"Weekly Editor's Picks" is a "functional" column of Odaily Planet Daily. In addition to covering a large amount of real-time information every week, Planet Daily also publishes a lot of high-quality in-depth analysis content, but they may be hidden in the information flow and hot news, and pass you by.
Therefore, every Saturday, our editorial department will select some high-quality articles that are worth spending time reading and collecting from the content published in the past 7 days, and bring new inspiration to you in the crypto world from the perspectives of data analysis, industry judgment, and opinion output.
Now, come and read with us:
Investment and Entrepreneurship
How to make money from cycles (Part 2): Fund flows from the perspective of the Federal Reserve’s monetary policy and stablecoins
The Federal Reserve adjusts interest rates by at least 25 basis points each time, and the adjustment decision is announced through the Federal Open Market Committee (FOMC) meeting. The motivation for raising interest rates is to prevent economic overheating, reduce inflation, and adjust monetary policy.
The Fed's most recent full interest rate hike cycle was from December 2015 to December 2018. This round of interest rate hikes has come to an end. However, the end of the interest rate hike does not mean an immediate interest rate cut. The most likely scenario is that high interest rates will be maintained for a period of time, after which the Fed will make adjustments based on macroeconomic data such as CPI, PCE, and non-agricultural data.
The growth of the crypto market bull market depends on the spillover effect of funds. The first effect of loosening monetary policy is reflected in the U.S. stock market. Funds flow into the U.S. stock market, leading to a bull market in the U.S. stock market. Too much funds in the U.S. stock market overflow into the cryptocurrency market, and the cryptocurrency market is also affected and enters the bull market. We can have an intuitive understanding of the strength of the U.S. dollar through the U.S. dollar index, and thus judge whether funds flow from risky markets into the U.S. dollar market.
The representative way for incremental funds to enter the market is to use fiat currency to purchase centralized stablecoins, and the stablecoin issuers issue additional stablecoins on the chain, and the market value of stablecoins increases. Since the funding information of centralized stablecoins is not transparent, stablecoin issuers are likely to over-issue, and the way of looking at the funds in the market by the market value of stablecoins has certain limitations. In fact, a big market does not necessarily require the inflow of incremental funds. The bear market is a game of existing funds. When stablecoins continue to flow into CEX, it means that the funds are highly active and traders are bullish.
DeFi
Foresight Ventures: Stablecoins, Ponzi schemes, leverage, and the holy grail of liquidity
Heterogeneous chains combined with stablecoin protocols are prone to Ponzi magic;
MakerDAO's bull-bear strategy switching is achieved by converting the source of income from on-chain to off-chain;
AAVE’s next strategic step is to increase GHO yields through Aura;
In the future, a large number of crvUSD cannon fodder will continue to emerge based on the curve and convex ecosystems;
Abracadabra points out a definite direction for the development of stablecoin protocols in the bull cycle;
"Maintaining yield in a bear market and increasing leverage in a bull market" may be the right path for developing a stablecoin protocol.
A brief analysis of the 6 modes of determining interest rates in DeFi lending protocols
Pricing is the mechanism for calculating how much interest borrowers and lenders pay each other. The article introduces:
Order book pricing: most flexible and market driven, but with tradeoffs in user experience;
Utilization-based pricing: This model has found product-market fit in DeFi, but is not 100% efficient and performs poorly in extreme cases;
Auctions: good pricing and efficient lending, but require users to plan ahead, have a fragmented secondary market, and other minor frictions;
Ajna Utilization Model: A modification of the classic utilization model suitable for use in oracle-free protocols;
Tazz perpetual loan funding model: a new p2pool lending primitive that allows the market to price interest rates, making collateral fully modular;
Manual Pricing: Governance-led Pricing.
An article explaining the Restaking protocol proposed by EigenLayer
In essence, Restaking is a shared security mechanism that allows the same assets to be pledged to multiple "decentralized applications/blockchains" at the same time to provide security for them.
Octopus Network, a leading infrastructure project in the NEAR ecosystem, announced the launch of the Restaking service. Octopus Network allows $NEAR holders to stake NEAR public chains while restaking for application chains, providing security to obtain staking rewards provided by application chains.
Among all types of shared security solutions, there are three key stakeholders, namely "decentralized applications/blockchains", "blockchains that provide shared security" and "stakers". The Restaking mechanism not only maximizes the interests of the three parties, but also completely unifies the interests of the three.
NFT, GameFi and the Metaverse
GameFi Summer is here again? Sector rotation or fundamental improvement?
Since September this year, several high-quality GameFi projects such as Matr1x Fire and Mahjong have reappeared in the market, and they have also received excellent responses in the community. Old blockchain game projects have exerted their strength, blockchain game masterpieces have been launched, and the Base chain has begun the GameFi carnival. Now the token price is still in the bottom stage of returning to value after the bubble burst, and it has stabilized. From the perspective of financing, funds are still choosing to enter the blockchain game sector. At the same time, playability is also inseparable from the follow-up of infrastructure.
Web 3.0 and AI
Vitalik's long article: The intersection of artificial intelligence and blockchain under the concept of "d/acc"
Technology is truly amazing, and delaying its development can be extremely costly. Context and the willingness to coordinate are critical.
Artificial intelligence is fundamentally different from other technologies and requires special care. It is a new type of mind that is rapidly improving in intelligence, and it has a serious chance of surpassing human intellectual capabilities and becoming the new top species on Earth. The future of super-intelligent AI is probably not a world we want to live in. In the age of AI, the complete disappearance of natural constraints on government existence could have dire consequences. War becomes a pure technological competition.
OpenAI’s governance structure appears to be a well-intentioned effort to balance the need to be profitable in order to satisfy the investors who provided the initial capital, while also creating a system of checks and balances to resist moves that could allow OpenAI to destroy the world.
d/acc (decentralized acceleration) - defensive (or decentralized, or differential) accelerationism - a defensive world where health and democratic governance thrive, including macro-physical defense, micro-physical defense (aka bio-defense), cyber defense, information defense, etc. The situation becomes more unstable as superintelligent AIs act independently of humans. The most powerful AIs may quickly take the lead due to recursive self-improvement, and once AIs are more powerful than humans, there will be no force that can rebalance things.
A happy path: merging with AI. We need to build and accelerate.
Ethereum and Scaling
Comprehensive data comparison: Who is the rising star of the L2 track?
The data and pattern before the arrival of Blast
The mature Layer 2 and supporting cross-chain infrastructure can already meet the needs of smooth capital migration and can pursue good applications. In the future, it may gradually move from "thin applications" to "fat applications."
For Layer 2, the need to capture users, retain users, and keep funds active cannot rely on airdropped PUAs. What really drives a Layer 2 to stand out is narrative.
Footprint Analytics: Does Layer 2 Really Scale Ethereum?
Currently there are three main types of Layer 2: Rollups, State channels (such as Raiden Network), and Plasma (such as OMG Network).
There are two main types of Rollups: Optimistic Rollups (such as Arbitrum One, OP Mainnet, and Base) that use fraud proofs to ensure the validity of off-chain transactions, and Zero-knowledge Rollups (such as zkSync Era, Starknet, Linea, and Polygon zkEVM) that use zero-knowledge proofs to enhance privacy and security.
Representative innovations of Layer 2 include: Superchain proposed by the Optimism ecosystem, Hyperchains launched by zkSync, and Arbitrum Stylus launched by Arbitrum.
Layer 2 narratives include full-chain games, modular blockchains, zero gas fees, Layer 3, etc.
The key challenges facing Layer 2 include the security and decentralization of the proof system, decentralization of the sorter, cross-Layer 2 wallets, data availability, ecosystem, and applications.
Foresight Ventures: Nitrogen Acceleration! How ZK Coprocessors Break Down Smart Contract Data Barriers
The CPU can complete most tasks, but once it encounters a specific task, it needs the help of the graphics card because the CPU computing power is not enough. The CPU is the processor and the graphics card is the coprocessor. Mapped to the blockchain, the smart contract is the CPU and the ZK coprocessor is the GPU.
Coprocessors can easily and asynchronously handle specific tasks that are difficult and cumbersome for the CPU to handle on its own. One of the biggest bottlenecks facing smart contract developers is still the high cost associated with on-chain computing. Blockchain virtual machines (such as EVM) are not suitable for handling large amounts of data and intensive computing tasks, such as the decompression work mentioned above. The design focus of EVM is to execute smart contract code while ensuring security and decentralization, rather than processing large amounts of data or performing complex computing tasks. Therefore, ZK coprocessors came into being. ZK rollups are actually the earliest ZK coprocessors.
The application of ZK coprocessor is very extensive. In theory, ZK coprocessor can cover all application scenarios that Dapp can cover. Representative projects in this field include Axiom, Risc Zero, Brevis, Langrange, Herodotus, HyperOracle, Pado, etc.
In the two processes of data capture and calculation, ZK ensures both efficiency and privacy. ZK coprocessors will become powerful middleware, reducing costs and increasing efficiency for data capture, calculation, and verification of smart contracts while ensuring security, privacy, and trustlessness, liberating data networks, opening up more possibilities, and becoming the infrastructure for real intention application landing and on-chain AI Agents.
New Ecosystem and Cross-Chain
Starknet’s new roadmap is released. Which DeFi protocols are worth focusing on?
Starknet has identified five major priorities, namely network stability improvements, V3 transactions, transaction fee markets, reducing L1 fees using EIP-4844, and reducing transaction costs through the Volition model. STRK will be used as a staking token, governance token, and to pay transaction fees for participating in the Starknet consensus mechanism.
The author also selected some DeFi protocols that are worth focusing on and briefly introduced: JediSwap, Ekubo, mySwap, SithSwap, AVNU, zkLend, and Nostra.
Hot Topics of the Week
In the past week, the U.S. SEC solicited public feedback on Franklin Templeton and Hashdex Bitcoin ETF. Franklin has updated his application documents. The U.S. SEC confirmed that it had received the Fidelity Ethereum spot ETF application proposal submitted by CBOE. Grayscale plans to adjust the GBTC fee structure and asset custody method to prepare for the listing of the spot Bitcoin ETF. DCG and Genesis reached a $200 million repayment agreement, which will end a loan lawsuit of approximately $620 million. A U.S. judge approved a $1.65 billion settlement agreement between Voyager Digital and the FTC. CZ resigned as chairman of the board of directors of Binance.US. The Montenegrin court approved the extradition of Do Kwon to South Korea or the United States. The Hong Kong police: The amount involved in the HOUNAX fraud case is about 120 million yuan, and it may be jointly investigated with overseas institutions.
In addition, in terms of policies and macro markets, Charlie Munger passed away, and OpenAI announced that Sam Altman officially returned to take over as CEO and established a new board of directors;
In terms of opinions and voices, Coinbase CEO said that the settlement between Binance and the US Department of Justice will end the era of "bad actors" in the cryptocurrency industry. JPMorgan Chase: Binance's settlement with the US government eliminates uncertainty and will help Binance regain market share. Binance's new CEO: Binance is undergoing a transformation from a technology startup to a traditional financial company. TRON spokesperson: It is a completely wrong assertion that "Tron can control user entities". Mark Cuban: New American urban housing plans can be delivered with the help of L2 smart contracts and NFTs. Paradigm GP: Disapproves of some of Blast's designs and is communicating with the team about related concerns. BanklessDAO: Applying for ARB funding has nothing to do with Bankless. In the future, it plans to modify the proposal and shorten the activity cycle.
In terms of institutions, large companies and leading projects, BC Technology: its subsidiary OSL cooperates with Victory Securities to provide BTC and ETH trading services to Hong Kong retail customers. The SpaceX "Doge-1" satellite funded and named by DOGE has been approved by regulators. The internal governance conflicts of the Cosmos community have increased.
In the field of NFT and GameFi, Gas Hero has officially launched community testing (experience);
Regarding security incidents, Justin Sun: HTX and Poloniex will soon open deposits and withdrawals, and will start airdrops for users with assets on the two platforms; Blast: A parameter configuration error caused a user to receive 100,000 DAI less after a deposit, and the problem has now been resolved; ANTPOOL: A user’s previous 83 BTC transaction fee will be refunded, and the refund will be made after the user verifies his identity; The KyberSwap attacker proposed settlement conditions such as "obtaining full control of Kyber and handing over all property"... Well, it's another week of ups and downs.
Attached is a portal to the “Weekly Editor’s Picks” series.
Reunion in the second half~
