🟣 Put a DePin in It

Coinbase listed HONEY, the token for Hivemapper, which subsequently jumped 75% on the back of the announcement.

Gm!

Yes, I know that the previous sources who said we should expect ETF approvals on Tuesday or Wednesday were dead wrong, but the latest report from sources close to the SEC says that they should be expected Friday, with trading starting as early as next week. This time will be different, I swear.

I find it hard to believe trading will be live that quickly, given that many analysts outside of the group of Bloomberg ETF kings think it could potentially take weeks. Also, if it does happen that fast, I owe our very own Matt Fiebach fifty bucks, which would be devastating. 

Grayscale is also throwing their hat in the ring with a spot BTC ETF filing of their own issued this morning. It is also rumored that Goldman Sachs is in talks with Grayscale to become an authorized participant. Yet another horse in this race that should be a battle for the ages.

In other news, Coinbase listed HONEY, the token for Hivemapper, which subsequently jumped 75% on the back of the announcement. For those that aren’t familiar, Hivemapper is aiming to create a global, decentralized mapping network where anyone can hook up a dashcam and help contribute to their database while receiving HONEY tokens as a reward.

This just shows the growing validation of a Decentralized Physical Infrastructure (“DePin”) narrative that, in my personal opinion, is set to be a large one as more retail and institutional capital enters the space. This is because these DePin networks are solving real-world problems using crypto economics to create a flywheel.

Your average person is 1000x more likely to understand how these networks create value versus how to timelock their Convex LPs to maximize yield. And something like Helium, which is providing both $20/month cell phone coverage and profitable mining for those using hotspots in downtown Miami, people are going to love the endless possibilities of problems DePin can solve and companies these protocols can compete with. 

That’s just my 2 satoshis.

 - Westie

As the inscription craze spread from Bitcoin to other ecosystems in Q4 2023, the amount of data posted to Celestia has also ramped up as a result. After a one-off spike in the middle of December, mainly deriving from Astroglpyh—a data availability inscription service—data posted to Celestia Blobs has stayed quite constant at around 40MB per day. Most of the current usage seems to be coming from Manta Network.

Simply put, inscriptions are a form of NFTs where the metadata is inscribed directly onchain. Perhaps counterintuitively, none of the inscription token logic is onchain. Instead, offchain indexers have to interpret what the logic looks like. In comparison, for example, ERC-20 token rules are enforced by smart contracts.

As inscription operations are very cheap, it’s no surprise that they have been spammed within practically all ecosystems. Notably, this spamming took down Arbitrum on December 15 as the L2’s sequencer couldn’t handle the transaction surge. Regarding Celestia, the CEO of Celestia Labs, Mustafa Al-Bassam, tweeted that inscriptions used over $3M in daily fees on December 17, and Celestia Mainnet was doing over 300 TPS. This phenomenon will likely be short-lived across all blockchains with smart contract capabilities since they have more elegant solutions for NFTs, such as Ethereum’s ERC-721 standard. Nevertheless, it has been exciting to follow the trend as it showcases that onchain users are willing to gamble on anything and everything as long as the thing is new and shiny.

Through this emerging proposal, Phoenix Labs is suggesting, among other things, the following changes to Spark Protocol on Ethereum: (1) Activate the Lido Rewards Program, and (2) Increase the Spark D3M Max Debt Ceiling to 1.2B.

(1) Lido is providing 20 wstETH to ETH market suppliers on Spark Protocol for January. Lido will perform ongoing analysis to determine whether the program is worthwhile to continue and, if so, at what size. At the current supply levels, the aforementioned will lead to an additional annualized payout of ~0.15%. Although this increase is quite moderate, it might help Spark continue its growth.

(2) As it currently stands, the Spark D3M Max Debt Ceiling is at 800M DAI, of which ~93% is utilized. Increasing the debt ceiling by 400M DAI will allow Spark to cater to increasing demand without hitting its utilization limits.

I'm for both (1) and (2) since they help facilitate Spark's further growth. Borrowing on Spark protocol has already increased notably in the past few months, going from ~$220M at the beginning of October to ~$1.1B currently (note that users can borrow other assets in addition to DAI.) With MakerDAO more aggressively pushing for Spark utilization, farming the associated SubDAO’s governance tokens, SPKs, could result in notable rewards. This can be done by either supplying ETH to or borrowing DAI from the lending market, although it should be noted that this opportunity is not available to users located in the U.S.

This emerging proposal has been approved for poll voting and will likely pass and, thus, be executed onchain in the coming weeks. All of this and more was first highlighted to Blockworks Research subscribers on GovHub. Consider subscribing if you haven’t already done so!

2021 was a massive year for network activity, so naturally protocol innovation and growth followed suit. Perps found true PMF, DEXs continued to launch new primitives, and stablecoins continued to excel.

Solana is generating an increasing amount of transaction fee revenue, with various fee market dynamics and ongoing proposals that are set to further accelerate this trend.

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.