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Welcome back to 0xResearch. Here's what we've got for you today: |
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Nakamoto upgrade cements Stacks link to Bitcoin |
Stacks, a Bitcoin-adjacent network often referred to as a layer-2, executed a scheduled hard fork early Tuesday following the September Nakamoto upgrade activated by network miners. |
"I think it went as smoothly as we could have hoped," said Muneeb Ali, Stacks co-founder, on a live X space. He added that developers in New York were up all night monitoring the fork. |
The Nakamoto upgrade increased the alignment of Stacks with Bitcoin's finality by further binding Stacks blocks to Bitcoin blocks. Stacks uses a consensus mechanism called Proof of Transfer (PoX), where transactions and Stacks blocks are anchored to Bitcoin. |
With the Nakamoto upgrade, this connection is strengthened. So a reorg in the Stacks blockchain would now require changes in the Bitcoin blockchain, according to Rena Shah, VP of product and operations at Trust Machines. |
"It is a fundamental shift," Shah told Blockworks. "You have to try to 51% attack Bitcoin L1 before you're able to do the same activity on Stacks." |
This dependency on Bitcoin makes the Stacks blockchain more secure, as Bitcoin's high security and resistance to reorgs (given the substantial hash power of bitcoin miners) provide Stacks with added resilience. |
Attempting a reorg of the Bitcoin blockchain is extremely challenging, due to both the financial and computational costs involved. This means Stacks is indirectly protected by Bitcoin's immutability, so the Nakamoto upgrade effectively made Stacks reorg-proof. |
"That might be the beauty of Stacks as an L2 for Bitcoin because it's always kind of adhered to the ethos of Bitcoin," Shah said. She noted the upgrade paves the way for sBTC, Stacks' version of bitcoin, the asset. |
Other features of the upgrade include faster transaction processing — Stacks now produces blocks approximately every six seconds — which enhances usability for developers and users, and improves the overall experience on the Stacks network. The upgrade also limits opportunities for miners to profit from rearranging or prioritizing transactions (MEV), which contributes to a fairer, more transparent network. |
The future of sBTC |
Granite, a new Bitcoin-focused DeFi protocol incubated by Trust Machines, came out of stealth last month, aiming to address the limitations of custodial BTC offerings for use in DeFi. The not-yet-launched app will leverage the sBTC Bitcoin bridge enabled by the Nakamoto upgrade. |
The platform should allow BTC to interact directly with DeFi dapps in a decentralized and permissionless manner. Like other new noncustodial offerings, sBTC users will be able to lend, borrow and earn yield on their bitcoin while minimizing counterparty risk. |
Traditionally, using BTC in DeFi has required custodial solutions or wrapped BTC assets, exposing users to substantial counterparty risks. |
More recently, Babylon has attracted interest as a way to direct staking yields to BTC holders, albeit with a risk of slashing. |
Granite, however, follows a no-rehypothecation model. User collateral remains untapped and fully controlled by the owner, ensuring that BTC does not become entangled in protocol dependencies, or what its developers call a "borrower-centric" DeFi model. |
Granite also introduces "soft liquidations," an approach pioneered by Curve that allows collateral to be liquidated only enough to maintain solvency and prevent catastrophic losses. Additionally, position tracking and push notifications allow users to manage positions without constant monitoring, a quality-of-life feature that's uncommon in DeFi. |
Another defining characteristic of Granite is its risk-tranched liquidity provisioning, which allows liquidity providers (LPs) to tailor their risk exposure. By choosing junior or senior tranches, LPs can manage their participation according to risk tolerance, with a reserve protecting all LPs as a first line of defense against market downturns. |
Historically, only about 1% of BTC has been engaged in DeFi due to security concerns, according to Ali. "Granite's security-oriented approach creates an opportunity to begin unlocking the remaining 99% of BTC capital," he said.
As with many other "Bitcoin DeFi" endeavors, Granite aims to make bitcoin a productive asset within the DeFi space, rather than merely "digital gold," driving new waves of adoption in the process. |
"The base case of bitcoin as money becomes more solidified when things like Stacks happens, so this is going to be good for Bitcoin," Ali said. |
Stacks is also working to bring sBTC to Solana. |
The launch comes as BTC is retesting its June highs above $71,100. Stacks' native token, STX, is up over 5% on the day, although it is still down about 50% from its all-time high of $3.84 reached April 1 this year. |
— Macauley Peterson (X: @yeluacaM | Farcaster: @Macauley) |
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Polymarket peak volume: |
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Onchain prediction market Polymarket registered a new record high volume on Monday, driven by a sharp uptick in the sports category. |
One week out from election day in the US, politics and election betting still dominate the market. But interest in Champions League football and the team of Manchester City has made it the second most popular single market, Blockworks Research data shows. |
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DA Exposé: Commodification of DA |
The market is oversaturated with availability solutions. There are currently 12+ solutions for data availability, with around six solutions live today. DA capacity is increasing rapidly, and pricing for DA is a race to the bottom, leading us to believe that DA will be commodified. Even in a world dominated by high-throughput SVM rollups posting data, it is unlikely that current valuations of some high profile projects are justified. |
Read more → |
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Kamino: A Powerhouse in the Making |
Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend v2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi. |
Read more → |
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Could exchanges decentralize themselves out of existence? |
Base DEX volumes have now eclipsed Kraken's. |
Read more → |
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Major earnings week sets up stocks for potentially breakout |
Five of the Mag 7 companies are slated to report earnings this week, while 169 companies in the S&P 500 are due to publish quarterly results. |
Read more → |
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 | Abdul @0x_Abdul |  |
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In 2020 anon devs launched defi protocols with egalitarian tokenomics, slapped a bare bones UI on top and just shipped it Users were hunting new protocols to farm early, and praying that the protocol doesn't rug until the audit results came back It was a magical time | | | 4:20 PM • Oct 28, 2024 | | | | | | 56 Likes 0 Retweets | 13 Replies |
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|  | Coop 🔥_🔥 @Cooopahtroopa | |
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One of the hardest things for me to come to terms with is that the market does not currently value NFTs. Sounds obvious to say this in 2024 but it's extremely evident that tokens are much preferred in just about every regard right now. This is not to say there aren't clear… x.com/i/web/status/1… | | | 7:45 AM • Oct 29, 2024 | | | | | | 27 Likes 2 Retweets | 7 Replies |
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|  | Brian L. Frye @brianlfrye | |
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Thank you @SECGov for my 50th birthday present in the form of a motion to dismiss the complaint @songadaymann & I filed asking for a declaratory judgment that selling art as NFTs doesn't violate the securities laws. I'm gonna tweet my favorite bits. drive.google.com/file/d/138LX2m… | | | 4:28 AM • Oct 29, 2024 | | | | | | 46 Likes 5 Retweets | 2 Replies |
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|  | Toghrul Maharramov 🇺🇦 @toghrulmaharram | |
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The best chain is the one that has not been released yet, since it's easier to shill numbers that cannot be tested a real-world deployment. | | | 8:48 AM • Oct 29, 2024 | | | | | | 55 Likes 2 Retweets | 7 Replies |
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|  | Nick White 🦣 @nickwh8te | |
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Unpopular opinion: Ethereum is doing everything right to win in the long run | | | 12:49 AM • Oct 29, 2024 | | | | | | 820 Likes 59 Retweets | 73 Replies |
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|  | Efrat Fenigson @efenigson | |
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An amazing drone show, a few days ago at @LuganoPlanB. #Bitcoin | |  | | | 3:28 PM • Oct 28, 2024 | | | | | | 143 Likes 25 Retweets | 3 Replies |
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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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