In this episode of 0xResearch, hosts Sam and Dan are joined by Matt and Westie from Blockworks Research team to discuss topics such as NFT PFPs, Proof-of-Reserves, FTX’s implosion, Cosmos 2.0, dYdX and more.
Read our notes below to find out more.
NFT PFPs
Most PFP projects’ floor prices are down.
Sam is bearish on PFPs.
Matt thinks PFPs will come back and are just getting started, but it will be a long bear market for them.
Matt thinks NFTs are well set for the next bull run but not sure which type - PFPs, music, or 1/1s etc.
Westie asks if PFPs have utility or just culture, and what should the future of NFTs be.
Joepegs (an AVAX NFT Project) announced that FTX Ventures was part of their most recent raise.
Custodians
Net outflows on exchanges and DeFi due to FTX’s incident.
Matt sees this as a catalyst for self-custody.
Dan thinks self-custody in its current form cannot facilitate mass adoption and centralised custodians are needed for mass adoption for now.
Dan hopes to see more regulation to force larger players to be accountable.
Solana
Solana ecosystem is hurt by FTX.
Jump is leading to fork Serum (SOL project focusing on fast trading).
Sam would still rather hold a bag of Solana over Avalanche.
Dan thinks it will be interesting to see how the Solana community will build post-FTX.
Westie thinks there is a bull case for Solana.
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DeFi Perps
Tokens for perpetual protocols (GMX, GNS, SNX, dYdX) have been doing well since FTX happened.
Westie thinks trading on DeFi will be a long term trend.
Westie thinks these platforms will get more efficient over the next few years.
Proof-of-Reserves
DeFiLlama created a dashboard to track CEX reserves.
How to move forward after FTX
Only true believers are left in the space.
Sam fears the regulation that might follow.
More people realise the distinction between self-custody, DeFi, and centralised exchanges.
Matt thinks it is going to be a long path to recovery before confidence will come back.
Crypto-educated people are getting into regulatory positions.
Investment firms like Paradigm and a16z now have policy teams fighting for crypto regulations.
Dan thinks it was good that SBF was closely tied to the regulatory bill that was predatory to DeFi.
Dan thinks the focus is to get regulators on DeFi’s side and limit the regulation on CeFi.
Dan says we will probably see mainstream penetration from stablecoins.
Situation would be alot worse if FTX’s stablecoin was already released.
Westie’s FTX Conspiracy Theory
Westie questions how Alameda could lose so much money.
There had to be something structurally wrong or that they were taking on something constantly to lose money.
FTX’s liquidation engine allowed Alameda to take over positions before it reaches liquidation.
When prices move too quickly too fast, it would be hard for Alameda to hedge these losing positions.
Westie thinks this is somewhere along the lines of how Alameda ended with such a huge hole.
Regarding FTX Hack
FTX spokespeople had no idea what was going on.
It was not the liquidator or any legal person moving the funds.
How can we assume it was not SBF and friends doing it.
Matt believes that SBF and friends became scammers even if they didn’t start as scammers and probably had malicious intentions the entire time.
Dan thinks the sequence of events on the day of the hack and the access required for the hack points to an inside job or an actual hacker getting into their systems.
Sam thinks that it might not be an inside job since insiders should understand that the money would be monitored and cannot be cashed out.
Westie thinks the motives don’t make sense.
Lower-level FTX employee with no knowledge of stolen funds would be legally safe
Hacker was smart enough to swap funds to uncensorable assets such as ETH and knows what they were doing, which Dan thinks points to an insider.
Dan thinks the motives could be an insider’s the last move to go down with FTX.
Cosmos 2.0 Proposal #82 Not Passed
Cosmos helped expand their entire ecosystem.
Next step of Cosmos Hub is to facilitate the growth of the interchain.
Proposal #82 was a new whitepaper and shifting the direction of the Cosmos Hub.
Main segments were Interchain Security, Liquid Staking, Economic Growth Engine, and revamping ATOM monetary policy.
It only took ⅓ of voters to stop the bill from passing, and 36% voted ‘No’.
Seems like each segment will now be pushed separately.
Some community members wanted to fork it to pursue the new direction.
Zaki, Ethan Buchman, and Jack Zampolin say forking is not the answer.
They will talk to validators who voted ‘No’ to see their area of contentions , resolve it and move gradually.
Dan thinks it is time to build in the bear market and he liked what Cosmos 2.0 offered.
Dan says the majority of Atom 2.0 depends on the success of interchain security, and the economic engine would not take off without great traction on interchain security.
Most of those who voted ‘No’ have issues around the monetary policy and where the inflation flows to.
The community has a problem with how the treasury will be run and the governance structure.
The treasury will fund the creation of more chains and increase the scope of interchain security which grows more chains and more revenue.
Goal is to decrease inflation to 1% after 36 months, after interchain security brings in enough revenue to offset the decreased long-term emissions.
Majority of core team voted ‘Yes’, while some of the large validators voted ‘No’
The idea of Atom 2.0 is that revenue from interchain security will offset the decreased inflation of Atom.
Validators will generate the same level of revenue, but less in inflationary Atom tokens and more in true protocol revenue.
Coinbase and Binance did not vote on the proposal.
Sam says Cosmos has a lot of problems with governance, needs to fix their tokenomics, and that not being able to agree on a 2.0 whitepaper does not reflect well.
Sam says Cosmos needs a token that people can rally behind now.
2022 might be the year where monolithic chains have died in the bear market with ETH and its roll-ups, modular stacks, and potentially Cosmos.
The Cosmos ecosystem needs a killer app and it has not found one yet.
Liquid staking is popular on ETH and is coming to Cosmos in Q1 2023 might kickstart DeFi on Cosmos.
dYdX on Cosmos
(dYdX is a decentralised exchange that supports perpetual trading)
Matt thinks dYdX will see a lot of success moving to Cosmos.
dYdX will need to overcome the issue of MEV.
Validators can reorder transactions which might degrade their UX.
Native USDC on Cosmos
Circle chain and Kado coming to Cosmos (Kado is provides on/off-ramp services).
Westie says maybe Cosmos DeFi will take off because of the ability to go from fiat to crypto and back, and maybe this is the next step of DeFi adoption is ease of on/off-ramps.
Matt says having native USDC is the biggest and best thing that could happen for the Cosmos ecosystem.
Having native USDC makes it an easy, quick, and safe bridging experience.
Circle chain might have a huge value proposition as a hub in Cosmos as people onboard through it.
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