10102 Quarterly #8
We find ourselves in a phase of the cycle characterized by euphoria, where memecoins and "degens" are gaining popularity once again. Furthermore, with the recent approval of ETFs and the upcoming Bitcoin halving, the fundamentals continue to be robust. Adding to the mix, the macroeconomic environment remains uncertain (with ongoing US elections, geopolitical tensions and fluctuation rates), marking this cycle with a distinct blend of factors. We will provide a few updates on 10102 and then delve into some of the prevailing trends we're observing.
Transitioning away from 10102 Etherbase Vault
As we prepare to conclude our on-chain experiment with the 10102 Etherbase Vault LP., it prompts a reflection: were the doors ever fully open? And why conclude this venture amidst a bull market? Read our key insights.
Expanding Our Mission
10102 continues to lead in the exploration of new technologies with a significant potential impact. Challenges do not deter us; instead, they offer valuable learning opportunities and fuel our growth. With our latest project concluded, we seize this moment to both refine and broaden our mission. Our commitment remains strong in the following areas:
Simplifying advanced DeFi strategies for the general public, safely opening up the gate to a new financial system that is more open, global and transparent.
Bridging the gap between popular yet divided ecosystems, with up-to-date thoughtful research and analysis, packaged in digestible content.
Upgrade our sovereignty and everyday operations leveraging on-chain capabilities, by building the necessary on-chain tools to address existing market gaps, and backing genuine innovations with significant impacts on tomorrow (ventures).
Looking ahead, we are excited about developing Web3 tools and content that are crucial yet missing from the current landscape, with focus on the above themes. Our dedication to on-chain managed vaults remains unwavering. We plan to innovate within our own company’s vault to explore new boundaries and address previously identified challenges. In addition, we will embrace AI technologies to nurture our initiatives, uncovering new possibilities for next-generation advancements. Our journey is far from over. As we embark on this next phase, our mission grows ever more inclusive and ambitious, reflecting our commitment to making a lasting impact in the tech world.
DeFi Expansion
Namespace Infrastructure: ENS has been a recurring topic in our discussions for a good reason. It remains a foundational component of the DeFi’s identity layer, much like what DNS did to the abstraction of IP addresses and the expansion of the internet. This importance was underscored recently with GoDaddy's collaboration with ENS, and Google's integration of wallet information for ENS name searches. Clusters, a new cross-chain name service that lets users register wallet names that work across Ethereum and non-Ethereum chains simultaneously, serve as a universal namespace, demonstrating the growing need for a DeFi infrastructure that accommodates all major ecosystems.
Classical DeFi: The Uniswap Foundation (UF) is proposing rewards for UNI token holders who have delegated and staked their tokens, leading the charge in promoting active governance. The Graph Network has expanded its multi-chain capabilities to include more than 40 of the most widely used blockchains, marking the inclusion of a non-EVM compatible chain like Near for the first time. This expansion signifies the broadening scope of DeFi's future. Meanwhile, Polygon's 19% staff reduction underscores the need for strategic adjustments within the Layer 2 technology space as competition is escalating, with notable players showing signs of solidifying their market positions. For example, Base, incubated by Coinbase, is a Layer 2 solution aimed at simplifying Ethereum development and scalability for dApps. Arbitrum is another notable Layer 2 that focuses on offering low fees and high throughput without compromising security.
Liquidity Restaking: In 2024, the crypto sphere is buzzing with the concept of restaking native ETH or a liquid staking token (LST), particularly through EigenLayer, attracting over $12 billion despite the uncertain risks and yields. Restaking allows the reuse of PoS stakes across multiple networks, allowing new protocols to borrow Ethereum's security instead of having to bootstrap their own, while offering higher potential yields (5-10%+) to investors compared to traditional Ethereum staking yield of ~3.5%. However, it introduces additional risks including enhanced slashing conditions, potential for collusion, single points of failure, smart contract vulnerabilities, and concerns of operator centralization. EigenLayer, leveraging Ethereum's economic trust, aims to bootstrap new decentralized networks through restaking, increasing the complexity and rewards for stakers willing to navigate these new, unknown risks.
Interoperability or Omnichain DeFi: The Cosmos ecosystem exemplifies the user experience in a multi-chain environment, simplifying governance across numerous Appchains. However, it's no longer the sole player in the interoperability space. Layerzero is bridging blockchains, enabling developers to create seamless omnichain applications, tokens, and experiences. For instance, Stargate facilitates liquidity transfers across various protocols, and Layerzeroscan introduces the concept of "explorers 2.0" by incorporating over 60 networks. The compatibility between ecosystems is increasingly evident, whether through EVM compatibility, zk rollups, or both, as seen with Astar zkEVM. The gradual integration of these technologies is leading to the formation of Omnichain DeFi. Finally, the Ethereum Layer 2 technology is booming, as scalability just passed a significant milestone with the introduction of blobs transactions, bringing Ethereum Layer 2 gas fees to virtually 0.
Emerging Mega-Trends
The Convergence of Crypto and AI and beyond: In recent years, advancements in AI, such as large language models (LLMs), and crypto technologies, including blockchain scalability solutions and cryptographic protocols like zero-knowledge proofs (ZKPs) and secure multi-party computation (MPC), have paved the way for promising applications that merge AI with blockchain ecosystems or cryptography. Projects like BitTensor, Near, Qubic, and Tau exemplify the integration of blockchains in constructing AIs for diverse applications, using cryptographic incentives to encourage training and prevent data misuse. An emerging trend is the escalating demand for computational resources necessary for AI development, with platforms like Render and Akash incentivizing this crucial layer.
The Unwavering Influence of Memes: Memecoins have become an integral part of cryptocurrency bull runs, encapsulating the spirit of decentralized finance (DeFi) with humor and satire. Platforms with low transaction fees such as Solana, BNB Chain, and Base have emerged as prime venues for this unique blend of entertainment and investment, highlighting the cyclical nature of 'casino seasons' in the crypto space. While occasionally indulging in DEGEN behavior, this section will deliberately remain our most concise.
Bitcoin Ordinals and Runes: Bitcoin's journey has evolved significantly from its inception, now embracing complex features like BRC20 tokens and Ordinals as mentioned in 10102’s Block 800k update, catalyzing debates within its community over network strain and innovation balance. Indeed, ordinals, leveraging the Taproot upgrade, mark Bitcoin's foray into NFTs, making satoshis unique digital assets with substantial opportunities for innovation and creativity. BRC20 tokens, inspired by Ethereum's ERC20, aim to expand Bitcoin's utility to include tokenized assets and DeFi, transforming Bitcoin from merely a currency to a platform for decentralized applications. With this evolution, concerns over network congestion and fees have surfaced. In response, Casey Rodarmor introduced Runes, proposing a more efficient alternative to BRC20 tokens by optimizing blockchain space and Unspent Transaction Outputs (UTXO) management, potentially reshaping Bitcoin's DeFi landscape. Runes emphasizes streamlined token creation, improved usability, and scalability, offering a lucrative opportunity for early adopters ahead of Bitcoin's halving event.
Real World Assets: RWAs refer to the tokenization of tangible assets from the physical world, including commodities and treasury products, for use in blockchain technologies. Tokenized US Treasuries saw an unprecedented increase in market capitalization, soaring 641% in 2023, from $114.0 million to $845.0 million. This surge underscores a growing trend of integrating traditional financial assets with blockchain technology, offering investors new opportunities for investment diversification in the crypto space. Some innovative projects in this space include: Plume, Dusk, XDC, Propy, RAM, Parcl.
Decentralized Physical Infrastructure: DePIN, with Hivemapper as its standout success, revolutionizes the mapping industry by leveraging crypto speculation. Hivemapper's tokenization is critical. Without it, the project could not attract the liquidity necessary to give its token value, which in turn draws drivers and challenges Google Maps' dominance. This speculation solves the "cold start" problem for new ventures. Despite concerns, the potential for DePIN extends beyond mapping into telecom, energy, and more, with the industry possibly reaching a $3.5 trillion valuation by 2028 according to Messari. This projected growth indicates DePIN could spearhead productive capital formation in crypto, marking a significant shift from speculation to tangible economic contribution. Some other notable projects in this space include Helium, DIMO, and more.
Airdrops: Farmers continue to farm, they just do so in a different field. Airdrops continue to evolve, offering diverse strategies for "free money" through direct announcements or usage-based distributions. The Ethereum Layer 2 ecosystem, along with its new chains and dApps, and the Cosmos ecosystem, are central to this trend, embracing airdrops as a means to engage and reward community members. Distinctively, while the Ethereum ecosystem started using "points" to reflect the expected (but not guaranteed) future reward tokens, Cosmos and its Appchains continue to organically airdrop to its security layer’s capital contributors. Resources like Cosmos Everything, Airdrops.one, or Cosmos Guide (fr) are useful in navigating the Cosmos landscape. Some of the more anticipated dApps on the Ethereum side include: Rainbow points, FriendTech, EtherFi, Ethena, and Mantle.
X. Community. Notes. NFA Disclaimers apply