From the lifecycle of blockchain transactions to the new trend of Rollup-centric.

LianGuairt.1 Insight

From the Lifecycle of Blockchain Transactions to the New Trend of Rollup-centric

Unbeknownst to us, we are approaching the fourth quarter of 2023. Overall, the primary market has been relatively quiet recently, with most projects being rehashed versions of old ideas. However, in terms of valuation, the hype has not diminished. This article aims to combine recent observations of the primary market in the infrastructure sector and share some personal opinions.

• Pepe’s Quest for Stardom Is There a New Rival to Steal Its Thunder?
• SEC Leaves Investors in Grayscale ‘GBTC’ Bewildered as ‘ETF Appeal Window’ Slams Shut on Discount
• GBTC’s Discount Shrinks as Spot Bitcoin ETFs Close In on Approval

(Source: Flashbots)

Transaction Lifecycle

Based on the lifecycle of transactions, some infrastructure projects can be categorized as follows:

• Validator

• Validators can be divided into Solo Staker, Staking Service Provider, CEX Staking, and Liquid Staking. They can also be categorized as native cryptocurrency (Lido) or compliant (Liquid Collective).

• Currently, the Ethereum staking rate is about 22%. I estimate that there is still a growth potential of about 15% in the next one to two years, and this incremental market is likely to flow in from traditional institutions as an asset allocation tool. The Ethereum staking exposure held by traditional institutions helps consolidate and diversify the Ethereum validator set.

• Custodial service providers (such as Fireblocks and BitGo) mostly collaborate with Staking Service Providers to offer customized, all-in-one Yield Aggregation services. Additionally, most wallets, especially hardware wallets, provide access to staking. These partnerships fall under the Distribution Partnership of the staking side, allowing considerable flexibility, and even competitors can collaborate and provide support to each other. Staking solution providers receive approximately 10%-30% of the profits, while the end that provides user flow receives a greater share of the profits.

• Currently, the Ethereum staking market exhibits a dynamic competitive landscape driven by events (such as the SEC’s crackdown on Kraken’s staking business in the United States), price wars (reducing staking service fees), and target customer differentiation (native cryptocurrency and compliant paths). I believe that the compliant market will be a battleground in the future. In terms of regions, as the United States tightens regulation on cryptocurrencies, most staking services are seeking opportunities in the Asia-Pacific region. The Asia-Pacific and Middle East regions represent new growth areas for staking businesses.

• Builder

• Builders integrate orderflow resources from various channels and compete in auctions to win block space. In reverse, builders act as middlemen who wholesale block space from proposers and sell it to searchers after disassembling, earning a portion of the price difference. Builders’ core competitive advantages lie in orderflow and infrastructure.

• The former is the basic raw material for block building. The more orderflow they obtain, the more opportunities they have to mine MEV (Miner Extractable Value). If builders cannot grasp enough orderflow, even with excellent strategies, they will have little competitive edge in the market.

• The latter can also be referred to as Simulation Capability, which involves continuously simulating and updating bids for incoming transactions and observing competitors’ bids to make corresponding updates. This process is precise to the millisecond, and builders may update their bids hundreds of times within a short 12-second slot.

• Builders also need to subsidize, that is, spend money to win or maintain market share. Roughly speaking, market share in block building can be understood as Execution/Inclusion Guarantee, which reflects the probability of a searcher’s bundle being included in the next block. Since profitability is directly associated with it, searchers have high requirements for execution guarantee. Therefore, subsidies are viewed as a marketing tactic. The difference in bids between builders may be minimal, so subsidies for each slot do not need to be significant. In this competitive environment, the key lies in making wise choices regarding subsidies, or whether to subsidize at all, to leverage the game space.

• Since the adoption of MEV-Boost after The Merge, the competitive landscape of builders has undergone several changes. Based on advantages in orderflow, infrastructure, and accumulated experience, leading builders can establish monopolistic positions that are difficult to shake. Overall, I believe that builders have now achieved a winner-takes-all situation, with the top four builders occupying 85% of the market. From a business perspective, their profits are relatively meager, and stability and sustainability remain uncertain. It is difficult for midstream or downstream builders to obtain sustainable and sufficient economic incentives, and ultimately, they may have to give up competition, further strengthening the dominance of upstream builders. (This discussion pertains to neutral builders. If it involves a Searcher-Builder Entity, the situation may be better, but profitability is difficult to estimate due to arbitrage between CEX and DEX.)

• Users and Wallets

• OFA (Orderflow Auction). OFA refers to the process where users or wallets send orders to OFA, providing partial order information for buyers to assess the value of orders. Based on this, buyers make bids to participate in the auction. Ultimately, the bidding price is sent back to users or wallets as a rebate. Currently, there are mainly two products: MEV-Share and MEV Blocker. Up to now, the latter has returned rebates of approximately 443 ETH to around 320,000 users.

• For users, OFA is generally a good thing (although a recent article by Blocknative pointed out that OFA leads to larger slippage and slower execution), as the value of their order flow in the network is reflected and they receive rebates that were previously unavailable. It also avoids frontrunning and sandwich attacks. Additionally, wallets can monetize order flow as a source of traffic. Furthermore, OFA provides new channels for searchers and builders to obtain orderflow, offering diverse options. However, if more users and wallets adopt OFA instead of sending transactions to the public mempool, it means that the cost of obtaining orderflow increases

  Above all, according to the division of the transaction lifecycle, we can see the trend of infrastructure exploring upstream in the transaction lifecycle. In this process, specialization and refinement have significantly increased, while also introducing a diversity of competition and ensuring balanced competitive conditions.

  Rollup-centric Roadmap

  

  (Source: IOSG Ventures)

  In October 2020, Vitalik proposed the Rollup-centric Roadmap, which means that Ethereum needs to provide concentrated support for Rollup in the short to medium term. Firstly, Ethereum’s layer 1 scalability will focus on increasing the data capacity of blocks, providing more space for data availability, which is then reflected in the introduction of data sharding and EIP-4844. Secondly, Ethereum’s infrastructure will be adjusted to support Rollup (such as L2 support for ENS, L2 integration of wallets, and seamless cross-L2 asset transfers).

  Based on the current flourishing development of modular components, we already have the embryonic form of the Rollup-centric Roadmap vision. In this architecture, Ethereum gradually recedes, unburdening the execution layer and becoming a secure settlement layer and data availability layer. General Rollups mainly bear the task of scalability, carrying most of the application and user traffic, and further supporting dedicated execution environments for privacy, gaming, and other applications through L3 (i.e., Fractal Scaling). RaaS provides developers with a tool for rapid infrastructure launch. Restaking leverages existing Ethereum staking exposure to provide economic trust, decentralized trust, and Ethereum Alignment to new modular components. As the utility of ETH continuously expands, these components also strengthen Ethereum’s position as a base layer and provide value feedback.

  Monolithic and modular approaches have always been a debated topic. When a system reaches a certain level of complexity, modularization is usually a proven choice. For example, a car is a typical modular product. Modularization, as an engineering design principle, has advantages such as standardized interfaces, independence, reusability, and flexibility.

  Infrastructure projects are still driven by narratives and problem-solving, and cannot sustain huge valuations based solely on business models. In the context of this modularization, competition between modular projects is increasingly inclined towards BD (Business Development) Game. The bear market’s low market sentiment amplifies the importance of BD and tests the project’s ability to operate, market, and build a brand. Rollup and DA (Decentralized Applications) projects naturally need users and customers. The premise of Sequencer realizing network effects is that users have sufficient values that can be captured. RaaS is not a new story either. In 2019, Substrate achieved one-click chain deployment. The tool itself is secondary; the key lies in what kind of applications developers using the tool can build, and then value feedback can be discussed. In terms of the Shared Security project, the growth of EigenLayer and Babylon also relies on demand-side providing sufficient economic incentives and sustainability. Merely replicating a DEX or a similar application on top of each Rollup cannot be called an ecosystem; it requires differentiated products like Friend.tech.

  From current perspectives, Ethereum and its L2 ecosystem still have a dominant position. The mainstream applications, solid user base, and tested security are continuously strengthening the ecosystem’s moat. Celo, as an L1, has recently shifted towards Ethereum L2 and is supported by Restaking. As the narrative of Alt-L1 gradually declines and the narrative of application chains is replaced by App-Rollup, new projects have to answer the question of whether they are attached to Ethereum. For example, Celestia, although leading the narrative of modular blockchains, does not have a direct connection with Ethereum itself. As a general DA layer, from a broader perspective, Celestia faces competition from Ethereum and also competition at the same level based on Restaking’s EigenDA. In this mental model of project classification, orthodoxy seems to dominate people’s macro judgments of the project. However, regardless of everything, when it comes to investment logic, the main focus should be on whether it solves real problems rather than creating demand out of thin air and whether it actively voices outwards rather than working in isolation.

  LianGuairt.2 Investment Event

  Virgo Group Completes 5 Million CAD Financing

  *Exchange

  Virgo Group announced that after successfully raising 10 million CAD in the first round of financing in 2022, it has received an additional 5 million CAD investment from investors such as Shuidi Capital, Skylean Capital, and Nextport Capital. The new funds will be used for the group’s continuous development in compliant exchanges, accelerate its expansion strategy in new regions, and further consolidate its integrated ecosystem and full-service system from trading to asset management. Virgo Group provides one-stop services, including compliant digital currency trading platforms, cryptocurrency over-the-counter trading (OTC), and virtual asset investment management.

  Account Labs Raises $7.7 Million, Amber Group Leads the Investment

  *Wallet

  Account Labs announced the completion of a $7.7 million financing round, with leading investors including Amber Group, MixMarvel DAO Ventures, and Qiming Venture Partners. This strategic investment was launched simultaneously with the launch of the consumer-centric application UniLianGuaiss Wallet, a self-service wallet focused on peer-to-peer (P2P) stablecoin transfers. The wallet will also leverage account abstraction to improve user experience.

  LianGuairsec Raises $4 Million, Led by Galaxy Digital

  *Data Analysis

  LianGuairsec announced the completion of a new $4 million financing round. It was led by Michael Novogratz’s Galaxy Digital, with participation from Uniswap Labs Ventures, Robot Ventures, CMT Digital, and other companies. Meanwhile, LianGuairsec also launched a DeFi and NFT analysis product called “Team” and opened its API to the public. LianGuairsec previously completed a seed financing round of $1.25 million in January 2021.

  Beldex Receives $3 Million Strategic Investment.

  * Privacy Technology

  Beldex announces a $3 million strategic investment in Web3 market maker Enflux, and the two parties have reached a collaboration where Enflux will help Beldex enhance ecosystem participation and expand marketing initiatives to broaden the project’s scope. Enflux will also provide strategic advice and channels for Beldex to develop dApps, integrate EVM into the Beldex chain, and conduct research to expand the network.

  The Beldex ecosystem includes the private messaging application BChat, decentralized virtual private network (VPN) BelNet, Web3 browser Beldex, and the cross-chain privacy protocol Beldex, which enables anonymous movement of cross-chain assets. In February, Beldex announced a $25 million funding round led by DWF Labs.

  Membrane Labs completes $20 million Series A funding, with participation from Jump Crypto and others.

  * Trading and Lending

  Membrane Labs completes $20 million Series A funding, with participants including Brevan Howard Digital, Point72 Ventures, Jane Street, and others.

  Membrane initially built a clearing, netting, and settlement engine that allows institutions to choose where and how to custody funds, and then lets its front ends determine where and how to execute trades. On top of this core infrastructure, Membrane has established workflow management for collateral management, lending, over-the-counter trading, and derivatives to improve transparency and risk management.

  Untangled Finance completes $13.5 million funding round, led by Fasanara Capital.

  * DeFi

  After securing $13.5 million in venture funding, Untangled Finance launched on the Celo network on Wednesday, bringing tokenized personal credit to the blockchain. The main investor is London-based asset management company Fasanara Capital, which has also opened two credit pools on the platform to handle off-chain business and underwriting loans. Untangled also plans to expand to Ethereum (ETH) and Layer 2 network Polygon (MATIC) through the Chainlink (LINK) cross-chain interoperability protocol, making the platform multi-chain and interoperable for RWA credit agreements.

  Neutral completes $3.2 million funding round, with participation from DCG and others.

  * Trading Platform

  Neutral announces the completion of a $3.2 million funding round, led by North Island Ventures, with participation from Redalpine, Digital Currency Group (DCG), and others. The company will use the new financing to launch a regulated trading platform in Europe and plans to further expand into other regions in North America and Asia, establishing market infrastructure for environmental assets.

  OrdinalsBot completes over $1 million seed funding round.

  * Infrastructure

  OrdinalsBot completes over $1 million seed funding round, with participation from Kestrel 0X1, Lightning Ventures, Bitcoin Magazine Ecosystem Fund, Bitcoin Frontier Fund, and others. OrdinalsBot recently launched a software development kit (SDK) that provides developers with tools to seamlessly integrate Ordinals functionality into their projects.

  Hadean secures strategic investment from Yuga Labs.

  * Metaverse

  Hadean announced a strategic investment from Yuga Labs, with the specific amount undisclosed. This investment will support Hadean in establishing a US team to assist Yuga Labs in researching scalable concurrent technology stacks. This investment complements the latest technology collaboration and business agreement announced by Yuga Labs and Hadean in September, which provided a key technology for the Yuga platform that optimized high-fidelity virtual experiences, bringing creators and players together on a large scale. In September last year, Hadean completed a $30 million Series A financing, with participation from Epic Games; in March this year, Hadean completed a $5 million financing.

  Web3 Foundation to allocate over $40 million next year to help drive Polkadot development

  * Web3

  The Web3 Foundation has announced a new program on the X platform to reward teams and individuals who contribute to the success of Polkadot. They will allocate CHF 20 million (approximately $22.08 million) and 5 million DOT (approximately $19.30 million) in total value, amounting to approximately $41.38 million, throughout the year 2024. The Web3 Foundation stated that this enhances Polkadot’s treasury’s community governance financing mechanism to support meaningful projects that will have an impact on Polkadot’s future. Further details regarding the official launch date and how to apply for funds will be shared in the coming weeks.

  LianGuairt.3 IOSG portfolio update

  Arbitrum‘s first round of short-term incentive voting has ended, with 29 projects including Jones and GMX emerging victorious

  * Layer 2

  The first round of voting for Arbitrum’s 50 million ARB Short-Term Incentive Program (STIP) has been completed, with 29 projects out of 97 proposals qualifying to participate in this incentive program, including Camelot, Jones, Dopex, GMX, Galxe, LODESTAR, Socket, Timeswap, RADIANT, Pendle, MUX, Frax, Tally, and more.

  Previously, Arbitrum launched the first round of voting for the Short-Term Incentive Program (STIP), which will distribute 50 million ARB to drive network development. If the requested grants exceed 50 million ARB, they will be allocated based on the number of votes in favor of the proposals and the time the proposals were posted on the forum.

  Scroll mainnet has generated the genesis block this afternoon

  * Layer 2

  According to Scrollscan, the Ethereum Layer 2 network Scroll, based on ZK Rollup, has generated the genesis block at around 14:00 (Beijing time) today.

  zkSync Era has open-sourced the Block Explorer and Portal (Bridge) components and entrusted them to the core contributor community

  * Layer2

  zkSync Era has officially open-sourced the Block Explorer and Portal (Bridge) components. The two components are now entrusted to the core contributor community, and Matter Labs will gradually reduce their role in the subsequent zkSync technology development and ecosystem management. Community users can now run zkSync Portal independently and seamlessly bridge tokens. Additionally, the main interface for exploring transactions, blocks, and contracts, Block Explorer, is now fully open-source and supports local running. It has integrated Blockscout and L2scan to facilitate user access to on-chain data. A dedicated resource page is currently being launched to assist users and developers in adopting these alternative solutions, as well as other bridges and exchanges.

  Consensys Acquires SMG to Advance Web3 Plan

  * Blockchain

  Consensys has acquired Special Mechanism Group (SMG), and the financial details of the transaction have not been publicly disclosed. Consensys stated in a blog post that SMG is a mechanism design company known for its focus on blockchain microstructure research. Consensys plans to utilize the company to make Web3 accessible to everyone. The acquisition of SMG is the third acquisition within two years, following the acquisitions of Hal in February 2023 and MyCrypto in February 2022.

  LianGuairt.4 Industry Pulse

  Sui Mainnet Upgraded to Version 1.11.2, Sui Protocol Upgraded to Version 27

  * Infrastructure

  The Sui Mainnet has now been upgraded to version 1.11.2, and the Sui protocol has been upgraded to version 27. Upgrade highlights include: changes to gas fee settings for higher-level transactions to make gas consumption faster. These changes do not affect any previously executed transactions on the network; they are simply to ensure actual usage-based charging when resources are heavily utilized. The output of the sui client object command has been improved to make it a table that is easy to understand and browse. If standard JSON output is needed, the –json flag can be used. The display of constants in the disassembled Move bytecode has been updated to attempt to display deserialized strings if the constant is a valid utf8-encoded vector<u8>.

  LayerZero Launches OpBNB Mainnet

  * Full-Chain Interoperability Protocol

  LayerZero has announced the launch of the OpBNB network, allowing developers building on the BNB Chain to now extend their applications to OpBNB and over 40 other chains with LayerZero endpoints. The opBNB mainnet was officially launched last month.

  Reserve Goes Live on Base

  * Decentralized Stablecoin Protocol

  Reserve has gone live on Base, marking its first deployment outside of the Ethereum mainnet. Users will be able to create asset-backed tokens called “RToken” on Base. These assets are backed by a basket of overcollateralized ERC-20 tokens. The project states that the collateral selection on Ethereum and Base includes major stablecoins, Ethereum, and wrapped Bitcoin that can be used individually or earn yield from protocols like Compound, MakerDAO, Aave, Convex, Curve, Morpho, and Flux Finance.

  Uniswap Launches Android Testnet Wallet

  * Wallet

  Uniswap has announced the launch of an Android testnet wallet application. The application was previously available only on desktop and iOS mobile devices. According to the announcement on October 12th, the new Android testnet wallet allows users to choose tokens on different chains without switching networks. It automatically detects the network where the token resides and switches to that network. It currently supports Polygon, Arbitrum, Optimism, Base, and BNBChain, with future compatibility with more blockchains.

  Web3 Sports Gaming App dotmoovs Launches Fitness Service

  * Games

  dotmoovs has announced the launch of fitness services on its mobile app, and has introduced fitness hubs for brands, coaches, and fitness enthusiasts. After subscribing, users can get personalized exercise plans tailored to their goals, as well as AI-generated personalized nutrition plans. It is reported that dotmoovs has been approved to join the NVIDIA Inception program, and with the support of NVIDIA, dotmoovs will shape the future of sports through cutting-edge AI solutions.

  Xterio to launch NFT marketplace “Xterio Marketplace” on October 22nd

  * Games

  Xterio will launch the game-centric NFT marketplace “Xterio Marketplace” on October 22nd. Previously, Web3 game publisher Xterio received a $15 million investment from Binance Labs. Related reading: Xterio research report: GameFi as a service platform combining free games and on-chain games.

  Trezor launches new encrypted hardware wallet and backup solution

  * Wallet

  Trezor has launched the new Trezor Safe 3 hardware wallet, a limited edition version exclusively for Bitcoin, and Trezor Keep Metal for seed backup recovery. According to a statement, the Trezor Safe 3 hardware wallet comes in four colors: “Sun Gold, Star Silver, Galaxy Rose, and Cosmic Black,” priced at $79. The team also added that the Bitcoin-only Trezor Safe 3 was created to commemorate Trezor’s 10th anniversary and is in “Bitcoin Orange” color, while Trezor Keep Metal is designed to provide users with a secure and convenient backup solution for seed recovery.

  Fireblocks and other companies launch aid fund for war-affected Israeli citizens

  * Aid Fund

  The crypto and web3 communities in Israel have announced the establishment of Crypto Aid Israel, a fund to raise money for Israeli citizens who have been displaced and are in need of humanitarian assistance due to the outbreak of war with Hamas. So far, members of this alliance include Fireblocks, MarketAcross, Collider Ventures, CryptoJungle, and the Israeli Blockchain Association.

  The organization will host a multi-signature wallet jointly controlled by multiple parties to collect donations valued in various cryptocurrencies, including Bitcoin, Ethereum, and stablecoins pegged to the US Dollar such as USDT and USDC. Many Israeli banks and regulatory authorities have gotten involved in facilitating the flow of these crypto donations. It is understood that these banks are likely to provide bridging services for the first time, transferring these crypto assets into banks.

  We will continue to update Blocking; if you have any questions or suggestions, please contact us!

  Encryption marketRollup
  Share:

  Was this article helpful?

  Yes, thanks! Not, really

  93 out of 132 found this helpful

  Related articles

  • Analyst tells you how the cryptocurrency market is going BTC, SOL, LDO, ICP, VET
  • The Rise of Dogecoin: From Meme to Moonshot
  • News Weekly | He Yi Binance will not freeze or confiscate any assets of the public. Bitcoin’s Lightning Network has grown by 1212% in two years.
  • Tokenization A Trillion Dollar Market? A Quick Read of 21.co’s Latest Tokenization Report
  • SEC Clears the Way for Grayscale’s Bitcoin ETF: A Victory for Bitcoin Enthusiasts and a Giant Leap for Investors
  • Stellar (XLM) Price Flip Flops, Bulls Struggle to Keep up
  • Ether’s Price Takes a Dive: Is Ethereum Losing its Spark?

  Tokenized Future: The Hilarious Journey of Money

  Solana Foundation Joins Forces with Dubai Multi Commodities Centre: A Match Made in Blockchain Heaven