🟣 Hunting for gains

There’s always something for the degens among us

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Macauley Peterson & Donovan Choy
August 16, 2024

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Welcome back to 0xResearch. Here's what we’ve got for you today:

  • Arbitrum staking

  • RWA interest

  • Kelp airdrop gain

  • CT: Debating EigenLayer

Market volatility is taking the day off so far. Major US indexes and bitcoin are mostly flat, with the later more or less in the middle of a short-term range.

TOTAL3 — tracking the total crypto market cap excluding BTC, ETH and stablecoins — is comparatively weaker, shedding about -1% on the day.

Small caps, which we define as having a market cap of between $250 million and $2 billion have been absolutely shellacked over the past 3 months.

And judging from the muted funding rates, there is very little appetite for speculation these days.

In short, a boring period — not that there’s anything wrong with that. They’ve even added three decimals to Etherscan’s gas tracker!

— Macauley Peterson (X: @yeluacaM | Farcaster: @Macauley)

Liquid ARB staking soon

Arbitrum has just passed an initial temperature check proposal by a 91.5% margin to turn on the proverbial fee switch, marking it the third L2 after Metis and Starknet to potentially offer a staking yield on its native asset. If all goes as planned by October, the DAO will enable ARB stakers to receive an auto-compounding and restakeable liquid staked ARB token (stARB).

In a bid to improve governance participation rates, staked ARB will also be delegated to Arbitrum governance delegates, who will receive 1% of surplus fees. Today, 10% of circulating ARB is currently used for governance votes.

Disclaimer: Blockworks Research is an active Arbitrum delegate.

It’s not finalized yet where yield would be coming from, but the plan is to apportion 50% of Arbitrum’s sequencer fees. Can Arbitrum DAO afford the spend? 

Arbitrum’s treasury is currently worth $1.8 billion, made up of 95% ARB (3.17 billion) and 5% ETH (16.8K). About 31% of the treasury’s standing ETH is already planned to go toward bootstrapping BoLD (bounded liquidity delay) validators, Arbitrum’s new dispute protocol to enable permissionless block production. Moreover, L2 sequencer revenue has reduced since the introduction of Proto-Danksharding (EIP-4844) in March. 

There are also legal problems to consider, according to Blockworks Research Analyst Darren Mims.

“The Arbitrum proposal forks the Uniswap staker smart contracts. Uniswap recently postponed its fee switch after being hit with a Wells' notice by the SEC, which does not bode well for the Arbitrum community, especially since it will tie staking directly to delegation parties, making it a clear regulatory risk,” Mims said.

— Donovan Choy (X: @donovanchoy | Farcaster: @donovan)

All 1000X listeners know that when Jonah and Avi give guidance on the markets, it’s best to pay heed. 

Catch them live and in person at Permissionless III in October as they answer the perennial question: “Where are we in the cycle?”

RWA growth:

Source: rwa.xyz

Total real-world assets tokenized on blockchains (excluding stablecoins) continue to trend up — now at $11.7 billion in value. Much of the growth is coming from private credit loans, which make up about 75% ($8.8 billion) of all tokenized RWAs.

Zooming into private credit loans, 95% ($8.1 billion) is settling on Provenance, a TradFi-focused L1 blockchain developed by Figure Technologies using the Cosmos SDK. Since the start of July, private credit loans on Provenance have risen from $7.65 billion to $8.1 billion, largely driven by Figure’s home equity line of credit (HELOC) business.

— Donovan Choy

If you’ve ever wanted to farm airdrops with ether, but don’t have the time, KelpDAO has a vault for you.

Airdrop Gain, which launched Tuesday, attracted $50 million in TVL in less than a day, according to Kelp. The vault currently accepts ETH, stETH (Lido’s LST), ETHx (Stader’s LST) and rsETH (Kelp’s LRT). It deposits to layer-2 partners Scroll, Karak and Linea to earn points that are expected to convert into tokens for their respective networks.

The vault uses the ERC-4626 standard and has been audited by Zellic and Sigma Prime.

Kelp issues a ​​liquid token (agETH) against the deposited assets, which provides capital efficiency, as it is expected to be taken up by DeFi protocols such as Pendle, Balancer and Uniswap.

Kelp DAO takes a 2% annual “platform fee,” based on the deposited amount, so be sure your all-in yield estimates and tolerance for smart contract risk are suitable.

Kelp itself does not yet have a token.

— Macauley Peterson

Berachain is an experimental take on an alternative EVM chain as opposed to a more traditional, alt EVM L1s such as Avalanche and BNB Chain. Although the chain is innovative and has a unique approach, this also has caveats. Both Polaris EVM and Proof-of-Liquidity are very nascent, and have not yet been battle-tested which could lead to potential issues.

Today, the Obol Collective launched a contributions program which allows all stakers to stake on distributed validators (DVs) and earn access to future governance and ownership of the Obol Collective. By staking ETH on DVs, users enhance the security and resiliency of Ethereum, and therefore improve the network’s decentralization properties.

EigenLayer is at the center of what could be seen as an uncomfortable conversation.

Coinbase hints at “cbBTC” while decentralized alternatives are waiting in the wings.

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.