We explore ETH/USDC trading through the Uniswap front end. Since ETH prices are set on CEXs, and fees are much lower, theoretically most volume here should be filled offchain. That’s not the case, however, and almost ~30% of volume is filled by the AMM.
Why? We have two hypotheses.
1. Stale prices - AMMs can sometimes quote stale, better prices when the pool doesn’t have time to adjust to the market price, set on the CEX.
2. Filler economics - fillers have various fees, in addition to CEX trading fees, which can impact their economies of scale, making it difficult to fill smaller orders.
Why is this interesting? If we’re correct, with trade execution moving up to L2s, lower gas and faster block times have the potential to mitigate both of these issues, leading to more trades potentially being filled offchain.
This is undoubtedly a centralizing force, and AMM designs will need innovation for this new execution environment to keep up with offchain fills.
Some observations about the trad art market, and what it suggests about opportunities for digital art platforms: 🧵
1/ There are two main players in the trad art world:
1. Dealers - think independents, small galleries, etc 2. Auction houses - the name is pretty descriptive
2/ It fluctuates, but they both *roughly* do equal volume of the total art market. Thus, art is loosely power law’d - with the major auction houses at the head of the distribution, and a massive long tail of smaller dealers.
TLDR: royalties, growth vs Ethereum, sticky users 👇🧵
1/ Across all chains, NFT volumes are down ~80% from highs at the beginning of the year...
2/ ... although much of the decline is from falling token prices as floors are usually denominated in the L1 token. For example, Eth blue chips - often with diamond-handed holders - saw a considerable decline, but nothing compared to USD terms.
Staking is critical for ETH's security, and undoubtedly a multi billion dollar industry post-merge.
Here's an overview of current market dynamics and emerging trends:
There are broadly 2 options for staking (besides running your own node 😊): service providers and liquid staking. 1/n
Service providers include companies like @krakenfx Staked, @Figment_io, and others. They provide a more white glove service and setup a node for customers.
Pros: Very hands-on, KYC / AML met, more customization
0/ We @variantfund are thrilled to co-lead the seed in @NiftyApes, a new NFT lending protocol.
Here’s an overview of the category and NiftyApe's product features:
1.1/ Zooming out, NFT finance is one of the most exciting frontiers of crypto. Today, NFTs are limited to JPEGs, largely collectibles, digital art, and gaming assets, but the category is poised for massive expansion.
1.2/ As more digital assets see adoption, NFTs can represent everything from real world assets like real estate to immensely valuable digital art. The 2021 explosion is very reminiscent of the DeFi ICO boom of 2017 - suggesting we’re at the very beginning of the adoption curve.
2.1/ Back-ends -> APIs - finance is quite obviously one of the most heavily regulated industries in the US. Trying to start a neobank? If building out all the infra, this takes years to get proper approvals and licenses.
DeFi is entering an entirely new security paradigm:
Simply put, security measures are going from reactive -> proactive. Here are the emerging trends and projects. 🧵👇
1/ Zooming out, security remains one of the primary bottlenecks for crypto adoptions, particularly in DeFi. A survey earlier this year found it to be one of the primary reasons people don't invest.
1.2/ And just over the past 8 months, approximately $2b was lost in hacks. Notably events were Ronin ($616m), Poly Network ($602m), and Wormhole ($326m).