A new L2 called Blast was announced yesterday, with backers including prominent crypto names such as Paradigm and Hasu. The selling point: native yield!
Yesterday afternoon we heard that the U.S. Justice Department is seeking more than $4B from Binance as settlement for a years-long investigation into the exchange. A number in the billions had been rumored for some time now, but we finally got an official confirmation.
BNB reacted very positively to the news, jumping 5% in a matter of minutes. While $4B may seem like a large sum, I’m sure this is a small price to pay to get the Justice Department off your back, and there is nothing but smooth sailing from here.
In other news, Avalanche C-Chain is seeing a flurry of new activity on the network due to inscriptions, similar to Ordinals on Bitcoin. Some of these inscriptions include what they are calling ASC-20s, mimicking the BRC-20s on Bitcoin.
While this may seem very dumb, these inscriptions have burned over $300k in AVAX over the past few days from transaction fees. This is on top of these transactions being cheaper than your average Avalanche transaction. So there is clearly a good amount of demand to mint these things. Is there any venue to trade them once you have minted? Absolutely not. But people love to have their chance at being early to the next big thing.
We have also seen this type of thing pop up on Polygon PoS recently So, are inscriptions the next culprit of spam across these networks, just like the XEN ponzis that we saw popping up months ago? Looks like it may be the case.
Once we inevitably see something similar with Ethereum blobspace, we might see some chaos in the DA markets. I can already see it. It’s annoying, but that's the nature of permissionless blockspace.
The future is modular, or whatever my ETH homies usually go on yapping about. A new L2 called Blast was announced yesterday, with backers including prominent crypto names such as Paradigm and Hasu. As such, it didn’t come as a surprise that Blast got a lot of attention on crypto Twitter (crypto X just sounds wrong), and the number of wallets that have deposited funds to the L2 has already crossed the 15K mark. Almost $37M worth of assets have been deposited, with ETH accounting for ~$30M of the total value.
So, what makes Blast so special? Well, the L2’s selling point is native yield for ETH and stablecoins. User funds on the L2 will compound automatically, additionally earning Blast rewards. For ETH, the yield is created by Blast converting ETH into stETH, while stablecoins are deposited in onchain T-Bill protocols such as MakerDAO. The stablecoin yield is returned back to Blast users through USDB, an auto-rebasing stablecoin. Early depositors can already earn yield and Blast points, with the L2 set to launch its Mainnet in February 2024 and points redemption opening in May 2024. Blast is an EVM-compatible optimistic rollup, which isn’t anything revolutionary.
The concept has gotten some pushback since deposited assets are swapped to other yield-generating tokens on the backend, meaning that the risk profiles of deposited assets are changed. Moreover, this introduces some liquidity risk since if users want to pull, e.g., ETH en masse, enough of the underlying asset might not be immediately available. If you ask me, I think it’s cool that an L2 is introducing a baseline yield, but at the same time, one should remember that there are no free lunches, and I’d rather see the tech stack being moved forward than the introduction of another yield-generation scheme. Lastly, it’s worth pointing out that as it currently stands, if you deposit funds into Blast, in reality, you’re just yeeting money into a smart contract that has no functionality and is controlled by a 3/5 multisig.
This goes out to all the perp DEX enjoyoors. Vertex Protocol’s native token, VRTX, began trading today, with the liquid claim for the token going live here at 12:45 PM (UTC), while centralized exchanges such as KuCoin and Bybit listed the token at 1:00 PM (UTC). The liquidity bootstrapping auction (“LBA”) ended yesterday, with 13.7M VRTX and 4.29M USDC.e supplied and locked, setting the listing price of VRTX at $0.3133 ($313.3M FDV). VRTX can be staked, which will boost the rewards users get from participating in the USDC.e Insurance Fund, as well as award up to 50% of all trading fee revenue generated by Vertex in a single epoch (excluding sequencer fees) to VRTX stakers.
Vertex has managed to penetrate the market extremely well, currently accounting for almost 30% of onchain perp volume. With valuations within the vertical largely being based on current trading volumes, the token could do well in the long run if it manages to maintain trading activity. Moreover, VRTX staking yields could be highly lucrative following the token’s release, a factor that many market participants seem to have overlooked. But as the yield starts materializing, it is sure to capture mindshare. The main opportunity here is that the token is oversold within the next few days, as users who have traded on the platform over the past 7 months have received a 100M token allocation (total supply of 1B). 86.3M of these tokens will be liquid as a result of the LBA. Summa summarum, if you have the opportunity to buy into the project at a relatively low FDV, it might be worth your investment. (Brick’s lawyer here: any text or content contained herein is not intended to be, and should not be considered as, financial advice and is provided for informational purposes only—DYOR).
If you’re more interested in how this could play out in the long term and what VRTX staking yields might look like, our very own Senior Sam wrote an excellent Flashnote covering Vertex, which can be found here.
This past month had a flurry of highly important governance votes across the crypto landscape. We leverage GovHub—our powerful governance aggregator—to provide deep insights into the most important proposals in crypto.
Pyth is a low latency pull-based oracle. In a future that looks increasingly high frequency, with various alt L1s and L2s that have significantly shorter block times than Ethereum, and an explosion of “high-frequency” protocols such as oracle or CLOB perp DEXs, Pyth’s low latency oracle product looks much better positioned to capture a significant amount of market share in comparison to competitors.
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.
Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.