#6 What I Read This Week......
Farcaster, zk Rollups, Modular vs monolithic, Arbitrum One, base, =nil; , Azuro , shared sequencer, BAXUS is tokenizing rare wine, Telegram
When market conditions are uncertain, we often see significant trading in and out of stablecoins.
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Building shared sequencer and aggregation layers is challenging; they typically take a year to reach the market. In the meantime, existing bridges will improve tenfold and will provide a single-chain experience.
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User-facing applications (such as the execution layer, DApps, and Appchains) will capture more value than the infrastructure layer.
New dynamics between these layers and how we assign value to them
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BAXUS is tokenizing rare wine. This is just the beginning. Soon, luxury watches, sports cards, high-end cars, houses, and more will also be tokenized on-chain. There is a huge opportunity for authentication and storage vault services in this space.
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Farcaster is starting as a social platform and then converting into a financial one. Telegram is transforming its social app into a financial app.
We have started seeing tipping tokens everywhere: ‘Degen’ for Farcaster, ‘Enjoy’ for Zora.
Edge AI (edge computing on user devices) is becoming more prevalent.
Launching new infrastructure projects is no longer as profitable because the market is already saturated.
DApps will capture all the value because they control the user experience.
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Arch using ZKVM , Decentralized Verifier Network and settle data on Bitcoin.
Asset Tokenization will bring so many efficiencies to blockchains
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It costs a ZKRU approximately $200K per month to run a prover, but they earn about $1M per month in sequencer revenue. From a crypto network perspective, the economics clearly make sense. Considering Ethereum has 7,500 nodes, each re-executing every transaction, a ZKRU with 5,000 times the overhead is still cheaper for the system as a whole.
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Arbitrum One has more ETH bridged to it than all other Layer 2s combined. I believe the primary reasons are their lower block times, which enhance user experience, and the fact that they are the only Stage 1 general-purpose Layer 2.
Arbitrum is likely to be the first Stage 2 general-purpose Layer 2. More Eth is likely to flow.
Users, particularly those from the Ethereum community, care about decentralization.
As of April 28, Arbitrum One had reached an all-time high, accumulating $5.2 billion worth of ETH.
ETH inflows from centralized exchanges also indicate that Arbitrum One is the leading L2 for ETH deposits, accounting for 75% of all ETH inflows into L2s as of May 2024.
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Last month, Base collected $1.57M in transaction fees in a single day while incurring only $5K in data availability costs to Ethereum. The execution layer remains a critical bottleneck due to inefficient state access and computation.
Solutions include:
- Statelessness
- Custom state machines
- Sharding
- State expiry
- Database improvements
- Parallelization
At the L2 level, teams like MegaETH are actively applying the concept of statelessness to the design of optimistic rollups.
Designer Blockspace: The Future of Execution Environments
At the L1 level, Monad has implemented a database that supports asynchronous I/O (AIO), or parallel access, as a crucial part of their solution.
NEAR Protocol’s sharding design is also notable.
Others: Firedancer, Aptos, MoveVM, Reth
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The only way to scale to billions of TPS is to combine horizontal scaling (sharding) and vertical scaling (beefier systems, SVM, parallel execution).
Vertical scaling increases the hardware utilization or hardware requirements of each node.
Horizontal scaling increases the number of machines a system can access by splitting the workload over many nodes.
=nil is combining both approaches.
Modular vs. Monolithic Is Dead (nil.foundation)
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Base has quickly become the most used Ethereum L2 in terms of monthly active users. Base has also surpassed the Ethereum L1 in terms of daily transaction count.
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Azuro became the Biggest Protocol by revenue on Polygon.
Azuro protocol is currently adopted by 22 prediction applications, and counting, with hundreds of new end users joining every day.
Auzro need to be studied, they became the infra for pred markets without launching their own chain.
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State is the final boss. If you are interested in solving state growth for blockchains, checkout this blog post : Mastering the Final Boss in Blockchain Scalability: State Growth — Nick Dodson
Unveiling Bitcoin’s DeFi Potential: A Dive into Protocols & Innovation (cryptopragmatist.com)
https://x.com/RBhavinVaid/status/1785032403100057998
https://x.com/explain_briefly/status/1787508955196891210
https://x.com/avizurlo/status/1787470742226927969
https://x.com/RedactedRes/status/1785739408370774295
https://x.com/Shoalresearch/status/1785725876975571138
https://www.veradiverdict.com/p/investing-in-ton-network?r=3mnjfo&utm_campaign=post&utm_medium=web
ON–229: Layer 2s 🚅 (substack.com)
https://x.com/jessewldn/status/1787968830431478137
