🟣 Crypto gets political

Lido's reGOOSE plan, a new points program, and a shoutout by Trump. Just another day in crypto.

Author

Boccaccio
May 10, 2024

Welcome back to 0xResearch – quick hitting alpha for the crypto degens. Here's what we got for you today:

  • Lido’s reGOOSE plan

  • Hyperliquid Aqua = more points!

  • Crypto becomes a US election talking point

Another week of choppy market conditions! BTC is sitting slightly above 60K and ETH continues to chop around $2.9K. It definitely feels like we’ve been at the “it’s over” stage for longer than expected. Even though BTC and ETH are struggling, Solana coins seem to be doing relatively well. JTO is up 15% on the day, WIF is holding on to $3, and TNSR is up 5% today.

We had a few interesting updates come out from DeFi today. Hyperliquid decided to replace their existing points program with another points program! Yay (?). With Hyperliquid Aqua, the protocol is incentivizing users with points to supply liquidity to pairs within the exchange (through Elixir, a decentralized market making tool). Apart from Hyperliquid, we also saw a new proposal posted on the Lido forums by Hasu. Titled “ReGOOSE: Updated goals for Lido in the light of MVI and restaking,” it outlines how Lido should approach staking, and their thoughts on MVI (minimum viable inflation). You can read the full proposal here, or you can wait until next Thursday to hear Hasu and Vasiliy talk about it on the 0xResearch podcast (hosted by yours truly, Mr. Triple Boccaccio). The gist of ReGOOSE is that, Lido should:

  1. Stay focused on security and decentralization 

  2. Participate in Ethereum staking roadmap research 

  3. Reaffirm that stETH should stay an LST, not become an LRT. 

  4. Support Ethereum-aligned validator services, starting with preconfirmations, without exposing stakers to additional risk. 

  5. Make stETH the #1 collateral in the restaking market, allowing stakers to opt into additional points on the risk and reward spectrum.

I know at first-glance this may seem like it’s minimal and not particularly important, but it will be interesting to see how large staking providers approach restaking in general, and this is Lido’s first public discussion (as far as I know) of how they plan on approaching it. It’s on the safer side, which makes sense, given that there is a lot at stake with Lido.

Lastly, this week, Donald Trump, the Republican nominee for the 2024 US presidential election, expressed support for cryptocurrencies during an event with his NFT buyers at Mar-a-Lago. He stated that if crypto companies are leaving the US due to hostility towards crypto, "we'll stop it" and allow them to operate in the country if he is elected. Trump criticized the Biden administration and regulators like SEC Chair Gary Gensler for being "against" crypto, saying "I'm good with it" in reference to cryptocurrencies. He promised to accept crypto campaign donations and took a jab at Biden, claiming he doesn't understand crypto. 

Hope you all have a nice weekend!

– Boccaccio (X: @tripleboccaccio) 

  • Compute DePINs are one of the best positioned verticals in crypto for mass adoption as AI compute demand has exposed structural inefficiencies in the cloud computing and leading-edge compute markets. These structural inefficiencies could last for years, as concentrated and technically complex supply chains are moving too slowly to meet the insatiable demand for compute, and the step function growth in demand for AI compute sustains.

  • The Compute DePIN landscape will likely be fragmented, where projects focus on a single or related set of end use cases that conform to a set of related hardware configurations. There will likely be attempts at an aggregation layer that acts like a DePIN of Compute DePINs. This model is the highest risk / highest reward layer of the Compute DePIN stack.

  • Crypto-native developers and organizations, price-sensitive startups with little cloud lock-in, and academics & researchers are natural first customers. Projects can also position themselves as variable load sources of compute for independent and private data centers, or as synthetic data generation services for foundation model startups, which is a large market where Compute DePINs have a clear price and product advantage.

Arweave Buyers in Control:

Arweave is approaching an ATH in OI (~$123M). Is this a new paradigm? Speculation is accelerating on AR as more market participants learn about AO Computer, the Arweave team’s promising “hyper-parallel” messaging system that some believe could change everything. Interestingly enough, AR wallets hit a new ATH of 207k. We recently published a report about AO Computer, and I highly recommend giving it a read.

TLDR, the AO Computer is a highly experimental design that challenges what we know about traditional blockchain networks. It focuses on parallel execution over verifiable lists (“logs”) of memory, which drastically reduces processing constraints. In doing so, the team claims that AO is infinitely scalable. AO’s near-term vision is to spawn an autonomous agent economy. Yesterday, the first signs of AO agent feasibility were revealed. We do know that there will likely be a new AO token, but it is unclear how this affects AR. The market seems to think that AR will play a key role in the emerging ecosystem. AO’s testnet has seen substantial traction, with 75.6M transactions, 52.5k processes, and 258 modules to date.

The Across protocol emerges as a dominant bridge within the Ethereum and L2 ecosystem, settling notable volumes with low latency, low fees, and no slippage. The protocol’s architecture is based on intents, a deviation from many of its competitors’ designs of “lock-and-mint” or “message-passing.” The recent V3 upgrade dramatically expands the scope of transaction types that can be settled through Across, enabling a higher degree of cross-chain interoperability and chain abstraction.

With the spot BTC ETF behind us, the market can now turn its attention to a potential US spot ETH ETF approval/denial on May 23rd while Hong Kong’s first ETH ETF has started trading. April marked the first full month post the Dencun upgrade leading to a 90%+ reduction in L2 fees. Demand for restaking protocols continued strong with EigenLayer hitting $16B in TVL. However, ETH saw an 18% drawdown MoM alongside a downturn in the wider stock, bond and crypto markets.

While the current plan reflects progress, it represents a draft with “many blanks,” lawyer says.

Espresso sequencing marketplace wil enable efficient coordination and fast transaction finalization across multiple Ethereum L2s.

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.