John Lee Quigley

John Gilbert

<div id="highlights-block_48c2921c5c0807c63d03943f134a44e5" class="highlights">
        <ul>
                <li>Real-world assets (RWAs) are tangible assets or financial primitives with the potential to serve as collateral in the DeFi industry</li>
                <li>Real-world lending brings vast opportunities from emerging markets on-chain</li>
            </ul>
    
</div>



<p>The<a href="https://defillama.com/" target="_blank" rel="noreferrer noopener"> $50 billion</a> decentralized finance industry has been at the forefront of financial innovation in the past few years. Decentralized finance — or DeFi — primitives such as stablecoins, swaps, lending, derivatives, insurance and prediction markets have been democratizing access to financial products. Nonetheless, DeFi returns have been hard hit by recent bearish conditions. Yields have hit rock bottom with investor participation also <a href="https://ambcrypto.com/defi-activity-on-ethereum-network-continues-to-drop-heres-why/" target="_blank" rel="noreferrer noopener">at an all-time low</a>.</p>



<p>The reasons for DeFi&#8217;s rapid decline in assets under management are not overly complex. Aside from the industry&#8217;s nascent nature, yields typically come from a recursive on-chain activity tied to crypto assets. Investors earn yield by providing liquidity to borrowers and traders on decentralized exchanges (DEXes) or overcollateralized lending platforms, and they are rewarded for doing so with inflationary tokens or one-time treasury boosts. These chains of activities generate yield in a bull run but quickly turn into a death spiral when asset prices crumble and on-chain activity drops.</p>



<p>The DeFi landscape has struggled to scale because the underlying yield generation mechanism only works when prices are going up. The unsustainable yield model is best reflected by the cumulative total value locked (TVL) in DeFi protocols dropping from nearly $180 billion to nearly $50 billion since the market peak.&nbsp;</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/Lr6k4khk5TyhbDvRC2ignglNVAxB5dHLHSiiU8ILA6nFmjIvMkunuygizBgeLxUQ7X7eqV546E6hH5KGFSia1rDt6nQ2tWpsphQ63mYKttOpyJUgrZ5nik0k2Lj36EuFFpTZTlggH2A-5yqtzwP74tz8BC262Iim95WxHxXTmC4l6t33ZUMWO5x5Aw" alt=""/><figcaption class="wp-element-caption"><em>Source: <a href="https://defillama.com/" target="_blank" rel="noreferrer noopener">DeFiLlama</a></em></figcaption></figure>



<p>The pressing need for sustainable income in DeFi has ignited the growth of protocols that generate a yield from <strong>real-world assets (RWAs)</strong>. While many protocols were created to tokenize RWAs, only a few integrated this technology to provide investors across DeFi and TradFi yields that tap into some of the world&#8217;s biggest financial credit markets.&nbsp;</p>



<p>For example, <a href="https://goldfinch.finance/" target="_blank" rel="noreferrer noopener">Goldfinch’s lending protocol</a> uses RWAs in a way that demonstrates higher stability and growth. According to LoanScan, its USDC yields outperformed Aave and Compound over the past year.</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh4.googleusercontent.com/Hu4YeoG0dEwYiGtnhGnUexlIQzxmZ0jPyma5tn292MDW49xVYAtrEsWluSHCbon4_zOCBWo0-o-utQscaUlC8ZaLgYRl9hLHZTf8o3aRZ5v5j8dTF2c7M3xByccei8litPIPS_YoLbCPYUQTp57BYFi0PUB-KONbWADHqdvLd1w49m77KJYHw2jAbA" alt=""/></figure>



<p>And when comparing Goldfinch’s revenue model to Aave’s, it is clear that the source of yield is fundamentally different:</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh3.googleusercontent.com/JbdbXQ__zsjxDW2OIXhnKBadIBZzcGbOlmP9upOJ8Y7WEgGeVFeZRyKcQPNEviPYtCtrO2GnjGkBhK1VoSOzDrgM4m-eJb22jkmnvrT6xQzgGkjazt8sOR0Iy4_Fu2neuVfNNLwekSt5-NsWZJmmkCNgCWX2fhx9ESiW5TM8ODwStFiHVcixAEoQuA" alt=""/></figure>



<p>To understand how this strategy is a fundamental shift in DeFi, we need to explain the evolution of RWAs.</p>



<h3 class="wp-block-heading">What are real-world assets (RWAs)?</h3>



<p>Real-world assets are tangible assets or financial primitives with the potential to serve as collateral in the DeFi industry. Here are the most popular examples of RWAs:</p>



<ul class="wp-block-list">
<li>Cash</li>



<li>Metal (gold, silver, etc.)</li>



<li>Real estate&nbsp;</li>



<li>Corporate debt</li>



<li>Insurance&nbsp;</li>



<li>Salaries and invoices</li>



<li>Consumer goods</li>



<li>Credit notes</li>



<li>Royalties, etc.&nbsp;</li>
</ul>



<p>RWAs compose the majority of global financial value. For instance, the fixed income debt market is worth an <a href="https://www.sifma.org/resources/research/fact-book/" target="_blank" rel="noreferrer noopener">estimated $127 trillion</a>, the total value of global real estate is <a href="https://www.savills.com/impacts/market-trends/the-total-value-of-global-real-estate.html" target="_blank" rel="noreferrer noopener">approximately $362 trillion</a>, and gold has an <a href="https://companiesmarketcap.com/gold/marketcap/" target="_blank" rel="noreferrer noopener">$11 trillion market capitalization</a>.&nbsp;</p>



<p>RWAs already underpin lending and yield generation activities in the traditional finance world. However, they&#8217;re relatively untapped in DeFi. Unlocking the considerable value attached to RWAs, and to the off-chain financial system in general, is the key to sustainable yield DeFi models without the vast volatility that has historically been associated with the relatively nascent DeFi world.</p>



<h3 class="wp-block-heading">How are real-world assets used in DeFi?&nbsp;&nbsp;</h3>



<p>The term &#8220;real-world assets&#8221; emerged in recent years to differentiate cryptocurrencies from traditional financial holdings. Unlike cryptocurrencies that only exist in digital form, RWAs are usually tangible and tied to real-world organizations.&nbsp;</p>



<p>However, blockchain technology has unlocked the possibility of bridging real-world assets to DeFi. Developers typically use smart contracts to create a token representing an RWA while providing an off-chain guarantee that the issued token is always redeemable for the underlying asset.</p>



<h3 class="wp-block-heading">Stablecoins</h3>



<p>Stablecoins are a perfect example of successful real-world asset use in DeFi, with three of the top seven crypto tokens by market capitalization being stablecoins (a combined $136 billion). Issuing companies such as Circle maintain an audited reserve of USD assets and mint USDC tokens for use across DeFi protocols.</p>



<h3 class="wp-block-heading">Synthetic tokens</h3>



<p>Synthetic tokens represent another use case involving the bridging of RWAs to DeFi. Synthetic tokens allow on-chain trading of derivatives linked to currencies, stocks and commodities. Leading synthetic token trading platform Synthetix had <a href="https://defillama.com/protocol/synthetix" target="_blank" rel="noreferrer noopener">$3 billion worth of assets</a> locked in its protocol at the peak of the 2021 bull run.</p>



<h3 class="wp-block-heading">Lending protocols</h3>



<p>Another exciting adoption of RWA in DeFi involves lending protocols. Unlike primitive lending protocols that rely on crypto-native borrowing, RWA-focused DeFi platforms service borrowers with real-world businesses. This model offers relatively stable returns insulated from crypto volatility.</p>



<h3 class="wp-block-heading">How lending protocols leverage RWA to generate actual yield</h3>



<p>The DeFi lending business model provides the most cost-effective way to pool and distribute capital between a vast group of lenders and borrowers. It cuts out intermediaries and automates money movement while offering users relative anonymity.&nbsp;</p>



<p>However, the focus on serving crypto-native investors creates significant limitations. The pool of capital in DeFi is underutilized, especially during bear markets. The funds are also inaccessible to the world’s biggest borrowers — real-world businesses with no crypto assets to post as collateral.</p>



<p>Lending protocols such as <a href="https://goldfinch.finance/" target="_blank" rel="noreferrer noopener">Goldfinch</a> address these limitations by building a robust model for making DeFi capital accessible to businesses with real-world economic activity. These audited firms with millions of dollars tied in RWAs enter into a legally binding agreement to obtain loans issued with these assets as collateral. The DeFi protocol generates yield from interest paid on issued loans, along with yield enhancements from the treasury, which collects platform fees, and additional token incentives.&nbsp;</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/i-mvdX85T4s3KuNV6bNoWSE_H5Cf2zRbrQn1FypeSYtLz1eUpWxUQEQnLXa3MWtTJ0HVVkHNzf2R60BDWAjTvfo4itfkrVfqDfweHnDMtovlJFsfD3eSIwCL4qCCGOII7lVy9lHQYbCLpdxuUKhfMyK9EitKstqsTFbAie2PmVqAiphpmRDYXmhDuQ" alt=""/><figcaption class="wp-element-caption"><em>Active loans on Goldfinch | Source: <a href="https://dune.com/queries/15148/83023" target="_blank" rel="noreferrer noopener">Goldfinch dashboard on Dune</a></em></figcaption></figure>



<p>Most importantly, Goldfinch&#8217;s yield is insulated from crypto volatility as borrowers deploy funds in real-world ventures. With the average borrower pool loan term on Goldfinch lasting 3-4 years with a set interest rate, the protocol’s interest-sourced USDC yields remain stable despite volatility in the crypto markets. There is also sustainable capital demand, ensuring the lenders get the best rates for deposited assets. Let’s take a closer look at how this works under the hood.</p>



<h3 class="wp-block-heading">How Goldfinch works</h3>



<p>Goldfinch is pioneering an efficient DeFi lending model that supplies on-chain financing to offline businesses. These borrowers propose debt capital raises to the Goldfinch protocol. Once approved, they enter a legally binding agreement to post off-chain assets as collateral for the loan.&nbsp;</p>



<p>Goldfinch operates with a novel “trust through consensus” mechanism which allows borrowers to show creditworthiness based on the collective assessment of other participants, combining the trust of its tiered deposit model for investors, robust due diligence documentation, and a credit specialist community to verify that a borrower is creditworthy.&nbsp;</p>



<p>A common misconception is that approved borrowers can immediately access a pre-funded pool. In reality, a borrower proposes the terms it wants for its loan to the protocol, and the protocol&#8217;s participants actively choose whether or not to fund that specific deal.&nbsp;</p>



<p>First, borrowers propose the loan amount and terms they are seeking in the form of a borrower pool smart contract and provide due diligence information to the community of investors. There are two ways to invest: as a backer or as a senior pool liquidity provider. Backers actively evaluate individual borrower pools, and choose whether or not to invest USDC into a specific deal. Backers are incentivized to effectively evaluate loan terms by providing first-loss capital.&nbsp;</p>



<p>When backers invest, the protocol’s senior pool automatically allocates funds to the pool according to the protocol’s governance-set leverage model. Currently, that means the senior pool automatically supplies USDC at a 4:1 ratio to the USDC actively supplied by backers. While their investment is automatically diversified across the protocol’s loans, senior pool liquidity providers are protected by supplying second-loss capital, and 20% of the senior pool’s interest is reallocated to backers to reward their work evaluating pools.&nbsp;</p>



<p>So, while a borrower could be qualified to participate on the platform based on their proven track record of business success, history of repayments, or real-world assets to provide as collateral, their proposed loan could still not be funded if they are proposing terms that no backers deem a worthy investment.</p>



<p>This month, Goldfinch also announced the launch of a novel <a href="http://goldfinch.finance/membership" target="_blank" rel="noreferrer noopener">Membership Vault system</a>. They stated that it is designed to enhance protocol participation and is the first step of a broader tokenomics redesign. The membership offers an opportunity to further align and incentivize Goldfinch investors’ interest in the long-term success of the protocol. And secondly, it rewards the global community of Goldfinch participants who continue to contribute to Goldfinch’s growth and resilience.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>



<p>Goldfinch taps into blockchain’s immutability to incentivize borrowers to repay their loans. Borrowers must maintain a reputable on-chain credit history to qualify for future loans. Blockchain smart contracts also provide automated settlements, delivering superior efficiency to TradFi lending.</p>



<p>Goldfinch’s model is efficient for DeFi lenders and provides global access to capital for businesses. The two-sided marketplace gives DeFi lenders access to stable crypto yields backed by RWAs, while providing borrowers with faster, cheaper, and more efficient access to financing than traditional outlets can offer. It also unlocks lucrative lending opportunities in emerging markets that were initially only available to institutions and insiders.&nbsp;</p>



<h2 class="wp-block-heading">Opportunities in emerging markets&nbsp;</h2>



<p>Goldfinch&#8217;s approach to real-world lending brings vast opportunities from emerging markets on-chain. For instance, Africa is currently the world&#8217;s <a href="https://partechpartners.com/2021-africa-tech-venture-capital-report/" target="_blank" rel="noreferrer noopener">fastest-growing financial technology market</a> with an explosion in the adoption of internet-connected devices. Yet, African tech startups <a href="https://qz.com/africa/1861034/what-covid-19-is-doing-to-africas-tech-startups/" target="_blank" rel="noreferrer noopener">lack access to requisite capital</a> or pay extremely high interest rates to do so. They face international barriers, compete with government bonds, infrastructure,&nbsp;and&nbsp;wealthier enterprises.</p>



<p>DeFi lending allows these borrowers to access on-chain capital while using off-chain assets as collateral. In turn, lenders enjoy lucrative yields that are historically unavailable in developed markets.&nbsp;</p>



<p>There are more benefits. According to the <a href="https://www.imf.org/en/Publications/GFSR/Issues/2022/04/19/global-financial-stability-report-april-2022#Chapter-3:-The-Rapid-Growth-of-Fintech:-Vulnerabilities-and-Challenges-for-Financial-Stability" target="_blank" rel="noreferrer noopener">IMF 2022 Global Financial Stability Report</a>, the IMF estimates DeFi could provide up to 12% in annual savings to emerging market businesses.&nbsp;</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh5.googleusercontent.com/dTvnOQilx4_cA4nvReWE7-jn3lhlGyj7KCpnDStTgv_rZ1Z5rz7P0KhYwg8jKfIYAa_lbq6nEUACeeXtypF5CzDVZmaAP-KwLhli5iX2rmNLt3FBZpjDDsdjO0z69h-PEWdAosetDPP_E2BpvLzDqjQmKhBZaQvc9uHg6AbfMTGFu6Id-nXEDrQFxg" alt=""/></figure>



<p>Blockchain&#8217;s efficiency allows network participants to enjoy near-instant loan settlements, as opposed to the lengthy waiting times associated with moving funds through the traditional banking system. Furthermore, the entire system democratizes access as individuals can become business financers on Goldfinch, while businesses globally can tap into an exhaustive capital marketplace.&nbsp;</p>



<p>The adoption of RWAs within DeFi opens up the industry to the world&#8217;s largest debt markets. It also provides greater capital efficiency for lenders and unlocks a huge capital pool to borrowers in emerging markets. Over time, this approach will accelerate mainstream cryptocurrency adoption and provide a stepping stone for DeFi to reach its $100 trillion potential.</p>



<p><em>This content is sponsored by <a href="https://goldfinch.finance/" target="_blank" rel="noreferrer noopener">Goldfinch</a>.</em></p>



<p><strong><em>Disclaimer:&nbsp;</em></strong><em>Nothing in this sponsored article and site constitutes professional and/or financial advice, nor does any information on the site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. Blockworks is not a fiduciary by virtue of any person’s use of or access to the site or content.</em></p>



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defi lending

What Are Real-world Assets? DeFi’s Newest Yield

Sam Martin

<div id="highlights-block_9395deceadc1e6f2393411af7d750ead" class="highlights">
        <ul>
                <li>Bitcoin’s weekly outflows reached a five-month high with nearly $3 billion worth of BTC leaving centralized exchanges</li>
                <li>The inflation outlook for December remains unclear as shipping and energy costs begin to rollover.</li>
            </ul>
    
</div>



<p>BTC rallied to near $50,000 after the 6.8% CPI print before erasing the gains and trading below $47,500.</p>



<p>Real yields on the US 10-year are at their lowest level since the 1940s.</p>



<p>The inflation outlook for December remains unclear as shipping and energy costs begin to roll over.</p>



<p>Bitcoin’s weekly outflows reached a&nbsp;five-month high&nbsp;with nearly $3 billion worth of BTC leaving centralized exchanges.</p>



<p>Axie Infinity teases future aspects of gameplay and provides an overall update of the largest blockchain-based game.</p>



<h3 class="wp-block-heading"><strong>Latest in Macro:</strong></h3>



<ul class="wp-block-list">
<li>S&amp;P 500: 4,712, +0.95%</li>



<li>NASDAQ: 15,5630, +0.73%</li>



<li>Gold: $1,782, +0.36%</li>



<li>WTI Crude Oil: $71.95, +1.42%</li>



<li>10-Year Treasury: 1.482%, -0.005%</li>
</ul>



<h3 class="wp-block-heading"><strong>Latest in Crypto:</strong></h3>



<ul class="wp-block-list">
<li><a href="https://blockworks.co/price/btc">BTC</a>: $48,348, +0.97%</li>



<li><a href="https://blockworks.co/price/eth">ETH</a>: $4,043, -2.61%</li>



<li>ETH/BTC: 0.0836, -3.31%</li>



<li>BTC.D: 41.19%, +1.54%</li>
</ul>



<h3 class="wp-block-heading">6.8% CPI print</h3>



<p>After a <a href="https://cms.blockworks.co/bonds-sell-off-on-6-2-cpi-print-bitcoin-liquidations-spur-correction-markets-wrap/" target="_blank" rel="noreferrer noopener">6.2% Consumer Price Index (CPI)</a> print for the month of October, November&#8217;s numbers showed a 6.8% year-over-year inflation rate. This is the highest inflation rate since June of 1982, <a href="https://twitter.com/JackFarley96/status/1469300999860989955?s=20" target="_blank" rel="noreferrer noopener">according</a> to Jack Farley.</p>



<p>Moreover, the 10-year real yield is also officially at its lowest level since the 1940s, <a href="https://twitter.com/TaviCosta/status/1469312450445123584?s=20" target="_blank" rel="noreferrer noopener">per</a> Crescat Capital portfolio manager, Otavio Costa. Real yields are calculated by subtracting the prevailing inflation rate from the nominal Treasury yield, thus providing investors with the real rate of return of bond yields.</p>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="791" height="578" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/10-year-real-yield.png" alt="" class="wp-image-12432" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/10-year-real-yield.png?w=791 791w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/10-year-real-yield.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/10-year-real-yield.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/10-year-real-yield.png?w=352 352w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/10-year-real-yield.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/10-year-real-yield.png?w=80 80w" sizes="auto, (max-width: 791px) 100vw, 791px" /></figure>



<p>Container shipping rates have begun to roll over, which should help ease CPI prints going forward.</p>



<p>&#8220;If the Fed errs, the bond market and its deflationary signals will say, &#8216;Told you so!&#8217; Long yields are very low considering low jobless rates and inflation, and inflation expectations are falling. Note the 5-yr-5-yr forward TIPS break-even spread and container shipping rates,&#8221; <a href="https://twitter.com/TimmerFidelity/status/1469336106764316685?s=20" target="_blank" rel="noreferrer noopener">wrote</a> Jurrien Timmer, Director of Global Macro at Fidelity.</p>



<p>US President Joe Biden also signaled ahead of today&#8217;s CPI number that, &#8220;the information being released tomorrow on energy in November does not reflect today&#8217;s reality, and it does not reflect the expected price decreases in the weeks and months ahead, such as in the auto market,&#8221; according to a <a href="https://www.reuters.com/business/biden-says-inflation-data-due-friday-will-not-reflect-recent-drop-some-prices-2021-12-09/" target="_blank" rel="noreferrer noopener">Reuters report</a>.</p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="553" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg" alt="" class="wp-image-12433" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/inflation-exp-1024x553.jpg?w=1193 1193w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: Fidelity</figcaption></figure>



<h3 class="wp-block-heading">BTC fake-out</h3>



<p>Similar to last month when <a href="https://cms.blockworks.co/bonds-sell-off-on-6-2-cpi-print-bitcoin-liquidations-spur-correction-markets-wrap/" target="_blank" rel="noreferrer noopener">BTC rallied to an ATH</a> following the CPI print for the month of October only to quickly erase the gains shortly thereafter, the same thing happened today. BTC rallied close to $50,000 before dropping below $47,500 moments later, according to data from <a href="https://coinmarketcap.com/currencies/bitcoin/" target="_blank" rel="noreferrer noopener">CoinMarketCap</a>.</p>



<p>&#8220;Bitcoin is below the short-term holder cost basis, which currently sits at $53K. Until this is reclaimed, not bullish. Not saying I am a &#8216;giga bear&#8217;, just cautious until the market shows me otherwise. Happy to flip bullish if reclaimed. Bearish confirmation would be a failed underside retest of the band,&#8221; reads a <a href="https://www.blockwareintelligence.com/p/blockware-intelligence-newsletter-35b?r=fg8t4&amp;utm_campaign=post&amp;utm_medium=web" target="_blank" rel="noreferrer noopener">Blockware Intelligence Newsletter.</a></p>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/on-chain-cost-1024x576-1.jpg" alt="" class="wp-image-12434"/><figcaption class="wp-element-caption">Source: Blockware Intelligence</figcaption></figure></div>


<p>Some other bitcoin highlights from an <a href="https://medium.com/intotheblock/macro-conditions-dominating-cryptos-outlook-f323bdec3043" target="_blank" rel="noreferrer noopener">Intotheblock report</a> include:</p>



<ul class="wp-block-list">
<li>Bitcoin recorded a modest increase in the fees generated by its blockchain as network activity picked up during the crash</li>



<li>BTC&#8217;s weekly outflows reached a&nbsp;five-month high&nbsp;with nearly $3 billion worth of BTC leaving centralized exchanges</li>



<li>Bitcoin’s underperformance comes at a time when both the dollar (DXY) and the volatility index (VIX) are at their highest in months</li>



<li>Year-to-date, bitcoin has significantly outperformed traditional markets, potentially leading to profit-taking activity amid uncertain conditions</li>



<li>Bitcoin&nbsp;<a href="https://app.intotheblock.com/coin/BTC/deep-dive?group=derivatives&amp;subgroup=perpetual&amp;chart=all&amp;utm_source=hs_email&amp;utm_medium=email&amp;_hsenc=p2ANqtz--3HthPON7RdkqvpuHQkAo5sKcLDqom_ZNmPoINz_cKzhRZDdo6RhGdAF5Y5S0AsAjgyfRx" target="_blank" rel="noreferrer noopener">perpetual swaps’ funding rate</a>&nbsp;remain near zero, pointing to neutral expectations in the near-term</li>
</ul>



<h3 class="wp-block-heading">Axie Infinity December update</h3>



<p>An <a href="https://axie.substack.com/p/dec2021" target="_blank" rel="noreferrer noopener">Axie Infinity development update</a> that was released last night shows that the popular play-to-earn game is approaching 3 million community members and significant progress in the battles, land and origins game development.</p>



<p>For comparison, there are roughly 4.1 million unique addresses in DeFi, <a href="https://dune.xyz/rchen8/defi-users-over-time" target="_blank" rel="noreferrer noopener">according to data</a> from Dune Analytics.</p>



<p>The report continues by comparing Ronin usage, the Ethereum sidechain that Axie Infinity is built upon, to activity on the Ethereum base layer. &#8220;Today, Ronin’s transaction volume has grown to roughly 4x the number of daily transactions of the Ethereum chain, and that growth has pushed us all to prepare for significant scale in 2022!&#8221; according to the report.</p>



<figure class="wp-block-image size-large"><img decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/ronin-activity-1024x879-1.jpg" alt="" class="wp-image-12436"/><figcaption class="wp-element-caption">Source: Nansen </figcaption></figure>



<p>Land gameplay is <a href="https://axie.substack.com/p/dec2021" target="_blank" rel="noreferrer noopener">still under development</a> and set to roll out in the first half of 2022. The team continues to work on resource production, gathering, and crafting mechanics and even teased what some of the in-game art will look like:</p>



<figure class="wp-block-image size-large"><img decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/axie-art-1024x491-1.jpg" alt="" class="wp-image-12438"/><figcaption class="wp-element-caption">Source: Axie Infinity Development Update </figcaption></figure>



<p>The <a href="https://axie.substack.com/p/dec2021" target="_blank" rel="noreferrer noopener">update continues</a> by adding, &#8220;We also continue to make significant progress with our next generation battles experience, where we provide opportunities for players to experience a full, brand new storyline, non-blockchain “starter” Axies, the ability to attach power-ups to Axies, and much more.&#8221;</p>



<p>Sky Mavis, the <a href="https://cms.blockworks.co/axie-infinity-developer-scores-152m-in-series-b-funding-nearing-3b-valuation/" target="_blank" rel="noreferrer noopener">developers</a> behind Axie Infinity, are also working on graphical special effects for the game and leaked some of what they have been working on:</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Origin VFX Leek!" width="1024" height="576" src="https://www.youtube.com/embed/wrbEyQZGipc?start=11&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>
</div></figure>



<h3 class="wp-block-heading">Non-Fungible Tokens (NFTs)</h3>



<p>Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found below:</p>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="332" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png" alt="" class="wp-image-12450" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.24-PM-1024x332.png?w=2048 2048w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Top Ethereum Projects</figcaption></figure></div>

<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="283" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png" alt="" class="wp-image-12451" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-10-at-4.36.32-PM-1024x283.png?w=80 80w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Top Solana Projects </figcaption></figure></div>


<p>If you made it this far, thanks for reading! I am looking forward to catching up on Monday.</p>



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