Welcome back to 0xResearch – quick hitting alpha for the crypto degens. Here's what we got for you today:
BTC resistance holding
ezETH dumps on Renzo REZ airdrop news
Starknet Paymaster
Reaction to REZ distribution
The steady grind high since last Friday’s whipsaw price action appears to have stalled, with bitcoin taking a -2.5% tumble in New York morning trading.
Conversely, US equities have opened more or less flat. The correlation between crypto and equities, particularly tech stocks, tends to go in waves but is usually positive, and recent days and weeks have been no exception.
Since the late-October rally, the correlation coefficient between the bitcoin (BLX) and the Nasdaq (QQQ) has trended higher, reaching a peak of 0.86 in February and currently at about 0.7.
If the broader risk-on markets hold up, it means we should be on lower-high watch for bitcoin somewhere between here and about $62k.
Starknet Paymaster
Efforts to abstract away this and that are among the many UX improvements planned for scaling Ethereum. One prominent enhancement is to do away with the need to hold a specific gas token on layer-2 networks.
Ether (ETH) is of course the most common, though some L2s have opted for their own native asset (e.g. Mantle and MNT and, optionally, STRK on Starknet).
Now, Starknet has switched on a feature called Paymaster which does away with the concern altogether by letting users pay gas fees in whatever token they happen to have.
Starknet dex AVNU will imminently implement the feature, meaning transaction fees can be baked into any swap transaction and Paymaster will make any needed conversions in the background.
On LRT de-peg risk
Leveraged restaked ETH farmers using Renzo protocol got a taste of what can happen when too many token holders head for the exits all at once. Evidently, the release of the protocol’s REZ token distribution plan led ezETH to take the "easy" route back to ETH by swapping in onchain liquidity pools.
Renzo’s liquid restaked ether proceeded to crash at least -17% (according to Pyth’s oracle) — much lower depending on your trading venue — in the space of 20 minutes beginning at 2:20 pm UTC, before recovering roughly 40 minutes later.
That was enough of a jolt to cause liquidations on DeFi protocols specializing in leverage like Morpho and Gearbox, providing a painful lesson on leaving sufficient margin for those tabling in the points farming game.
Renzo sports about 1 million restaked ether, making it the second-largest LRT, only slightly behind EtherFi.
Thousands of rollups will continue to launch. With that, rollup interoperability presents a major challenge. Our latest unlocked report here unpacks how Avail presents a potential solution to rollup fragmentation through its three products: Avail DA, Nexus, and Fusion. Avail, the unification layer for web3, may prove to be the logical end game for DA layers, so if you’re interested in what that means, check the report out!
(Or should we say Chart crime of the Day)
The Renzo token distribution:
Maybe it was just an honest design mistake, but the odd proportions of these wedges did not escape the notice and ridicule of Crypto Twitter.
A more cynical interpretation is that the team was looking to diminish the apparent size of the team and investor portion of the allocation. The X post containing the chart was subsequently deleted, but lives on in various handy explanatory threads.
Not pictured is the 10% allocated to an airdrop, 5% of which will be claimable on May 2. But Renzo’s deal with Binance for the "Launchpool" portion will see tokens begin trading on the exchange a full two days earlier on April 30.
That’s naturally rubbing trigger-happy would-be REZ dumpooors the wrong way.
Data publishing costs have historically been a bottleneck for rollups, and as more rollups launch, interoperability will continue to be a major challenge. Avail presents a potential solution to rollup fragmentation through its three products: Avail DA, Nexus, and Fusion, which together aim to unify the web3 experience.
Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.
The projected medium-term $1 billion inflow total for the Hong Kong crypto funds would represent about 2% of the region’s ETF market.
The government says Zhao "willfully" and strategically put US national security at risk in order to "line his pockets."
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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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On May 4, 2024, Polygon developers met for the Polygon Protocol Governance Call (PPGC) #19 to discuss and finalize inclusions for the upcoming hard fork. The main focus was on PIP 22, PIP 36, PIP 30, and increasing the minimum gas price. With the inclusion list finalized, Polygon will target shipping these changes at the end of May or early June depending on testnet deployment timelines. The next PPGC meeting is tentatively scheduled for May 30 but may shift a week or two to align with the rollout.
by Boccaccio
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