Donovan Choy

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Here’s a simplified explanation of how restaking works today:&nbsp;



<ol class="wp-block-list">
<li>Bob deposits ETH/stETH into a liquid restaking protocol like Ether.Fi, Puffer, Eigenpie or Renzo.</li>



<li>The liquid restaking protocol delegates Bob’s assets to an EigenLayer operator.</li>



<li>The EigenLayer operator uses Bob’s asset to secure one or many AVSs to return some yield to Bob.</li>



<li>Bob is happy because his ETH is a yield-bearing productive asset, and he enjoys a liquid ETH derivative that he can use to dabble in other degenerate DeFi activities.</li>
</ol>



About <a href="https://app.eigenlayer.xyz/operator">299</a> active EigenLayer operators compete for $11.2 billion in TVL in EigenLayer, so competition is pretty stiff.



EigenLayer operators compete for user attention in one of many ways.&nbsp;



Technical competency is one obvious factor, namely keeping a consistent uptime and fulfilling specific responsibilities for the AVSs they validate.



Operators also try to validate as many AVSs as they can so as to compound yield returns to users (and slashing risks), or promise to share any potential airdrops with delegators. You can see many such explicit advertisements on the EigenLayer operator page.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfqAipEC7L-Aam8rAjKDpl8FVl8un07v6wRcCXCulDlD_-rxh4QoTCLMYV76CjPOvZAgbFZf0hxmz_iW5t9cPhYExziKgjvCnd0vb20m3CQBZobzFv5Po-7KHMOS7x0lGRYp3Y4cITGYYsNhC5msjdBQ77K?key=iNUO5Mkvv7G-Ji0ffJ3mQQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.eigenlayer.xyz/operator/0x5accc90436492f24e6af278569691e2c942a676d">EigenLayer</a></figcaption></figure>



Another way that EigenLayer operators could compete, of course, is to simply promise more of their cut to delegators. That has not been the case, until today.



P2P.org, the <a href="https://app.eigenlayer.xyz/operator">largest</a> EigenLayer operator by total ETH restaked (at 274,000 ETH), announced Wednesday that it would launch revenue distribution to users delegating ETH to them.



As part of a “new structure [to] reward long-term trust and engagement,” all delegators staking with P2P.org prior to Aug. 15 will be eligible for the revenue share.



It’s a bold move —&nbsp;and not one you’d typically expect from a leader at the top.



It’s not clear how much revenue that actually translates into for P2P.org delegators, but here’s some napkin math from Blockworks Research Analyst Marc Arjoon.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">With ~8K stakers on <a href="https://twitter.com/P2Pvalidator?ref_src=twsrc%5Etfw">@P2Pvalidator</a> this equates to ~$1,500 pp (at today&#39;s prices with no commission and excluding additional AVS revenues) <a href="https://t.co/14oN8AG1rI">https://t.co/14oN8AG1rI</a> <a href="https://t.co/7KEvvmcI8J">pic.twitter.com/7KEvvmcI8J</a>&mdash; Marc Arjoon 🟪 (@marcarjoon) <a href="https://twitter.com/marcarjoon/status/1846557289391481090?ref_src=twsrc%5Etfw">October 16, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



P2P has about 274,000 ETH and 8.53 million EIGEN staked on EigenLayer across ~8k stakers.



As part of its “programmatic incentives” program, EigenLayer is allocating 67 million EIGEN through the first year, with 3/4 going to ETH stakers and another 1/4 to EIGEN stakers and operators.



For P2P, that comes up to about ~3.63 million of EIGEN incentives (worth $12 million today).



Assuming today’s EIGEN price of $3.3, each staker would receive about $1,500, excluding any AVS yield.



Not a bad reward.



<h2 class="wp-block-heading">Chart of the Day</h2>



Crypto VC funding still lagging:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcnsYi8_AzNTEzO3QQPzzmv-jGZq_tpZUowCxGnoa6sHHBPiIoOUdTL4sTcGzKiGgSgzm-h1wvNNGsxzr6oPCfrmz0vNLn562Dh6JryF73Wf4GhkqHs4lMMbeiRcEItVnT5mFG8t7cQE96KSqCRCApuSIv6?key=iNUO5Mkvv7G-Ji0ffJ3mQQ" alt="1 - crypto deal count capital invested2"/><figcaption class="wp-element-caption">Source: <a href="https://www.galaxy.com/insights/research/crypto-blockchain-venture-capital-q3-2024/">Galaxy Research</a></figcaption></figure>



According to Galaxy Research, crypto venture capital funds invested about $2.4 billion across 478 deals in Q3 2024. That’s 20% capital invested and 17% fewer deals than the previous quarter.&nbsp;



Within Q3, companies in the “trading/exchange/investing/lending” category raised the most, at $462 million. Cryptospherex and Figure markets raised $200 million and $73.3 million, respectively.&nbsp;



In a sign that the L1 trade isn’t going away, the second-largest raise came from L1 projects — about $341 million in total.



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EigenLayer’s biggest node operator promises revenue-sharing

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<h2 class="wp-block-heading">Using “Trusted Execution Environments” for MEV</h2>



If you lose your iPhone today, you may be worried that a hacker would access your sensitive facial and fingerprint biometric information for their gain.



But that is not possible, largely thanks to what is commonly known as a <a href="https://support.apple.com/en-sg/guide/security/sec59b0b31ff/web">secure enclave</a>. It’s a kind of chip where applications process sensitive information separately from the phone’s main processor and operating system, such that it would afford data protection from a potential attacker (or even Apple itself).



It turns out that crypto developers and researchers are looking to utilize this hardware-based technology for groundbreaking use cases in the blockchain world.



Secure enclaves, or “trusted execution environments” (TEEs) as is more commonly referred to in crypto, can be used for instance to thwart the so-called MEV trilemma.&nbsp;



The Ethereum public mempool is fast and decentralized, but not private, which opens a profitable opportunity for MEV extractors.



Centralized block builders are fast and solve the “privacy” aspect, but they’re not decentralized. That has emerged in an oligopolistic status quo where the dominant block builders like <a href="https://mevboost.pics/">Beaverbuild or Titan</a> strike up exclusive deals with popular applications/wallets with lots of incoming transaction orderflow, then divvy up the MEV profits between themselves.



You can have two properties, but not all three. In either scenario, users get the short end of the stick.



In theory, TEEs could solve this by creating a decentralized MEV auction. As Flashbots’ Shea Ketsdever <a href="https://x.com/BanklessHQ/status/1831687078276366552">explains</a>, users could privately send their transactions to a block builder running within a TEE and have a guarantee that their order flow data won&#8217;t be leaked, thereby protecting it from MEV attackers.



The block builder would remain decentralized because it’s in a secure enclave, and is now computationally fast thanks to <a href="https://www.intel.com/content/www/us/en/developer/tools/trust-domain-extensions/overview.html">Intel’s TDX</a>, the tech firm’s latest in TEE technology.



That’s the bet that Uniswap is making on its recently announced L2 rollup Unichain.



To mitigate MEV leakage, Unichain will <a href="https://docs.unichain.org/whitepaper.pdf">execute</a> its block-building operations within a TEE, specifically Intel’s TDX hardware “which offers both private data access and verifiable execution through its computational integrity property” while enabling “execution attestations [to] be posted publicly” so anyone can verify that blocks were indeed built inside the TEE.



But when things seem too good to be true, they usually are. TEEs are, of course, subject to a whole bunch of <a href="https://x.com/EdFelten/status/1844414561941848312">criticism</a>, namely that it won’t be fast enough or the hardware secure enough, and a reliance on a piece of hardware built by Big Tech.



Enough security vulnerabilities have merited an entire website “sgx.fail” that compiles the failures of Intel’s “Software Guard Extension” (SGX).



In regards to Unichain, Daniel Shapiro puts it succinctly in a recent <a href="https://app.blockworksresearch.com/flashnotes/unichain-liquidity-potentially-begets-liquidity">Blockworks Research report</a>:&nbsp;



A final risk to note is that much of the architectural design of the (Unichain) rollup is reliant on TEEs used in Flashbots verifiable block builder (rollup-boost). Specifically, the initial TEE builder will run on Intel TDX’s hardware. There are long-standing, unsolved problems with TEEs with respect to security vulnerabilities. Although Flashbot has addressed these challenges, it remains unclear how scalable this strategy is. As the chain grows, the incentive to attack will grow in unison. New security exploits could arise that could put user funds at risk. In addition, criticism has been directed towards the TEE design with respect to transaction inclusion and priority inclusion.



— Donovan Choy



<h2 class="wp-block-heading">Is Off the Grid good for Avalanche L1?</h2>



We asked for more apps in crypto and they delivered.&nbsp;



With a unique combination of tactical gameplay, cyberpunk aesthetics and a blockchain-based economy, Off The Grid (OTG) by Gunzilla has proven that consumer-focused applications can successfully integrate blockchain without alienating users. By implementing elements like NFT-based in-game assets while giving players the option to avoid direct interaction with blockchain mechanics, Gunzilla has created an inclusive and free-to-play platform that appeals to both crypto enthusiasts and traditional gamers.



OTG has hit several major milestones including 6.1 million active addresses, 58 million transactions, 1+ million hours streamed on Twitch and partnerships with many top gaming streamers such as Shroud and Ninja. If Off The Grid maintains its momentum, it could inspire other developers to create blockchain-powered games and potentially establish Avalanche as a hub for Web3 gaming and consumer applications.



Built on Avalanche&#8217;s L1 framework, OTG not only demonstrates Avalanche’s scalability and flexibility for game development, but also highlights the platform&#8217;s potential to attract new games and applications. Avalanche&#8217;s L1 infrastructure is positioned to draw developers who want to tap into the benefits of blockchain without compromising the gameplay experience. Upcoming and existing features of Avalanche, such as ACP-77 and HyperSDK, not only make it more affordable for developers to launch their own L1 blockchain but provide a performant, cheap and abstracted experience to the end user.



While the best form of financial exposure to OTG&#8217;s early success is unclear, the game can still serve as a key driver for the Avalanche ecosystem (Avalanche’s Blizzard fund also co-led Gunzilla’s last <a href="https://gunzillagames.com/en/news/55-Gunzilla-Games-Announces----M-in-Funding-Co-Led-by-CoinFund-and-Avalanche">funding round</a>). Gunzilla has not yet introduced a native token or NFT model for public investment, though its future native token on the Gunz Avalanche L1 will play a role in the game&#8217;s economy (e.g. by paying for gas on its network). Additionally, Avalanche&#8217;s L1 economics are still evolving, with options like the pay-as-you-go (PAYG) model providing flexible opportunities for validators and ecosystem participants, or staking 2,000 AVAX per validator up front in order to take advantage of interoperability between other Avalanche L1s.



<a href="https://app.blockworksresearch.com/research/the-avalanche-ecosystem-an-analysis-of-subnet-adoption">Blockworks Research</a> has covered the evolving Avalanche L1 (previously known as subnets) economics, for those interested in learning more. Additionally, there are also Web3 Gaming Guilds that have both invested in and are running validators in OTG, offering another potential way for exposure.



Overall, OTG&#8217;s success signals that blockchain can enhance game development in meaningful ways by drawing in non-crypto users and providing a viable blueprint for future blockchain-powered consumer applications. As more games and applications potentially adopt Avalanche&#8217;s blockchain framework, it could lead to increased network usage, validator participation and overall ecosystem growth.



— Nikhil Chaturvedi 



<h2 class="wp-block-heading">Chart of the Day</h2>



Total stablecoin supply increasing:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcJo3vdqvqRqDyV7Qq2QZi2XJ4JAEGf3Jy9NDjQ90HBQGgP0BksjCPOUYtjq3nOmmZlDeiX326xQzNT3Z87blQbyFVcYQdc1gpsDmzUkXWlslnYt0cdUELEgnojhv80sp8teIWc4oFT0GV5UmLSsZFiIxI?key=76Ovo7XoZXkuObyYsvw-XA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.artemisanalytics.com/stablecoins">Artemis</a></figcaption></figure>



The total supply of onchain stablecoins today is $163.2 billion, creeping ever closer to its March 2022 all-time high of $166.4 billion. Total stablecoin market cap has increased by about $1 billion over the past month, with about $1 billion apiece coming from USDT and USDC.



— Donovan Choy



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Can the MEV trilemma be solved with trusted execution environments?

Macauley Peterson

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<h2 class="wp-block-heading">Why bitcoin ETF flows matter</h2>



As we approach the mid-point of October, net inflows for the US bitcoin ETFs have flipped into positive territory for the first time this month.



Bitcoin ETFs notched $253.6 million in net inflows on Friday, breaking a three-day negative streak. They ended the week with a solid net of $348.5 million.



ETF flows provide insights into bitcoin price movements, acting as a potential indicator of directional trends, according to David Lawant, head of research at FalconX.



In addition to a correlation between BTC price and ETF flows overall, “a positive shock to ETF flows leads to a persistent positive effect on bitcoin prices, peaking around days 3-4 with approximately a 1.2% price increase before gradually diminishing,” Lawant wrote in a research note Friday.



BTC is up about 5% today, threatening to break above the daily high set on Sept. 28 at nearly $66,000. The brief dip below $60,000 last week has turned into a spring, setting up a <a href="https://x.com/BigCheds/status/1845821835574759861">bullish double-bottom</a> chart pattern.



Ritesh Dutta, Deputy CEO at AMINA Bank, finds solace in the relative outperformance of venture capital-backed cryptos. “The recent surge in VC-backed cryptocurrencies, particularly SUI and Aptos, is a strong signal of market confidence in <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">institutional adoption</a> of innovative blockchain technologies,” Dutta told Blockworks. He also likes the “resilience in DeFi,” which has maintained its total value locked (TVL) in the third quarter, alongside a 14% rise in the total stablecoin market cap to $172 billion.



For most crypto assets, the <a href="https://blockworks.co/news/btc-uptober-market-odds">anticipated “Uptober”</a> has been more like a continuation of “<a href="https://blockworks-research.beehiiv.com/p/closing-september-on-a-pullback">Choptember</a>.” But the present attempt to reverse a longer-term downtrend looks promising.



— Macauley Peterson 



<h2 class="wp-block-heading">Chart of the Day</h2>



Slow and steady progress with Ethereum solo stakers:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdRifiwliPYTJVYY_Fy7hfk2fs8ViYZZ4mOYNqCpY4bXtFh_m9Fy2NunrQPZYF-CDxf6Xl27b8kmommTR4Q2MaiKX5c3vkDOO9LUPyuCsPv9fxSIFrvuFBhF1dnIkGIXyzev3FMZ_6zQajj1CZnzHp-uPA?key=cpT_n3yTt4E3sWur4lvNGQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://ethresear.ch/t/on-solo-staking-local-block-building-and-blobs/20540">Ethresearch</a></figcaption></figure>



How well has Ethereum been preserving decentralization? According to research from Toni Wahrstätter, the reorg rate for solo stakers (dark purple line) has decreased about 0.25% since the <a href="https://blockworks.co/news/ethereum-dencun-upgrade-mainnet">Dencun hard fork</a> in March 2024.&nbsp;



Solo stakers may not necessarily be local block builders, however, as a certain subset are using third-party relays and <a href="https://blockworks.co/news/mev-the-relays-problem">MEV-Boost</a> to outsource block building. The bad news: Based on the last 12 months, local block builders — considered the holy grail of decentralization — are still about 5x more likely to be reorged than MEV-Boost block builders.



— Donovan Choy 



<h2 class="wp-block-heading">Governance</h2>



Ethena proposal to onboard SOL as USDe backing asset:



In August, Ethena made the <a href="https://x.com/ethena_labs/status/1821185511563956569">strategic decision</a> to expand its yield-bearing synthetic stablecoin USDe <a href="https://blockworks.co/news/lightspeed-newsletter-ethena-solana-integration">to Solana</a> with the use of LayerZero’s OFT (Omnichain Fungible Token) standard. Ethena looks to further expand its presence in Solana with a governance proposal <a href="https://gov.ethenafoundation.com/t/proposal-onboard-sol-as-a-usde-backing-asset/232">posted</a> last Thursday looking to onboard SOL as a backing asset to USDe.



Unlike centralized stablecoins such as USDT and USDC, USDe is collateralized by a “cash-and-carry” trade. Short positions on perpetuals futures are taken by Ethena against user-deposited BTC, ETH and possibly SOL (the long position) to exploit a difference in funding rates for profit, with a <a href="https://app.ethena.fi/dashboards/solvency">reserve fund</a> ($46.6 million) to mitigate short-term volatility.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXddKWJYtjSSqfUk4MbpsCss8cFtc_evkinQiVsOZbu6IR9hbvGnKMVjnIjHX6q3jkb4WWwwuMn0zRsMVAiWB-j5lRgPsbfNEg3-ypnankxvZ-ngbOlToMJWPJaUCkB4GuSgGHdDpRqmAX-h3ns7gK_flDVo?key=cpT_n3yTt4E3sWur4lvNGQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.ethena.fi/dashboards/positions">Ethena</a></figcaption></figure>



Posted by Ethena Labs Research, the economic rationale for the proposal is the relatively favorable funding rates of SOL perpetual futures in 2024 to BTC and ETH over the last several months.&nbsp;



If approved, the plan is to target an initial allocation range of $100 to $200 million SOL for USDe. That is about 5-10% of SOL open interest, compared to Ethena’s present stake in 3% of BTC open interest and 9% of ETH open interest.



— Donovan Choy



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Bitcoin is poised for a bullish reversal

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The notion that a (former) president of the United States would throw his support behind a DeFi project would’ve been inconceivable just a few years ago, but <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-family-defi-venture">it’s happening</a>.



The Trump-backed World Liberty Financial (WLF) project <a href="https://governance.aave.com/t/temp-check-world-liberty-financial-aave-v3-instance-on-ethereum-mainnet-proposal/19383">submitted</a> on the Aave governance forums a proposal to deploy an Aave v3 instance on Wednesday.



WLF is not technically a fork of Aave’s code, as confirmed by Aave founder Stani Kulechov on the Chopping Block <a href="https://youtu.be/gZyn9R_hBIc">podcast</a>.&nbsp;



On the backend, WLF seems to be a segregated instance of its own “Aave” from the main Aave protocol. WLF’s users are then serviced from its own separate <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">KYC’d front-end</a>, where it will presumably charge a trading fee.



That makes it very much a “DeFi” project, insofar as World Liberty Financial is running on the largest smart contract compatible public blockchain and leveraging core DeFi primitives.



Yet it’s also not quite “DeFi,” given its strict KYC measures for global users and how it’s presently limited to only accredited investors in the US.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd3U24H8ZS257qXT9Hvwhd4CNlOhRsf_dk2y4ovh-2IKO-Q1vZSO7qk9o8j9mf05Wf240MIPaE9Eyb43h6ZE-yCYEcKsJuvdpmtTl8XwDhigVG2VrzPNOlmlslKlcITB8iWge1otfQ-P3TUMKOvlfBZqz5k?key=JQMVYvq9Jhk3rOrcyxUrZg" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://www.worldlibertyfinancial.com/">World Liberty Financial</a></figcaption></figure>



In exchange for using Aave, WLF is offering 20% of its protocol fees and 7% of its WLFI governance token supply to Aave.



Part of the allocated WLFI token supply is explicitly for liquidity mining rewards on Aave, despite previous claims from a <a href="https://www.coindesk.com/business/2024/09/03/inside-the-trump-crypto-project-linked-to-a-2m-defi-hack-and-former-pick-up-artist/">leaked draft</a> of World Liberty’s plans that the token will be non-transferable.



USDC, USDT, ETH and WBTC are four of the assets to be initially listed on WLF for lending and borrowing.&nbsp;



The proposal has received the verbal <a href="https://governance.aave.com/t/temp-check-world-liberty-financial-aave-v3-instance-on-ethereum-mainnet-proposal/19383/4">approval</a> of Aave-chan Initiative (ACI) founder Marc Zeller, who “welcomes the alignment between the WLF and the Aave ecosystem.” However, other DAO members are <a href="https://governance.aave.com/t/temp-check-world-liberty-financial-aave-v3-instance-on-ethereum-mainnet-proposal/19383/9">questioning</a> the strategy of saddling Aave with the baggage of <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-crypto-promises">Trump’s politics</a>.



Though the Trump family’s names are attached to the project, it’s hard to believe that it goes beyond much more than a brand name association.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">.<a href="https://twitter.com/worldlibertyfi?ref_src=twsrc%5Etfw">@worldlibertyfi</a> <a href="https://t.co/mwhVIzPJyq">pic.twitter.com/mwhVIzPJyq</a>&mdash; Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/1829141447087648796?ref_src=twsrc%5Etfw">August 29, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The people behind WLF are clearly crypto natives. From the precise selection of Aave, and the strategy to incentivize liquidity providers with its own native token, to the linguistic nuances of its governance proposal, WLF has all the trappings of a team that understands how things are done in this business.



Who knows how it will end —&nbsp;stay tuned, as they say.&nbsp;



<h2 class="wp-block-heading">Chart of the Day</h2>



Optimism Collective generates $911 million in monthly revenues:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXes5oaGYzL4yu5BVrVawekIcM1CLBfUtqIwvyqnWet2tdkrPr2mgyHBiw9y4JApTkCI1jpbtjQy-GKL_UVnF8vtXPJ624F5B9SuKKkie6OODx8s9ChzXsHd2SlykEqtiCihk9_7J6qGO-uc5ARW71Crng_Y?key=JQMVYvq9Jhk3rOrcyxUrZg" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/superchain">Blockworks Research</a></figcaption></figure>



Uniswap announced its own <a href="https://blockworks.co/news/0xresearch-newsletter-uniswap-layer-2">Unichain L2</a> yesterday as part of the Optimism Collective/Superchain. One revenue-sharing <a href="https://base.mirror.xyz/aBwt4flT1WAKJGQTj2AXBpH_8Qd3umQ-ZECLAJoO_nE">criteria</a> of being an L2 chain within the Optimism Collective is to share 2.5% of your total sequencing revenues, or 15% of your gas fee profits (after deducting data availability costs) — whichever is higher.



In the month of September, the Optimism Collective raked in $911 million in total revenue. Optimism mainnet and Base make up the two largest revenue contributors, at $646 million and $263 million, respectively.



Note that the Blast L2 is left out of the above chart. Though L2s may be built with the Optimism’s OP Stack developmental kit, that does not make them necessarily committed to the Optimism Collective.



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Trump’s World Liberty Financial is using Aave

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Uniswap Labs is launching its own L2 chain, Unichain.



Unichain will be built on Optimism’s interconnected network of rollups, <a href="https://blockworks.co/news/optimism-interoperability-layer-superchain">dubbed the Superchain</a>.



Why Unichain? Uniswap Labs claims block times will see an initial speed of one second, after which they will fall to 200-250 millisecond block times — a vast improvement over the 12-second block time on Ethereum mainnet.



As part of the Optimism Superchain, users on the new Unichain will also enjoy native cross-chain interoperability of assets across the Superchain’s network of blockchains.



For L2s outside of Optimism’s Superchain, Uniswap Labs plans to leverage <a href="https://www.erc7683.org/">ERC-7683</a>, a cross-chain intent standard co-developed with <a href="https://app.blockworksresearch.com/unlocked/across-protocol-based-on-intents">Across Protocol</a>, that will effectively enable users’ trading orders to be fulfilled by intermediary relayers/solvers regardless of what chain they’re on.



This potentially obviates the need for Uniswap to “port” its massive pool of liquidity it enjoys on the Ethereum L1 to Unichain, and thereby abstract away the hurdles of moving its existing user base to a different chain.



Hayden Adams, CEO of Uniswap Labs, said of the launch: “Unichain will deliver the speed and cost savings already enabled by L2s, but with better access to liquidity across chains and more decentralization.”



Unichain will also leverage new technical innovations, like a trusted execution environment (TEE) for block building, and a “community validation network.” Both features are developed with Flashbots.



Unichain’s validation network will be open to any node operators staking UNI, but only a “limited number of validators with the highest UNI stake-weight will be considered the active set,” according to the Unichain <a href="https://docs.unichain.org/whitepaper.pdf">white paper</a>. It suggests that the largest UNI token holders, such as the Uniswap Foundation and early investors, will likely be the only initial validators on the network.



Ethereum’s largest DEX moving to an L2 can be taken as a great or terrible piece of news, depending on whether you <a href="https://blockworks.co/news/0xresearch-newsletter-eip-7977">approve of Ethereum’s roadmap</a>.



For Ethereum-aligned users who are onboard with its rollup-centric roadmap, Unichain makes perfect sense. From Uniswap’s perspective, this is a win-win for both the protocol and its users: Uniswap retains its MEV, and users enjoy cheaper gas fees.



From Ethereum’s perspective, that was obviously always part of the plan.



On the flip side, this looks to accelerate the ongoing <a href="https://blockworks.co/podcast/bellcurve/60051c06-6bd0-11ef-bcc2-e76505f9d524">complaints</a> about Ethereum L2s being “parasitic” to the L1, and the lack of value accrual to ETH (the asset).



Uniswap is the largest gas guzzler on the Ethereum L1 today (see below), which means that ETH spent as gas fees on the L1 is contributing to a non-trivial portion of ETH burn and value accrual to ETH, thanks to <a href="https://consensys.io/blog/what-is-eip-1559-how-will-it-change-ethereum">EIP-1559</a>. 



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcFBbb0qGww9D7HnE7ZAZrgoRfvLcEpfJwOz0ldW0grQK_jF3bPrCAgNtLP9Cgwgz_IPaGuzPkMtA_jj1F82UIGoRivSoInKGf7sGd8GooP0ITK7wRZLmphBJq3Ki1-dNdPxPa0AH5998weqbiNEGnGVOY?key=CnMrFVTVSBnOOas2r63roA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://etherscan.io/gastracker">Etherscan</a></figcaption></figure>



Additionally, MEV that’s accruing to the Ethereum L1 will now be “leaked” to the Unichain L2 in the form of sequencer revenues —&nbsp;further reducing ETH’s value accrual.



A reversal of fortune for Ethereum largely depends on the “<a href="https://www.youtube.com/watch?v=yvP39-EOADU">induced demand</a>” its core developers believe would eventually emerge from having a multitude of cheaper L2 execution environments. The idea is that faster blockchain speeds would significantly drive more transactions on L2s, which in turn would increase settlement fees paid to the L1. So far, that hasn’t happened yet.



The UNI token has rallied 11.9% in the last 24 hours, according to <a href="https://www.coingecko.com/en/coins/uniswap">CoinGecko</a>.



<h2 class="wp-block-heading">Chart of the Day</h2>



There’s a tsuinami coming:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcNNW7MQjRPX1WgLZfuzADo6ZYhmsVx78fv3zNRUFRroszlu5hRvWhC-WCsA12Iv7Uq7LWBc0yDo9xuVzjHyGaT1a42sVgBkKSV7MHkBTfWo5GzRAukjSweJJIn5OQmI95egRTxc_2YGO1bMxurU7wgrzk?key=CnMrFVTVSBnOOas2r63roA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.artemisanalytics.com/chains">Artemis</a></figcaption></figure>



The MoveVM-based L1 blockchain Sui briefly flipped Solana in daily transactions earlier this week. Sui saw 41.8 million transactions against Solana’s 40.1 million on Monday, though it has since fallen back down. Just as Solana once posed itself as an “ETH killer,” Sui looks to do the same to Solana.



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Uniswap announces Unichain L2

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<h2 class="wp-block-heading">Babylon sees $1.4 billion in deposits</h2>



Babylon is a restaking protocol on the CometBFT consensus that saw a mainnet launch in August.&nbsp;



As of today, the Babylon chain has racked up an impressive 23,000 bitcoin ($1.4 billion) staked from 25.3k stakers. That puts it in the TVL ballpark of major restaking protocols like Symbiotic ($1.5 billion) and EigenLayer ($10.7 billion).



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">🎉 Cap-2 Completed! 🎉 Today, Babylon reached an incredible milestone—almost 23,000 bitcoins staked in Cap-2! A big thank you to all of our stakers for being part of this journey&mdash; Babylon (@babylonlabs_io) <a href="https://twitter.com/babylonlabs_io/status/1843795314282770869?ref_src=twsrc%5Etfw">October 8, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Unlike previous sidechain attempts at bridging bitcoin to smart contract chains, Babylon offers a trustless coordination layer to do so <a href="https://docs.babylonchain.io/docs/faq/overview">without technically</a> bridging bitcoin.



This is achieved through the use of Cosmos’s Inter-Blockchain Communication (IBC) protocol to communicate messages between networks, and a mix of cryptography methods like “covenants” to lock bitcoin in a time-locked self-custodial vault until conditions are fulfilled. Additionally, <a href="https://docs.babylonchain.io/docs/introduction/btc-timestamping">timestamping</a> is used to synchronize a record of transactions on PoS chains.



To get around the lack of smart contract compatibility on the Bitcoin chain, Babylon’s design requires stakers to use their private keys to lock and unlock their stake, which is then delegated to a trusted validator for a fee.



In the event of malicious behavior, the validator’s private key is revealed and slashed with extractable one-time signatures (EOTS) — a concept that builds on Bitcoin’s Schnorr signatures algorithm.



This architecture allows bitcoin stakers to “bridge” their bitcoin into a PoS chain, and receive a yield that is paid out in the destination PoS chain’s tokens, a future feature to be implemented.



Presently, the two <a href="https://btcstaking.babylonlabs.io/">largest stakers</a> are liquid restaking protocols Lombard, and Solv Protocol, which have a total delegated 7166 and 6009 bitcoin, respectively.



Solv Protocol also <a href="https://x.com/SolvProtocol/status/1843607388181672008">announced</a> yesterday the Staking Abstraction Layer (SAL), a framework to standardize token standards across the growing number of bitcoin derivative tokens.



Due to its lack of smart contract capabilities, Bitcoin DeFi must go cross-chain. This in turn creates a need for such common standard frameworks.&nbsp;



Various cross-chain <a href="https://li.fi/knowledge-hub/comparing-token-frameworks/">token standards</a> have been used in Ethereum DeFi to create standardization, such as LayerZero’s OFT (Omnichain Fungible Token) and Axelar’s ITS (Interchain Token Service) standard.



<h2 class="wp-block-heading">Chart of the Day</h2>



Most Polymarket users lose money:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc0FRZL63MUzQ5-bUaZ-hXPMXC29YE-AEY0cSJdYidgo_l5TUuQSaRhNP_jXlzE_xauj8ZLbFm4tlPS-GcJyQs7e8XL6snro_nAu1lr9fCDdSFgR9DxR9hNW_-HcjaMsbzt2pizvd5OQlwG-2VvN7xQxaXi?key=W4Q8IbtOgbPiDJVVY9bCnQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://layerhub.xyz/protocols/polymarket">Layerhub</a></figcaption></figure>



As with most casino-based businesses, most Polymarket users are unsurprisingly in the red. Based on Layerhub’s data, 86.7% of users have made losing bets on the prediction market. Only about 2,148 (1.2%) of Polymarket users have made profits of upwards of $1k.



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Bitcoin-staking protocol Babylon attracts $1.4B in deposits

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Memecoins are entering a so-called “supercycle phase” — a fitting choice of words when you need to scream into the ears of unsuspecting investors that something of epic proportions is coming.



That’s the thesis of a somewhat viral <a href="https://youtu.be/6nqzwdGxTGc">Token2049</a> talk by Murad Mahmudov titled “The Memecoin Supercycle,” to which a growing contingent of Crypto Twitter seems to be subscribing.



Embrace memecoins, argues Mahmudov, because memecoins give you hope, fun, identity, a sense of belonging, emotional connection, a way to reduce loneliness and a way to engage in collective artistic expression and an imagined reality.



Let’s back up for a second here.



Based on <a href="https://www.coingecko.com/en/categories/meme-token">CoinGecko</a>, the entire memecoin market is $53 billion, about 2.3% of the entire $2.3 trillion crypto market cap. <a href="https://blockworks.co/news/lightspeed-newsletter-pump-dot-fun-memecoin">Pump.fun launched</a> in January 2024, and about <a href="https://dune.com/hashed_official/pumpdotfun">2.3</a> million memecoins have been created since then.



How many of these memecoins have been “successful” for investors?



Not many, is the answer. Based on August data by <a href="https://x.com/Adam_Tehc/status/1824994679265349802">@Adam_Tehc</a>, 64.7% of pump.fun traders on Solana lose money or breakeven at best. Only 3% make more than a thousand dollar profit, and a rare few of 0.0028% wallets are hitting the $1 million moonshot on memecoins.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcQsSuXzpMETIbsynFe0NTEsuMEbiGiZdkCfchgztgK8rJM-Jtj_oNpqJMPhdGLVSuN0hfBuI553uhmlmV0ri6xMSmisy4EiBbwqztU1rn-bgNXqUyvO8LTke-stE1KC3w5yJbgB1-lQTe2ux8SdYv5NK_d?key=mfn73cL5xdusnrfBtAxlGg" alt="" style="width:551px;height:auto"/><figcaption class="wp-element-caption">Source: <a href="https://x.com/crypto__kermit/status/1825109763966787894/photo/1">@crypto__kermit via Twitter</a></figcaption></figure>



Part of the argument for “why memecoins” is because the VC-backed altcoin alternatives are terrible.&nbsp;



There’s admittedly a grain of truth there. Most VC-backed tokens have seen a down-only chart from their CEX listings, they’re rid with <a href="https://blockworks.co/news/0xresearch-newsletter-eigen-tokens-transparency">fishy insider investor tokenomics</a> and many of their products haven’t panned out (about 18% of crypto companies that <a href="https://blockworks.co/news/lightspeed-newsletter-solana-venture-capital">raised in 2022</a> have shut down, according to <a href="https://x.com/reganbozman/status/1841218868787978255">Lattice Fund</a>).



But the solution, I think, is to get these things right rather than dive headfirst into memecoins and throw the baby out with the bath water.



Recall that the history of the internet for instance, is littered with dead companies that collectively raised billions of dollars. In her <a href="https://www.amazon.sg/Bull-History-Boom-Bust-1982-2004/dp/0060564148">recollection</a> of the dot-com bubble, journalist Maggie Mahar estimated that by February 2002 — two years after the peak of the bubble — about 100 million investors lost ~$5 trillion in the stock market.&nbsp;



Today, the internet is indispensable. Suffice to say, we did not arrive there by doubling down on speculative use cases.



Memecoins do not pretend to try to create a socially innovative product, and that has been wrapped up in a marketing spin to be portrayed as a kind of investor advantage.



But failed crypto projects at the very least net socially important lessons and knowledge that is being taken and applied forward in the industry.&nbsp;



We know that algorithmic stablecoins are probably not a good idea, given the <a href="https://blockworks.co/news/one-year-since-terra">spectacular collapse of Terra</a>.



We know from the meager improvements in costs from decentralized storage solutions like Filecoin (relative to centralized competitors like AWS) that data is not likely to be the breakout use case for DePIN.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf5c3ldVjEXVZsXdevlFQ7S2h2m-XsBHthqJYVBqfYz9-bl5RwlD1FCdyoX0ltr_i6sB8LfkygdG4CoLjO9MinHk3IhHhjPhUWcXhWuYbix8xUPHv0Wn50g8gRWKh_x1homGvC9Tl5q31nj_yHE0xce_EfQ?key=mfn73cL5xdusnrfBtAxlGg" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/dunleavy89/status/1833167137633866157">MV Global</a></figcaption></figure>



We know that from the downfall of Axie Infinity, the next wave of blockchain-based games are not likely to be based on play-to-earn mechanics.



The point here, really, is that we don’t know the exact recipes for what will and won’t work until entrepreneurs (and, unfortunately, many hoaxsters along the way) give it a go. That is — after all — the whole point of a permissionless market: to allow an archipelago of experiments to flourish simultaneously.



If memecoins do indeed see a “supercycle,” it does beg the giant question of: So what? What has the blockchain industry proved to themselves, as well as outsiders and regulators, aside from the perennial need that people gamble?



Crypto wasn’t designed to make you rich. If that happens along the way, congratulations! But crypto was here to set you free.



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Who cares about a memecoin supercycle?

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<h2 class="wp-block-heading">A new EIP to make Ethereum faster</h2>



Everyone wants the Ethereum network to be faster. This can be achieved in one of three ways:



<ol class="wp-block-list">
<li>Reduce slot times (i.e. the time intervals between newly proposed blocks).</li>



<li>Make blocks bigger by increasing gas limits.</li>



<li>Improve blob (Binary Large OBject) transactions capacity, a temporary form of data structure introduced in EIP-4844 that allowed L2s to settle to Ethereum more cheaply.</li>
</ol>



This weekend saw the emergence of the newly proposed <a href="https://github.com/ethereum/EIPs/pull/8931">EIP-7781</a> aimed at the first.



Proposed by <a href="https://x.com/ben_a_adams">Ben Adams</a>, co-founder of Illyriad Games and Nethermind contributor, EIP-7781 wants to shorten slot times on the Ethereum L1 from from 12 seconds to eight seconds.



The proposal cites EIP-7781’s impact as an improvement in overall throughput by 33% and reduced latency for based L2 rollups, which roughly translates to a hypothetical gas limit increase from 30 million to 40 million or a blob count increase from six to eight.



Since block sizes remain unchanged, aggregate peak bandwidth demands will not rise either.



In other words, Ethereum would be faster, without increasing the bandwidth requirements on individual nodes (though the impact on hardware is up for debate).



The new proposal has received the approval of Ethereum Foundation researcher <a href="https://github.com/ethereum/EIPs/pull/8931#issuecomment-2395026393">Justin Drake</a>, who agrees EIP-7781 would roughly increase throughput by 50%, make DEXs like Uniswap roughly 1.22x more efficient and reduce confirmation times of L1 contracts by one-third.&nbsp;



If passed, EIP-7781 would have significant positive impacts on based rollups like Taiko, whose architecture leverages the sequencer of the L1 (and thereby is constrained by L1 block times), as opposed to traditional rollups like Optimism and Arbitrum, who run their own centralized sequencers.



It’s a welcome change but one wonders if it’s just another EIP on an Ethereum roadmap already chock-full of EIPs waiting to be implemented.&nbsp;



Recall that the upcoming <a href="https://blockworks.co/news/testing-bottleneck-next-ethereum-upgrade">Pectra hard fork</a> (with already 20+ EIPs) that was scheduled in early 2025 was <a href="https://blockworks.co/newsletter/research/issue/post_a2d3d0b2-7573-4379-a2d8-db9d7c7dc488">split</a> in two during the last Ethereum All Core Developers (ACD) call.&nbsp;



ETH Core Dev Alex Stokes, who moderated the last ACD, <a href="https://hackmd.io/@ralexstokes/rJVuKtlpR">cited</a> Pectra as “one of the biggest hard forks we have had in Ethereum history.”



<h2 class="wp-block-heading">Chart of the Day</h2>



Polymarket hits all-time highs in daily trading volumes:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdyTH-VvCX_CqNObVhkC9sV1_qTVGXpQi6x4ChVNpdXKjicjoF8Oi1qSfQByqGw7CM-1_cMMHX6RZfi_toKMWcqMUXAGeVV1JILvqZ7G5vrUF3wIXyCLpYoP26sqf619fh8_EAFnGUlI61LNIk1OB050Z0?key=26-qyIB22NbzOhdKnKWiqQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/polymarket">Blockworks Research</a> (h/t <a href="https://x.com/smyyguy/status/1843278051142242528">Dan Smith</a>)</figcaption></figure>



Polymarket is racking up all-time highs in daily trading volumes. On Sunday, 82% ($79.3 million) of volumes came from the “elections” category. The biggest market by far is still the “<a href="https://polymarket.com/event/presidential-election-winner-2024?tid=1728309704050">Presidential Election Winner 2024</a>” prediction market, with about $1.38 billion worth of bets riding on it. It’s right now giving Trump a 51% lead compared to Harris’s 47.9%.



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New EIP-7781 to make Ethereum faster by 33%

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<h2 class="wp-block-heading">Funding science onchain with BIO protocol&nbsp;</h2>



The general way a scientist would bring their lofty academic ideas to market is to first get published in a peer-reviewed journal, spend years setting up a BioTech company as a CEO and then raise funding for that idea.



But if a collective group of individuals could raise a whopping $47 million on the blockchain to purchase an original copy of the US Constitution back in 2021, then surely the same model could be applied to fund niche fields of scientific research.



That’s what the nascent subsector of decentralized science (DeSci) has been attempting for the last few years. According to <a href="https://www.coingecko.com/en/categories/decentralized-science-desci">CoinGecko</a>, DeSci today comprises about 25 tokens with a total market cap of $459 million.



The most prominent DAO at the forefront of this effort is the <a href="https://blockworks.co/news/vitadao-pfizer-biotech-arm">longevity-focused VitaDAO</a>, which previously <a href="https://www.vitadao.com/blog-article/vitadao-closes-4-1m-fundraising-round-with-pfizer-and-shine-capital">raised</a> $4.1 million in January 2023 from Pfizer Ventures, alongside Bryan Johnson and Balaji Srinivasan. 



Today, VitaDAO is one of eight BioDAOs that are partnered with BIO.xyz, a traditional accelerator by Molecule that launched in 2022. BIO.xyz will eventually spin out a decentralized protocol and dapp of the same name that is expected to launch on the Ethereum L1 early next year.&nbsp;



The BIO dapp will effectively serve as a Y Combinator-like accelerator program to fund a <a href="https://blockworks.co/news/daos-web3-future">variety of scientific DAO project</a>s dedicated to specific areas of research.



For instance, HairDAO is trying to solve hair loss, CyroDAO is researching cryopreservation, AthenaDAO is focused on women&#8217;s reproductive health and PsyDAO is looking at the use of psychedelics for mental health.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd0u7xq653Wo0jnCH_ohW8lnvTGIKWpbNLSpCmJLZiu-vrINIMgNvoxg1DIeSFYkbjC1oXe6q4yJBiJKHERIsbqObbuJaTgIut44a85GpPuhCeHuu-4DXeQZSgTDI4IlS4ndbFuTM8XEwCc2rzkFtvlNps?key=yECc-QPO3h709JdfvfadbQ" alt=""/></figure>



“After we built VitaDAO, we were approached by many people [who] wanted us to build a DAO for other biotech fields other than longevity,” Kohlhaas told Blockworks.



The need to create a unifying piece of liquidity infrastructure came naturally as an idea to unify the many illiquid tokens of these DAOs, Kohlhaas said.



The first $BIO token fair launch mint occurred in Q2 2024 and raised $8.25 million. The token remains non-transferable (though it is currently <a href="https://app.bio.xyz/genesis/round2">swappable</a> for specific BioDAO tokens) and is going through its second fair launch round, having raised about <a href="https://app.bio.xyz/genesis">589 million</a> BIO so far.



For now, aspiring BioDAOs need to be first whitelisted by BIO protocol before proceeding to a DAO token holder vote, though the plan is for this process to be fully permissionless.



Put simply, it’s an alternative funding model using the Web3 tools of tokenization for scientists (or patients like Ron Woodroof in the Oscar-winning film Dallas Buyers Club) who are restricted from the thick political bureaucracies of the pharmaceutical industry.



It’s the <a href="https://blockworks.co/news/decentralize-science-research-data">familiar DAO model</a> that we’ve seen replicated across Web3 from financial products and social media platforms to games. Even the prestigious scientific journal Nature has <a href="https://x.com/NatureBiotech/status/1708892918700769698">acknowledged</a> scientists should “get on board” with the model.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The community of the DAO Decentralized autonomous organizations are growing as alternative research funding models, but are also strong scientific communities. We should get on board <a href="https://t.co/x8wigDxOIh">https://t.co/x8wigDxOIh</a> <a href="https://t.co/0PRv5OrZi4">pic.twitter.com/0PRv5OrZi4</a>&mdash; Nature Biotechnology (@NatureBiotech) <a href="https://twitter.com/NatureBiotech/status/1708892918700769698?ref_src=twsrc%5Etfw">October 2, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



BIO protocol offers an initial funding seed of about $100k to $250k for approved BioDAOs, as well as connections with service providers in their network and help with legal, branding and tokenomics.



In exchange, BIO protocol receives 6.9% of the token allocation of each BioDAO and some ownership in the BioDAO’s NFT intellectual property.



“We want these scientists or patients to be focused on doing the research, not flying around to crypto conferences and trying to figure out what a SAFT, or Univ3 liquidity position or multisig is,” Kohlhaas said.



After DAO approval, $BIO stakers can receive $BIO emission rewards and are whitelisted for priority access to the intellectual property-NFT funding rounds of respective BioDAOs. At that stage, they may decide what future BioDAOs should be approved onto the protocol.



Each BioDAO pursues one branch of scientific research (e.g. longevity, hair loss), though they may also work on several research projects at any given time.&nbsp;



Each piece of research is typically tokenized as a specific NFT, or “IP-NFT,” which offers a quick way for investors to fund a specific research project and own a piece of the pseudo-patent.



One VitaDAO research project offers a concrete example of the benefits behind marrying markets with scientific research in its very early stages. A project behind new gene therapy to target aging saw a 150% jump in value for its <a href="https://www.coingecko.com/en/coins/vitarna">VITARNA</a> token after <a href="https://drive.google.com/file/d/1ffqxicY_S9cohtkEloi6sCwrDgkA2Wad/view">positive results</a> were published on in-vitro tests.



These BioDAOs technically operate under a non-profit structure, yet some have chosen to monetize their work in order to fund further research. <a href="https://www.hairdao.xyz/">HairDAO</a>, for instance, has an actual <a href="https://shop.hairdao.xyz/">shampoo</a> product on the market, with its related tokenized $POO tokens.



Kohlhass likened it to a university endowment fund that actively invests to grow the university’s treasury.



It’s a pretty complex structure, and this attempt at disrupting the fundraising process around the trillion dollar industry of Big Pharma is just one subsector of DeSci.



Other DeSci verticals are targeting the problems involved in academic peer-review publishing, including Research Hub, a project founded by <a href="https://blockworks.co/news/brian-armstrong-tokens-for-science">Coinbase’s Brian Armstrong</a>.



<h2 class="wp-block-heading">Chart of the Day</h2>



NFT trading volumes at a low:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdo_9-exxzKXs7nXFd97zoou9VzG46HelKCb0PjxpYt0LD-6LqL7nJrJAztdj_vYdPgDwV5fhLUPcxLLPzWkRc1ORU9ZLj2evdgnMfu5lvvm1mHa8NLUGba_lsErH2MPNCM5adRRzH6QYV-XVRVvHdyN4gT?key=yECc-QPO3h709JdfvfadbQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/punk9059/status/1840947500858962164">Twitter</a></figcaption></figure>



NFT trading volumes in September are at all-time lows of 115k ETH ($272 million), the lowest since January 2021. Based on <a href="https://coinmarketcap.com/nft/?page=1">CoinMarketCap</a> data, the total market cap of NFTs is about $29.9 billion.



Updated October 4, 2024 at 4:49 pm ET: Removed mention of Vitalik Buterin&#8217;s participation in a funding round.



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BIO protocol is pushing scientific funding onchain

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<h2 class="wp-block-heading">New tech for cross-chain interoperability</h2>



Several teams are making strides to enhance the crypto developer experience, offering advanced tech stacks with the ultimate goal of simplifying the onboarding experience for new users.



OKX has launched <a href="https://www.okx.com/web3/build/docs/waas/okx-waas-what-is-waas">OKX OS</a>, an open-source infrastructure suite of tools, SDKs and APIs needed to build applications across a wide range of blockchains, including Ethereum, Bitcoin and Solana.



This new stack allows developers to leverage the same technology that powers the OKX Wallet, and aims to simplify and scale development for 100+ chains, the company announced Monday.



Another new path toward an omnichain user experience is Axelar’s Mobius Development Stack (MDS).



The tech stack, unveiled today, is offered as vendor-agnostic architecture integrated into popular OpenZeppelin libraries.



Axelar’s MDS also marks the mainnet debut of its <a href="https://blockworks.co/news/axelar-interchain-amplifier-liquidity-flow">Interchain Amplifier</a> for permissionless cross-chain connections at the smart-contract layer. The Interchain Amplifier is secured by staked AXL, or restaked assets like ether and bitcoin.



This approach places cross-chain interoperability front and center, spanning diverse L1s including Solana, Stellar and XRP Ledger — without requiring bridges. But it also offers a way to connect off-chain resources, like zk or AI co-processors.



Features such as the Interchain Token Service (ITS) facilitate native cross-chain tokens, with use cases such as tokenizing real-world assets, enhancing liquidity and enabling fractional ownership across different chains.



According to Axelar co-founder Georgios Vlachos, MDS is “empowering developers to build decentralized applications that compose resources, logic, value and network effects freely across a truly global internet landscape.”



OKX and Axelar’s recent launches tie into a broader trend in the Web3 space around improving developer experiences and user onboarding through enhanced infrastructure.&nbsp;



W3.io, launched in September, is building the Orchestration Cloud, an industry utility that aims to bring the benefits of an orchestration layer — long proven in Web2 environments — into Web3.



Backed by an impressive cadre of crypto builders, W3 functions like an advanced oracle and is designed to string together multiple services to support complex transactions across Web3.



Similar to Axelar’s MDS, W3 also looks to enable developers to build applications that not only function efficiently across blockchains but also integrate off-chain resources.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcToQY7_SakDzRyUKygy3d_AQijjwiL6esFBGyQJ57Xkq5oiN36qtvXxjZwiTAJEmPNpgy_1NEtclysGh4TvyQQZNXDD0vyNON_W1qNLYE77lAv4i38DZvER8o8z8Y8aT1PVIN83oA9TAXyHguKu0W1WJo?key=Fg21ruo8oQ1_UB1OqbE92Q" alt=""/></figure>



W3.io can simplify the process of coordinating multiple actions, according to Scott Dykstra, co-founder and CTO at Space and Time.



“The challenge that developers have right now is stringing together a bunch of different services to accomplish very complex onchain tasks,” Dykstra told Blockworks.



For example, it could help a game manage steps such as tracking player achievements, minting NFTs and updating the game server with new data. W3.io acts as middleware that connects off-chain and onchain actions seamlessly.



Together, these technologies point to the creation of a holistic ecosystem where developers can build decentralized applications that are interoperable, scalable and easier to use across the entire Web3 space.



— Macauley Peterson



<h2 class="wp-block-heading">Chart of the Day</h2>



Base increases gas limits:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXea8tr69lP15mz3TFA5mEbokMlkeyL2I98nJadL-FUGz8gKZ_aDW-Pxx0d2Q0RPp6HujPaCMkVjW9JrUUvav16lFCnp0bCsKTSjoSipY6UbhY8fHrP3IBOprgzaTqonOaT_Rzaoa7gkz5lss1-VsfHxE7c?key=Fg21ruo8oQ1_UB1OqbE92Q" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/base/status/1838639094995521831">Base</a></figcaption></figure>



In pursuit of scalability, Base continues to ramp up gas limits per block. 1 Megagas/s per block will be added weekly, with this week’s increment going from 11 to 12 Megagas/s. Base’s stated goal is to reach 1 Gigagas/s capacity eventually.



L2s drastically increasing gas limits have some subtle, but far-reaching implications for Ethereum’s grand roadmap. As explained on <a href="https://youtu.be/yvP39-EOADU">The Rollup podcast</a> by Justin Drake, raising gas limits reduces the baseline profitability accrued from priority transaction fees paid by users, which in turn increases the dependency on centralized sequencer profits (MEV).



Since MEV profits for L2s outweigh transaction fee profits, this may ultimately reduce the incentive for L2s to decentralize its sequencer and enter into a multichain-like shared sequencer arrangement, sometimes referred to in Ethereum research circles as “synchronized composability.”



— Donovan Choy



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OKX and Axelar launch tech development stacks

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<h2 class="wp-block-heading">The FUD around EigenLayer tokenomics</h2>



Here’s how private investor allocations into pre-launch tokens generally work:



<ol class="wp-block-list">
<li>You are a reputable name or a KOL with many Twitter followers, and projects want your clout.</li>



<li>A project offers you a percentage of locked tokens at a favorable price, so you agree to invest.</li>



<li>On the day the project launches its “token generation event” (TGE) and tokens become tradable, your locked allocation of tokens enter a “cliff” period.</li>



<li>That cliff is typically about a year (though in bull markets has been known to drop to six or even three months), during which your tokens are effectively locked up.</li>



<li>Once that cliff is up, your tokens enter a “vesting” period — typically two to four years — during which your locked tokens begin to slowly unlock and become liquid and tradable.</li>
</ol>



Things are set up this way to create long-term incentive alignment between investors and projects to build a successful product, and ultimately deter predatory dumping on retail investors.



EigenLayer finally made its native EIGEN token transferable yesterday, amid a barrage of criticism around the opaqueness of EIGEN’s true float (circulating supply).&nbsp;



That is pretty important to know because low-float tokens are more volatile and subject to less market price discovery, and are therefore <a href="https://cobie.substack.com/p/new-launches-part-1-private-capture">predatory</a> for the unsuspecting retail investor eyeing them hungrily on the Binance mobile app.



After accounting for unclaimed EIGEN and the 73 million EIGEN already restaked on EigenLayer, Kairos Research estimated that the real float of EIGEN was about 2.42% — a float even shockingly lower than Worldcoin’s (WLD) ~4.9% — though EigenLayer <a href="https://x.com/Ian_Unsworth/status/1840753494560587859">disputed</a> that number.



And it gets more complicated.



The “locked” EIGEN tokens by EigenLayer investors are apparently not entirely locked.



During the so-called locked cliff period, EigenLayer investors can already stake their “locked” tokens, receive rewards, and begin selling those rewards on the open market. As noted in their <a href="https://docs.eigenlayer.xyz/eigenlayer/information-and-transparency/disclosures">just-updated docs</a>:



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<figure class="wp-block-pullquote"><blockquote>“*EIGEN staking: Eigen Labs Investors are not restricted from staking EIGEN on EigenLayer. As such, investors may choose to stake their EIGEN and receive staking rewards the same as any other user. EIGEN provided by Eigen Labs to investors is subject to the Lockup Schedule, but EIGEN investors receive from staking will not be subject to the Lockup Schedule.”</blockquote></figure>
</blockquote>



But if locked tokens are accruing a yield, then that is arguably not a “locked” token.



I was under the impression that this was a rare and frowned upon practice that <a href="https://x.com/karl_0x/status/1841325496266596791">Celestia</a> <a href="https://x.com/TardFiWhale/status/1841307976134484264">started</a>, but it’s apparently becoming a standard playbook with several L1 projects including Sui, Sei and Aptos.



Yield-generating “locked” tokens defeats the whole purpose of locking up private investor tokens for “incentive alignment,” and it’s also effectively a form of double-dipping. Worse still, it double-dips from a reward pool that could have been allocated to actual productive capital, e.g. restaking and securing an EigenLayer AVS.



In EigenLayer’s defense, there is at least a cap on those emitted rewards. Based on its <a href="https://x.com/eigenlayer/status/1841313990401548434">docs</a>, 1% of the total EIGEN supply ($60 million) is emitted as rewards annually, and 25% of that is reserved for EIGEN stakers, while the other 75% goes to ETH stakers on EigenLayer.



I guess when EigenLayer was talking about “restaking,” it had in mind its investors too.



— Donovan Choy



<h2 class="wp-block-heading">Chart of the Day</h2>



USDS heads skyward:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdI4Kr1Y-epxHWTIOpfVB80gqO9IEpA9yL1zYcWNZpnHOIbrkFTWOqMSt0wP_qzxJUCobJW1iFgpaQwQExp1xBLyRdn6OKDHRRVKN2TT3ex2zY64izRlfEYtIWrPLqD90--DysPi8N4kdQETB99pe6UXlvl?key=w8qNfYNiNHCY4XnEWz3pZQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://info.sky.money/tokens/0xdc035d45d973e3ec169d2276ddab16f1e407384f">Sky.money</a></figcaption></figure>



Sky’s USDS stablecoin has hit $1.1 billion since its inception exactly one month ago. In Maker’s <a href="https://blockworks.co/news/maker-rebrands-as-sky-dai-will-be-changed-to-usds">rebrand to Sky</a>, existing DAI holders have the option to convert DAI to the rebranded USDS.



The joint market cap of both USDS and DAI is now nearly $5.9 billion, the <a href="https://makerburn.com/#/charts">highest</a> it’s been on a year-to-date basis.



— Donovan Choy&nbsp;



<h2 class="wp-block-heading">Degen Corner</h2>



<h3 class="wp-block-heading">Simple bitcoin staking</h3>



We previously looked at <a href="https://blockworks.co/newsletter/research/issue/post_339ee473-ace9-402e-a5cb-2419f96a403e">BOB Stake</a> for the Bitcoin/Ethereum “hybrid L2” BOB, and <a href="https://blockworks.co/newsletter/research/issue/post_9f505f0e-c0a8-4fde-a27a-375e53a10ab0">Stroom</a>, a liquid staking provider for the Lightning Network. To further the theme of safe bitcoin staking for noobs, leading staking-as-a-service provider P2P.org today introduced a <a href="https://blockworks.co/news/institutions-get-in-line-for-staking-bitcoin-with-babylon">Babylon</a> staking API to offer exchanges, custodians and wallet providers a way to integrate bitcoin staking directly into their platforms.



Instead of switching to a third-party interface, individual users and institutional investors can use the service to access bitcoin staking rewards through a familiar platform. Candidates include exchanges, wallets and LRT providers.



The API is designed to simplify the complex tasks of creating, signing and broadcasting bitcoin transactions, for instance by handling the <a href="https://app.blockworksresearch.com/glossary/#remote-procedure-call-rpc">RPC connection</a>.



In terms of future updates, P2P plans to add features like batch staking — allowing users to generate multiple staking transactions from a single address. This will help institutions stake bitcoin efficiently before the Babylon BTC cap is reached.



— Macauley Peterson



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Critics question the transparency and true float of EIGEN tokens

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<h2 class="wp-block-heading">Averting disaster</h2>



There are about 1.38 million <a href="https://app.blockworksresearch.com/glossary/#erc-20-token">ERC-20 tokens</a> in existence. But exchanges, naturally, support only a tiny fraction of those tokens for deposits and trading. <a href="https://blockworks.co/tag/coinbase">Coinbase</a> caters to around 200.



If you sent one of the unsupported tokens into an exchange deposit address, you would be very disappointed to find it vanish into the aether (not to be confused with ether!).



Enter asset recovery. Coinbase’s in-house tool, launched in December 2023, was recently upgraded to support <a href="https://blockworks.co/tag/base">Base</a>.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Asset recovery is now available for Base. Users can now recover unsupported ERC-20 tokens mistakenly sent to their Coinbase account via Base. For more information head to: <a href="https://t.co/vDPQaYiTAF">https://t.co/vDPQaYiTAF</a> <a href="https://t.co/rm7sjPVqiF">https://t.co/rm7sjPVqiF</a>&mdash; Coinbase Assets 🛡️ (@CoinbaseAssets) <a href="https://twitter.com/CoinbaseAssets/status/1839738260311990538?ref_src=twsrc%5Etfw">September 27, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



According to a spokesperson, the tool will allow users to recover some 4,000 distinct ERC-20 tokens erroneously sent to Coinbase addresses over the years.



The US dollar value of all that previously marooned crypto was not disclosed, but if you were the unwitting Coinbase client with assets cast asunder, you may be in luck.



Customers can recover eligible assets and send them to a self-custodial wallet, although for recoveries over $100, “a small administrative fee” applies, along with network fees (deducted from the user’s ether balance).



<h3 class="wp-block-heading">Sygnum’s Safe Solution</h3>



What if, after you recover some castaway crypto from Coinbase and sent it to your <a href="https://blockworks.co/tag/safe">Safe</a>, you suffer another sad misfortune and misplace a private key to your multisig?



Today, Sygnum Bank switched on a module for Safe’s Recovery hub that could come to the rescue.



Sygnum is the first bank to offer this service, <a href="https://blockworks.co/news/safe-social-recovery-eases-private-key-management">in development since last year</a>, which provides an institutional-grade recovery option for users who lose access to their Safe wallets. When designated as a recoverer on Safe’s platform, Sygnum can restore wallet access, thus addressing a thorny problem in the crypto space.



Forgotten keys often result in inaccessible funds, and somewhere north of 900,000 ETH — worth billions of dollars — may have been irrevocably stranded due to lost keys, the bank estimates.



The safe module is an alternative to relying on social recovery methods, such as sharing private key fragments with friends and family, or managing personal backups.



And you don’t have to trust the Swiss bank to designate it as a third-party recoverer. Importantly, Safe’s design allows the owner to cancel any recovery attempt through onchain veto rights in the case a bogus recovery is attempted. The tool is designed to be flexible, allowing users to set multiple recoverers, and also features additional security measures like time delays.



The service is designed to be compliant with regulatory requirements, requiring identity verification (<a href="https://blockworks.co/tag/kyc">KYC</a>) for both the setup and recovery process.



That may rub some the wrong way, but Martin Burgherr, Sygnum’s chief clients officer, assures that the bank takes “appropriate security measures to maintain the required security of personal data and ensure its confidentiality.”



In the future, one might imagine a more Web3 identity alternative that uses zero-knowledge proofs to allow clients to provide selective disclosure. That’s something the bank is watching, Burgherr told Blockworks.



Key management remains a challenge for many, but Sygnum and Safe are working toward a practical solution that retains the concept of self-sovereignty for both institutional and individual users.



— Macauley Peterson 



<h2 class="wp-block-heading">It’s pronounced &#8216;swee&#8217;</h2>



I opened up Twitter today and all over the timeline was Sui.



The MoveVM L1 is <a href="https://x.com/EmanAbio/status/1840782691652034660/photo/1">coming up 6th</a> in daily trading volumes, a Sui bridge connecting to EVM-based chains is going <a href="https://x.com/SuiNetwork/status/1840829418455126182">live</a> today on mainnet, and the SUI token has <a href="https://coinmarketcap.com/">rallied</a> this week into the top 20 tokens by market cap at $5.2 million.



The armchair analyst kind of way to explain this type of sudden burst in growth is to look at how much Sui is giving out in terms of liquidity incentives.



As far as I can tell, that number is not officially reported. But we can make some guess-timates based on Twitter posts:



<ul class="wp-block-list">
<li>Navi Protocol, the top lending market on Sui, is getting <a href="https://x.com/navi_protocol/status/1838235899949134315">520,000 SUI</a> ($936k) for two weeks. </li>



<li>Scallop, the second-largest lending market on Sui, is receiving about <a href="https://x.com/Scallop_io/status/1840688487982608846">170,000 SUI</a> ($314k) on a weekly basis.</li>



<li>Suilend, the third-largest lending market, is doling out <a href="https://x.com/suilendprotocol/status/1838375314055139454">426,195 SUI</a> over two weeks.</li>
</ul>



Together, that’s a weekly average of about 643k SUI. If we assume that 15 Sui dapps have the liquidity tap turned on, that bill comes up to something like 77.2 million SUI ($139 million) over the last two months.



That is a lot of money for a very short period of time.&nbsp;



Again, that is just a guess, but with that much money up for grabs, it does explain why Sui’s TVL has seen an up-only direction:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXehFPDwrDPtErteZr3IxzNFXJpKp-BYaUuYTlU4igps7aaAL4jkpq4BIPKOAeA7EAluty36mMxut108Wnm5_qrMzOgBt7fJRb3X3ZSuZ6Lt848tMw9A2Lv5clCLka_LMrSqAiuKWBNuCJ59-TXabI7JiV8N?key=imRRQbvv5W89unYTWykNRQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://defillama.com/chain/Sui">DeFiLlama</a></figcaption></figure>



That is not to take anything away from the technological design of Sui, which I&#8217;m sure is impressive.&nbsp;



Like all new L1s on the block, Sui is fast. Its founders have <a href="https://youtu.be/d4T0vLwTbxA">claimed</a> on the 0x Research podcast the chain’s parallelized execution design allows horizontal scalability to be “infinite,” thus rendering Vitalik’s <a href="https://vitalik.eth.limo/general/2021/05/23/scaling.html">blockchain trilemma</a> “irrelevant.”



Sui does not have to grapple with the multitude of scalability problems that plague older chains like Ethereum. It doesn’t have to deal with the kind of political turmoil stirred when a new up-and-coming researcher like Max Resnick comes in and questions the overarching multiyear-long roadmap and proposes a radical idea of his own (multiple current proposers).&nbsp;



Sui’s fee markets are also segmented and use auctions to <a href="https://docs.sui.io/concepts/tokenomics/gas-pricing">ensure</a> stable network fees globally, even when SUI’s price spikes up or down. This multidimensional fee market contains gas spikes to local fee markets. It’s a similar idea to one <a href="https://www.umbraresearch.xyz/writings/toward-multidimensional-solana-fees">Solana</a> has been talking about to explore solving its many network outages in earlier years <a href="https://blockworks.co/news/lightspeed-newsletter-dropped-solana-transactions">due to transaction spam</a>.



— Donovan Choy 



<h2 class="wp-block-heading">Chart of the Day</h2>



USDC transfers on Base:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf16rFN3LLcKGGdTzl0j5tYzzz3Jp3AxyeNSlcJNzgcDmaGutsEfk53TTyeKHsOhp_3YcY2fTgiNP1B427EhlMEvtr9lBrj0-OFN30we1EAqio1yCp5EZjirERsyLqxzWpEa0KXDSY1aYiAWLPvQgR_ida8?key=imRRQbvv5W89unYTWykNRQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://dune.com/queries/2291768/3755580">Dune</a> (h/t Sebastien Derivaux)</figcaption></figure>



Base’s share of total USDC transfer volumes across major EVM networks is hitting a second consecutive weekly peak over Ethereum mainnet —&nbsp;60.2% share this time. It’s not clear what onchain activity is driving the surge.



My first hunch was memecoins, yet Base’s memecoins do not drive that much trading volume. Its top memecoin, BRETT, <a href="https://www.coingecko.com/en/coins/brett-2">generated</a> $44 million in trading volume over the last 24 hours. For context, total USDC transfer <a href="https://dune.com/queries/2291768/5147382">volumes</a> in the last week of September was $75.8 billion.



Other relevant variables may include the revamp of Coinbase’s Web3 smart wallet, which lets users send USDC (and EURC, cbBTC) for free, or the <a href="https://x.com/base/status/1833222011176554573">conclusion</a> of <a href="https://blockworks.co/news/base-kicks-off-onchain-summer">Base’s three-month long “Onchain Summer” </a>campaign which distributed 300+ ETH to builders and generated $5 million revenue for creators.



— Donovan Choy



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