#70 Superpowered superchains
L2 space is doubling its bet on the rollup centered Ethereum, with several alternatives for a multichain future.
Audita, an auditor firm for Web 3 protocols and dApps, sponsors this issue. Audita performs high-quality security reviews of EVM-based web3 projects. It helps projects stay ahead of hackers
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The second week in a row of good vibes. The crypto market is basking in a period of optimism, fueled by the momentum generated from the influx of numerous ETF filings. Bitcoin and Ethereum, the leading cryptocurrencies, have experienced sustained upward trends in their values. As a result, the vision of an interconnected on-chain, off-chain financial system is rekindled, and the hopes of a seamless integration of traditional and digital economies emerge again, with record inflows of capital into crypto to feed this hypothesis.
These days, we're seeing a lot of buzz coming from layer 2 solutions, who are making significant announcements about their visions for the future of the blockchain ecosystem. The overall sentiment is warm, like summer, so let's enjoy this small dose of optimism.
1. Scalability | Superpowered L2s
There has been a bunch of big news coming from the L2 angle these days.
Optimism has renamed its blockchain to OP Mainnet, while the broader term will refer to the general ecosystem built under the Superchain philosophy, and OP Chain will be its primordial chain. Superchain is the galaxy of interoperable, scalable blockchains built with the OP Stack, like Coinbase's Base and soon Binance's own opBNB.
Speaking of stacks, Matter Labs' zkSync has also released a "modular framework for building sovereign ZK-powered Hyperchains, based on Era's open-source code." So another set of tools for developers to streamline the deployment of new L2s, protected by zero-knowledge proof and fully EVM compatible.
Speaking of zero-knowledge, Polygon is going to transform their Proof of Stake chain into a zk validium rollup. Polygon's PoS is one of the oldest scalability solutions available for Ethereum, with a TVL close to $1B and numerous integrations. But as the team has anticipated many times, they envision a zero-knowledge future. With that perspective in mind, Polygon is set to transform their PoS into a zk-validium, a "lower-cost, higher-throughput sibling of a rollup" meant to be used for applications that require higher throughput but don't need that much security (like, for example, gaming). The new version of PoS will be compatible with zkEVM, taking Polygon's vision one step further.
2. Crypto 101 | A new type of company called DAO
Crypto can be daunting because it challenges many well-established concepts with new ideas, equal parts exciting and confusing. DAOs are one of those ideas: a new type of crypto-native company that defies the way we understand business, HR, compliance, and more.
There are dozens of fully functioning DAOs with sustainable business models, remote teams, and operational resources working in crypto but without headquarters, contracts, or bank accounts. How is this possible?
This article highlights the differences between traditional companies and DAOs, and how this new type of company, fully digital, crypto-native, is paradoxically often more transparent than its traditional counterparts but still very confusing.
3. Bitcoin | Bitcoin dominance
Bitcoin dominance is at its highest level since April 2021. Dominance reflects the percentage of crypto's total market cap that's comprised of BTC, and it has lately risen from 49.6% to 51.8%, signaling both a weakened altcoin moment and a strong appeal from Bitcoin. There's a very obvious reason in recent news and a not-so-recent one:
The obvious one is the ETF fever kicked off by BlackRock, which has drawn a lot of attention to the ecosystem again. Imagine if there was regulatory clarity...
The not-so-recent one is the high level of activity in Bitcoin as an ecosystem. It does seem like devs are reinventing the wheel on Bitcoin, with (too many) NFT collections popping up in various forms, and Bitcoin's own exploration of tokens through protocols like BRC-20. All these developments are in extremely early stages, but they're drawing attention and funds.
4. Regulation | The IMF on banning crypto
The IMF is starting to get crypto. In February this year, spokespersons from the International Monetary Fund claimed that a ban on crypto should not be off the table. These days, the institution has announced a 180-degree turn, in their opinion, and it claims that bans don't look like a good option anymore.
What do they know today that they didn't earlier in the year?
First, banning crypto is virtually impossible. What to ban, who to prosecute, and where are very complicated questions to answer in crypto. As an industry that relies on public pieces of code, operates 24/7 and without borders, and has customers around the world, there's no easy thing to go after.
Second, banning crypto would leave countries out of the benefits of the technology. In a website post about CBDC banking in Latin America, the IMF stated that "the region should instead focus on addressing the drivers of crypto demand, including citizens' unmet digital payment needs, and on improving transparency, by recording crypto asset transactions in national statistics."
Can you think of something that streamlines payment needs while remaining transparent and fair?
5. NFTs | Azuki's flop
NFTs remain in bearish times in spite of crypto’s trends. Sales are lagging, and spirits are low. And last week's move by Azuki didn't help scatter the doubts over the industry.
Azuki is one of the leading NFT collections. A series of manga-looking pfps that often stands in the top 3 main collections after Cryptopunks and Bored Apes. Last week, Azuki released Elementals, a secondary collection... of manga-looking pfps, some of them almost identical to the originals.
Besides the obvious effect (furious collectors and a sudden drop in price and value of the originals), many are left wondering what the future is for these pfp collections that have been fueling NFT sales for so long. What’s a possible model for them, other than launching successive collections that dilute the value of the original?
6. Security | Walk before you run
In crypto, there are many avenues available for people to familiarize themselves with protocols within sandbox environments. Virtually every blockchain offers testnets, which are separate networks designed specifically for testing purposes. These testnets mimic the mainnet, allowing developers to experiment with the protocol and gain hands-on experience without risking real assets or affecting the live blockchain.
By launching smart contracts on testnets, developers can test and debug their code, identify any vulnerabilities or flaws, and improve the user experience before deploying the smart contracts immutably on the actual blockchain. At the same time, test environments allow users to get acquainted with protocols before risking any funds.
So if you’re considering acquiring some experience interacting with a crypto protocol, consider using training wheels first and check out its testnet version.