Weekly Blockchain Insights (CW 31-2020)

Weekly BC Insights

Blockchain governance, go-to-market approaches & NFTs

 

In Weekly Blockchain Insights, we share the most interesting Blockchain Tweets, discussions about crypto from all blockchain ecosystems and various blockchain solutions from the past week. Make sure to sign up for the newsletter below and get all blockchain insights to your inbox.

This week’s blockchain insights include 2 different go-to-market approaches for crypto projects, developments towards decentralized project governance, cross-blockchain & cross-project collaborations and insights into non-fungible tokens.

If you come across a great Tweet in the future, please tag us @BCComparison. And make sure to join our new Telegram group where we collect insights from all ecosystems: @BCinsights.

 

Blockchain Basics

Blockchain token projects are able to raise quickly large amounts of money and attract a large number of investors and supporters through token sales and liquidity mining (See this post by Balaji Srinivasan). Since we’ve seen the rapid growth of “total value locked” in DeFi protocols, people have been asking whether that’s a bubble or even a scam. In crypto, early joiners & supporters are rewarded proportionally higher in any other market through the creation of new currencies, high initial interest rates & special incentive structures. Here’s another perspective on this:

Whenever we enter a growth period and we see many new projects launch, we try to filter the good from the bad projects, rank them against each other and objectively measure them. In the past weeks, we’ve seen more and more discussions come up around metrics & KPIs to include on Coinmarketcap and Defimarketcap.

 

General blockchain insights

In the past 2.5 years, many layer-1 protocols were funded by VCs instead of going the ICO route. In 2020, a lot of these projects are launching and we’re starting to see the competition of grassroots approaches and VC-backed approaches. Here’s one comparison of such competition given between mStable (MTA) and yearn.finance (YFI) to “be the de facto settlement asset for all financial activity in crypto”.

At the same time, we’re seeing in DeFi that you don’t need to follow the traditional way of securing funding. With the availability of DEXs, great incentivization mechanisms, and ultimately community participation you can go to market very quickly without the need to play by traditional playbooks. Synthetix founder Kain Warwick shared a great insight into capital formation of crypto protocols and explained incentivizing community participation (DAO) and a potential go-to-market approach.

The Synthetix Foundation is going this path now after being the protocol steward for the first 2+ years. They announced in 2018 that they would eventually replace the foundation with a DAO framework and in June 2020, the Synthetix foundation has been decommissioned and control shifted to 3 DAOs that manage protocol, grants and overall ecosystem building.

DeFi is still very small compared to layer 1 protocols and the overall crypto market. The entire DeFi sector is worth less than Bitcoin Cash. It’s worth less than 10% of all publicly traded layer 1 protocols outside of Bitcoin and Ethereum. And, DeFi makes up only 1.5% of the entire crypto market.

Some risks in crypto are better documented than others. In DeFi, the combination of various protocols significantly adds (multiplies) risks. Besides that, we are seeing quite a few “fake tokens” on DEXs that imitate other tokens that are not yet listed. In this thread, some of the less-known DeFi risks are included as well.

We’re seeing many more protocol collaborations and announcements pop up. This happens within the Ethereum ecosystem among DeFi protocols but also between Oracle solution providers, different layer 1 protocols and interoperability solutions. Since tech can be replicated and short-term yield opportunities will change, users would switch to other protocols. Currently, dominant protocols have to build defensibility mechanisms against this. Deeper integrations among existing protocols (under-the-hood) can manifest their current standing in the industry because new projects will build on top & leverage all underlying solutions.

Layer 2 protocols are still not much used. The involvement of big players like Reddit can push an industry quickly forward. More than 20 projects have participated in the “Great Reddit Scaling Bake-off” and introduced their ideas & even demos to scale Ethereum to handle Reddit’s scale (See here). Great research advancements and project launches are happening in 2020 around zero-knowledge proofs, rollups and now Matterlabs also contributed to composability.

 

Non-fungible tokens

The NFT community has recently grown significantly in the shadow of DeFi. Collaboration, mutual support and new community projects are happening right now in many forms and shapes. Some are discussing the organization of the biggest NFT collaborations..

while others advance research and contribute to specific niches such as tokenizing art & leveraging cryptographic hashing (See here). Overall the NFT space is still small but nice marketplaces are in place and actively used by a few thousand users per week.

Special events such as William Shatners’s sale finished within a few minutes. Great stats are provided by marketplaces and insights about top tokenized art creators, top art buyers and sellers can be looked up. (Very soon also featured in our lists & comparisons.)

Great insights. No noise. Weekly Newsletter.

In our newsletter we introduce great blockchain solutions and share a collection of the best blockchain insights from the past week.

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