Blockworks Research

We first wrote about Metaplex in July 2024 - the token is now up over 50% this month. They're rapidly expanding their product offering. Evolving from NFT and token tools to a comprehensive suite that now includes Aura. A decentralized indexing and data availability network. That's right - data availability has come to Solana! Aura falls within the same ethos as Meaplex’s existing products- tackling the difficult problems so that web3 developers don't have to. It offers three core functionalities: data availability, comprehensive indexing across any SVM (including L2s), and elastic state management. The Aura network is secured by the MPLX token, providing more utility and demand for the asset. What's more, is that same MPLX token that is now fully diluted and lies just under our upside scenario outlined in our July report. For more details on these updates, check out the flashnote by Marc-Thomas Arjoon, CFA here: https://lnkd.in/efknWe-C

Perp DEXs are becoming a more fragmented market and there are now over 50 of them. But Vertex has flipped the script. With Vertex Edge, the more chains it launches on, the more liquidity each chain receives. This shared liquidity has led to Vertex becoming the leader on half of its chosen chains. Volume from Edge now accounts for half of taker volume on the exchange. What's more, the capability to launch on new chains is increasing. Vertex has now launched on three EVM L2s and one CosmWasm L1. This is particularly important for general-purpose chains as app chains may be seen as parasitic by extracting capital/users. Conversely, by settling onchain, Vertex, users, and the selected chains all benefit from Edge. For a breakdown of Vertex's performance by chain, potential future launches, new features, and risks - read the full report by Marc-Thomas Arjoon, CFA for a deeper dive into the protocol. https://lnkd.in/epAH8yMf

The competition amongst high-performance, alternative layer-1 blockchains is heating up. In this race, Aptos’ key network and application metrics have accelerated. Across the network, TVL has risen over 260% year-to-date, from $116M at the start of the year, to over $425M today. Additionally, onchain DEX volumes have risen dramatically. Testament to the traction the chain is gaining, monthly aggregate DEX volumes on Aptos are eclipsing $1B. As a delegated proof-of-stake blockchain with novel architecture designed for high performance and scalability, Aptos has three main components for consensus and transaction processing. They are: 1) AptosBFT v4, a modified consensus protocol that incorporates reputation-based leader election and peer-to-peer validator communication; 2) Quorum Store, which separates data dissemination from transaction ordering to enable horizontal scalability and improve workload efficiency; and 3) Block-STM, an execution engine that enables parallel processing of transactions using optimistic concurrency control. In July, the team introduced Aptos Connect, a self-custodial crypto wallet that allows users to access and manage their crypto using familiar social logins like Apple or Google, completely eliminating the need for complex private key management. Further, if users happen to lose access to their social account, the wallet allows for web2-like recovery flows. Leveraging this industry-leading tech, Aptos ecosystem projects are beginning to flourish, with a number of key projects emerging across money markets, liquid staking, DEXs, and leveraged trading. Deposits and volumes across these core Aptos projects have risen steadily. Thala offers a suite of products covering a decentralized exchange with ThalaSwap, an APT LST with Thala’s thAPT, and a collateralized-debt-position (CDP) backed stablecoin with ThalaCDP’s Move Dollar, MOD. All three of these product verticals have shown strong growth over the past year. ThalaSwap demonstrates to be the second largest DEX on the chain, with $44M in liquidity provided and over $1.6B in cumulative spot volume settled. Volumes on ThalaSwap have risen consistently month over month. Aptos has entered into a strategic partnership with @OndoFinance to bring RWAs and other innovative financial products to the chain. Already, the supply of USDY, Ondo’s tokenized US treasury product, has eclipsed $15M on Aptos, $10M of which has been deposited to Thala to collateralize the MOD stablecoin. While the chain is still early in its lifecycle, the acceleration in key network metrics over the past year suggests legitimate traction and promising growth ahead. To learn more about Aptos, check out our recent unlocked report, made possible by @Aptos. https://lnkd.in/dJvaGF7J

Recent discussions within the Ethereum community highlight this broader trend in crypto: L1s are converging on leaderless consensus designs to deliver higher performance and hardened censorship-resistance. Hayden illustrates the L1 convergence, discusses the two prevailing leaderless consensus designs (multiple concurrent proposers and directed acyclic graph based protocols), and argues refreshing one's perspective on the L1 landscape is an advantageous position for evaluating adoption and the potential investment value of L1s and their applications. He briefly discusses the two prevailing schools of thought for hardening Ethereum's censorship-resistance: Mechan-stein and Multiple Concurrent Proposers (MCP). Mechan-stein is a combination of well-researched implementations. But individual components do not sufficiently address performance and censorship-resistance given their total additional complexity and overhead. MCP, on the other hand, completely rewrites consensus in a way that directly increases censorship-resistance, repurposes builders, and indirectly increases performance. Interestingly, MCP is also on Solana's roadmap. In terms of achieving high performance and censorship-resistance, DAG-based blockchains, SuiNetwork and Aptos (Mysticeti-C and Shoal++, respectively), are state-of-the-art leader consensus protocols that already boast high performance and censorship resistance. While is still really early for DAGs, completely dismissing them is also overlooking the complexities and setbacks of Mechan-stein, MCP, and other important topics such as increasing gas limits, Ethereum’s free DA problem, and updating EIP-1559. All in all, as noted by Michael Ippolito in a Bell Curve podcast, we think over time the "L1 convergence" commoditizes the value of L1 assets, and value will increasingly flow up the stack to applications. This makes application-specific sequencing a compelling area of R&D. Furthermore, expressing a fresh unbiased perspective on the L1 competition might surface more legitimate frameworks for modeling adoption and value accrual, for both L1 assets and applications. Read the full report for a deeper dive into this thesis: https://lnkd.in/e8PEYAHr

Liquid Collective’s LsETH offers a unique value proposition for ETH stakers requiring the highest standards in security and compliance. The 155% year-to-date growth in ETH deposits is testament to the protocol carving out its niche in the LST market, satisfying demand for a compliant, secure, and decentralized solution. Many LSTs lack a comprehensive KYC/AML process for core deposits, which can restrict institutions from participating in liquid staking. Liquid Collective presents a solution, ensuring that all of the core ETH deposits backing LsETH have passed compliance checks, and that only known counterparties are interacting with the underlying protocol’s contracts. Minting and redeeming of LsETH is restricted to an allowlist for clients that meet and pass know-your-customer (KYC) and anti-money laundering (AML) checks, performed by platforms like Coinbase, Figment, Bitcoin Suisse, Twinstake, Hashnote, and Alloy. Currently, there are 2,781 active validators on the protocol, running geographically-distributed nodes and diversified Ethereum client implementations.  Node operators include Figment, Coinbase, Staked, and Blockdaemon. Node operators adhere to Liquid Collective’s service-level agreement (SLA), outlining baseline performance requirements, requiring them to maintain performance consistent with the top 50th percentile of large-scale staking providers. Failure to maintain this level of performance will require the node operators to reimburse the protocol for missed ETH network rewards. Additionally, Liquid Collective implements a comprehensive slashing coverage program for added security on funds. Nexus Mutual provides a bespoke coverage plan to protect against the loss of funds from slashing, and the protocol’s Slashing Coverage Treasury collects 0.30% of protocol rewards to pay for coverage. Node operators match 0.30% of the protocol’s deposits to fund coverage in the event of a fault or misconfiguration in their own infrastructure. Liquid Collective’s model offers an LST to meet the unique requirements of institutions, funds, or individuals demanding known counterparties and security on a liquid staked ETH position. To learn more about Liquid Collective’s LsETH, check out our latest unlocked Flashnote, with a special thanks to @alluvialfinance https://lnkd.in/egqe_fCV

We just made our @Solana dashboard available to everyone 🔥 Let this be your one-stop shop for all things Solana data. Track TEV stats, validator and staker cash flow, transaction activity/segmentation, and more! Let's take a look at the highlights 👇 This dashboard was made available in collaboration with the Solana Foundation. TEV tracks the total amount of top-line fee generation for a blockchain, via both in-protocol transaction fees and out-of-protocol tips. Thus it tracks users' willingness to pay for state and blockspace. Solana TEV erupted higher in 2024, currently sitting at $9m/week. Source of TEV: Priority fees and Jito tips currently drive ~85% of TEV as users compete on execution speed. Use of TEV: The Burn, Validators, and Stakers see roughly equal shares of TEV. SIMD-0096 will soon decrease the burn and increase the Validator's share of TEV. We also zoom in on the cash flow to validators and stakers, breaking down where the value is derived. The table below also accounts for emissions, unlike TEV. Note that validator commissions are currently estimated using the stake-weighted average commission rates. Using the Onchain Activity tab, you will see metrics that analyze transaction level metrics. As an example, we segment addresses by the number of txs sent per day to isolate bots (>5000). We see that bots have a 25x higher revert rate than addresses that send 1-5 tx/day. We also see a meaningful gap in median fee between these two groups, suggesting that bots are more sophisticated and capable of paying a lower median fee & addresses in the 1-5 group are less sensitive to fees. Solana transactions are constructed with a series of "instruction" calls to onchain programs/smart contracts. Our dashboard tracks the compute unit (CU) consumed and fees generated by these instructions. We track consumption based on outer instruction calls only. We will continue developing this dashboard over the coming weeks. You will soon see fresh tracking of: - Enhanced Stablecoin metrics - Staking and supply data - Detailed DEX breakdown - Network health tracking Let us know if there's anything you want to see! We will build it. The dashboard can be accessed below, check it out! https://lnkd.in/eQ_dg7kH

Polygon is gearing up for a big year. Recently, they've fallen under the radar to many, but with collaborations, technical developments, a tokenomic upgrade, and Polymarket, there may be some new cards for Polygon to play. What is Polygon cooking? A 🧵 Polygon's ecosystem continues to hold a solid position among the top 10 chains. The PoS ecosystem remains a key player in the rollup landscape. While the zkEVM network has successfully demonstrated zk technology, its TVL activity is still catching up. The PoS network has developed a penchant for supporting onchain prediction markets and gaming. Dapps like @Polymarket @azuroprotocol and @Matr1xOfficial have embedded themselves deeply. Polymarket is buzzing with prediction market activity, grabbing media attention and delivering big payouts. Election coverage has driven new volume highs, but can it stay relevant after the US election cycle? Azuro acts as a liquidity layer for prediction markets, with smart contracts that serve as building blocks. It manages the prediction engine and liquidity (via liquidity trees) for protocols like Chiliz and Bookmaker. Since moving to Polygon, its TVL has increased eightfold. Matr1x is currently the biggest Polygon gaming app. Users can play a valorant-esque first person shooter that's connected to a wallet account that wins rewards/skins from the game. It is the bulk of all Polygon gaming transactions. Apart from the dapps building in the ecosystem, Polygon Labs has unveiled new collaborations that will bring new users and applications into the ecosystem: Ronin, Immutable X, Movement Labs, X Layer, and more. This leads to Polygon's largest catalyst, the Agglayer, a proof-agnostic, VM-agnostic, interoperability solution that aggregates zk proofs from chains connected. While it requires a relayer network, it also enables safety for coordination infrastructure like shared sequencers. The Agglayer can integrate any chain irrespective of their architecture, and is completely free public infrastructure. This aligns with horizontal scaling strategies but stands out by offering interoperability as a clear public good accessible to everyone unlike competitors. Upgrading Polygon PoS to zkPoS, merging with zkEVM, and the September 4th launch of $POL may spur further growth. For more details, check out the FREE report written by @0xMims here: https://lnkd.in/e_mTg_Us

The crypto-AI space is in its infancy, with few protocols generating material revenue. Despite this, the sector has been one of the best performing crypto asset classes this year. The AI supply chain consists of three main prongs: Data, Compute, and Machine Learning Models. Blockchain technology exhibits strong synergies with each category, in turn enhancing the overall utility of AI. --Data-- Cryptographic primitives such as zero knowledge proofs, fully homomorphic encryption, and secure multiparty computation could enable AI models to train on high quality private data. --Compute-- Multiple DePIN protocols have bootstrapped peer-to-peer GPU and CPU marketplaces, providing a critical service to AI labs in need of compute resources. --Models -- Tokens are a powerful mechanism to incentivize the curation of machine learning models, combining the efforts of multiple AI scientists to create a credibly neutral, decentralized alternative to centralized frontier models. Some of the best performing AI coins YTD from each of the three categories can be seen below. Although there are strong synergies between crypto and AI, investors need to be on the lookout for teams that artificially combining crypto and AI to generate hype. For instance, blockchains that claim to be AI-focused deserve extra scrutiny. It is unclear if there are any technological differentiations between a high-performance chain and one that is "optimized" for AI. To conclude, the crypto-AI market appears overhyped in the short term, with most applications still in Beta or without a product entirely. In the long run, this sector will likely produce critically important products that have an outsized impact on greater society. Please subscribe to get an overview of the entire liquid market from our analyst @_dshap: https://lnkd.in/eGdPXGfm

Memecoins have long been a point of contention within the crypto space with @pumpdotfun tokens commanding 20%+ of daily DEX volume on Solana. Is the industry vexation with memecoins misplaced? A thread ⬇️ Memecoins have been around since the early days of crypto starting with DOGE in 2013. In 2021, DOGE and SHIB reached dramatic heights along with other coins like the notorious Safemoon. Now over this past year, a new crop of memes have gained traction. If we follow the historical dominance of new token creation by chain we see there are parallels to memecoin dominance. Originally, nearly all tokens were created on ETH, followed by an enduring BSC era, and now recently Solana has cemented itself as a hub of token creation. Today, Solana is introducing upwards of 100k new token pairs per week to the onchain economy, largely due to the growth of @pumpdotfun. Pump's platform has driven token creation cost and effort to near 0, leading to more ideas to be tried as memecoins. The growth of memecoins can also be seen via the growth of Telegram DEX Bot activity. The category touts >$30B lifetime volume and has seen significant diversification and growth over the past year. Reviewing top all-time pairs across the category leaders we find that memecoins dominate DEX bot usage historically and at present. In other words, they have become *specialized trading venues* for memecoin traders. Interestingly, both pumpdotfun and DEX bot apps have take rates around 1% for in-app volume. These are incredibly profitable businesses - and retail users are willing to pay for access to the memecoin lottery. Furthermore, the introduction of Farcaster Frames and Solana Blinks present means to directly integrate memecoins into existing social feeds and amplify the connection between memecoins and content creation. However, while retail is happy to chase memecoin volatility, institutions remain sidelined. But it may be possible to develop advanced strategies to trade these coins via their beta velocity relative to gas assets (e.g. WIF to SOL). Looking forward, we are starting to see a shift from memecoins to generalized attention tokens in which socially-integrated coins could serve as the basis for incentivizing online content generation. 11/ Dive deeper into the past, present, and future of memecoins in the latest report from our analyst @defi_kay_: https://lnkd.in/eZReBK6j

In partnership with @Obol_Collective and @alluvialfinance, we are conducting a survey to gain insight into the institutional staking landscape. This data will help industry leaders adopt their strategies moving forward as the industry matures. If you're an institutional staker, we want to hear from you! Please consider taking 5 minutes to fill this out: surveymonkey.com/r/Z79RYPS https://t.co/bWjp8JVnMo