantly, according to Syndicate, encouraging experimentation with new economic and governance models. |
The technique could also improve cross-chain interoperability since these L2 smart contracts will store state data, reducing reliance on often centralized L3 nodes. |
This development is part of the Metabased alliance, which Syndicate co-founder Ian Lee calls "a collaborative industry initiative." |
"It's a community of organizations coming together...to build the technology and infrastructure to enable decentralized community-owned rollups at scale," Lee told Blockworks. |
— Macauley Peterson (X: @yeluacaM | Farcaster: @Macauley) |
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Taiko transactions: |
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The Taiko L2 is seeing a large spike in transaction count, hitting all-time highs of 2.7 million. This is largely driven by the 12-week-long Taiko Trailblazer campaign offering 12 million in TAIKO incentives (about $21 million) to several participating protocols like Oku, Ritsu, Izumi, Meridian Finance, KiloEX, and Stargate. ETH:TAIKO LP yields on Ritsu are currently 107%. |
— Donovan Choy |
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Proposed legal structure changes from bitcoin custodian BitGo on August 10, led to speculation that the market might lose confidence in the safety of WBTC under the new regime. BitGo moved swiftly to rebut concerns, but the question remains: Can would-be competitors seize the opportunity? |
In the 20 days since, there hasn't been much movement, data shows, with WBTC losing about 0.2% market share on Ethereum to TBTC, from Threshold Network. |
One problem is there is still relatively little you can do with TBTC in DeFi. Most common is to provide liquidity for swaps with WBTC, and if you're concerned about WBTC's health, then you don't want to do that; as an LP you remain exposed to risk of a WBTC depeg if something goes horribly wrong at BitGo. |
But there are dozens of new forms of BTC on the horizon, thanks to the growing number of Bitcoin L2s and sidechains. |
 | Source: Persistence One |
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And even more opportunities for generating yield on BTC while maintaining self-custody, thanks to shared security staking via Babylon. |
The challenge is sussing out the relative trust-assumptions of each, assessing their security properties and risk, and weighing those against the potential yield, not to mention the opportunity cost of what else you might do. |
If you've seen any solid attempts at this to date, hit me up on X and point them out. |
— Macauley Peterson |
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The L1 Convergence |
Recent discussions within the Ethereum community highlight this broader trend in crypto: L1s are converging on leaderless consensus designs to deliver higher performance and hardened censorship-resistance. magicdhz illustrates the L1 convergence, discusses the two prevailing leaderless consensus designs (multiple concurrent proposers and directed acyclic graph based protocols), and argues refreshing one's perspective on the L1 landscape is an advantageous position for evaluating adoption and the potential investment value of L1s and their applications. |
Read more → |
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Liquid Collective's LsETH |
Liquid Collective's LsETH offers a unique value proposition for ETH stakers requiring the highest standards in security and compliance. With these requirements, LsETH is the preeminent solution. The 155% year-to-date growth in ETH deposits is testament to the protocol carving out its niche in the LST market, satisfying demand for a compliant, secure, and decentralized solution. |
Read more → |
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Blockworks Research is conducting a survey to gain insight into the institutional staking landscape. This data will help industry leaders adopt their strategies as the industry matures. |
If you're an institutional staker, we want to hear from you (and if you're new to Blockworks Research, get 20% off of our service while you're at it!) |
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Circle and Paypal's stablecoins keep notching gains |
An Empire episode this week featured Jason Yanowitz, Santiago Santos and Circle CEO Jeremy Allaire. |
Read more → |
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Ethereum Foundation under fire for lack of transparency in treasury management |
Aya Miyaguchi, executive director of the EF, emphasized that the transfer was routine treasury management and not indicative of a sale. |
Read more → |
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 | Misha @Psalom |  |
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Things most people don't get about shared security: 1) Faster (and cheaper) operator onboarding democratizes decentralization 2) Instant scale with stable economic security gets you rapid Traction/PMF validation 3) More flexible and streamlined incentivization schemes… x.com/i/web/status/1… | | | 11:41 AM • Aug 30, 2024 | | | | | | 29 Likes 7 Retweets | 1 Reply |
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|  | timbeiko.eth @TimBeiko | |
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Thanks @ralexstokes for filling in last #AllCoreDevs 😁 I was back today for ACDE#195! Here were the main takeaways & next steps: | |  | | | 4:20 PM • Aug 29, 2024 | | | | | | 51 Likes 16 Retweets | 3 Replies |
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|  | //Bitcoin 𝕵ack 🐐 @BTC_JackSparrow | |
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Chances are people are thinking way too much in terms of the old halving cycles and after a few cycles will relate good or bad things to price movements because x or y didn't happen or used to happen and may or may not be different and have some juju tea leaves explanation… x.com/i/web/status/1… | | | 3:10 PM • Aug 30, 2024 | | | | | | 60 Likes 2 Retweets | 13 Replies |
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|  | Sir Doge of the Coin ⚔️ @dogeofficialceo | |
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The documents the judge submitted today dismissing Elon Musk's insider trading case related to Dogecoin, which originally sought $258 billion in damages, are absolutely hilarious 😂 | |   | | | 11:28 PM • Aug 29, 2024 | | | | | | 552 Likes 85 Retweets | 72 Replies |
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|  | Mippo 🟪 @MikeIppolito_ | |
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The more I think about RWAs, the less I understand the value for end users or blockchain networks. For end users, I've always viewed settlement assurances as the value prop (strong guarantee that inbound transactions won't get reversed). With RWAs that benefit doesn't exist… x.com/i/web/status/1… | | | 1:12 AM • Aug 30, 2024 | | | | | | 166 Likes 10 Retweets | 83 Replies |
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|  | Ryan Berckmans ryanb.eth @ryanberckmans | |
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What's the point of a maximally decentralized and credibly neutral base layer if many/most of the biggest apps/tokens are centralized? In other words, what's the point of Ethereum's strategy to focus on being the world's settlement layer? An app/token can't be more… x.com/i/web/status/1… | | | 3:00 PM • Aug 30, 2024 | | | | | | 20 Likes 4 Retweets | 1 Reply |
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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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