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Although most of the funds surrounding the crypto ecosystem are difficult to understand or deal with, here is an examplbitcoin exchange without kyce of how the rising wave of crypto prices directly helped artists. This may have a domino effect. First, Voxel Bunny created Witch Tower and sold it for $2,300, and then it might be the buyer—the game creator—using it in a monetization task. Now, players of this game will earn cryptocurrency when they try to solve tasks, thus completing a virtuous circle.Enter Darth Vader
Decentraland or sandbox? At least for now, the various meta-universe projects seem to believe that each other needs cooperation rather than competition. "I don't think this is a winner-takes-all situation," said Hamilton of Decentraland, who thinks that just like Twitter, Facebook, Snapchat and Tik-Tok there are spaces — each plays a different role — there will be space for metaverse Multiple platforms in. Sandbox’s Borget said that “everyone has different powers”, Decentraland is more suitable for events, Crypto Voxels is simpler and more accessible, and Sandbox is more suitable for games.But in the end, of course, we have a problem that hangs over all of this. This is what I call the Darth Vader scenario.A strange coincidence is that on the same day I was talking to many of these crypto meta-universe advocates, I happened to visit a friend who wanted to show off his new "Oculus", which is a virtual reality headset. It is made by Facebook. This is the gateway to the horizon, Zuckerberg's meta-universe plan.I put on VR goggles, completed a quick tutorial, and took a breath when I found myself standing on top of a skyscraper.A virtual city enveloped me. The blue sky, the car that honked the horn, the plane overhead-everything looked real. Maybe not very realistic, but real enough that when I peeked from the edge of a skyscraper, my stomach shrank sharply when I saw the ground in the distance. I have no fear of heights. My brain knows, in fact, yes, of course, I am safely in my friend's living room. It does not matter. When I walked out from the edge of the skyscraper and looked down at the 100 stories below me, I was both scared and excited.
"Jump!" My friend urged me."no way."Although Ethereum L2 provides many benefits, such as low gas fees, almost instant transaction confirmation, and inheriting the security of Ethereum L1, there has not been a good catalyst to promote the adoption of L2 until the first on Arbitrum The launch of ArbiNYAN, a major revenue farm, has pushed the TVL (total value of locked positions) of Arbitrum, an L2 network, from USD 238 million to over USD 2.5 billion in less than 5 days.
Although it is still in the early stages, it has fully proved the huge demand for Ethereum L2. Of course, this also raises a question: how can investors gain exposure to this trend? Let's explore some of these methods.Nothing in this article constitutes investment or financial advice. Please do your own research before making any decision.Investors do not have to bet directly on the success of a single application or L2 network. Instead, investors can configure the L2 infrastructure layer in their portfolio and choose those tools that power L2 to gain exposure.This strategy may be suitable for investors who want to avoid choosing who will be the winner in the L2 ecosystem, but still want to gain exposure to assets that will benefit from L2 growth. In addition, due to the network effects of these infrastructures and the huge barriers to entry faced by other competitive services, many infrastructure agreements are in a monopoly position and the competition they face is limited.
The DeFi protocol requires safe and trust-minimized oracle price feeds to realize contract pricing and timely liquidation activities. For example, almost all major DeFi protocols deployed on the Optimistic L2 network, including Synthetix, Aave, Curve, SushiSwap, Dopex, and other protocols, have integrated Chainlink (LINK) oracles into their feed prices to achieve timely settlement And other activities.The protocol not only needs to access data off-chain, but also data on-chain.
The Decentralized Data Index Protocol The Graph is another key component in the infrastructure stack. It provides an index of data on the chain, allowing applications to query data on the chain in a decentralized and trustless manner. The protocol supports a variety of different networks, including Ethereum L2 networks such as Arbitrum and Optimism, and is used by some Dapps applications that have been deployed in L2, such as Uniswap, Synthetix, and Futureswap.Similar to Chainlink, The Graph can provide exposure to a wide range of L2 networks and excellent Dapps without betting on specific L2 networks or applications.Although compared with L1, the fast transaction confirmation of L2s and the reduction of gas fees significantly improve the user experience, but L2s still faces a series of unique challenges: Among them, it is worth noting that the withdrawal of funds from Optimistic Rollups to the main network requires a wait7 Days; it is also difficult to migrate liquidity between different L2s.Two projects, Hop Protocol and Connext, aim to solve this problem. These two projects allow users to seamlessly transfer assets between different networks compatible with EVM (Ethereum Virtual Machine), and allow users to withdraw funds "fast", allowing users to avoid withdrawal waiting periods.
Although these two projects have not yet issued tokens, these systems are worth experimenting because they may provide retroactive airdrops for early users!The second way for investors to gain L2 exposure is by investing in popular apps. Any blockchain or L2s will only provide the best possible experience for the applications built on it-if there is no worthwhile application on a certain network, then no one will use the network.Because of this, applications running on one or more L2s can provide investors with varying degrees of risk exposure. Importantly, L2s represents an emerging market, and the existing Dapps protocol can increase its user base on L2s, thereby increasing its usage and revenue.There are two main types of applications that can provide investors with L2 exposure: “early adopters” who migrate from L1 to L2 and “L2 native applications”. There has been a substantial increase in applications.
In comparison, the “early adopters” of L2 may prove to be “safer” because these applications are not entirely dependent on the success of the underlying L2, and “L2 native applications” may represent a greater impact on a particular L2 network. Concentrated bets.Although the applications listed below are not comprehensive (there are many opportunities not included), let's take a look at the following examples.
Uniswap is the largest DEX (decentralized exchange) on Ethereum L1, and it is also the earliest adopter of Optimism L2 network. Uniswap was deployed on the Optimism network in July 2021. At the time of writing, the agreement has more than 32 million U.S. dollars of liquidity on the Optimism network, and has achieved a daily transaction volume of more than 10 million U.S. dollars in recent days.In addition to Optimism, Uniswap has also recently been deployed on the Arbitrum network. This deployment has enabled Uniswap to gain greater usage. In the past 4 days, the agreement has locked a total of 37 million U.S. dollars in value on the Arbitrum network, and generated more than 20 million U.S. dollars in transaction volume every day.
SushiSwap is another important decentralized exchange and an early adopter of L2. SushiSwap has already occupied a considerable market share on the Polygon L2 network and is also deployed on other blockchains such as Fantom, Avalanche and Harmony. In addition, SushiSwap is also one of the first protocols deployed on Arbitrum.Since September 10th, the deployment of the SushiSwap agreement on Arbitrum has achieved great success. At the time of writing, its liquidity exceeded US$27 million, and its daily transaction volume exceeded US$24 million. In addition, Sushiswap's performance sometimes even outperforms its main competitor Uniswap, with transaction volume exceeding $125 million on certain days. See below:Although the SushiSwap team stated that given their multi-chain strategy, they may postpone deployment to the Optimism network, but it seems likely that they will eventually deploy to the network.Curve is another decentralized exchange that quickly embraced L2. Curve has almost monopolized the exchange of similar assets on the Polygon and Fantom networks, and the agreement has recently been launched on the Arbitrum network. Currently, Curve provides 2 liquidity pools of similar assets and 1 V2 liquidity pool on Arbitrum (see the figure below). At the time of writing, these pools have a total of more than 131 million US dollars in liquidity, and have achieved more than 590 Ten thousand dollars in daily trading volume. At the same time, Curve is also a popular income farming place to minimize the risk of impermanent losses for liquidity providers.Like SushiSwap, although it is unclear whether the Curve protocol is planned to be deployed on the Optimism network, considering the multi-chain tendency of the protocol, it seems likely that the protocol will eventually be deployed on Optimism.L2 native application #1: Synthetix (SNX)
Because the transaction of Synthetix synthetic assets is computationally intensive, it is affected by the high gas fee of L1, which limits the growth of the Synthetix protocol in Ethereum L1. To this end, the Synthetix protocol began to work on unlocking its full capabilities on L2.Synthetix is an early supporter and adopter of Optimism, and other projects are also built based on the deployment of Synthetix on Optimism. For example, the Kwenta exchange on Optimism allows users to mint and trade Synthetix’s synthetic assets (Synths); The option agreement Lyra has also been launched on Optimism. Currently, the agreement provides 2 incentive pools with a lock-up value of more than 12 million U.S. dollars.
Dopex is another one that may benefit from the lower transaction fees and faster transaction confirmation brought by L2.Dopex is a decentralized options protocol supported by DeFi celebrities such as Tetranode and DeFiGod. Currently, the farm of the agreement has locked in a value of more than 75 million U.S. dollars. Although the option agreement is still in the testnet stage, it is planning to deploy its mainnet on Arbitrum.
This means that the project can not only provide an investment method for investing in the emerging DeFi derivatives industry, but also increase exposure to the entire Arbitrum ecosystem.The decentralized perpetual contract exchange dYdX is another derivative protocol that releases its functions through L2.
dYdX has built its own L2 Rollup based on StarkWare's scalability engine StarkNet, and recently launched a liquid mining plan, which includes a retroactive airdrop of DYDX tokens worth $50,000 to some users. As a result, the attractiveness of the agreement began to increase, and its daily transaction volume increased by more than 10 times within 6 weeks, and it has remained above US$600 million.Perhaps the most direct way for investors to benefit from the success of a particular L2 network is to invest in the native tokens of that L2 network.Although the design space of L2 native tokens is emerging, and we don't know whether all L2 networks will issue their own native tokens, L2 native tokens can provide a similar role to L1 native tokens in terms of providing exposure to specific networks. Although it is unclear whether all L2s will issue tokens, users have the opportunity to place themselves in a position to receive retroactive L2 native token rewards.Loopring is one of the most prominent application-specific Rollups in the Ethereum expansion ecosystem. It provides a complete set of products based on ZK-Rollup, including an AMM (Automated Market Maker) and order book exchange.
Investors can gain exposure to the agreement, which has generated more than $2.7 million in revenue in the past year in the form of LRC tokens. LRC tokens are used to govern the system and serve as the final collateral. Investors can purchase the token directly, or obtain the token reward by providing liquidity to the exchange. In addition, the top 25 traders with the trading volume on the designated trading pair (see the figure below) can also receive LRC token rewards (starting on September 9, 2021, lasting 28 days; settlement cycle is 7 days, A total of 4 cycles).Immutable X is a ZK-Rollup built on StarkWare.
The agreement is optimized for NFT transactions and use in the emerging blockchain game field. Currently, it is using the "Play-to-Earn" model to motivate users to use the platform with IMX token rewards. . The IMX token plays several key roles in the operation of the network: users need to use IMX to pay 20% of the transaction fee, and users can use the token to vote on governance proposals. In addition, IMX holders can stake the tokens to obtain transaction fees paid by users to the network.When talking about L2, if Optimism and Arbitrum are not mentioned, it is obviously inappropriate.
Both of these two largest Optimistic Rollups networks have raised millions of dollars in funding, and none of them currently issue local tokens. In addition, despite their short time to go online, these two L2 networks have incurred millions of dollars in transaction fees, and these fees did not flow to their users in any way. Although it is unclear whether they will issue local tokens, if they initiate retroactive airdrops for early adopters, it may be worthwhile to become an active user of the two L2 networks.The season of L2 is finally here.
Now, investors with different risk tolerance and different exposure needs can benefit from the rapid development of L2 in several ways. Whether through infrastructure, Dapps, or local asset farming, investors have many different opportunities.On September 15th, Ryan Watkins, a researcher at encryption analysis agency Messari, tweeted that the supply of decentralized stablecoins exceeded US$10 billion, accounting for 8% of the total supply of stablecoins. The DAI of the MakerDAO platform has the highest market share of decentralized stablecoins.Subsequently, on September 17, Ryan Watkins once again tweeted that the total supply of stablecoins this week has exceeded 120 billion U.S. dollars. In the second quarter, the transaction volume of stablecoins on the blockchain exceeded US$1.7 trillion, a year-on-year increase of 14 times. At the same time, the supply of decentralized stablecoins has just exceeded 10 billion U.S. dollars and will continue to erode the share of centralized stablecoins.Watkins also believes that stablecoins have the characteristics of local digitization, global accessibility, and resistance to seizure. It can provide individuals and institutions around the world with easy access to U.S. dollars to meet offshore U.S. dollar demand. The offshore U.S. dollar market may exceed 57 trillion U.S. dollars, so stablecoins have broad prospects and are extremely disruptive. Therefore, they are closely watched by regulators.
The above two figures show the demand for stablecoins. Based on this market background, as users of stablecoins, whether they are centralized stablecoins or decentralized stablecoins, they may be affected to a certain extent by the price changes of stablecoins.For example, when users buy stablecoins and use them in exchanges, they will always be troubled by price fluctuations. The stablecoins that have been held will also receive different cash due to the pricing at the time of exchange.
In the international market of cryptocurrency, there are still some exchange stable currencies issued according to the regional legal currency. These tokens can be directly exchanged for legal currency, but the exchange requires a fee.And some fully open OTC trading markets mean that users have to pass the market pricing of stable currency acceptors to buy stablecoins.
For example, USDT has been issued on many chains, and after its issuance, it needs to reserve US dollars in the bank. But it is not the issuer of USDT that controls the price for USDT. It is an acceptor. The price of an acceptor is determined by market demand. At present, the most trading pairs on all exchanges are USDT, which means that when the price of coins rises, users may increase their demand for USDT, and there will be a lot of purchases. . This will be obvious in the OTC market.But there is another feature. If the price of Bitcoin increases, the price of USDT will decrease and then slowly return to the average value. If the price of Bitcoin falls, USDT rises instead.