PANews_

By Foresight News, Alex Liu

Solana is a high-performance Blockchain platform designed to support dApps, known for its speed and scalability, which is made possible by a unique Consensus Mechanism and architectural design. In this article, we will use Ethereum as a comparison object and briefly introduce the characteristics of the Solana smart contracts programming model.

Smart contracts, on-chain programs:

A program that runs on Ethereum is called a smart contract, and it is a series of codes (functions) and data (states) located at a specific address on Ethereum. Smart contracts are also Ethereum accounts, called contract accounts, which have balances and can be traded objects, but cannot be manipulated by humans and are deployed on the network to run as programs.

The executable code that runs on Solana is called an on-chain program, and they interpret the instructions sent in each transaction. These programs can be deployed directly to the network core as native programs, or released as SPL programs by anyone.

Instructions:* Instructions are a term specific to Solana on-chain programs. On-chain programs consist of instructions, the smallest unit in which a specific operation is performed: each Solana transaction contains one or longer instructions. Instructions specify the actions to be performed, including calling specific on-chain programs, passing accounts, entering lists, and providing byte arrays. Instructions have computational limitations, so on-chain programs should be optimized to use a small number of computational units, or split expensive operations into longer instructions.

Native Program: A native program that provides the functionality required to validate the Node. The most famous of these is the Program, which manages the creation of new accounts and the transfer of SOL between two accounts. SPL program: defines a series of on-chain activities, including token creation, exchange, lending, as well as the creation of staking pools, maintenance of on-chain domain name resolution services, etc. Among them, the SPL Token Program is used for Token operations, while the Associated Token Account Program is often used to write other custom programs.

You call it a smart contract, I call it an on-chain program, everyone says it differently, but they both refer to the code running on the Blockchain. Zhang San, Li Si, and Wang Mazi are all personal names, and other aspects have to be examined in terms of quality.

Account model, data decoupling:

Similar to Ethereum, Solana is also a Blockchain based on an account model, but Solana provides a different set of account models than Ethereum that stores data in different ways.

In Solana, accounts can hold wallet information and other data, and the fields defined by the account include Lamports (account balance), Owner (account owner), utable (executable account), and Data (data stored by the account). Each account designates a program as its owner to distinguish which program the account uses as a state store. These on-chain programs are read-only or stateless: the program account (executable account) only stores BPF bytecode and does not store any state, and the program stores the state in other independent accounts (non-executable accounts), that is, Solana's programming model decouples code and data.

The Ethereum account is primarily a reference to the EVM state, which smart contracts both the code logic and the need to store the user's data. **This is often considered a design flaw left over from the EVM's history.

Don't underestimate the difference! Solana smart contracts are fundamentally harder to attack than Blockchain with a coupled programming model, such as Ethereum:

In Ethereum, the smart contracts "owner" is a global variable that corresponds one-to-one to the smart contracts. Therefore, calling a function may directly change the "owner" of the contract.

In Solana, the "owner" of a smart contract is the data associated with the account, not a global variable. An account can have longer owners instead of being linked one-to-one. To exploit the security vulnerabilities of smart contracts, attackers need to not only find the problematic function, but also prepare the "correct" account to call the function. This step is not easy, as Solana smart contracts typically involves long input account and manages the relationship between them through constraints such as account1.owner==account2.key. The process from "preparing the right accounts" to "launching an attack" is enough for security monitors to proactively detect suspicious transactions that create "fake" accounts related to smart contracts before an attack.

Ethereum's smart contracts are like a vault that uses a unique password, and as long as you get this password, you can get full ownership; Solana, on the other hand, is a vault with longest passwords, but to get permissions, you must not only find a way to get the password, but also figure out the corresponding number of the password before you can open the lock.

Programming Languages

Rust is the primary programming language for developing smart contracts on Solana. Because of its performance and security features, it is suitable for high-risk environments of Blockchain and smart contracts. Solana also supports C, C++, and other (very uncommon) languages. SDKs for Rust and C are officially provided to support the development of on-chain programs. Developers can use tools to compile programs into Berkley Packet Filter (BPF) bytecode (files with .so extensions) and deploy them to Solana on-chain to execute the smart contracts logic through the Sealevel parallel smart contracts runtime.

Because the Rust language itself is difficult to get started with, and it is not customized for Blockchain development, long there are many requirements that require reinventing the wheel and code redundancy. Xu long long's newly created programming language dedicated to Blockchain development is based on Rust, such as Cairo (Starknet), Move (Sui, Aptos).

Many long projects in production use the Anchor framework

The Ethereum smart contracts is mainly developed in the Solidity language (the syntax is similar to java, and the code files are extended with .sol). Due to the relatively simple syntax and more mature development tools (Hardhat framework, Remix IDE...). Usually we think that Ethereum is a simpler and faster development experience, while Solana development is more difficult to get started. So despite the popularity of Solana right now, the number of developers in Ethereum is still far long than Solana.

In certain road conditions, top-of-the-line cars don't run as fast as modified cars. Rust is like a top-of-the-line racing car, which strongly guarantees the performance and safety of Solana, but instead of developing this track for on-chain programs, it has caused the difficulty of driving (development) to rise. Adopting a Rust-based public chain that develops a custom language for the on-chain is equivalent to modifying the car to make it more adaptable to road conditions. Solana is at a disadvantage at this point.

Summary

Solana's smart contracts programming model is innovative. It provides a stateless approach to smart contracts development, with Rust as the primary programming language, and an architecture that separates logic from state, providing a powerful environment for developers to build and deploy smart contracts, ensuring security and performance, but it is difficult to develop. With a focus on high throughput, low cost, and scalability, Solana remains the current choice for developers looking to create high-performance dApps.

Reference Link

Attitudes towards Crypto Assets have become an important issue in the US election this November. Interestingly, users are not only seeing traditional pollsters continue to provide data, but also Polymarket, a prediction market platform based on Crypto Assets, gaining popularity. As of May 16, nearly $127 million has been bet on the topic of "winner of the 2024 presidential race", of which $15 million is betting on Trump, who has a 50% chance of winning, $14.55 million is betting on Biden, which has a 42% chance of winning, and none of the other three candidates has a win rate of no more than 3%.

Just a few days ago, on May 14, Polymarket announced that it had raised $70 million through two funding rounds, the most recent of which was led by Peter Thiel's venture capital firm Founders Fund, and Polymarket's investors also included Ethereum co-founder Vitalik Buterin.

Polymarket was launched in May 2020 in response to the widespread spread of misinformation during the pandemic, and the platform went live in mid-June of that year. Also in time for the 2020 and 2024 U.S. elections, the interweaving of major events has gradually brought this Crypto Assets-based prediction market platform into people's eyes and market hotspots.

NYU dropped out of the Department of Computer Science to start a business and admired Hayek

Polymarket founder Shayne Coplan, 26, once studied computer science at New York University, according to his LinkedIn page. According to public reports, in many longer ways, Coplan has the temperament of a new generation of entrepreneurs. He is an artist who is fascinated by P2P file sharing in an era when people love to share music. Since then, he has been exposed to Bitcoin and has easily understood the Intrinsic Value of a global peer-to-peer asset network.

When Ethereum was announced in 2014, Coplan became an early follower and is believed to be the youngest of the presale participants. Two years later, at the age of 18, Coplan began working on Blockchain projects, and in June 2016, he interned at Chronicled in the San Francisco Bay Area, where his role was to "follow the Chief Product Officer and help decide how the product interacts with the Ethereum Blockchain." ”

Since then, Coplan has also been obsessed with Crypto Assets, launching a series of startups and founding a Decentralized Finance startup called Union.market, which is directly the predecessor of Polymarket. Although he later dropped out of school, he has been thinking for a long time about some of the specific problems faced by the creation of prediction markets and decentralization markets over the past few years. He called Hayek's famous essay "The Use of Knowledge in Society" an early entrepreneurial inspiration, and Coplan also drew on longest years of academic research on prediction markets. Hayek's related idea is that people are more likely to accurately understand the likelihood of uncertainty when economic incentives are at work. People read longer and better sources of information, think deeper, and try to invest their money in actual outcomes that are more likely to happen.

"When COVID broke out, there was so long uncertainty and so long different perspectives, [I think] if there was only a free market on those topics, people could tie money to their opinions," Coplan once told the media.

On June 16, 2020, the beta version of encryption prediction market Polymarket was released, but at the time there was high friction for users, with only Metamask login support, high Ethereum Money Laundering, and limited Liquidity. Three months later, with the release of the second phase of Polymarket, Coplan's approach to building Polymarket became clearer. The platform was ported to Ethereum's second layer, Matic (now Polygon), to drop gas fees for betting. He also designed the system for users who did not have Ethereum Wallet. All bets are placed in USD-pegged stablecoin USDC and can be purchased via debit or credit card.

Just a few months after its initial launch, Polymarket managed to attract attention with a massive $4 million seed round led by prominent investors Polychain Capital and Naval Ravikant.

The 2020 U.S. election became a catalyst for Polymarket. On November 3 of that year, affected by the U.S. election, Polymarket's volume soared to $1.297 million, from unknown to up-and-coming.

Polymarket's volume and monthly active population since its launch in 2020 With longer positive feedback from the community and market recognition, Polymarket later attracted Series A funding, where General Catalyst helped the company raise $25 million in Series A funding, with participation from Airbnb's Joe Gebbia and Polychain, among others.

Most recently, Polymarket's Series B funding reached $45 million, led by Peter Thiel's Founders Fund and existing investors 1confirmation and ParaFi, with participation from Ethereum co-founder Vitalik Buterin and Dragonfly and Eventbrite co-founder Kevin Hartz.

Fined $1.4 million by the CFTC, the submarine prediction sparked controversy

Polymarket's development has not been without its challenges. In January 2022, Polymarket was fined $1.4 million by the Commodity Futures Trading Commission for violating regulations and received cease and desist orders, including for failing to register as a trading intermediary facility. Protocol to the settlement, Polymarket committed to reducing its service in the U.S. and continuing to operate overseas.

However, Polymarket has also stepped up its compliance efforts. In May 2022, Polymarket appointed former U.S. Commodity Futures Trading Commission member J. J. Christopher Giancarlo is Chairman of its Advisory Board.

In addition to this fine, in June 2023, according to Mother Jones, a tweet about the results of the Titan submersible went viral, causing quite a few negative consequences for Polymarket. There's a bet on Polymarket on whether the submersible will be found by a certain date, with users betting more than $300,000 on whether the missing submarine will be found "by June 23." This has sparked online discussion about the ethics of profiting from potentially fatal events.

"What stage of capitalism does betting on someone else's death belong to," one Twitter user asked, posting a screenshot showing the odds on Polymarket. The sentiment touched a nerve, and the post quickly went viral, garnering over 9,000 retweets and over 150,000 likes. "It's insane. Imagine making money by whether someone dies or not," replied another user, which was liked more than 1,000 times. Others began to directly criticize the prediction that Polymarket would open up.

The developing Polymarket responded to ethical concerns, describing the submarine market as "irrelevant to any outcomes for passengers." "We understand that there has been some confusion due to the misunderstanding that our prediction market is related to the fate of passengers. We want to emphasize that this is not true," Polymarket wrote. "Our goal is not to profit from this unfortunate event. We didn't do that either. It's about helping people better understand the world around them. ”

"Break through" in the encryption prediction market track, when will it mature?

prediction market itself has a long history, but in the encryption space, the first Decentralization prediction market was Augur, which was launched at the Ethereum in July 2018. Augur was developed by the Forecast Foundation, which was founded in 2014 by Jack Peterson, Joey Krug, and Jeremy Gardner. The Forecast Foundation is advised by Ron Bernstein, founder of defunct company Intrade, and Vitalik Buterin, founder of Ethereum.

In addition to Augur, Polymarket is not the only prediction market in the market, but also Gnosis, Hedgehog, PlotX, Projection Finance, Sanr.app, Better.fan, Feel.market, etc. However, Gnosis turned to community management projects after failing to meet expectations. Other encryption prediction market, such as Veil, were simply shut down.

Early Crypto Assets-based prediction market experiments, such as Augur and Gnosis, have also been hit hard by Ethereum's long-standing scaling problem. In addition, they all initially used native tokens, adding friction to the user experience. Polymarket has learned from the mistakes of its predecessors.

After 4 years of development, Polymarke has now successfully "broken through", and will even be cited by media reports and industry research on some key issues as a reference for public opinion.

As of May 14, there are longing hot topics on Polymarket's website: Who will win the 2024 presidential election? Will the May 31 Ethereum ETF be passed? Will $GME reach all-time highs by Friday?

According to Token Terminal, Polymarket's highest volume so far this year came on January 10 at $5.73 million. The platform experienced a significant rise in the number of monthly active users in January, rise from 1,600 on January 1 to 4,100 on February 1, with a slowdown in monthly active users after April. As of May 15, the forecast on Polymarket has reached $202.7 million.

Following the recent funding round, Coplan said on LinkedIn that "the most gratifying thing is to see Polymarket being widely adopted as an alternative news source." The trend is clear: thanks to Polymarket, people are more aware of what is happening in the world. Fed up with the rhetoric of experts and Algorithm-generated news. In this age of rampant misinformation, Polymarket offers a new form of information driven by financial incentives to drive truth, rather than luring to get clicks. People want unbiased information. Polymarket is providing this. ”

As a firm believer in market theory, Coplan believes that forecasting platforms are a true way to better understand reality.

Polymarket has already attracted the attention of many long industry insiders. Vitalik used Polymarket to track Sam Altman's board out. Packy McCormick, an advisor at a16z Crypto, has also said that Polymarket's page is probably the best place on the internet to start the day.

Riding on the social hotspots, with the support of celebrity users, Polymarket has become the biggest encryption prediction market, however, to achieve its original intention, continuous optimization of the product experience and avoiding risks and ethical dilemmas is a crucial challenge for future development.

ORIGINAL AUTHOR: SHLOK KHEMANI

Compilation: LlamaC

"Testimonial: Sanctum has brought breakthrough changes to the Solana ecosystem, making staking more flexible and accessible. Its innovation not only improves the capital efficiency of LST, but also provides small validators with the opportunity to compete with larger projects, further promoting Solana's openness and inclusion. As more long individuals and projects begin to issuance custom LST, we'll see their community-driven, innovative energy. This article is designed to help you understand the Sanctum protocol, explore how it is redefining liquid staking, and think about how this innovation has brought new perspectives and opportunities to our Decentralized Finance journey. Pump knowledge together! enjoy！」

Body 👇

Tl; DR: liquid staking is one of the core security and Decentralized Finance primitives of any attestation (Proof-of-Stake, PoS) Blockchain. In this article, we compare the liquid staking landscape on Ethereum and Solana. One has a strong ecosystem, while the other is in a more nascent stage and is evolving in a different way.

We explain the different approaches taken by the two. Finally, we tear down Sanctum, a novel protocol that rethinks liquid staking on Solana.

Transaction networks require a high level of security to earn trust. If someone were able to change a SWIFT wire instruction or a Visa transaction, people would lose trustless in those systems. The same goes for Blockchain. Security determines how receptive users are to them. For example, there is the highest hashrate support behind the Bitcoin Blockchain.

Therefore, we have a basic understanding that once a transaction is recorded in the network, malicious actors cannot manipulate it. But the cost of trading on Bitcoin is very high.

In recent years, low-cost networks like Solana and Ethereum have transitioned to attestation (PoS) Consensus Mechanism. Unlike Bitcoin, which relies on computing power, these networks use stake capital to measure economic security.

Before we dive into how this works, here's a quick overview of some of the terms you might see in this article:

Validators: Users who protect the PoS chain.

Staking: Validators gain the right to create blocks, process transactions, and secure the network by locking a certain amount of the network's native coins as collateral. This Collateral is called their "equity". Some networks, such as Ethereum, stipulate a minimum stake amount, while others, such as Solana, do not.

Leader: The network chooses a validators, called a leader, to create the next Block. The probability of being chosen as a leader is directly proportional to the size of their stake and other network-specific factors. Once a leader creates a block, other validators in the network verify the validity of their transactions.

If the network accepts the block, the leader receives the block reward for the issuance of the network and the transaction fee paid by the user.

Slashing: If other validators deem a block invalid, the leader may lose a portion of the Token as a penalty in a process known as slashing. Validators often have significant economic exposure to the networks they help secure. As a result, they have little incentive to pass flawed data to the network. If they do, they will lose Token by slashing.

When a PoS Blockchain works as intended, the rewards earned by honest validators accumulate to form a steady return to the stake Token, usually expressed in APR (APY). On Ethereum, this yield is usually between 2-4%.

These returns from staking have three functions. First, they protect the network. Second, they incentivize long-term engagement within the ecosystem. Third, they help ensure that long-term participants are not diluted by Inflation.

If you think of the network as a city, staking is like building a house in that city. It keeps you there for a long time and appreciates in value over time.

Current dilemma

Staking has its advantages, but they are not cheap. Just like building a house in the real world, people may not have the time, energy, capital, and skills to set up a validators Node. Everyone wants yield, but expecting to run a validator for yield may not be feasible. This is where delegated staking comes in.

The concept is simple: users entrust their stake to a validators and then validators return the earned rewards to the user after deducting a percentage of the proceeds as a fee.

While delegating staking solves one problem for users, it also creates another.

When a user holds the chain's native coin, it is liquid. They can sell it at any time, or deploy it into Decentralized Finance protocol for additional income such as borrowing and liquidity pool. However, once the Token is natively staked, it becomes illiquid. Stakes must wait for the bonding period, after the cooling-off period has passed, before they can withdraw their stakes.

On some PoS on-chains, this can be up to 21 days. They also gave up the opportunity to earn extra yield when their tokens were staked. I guess you can't both hold your stake and eat (gains) in this game.

liquid staking is a solution that allows users to protocol stake their Token through a protocol minting that represents the liquid staking Token (LST) of the stake assets. These LSTs can be freely traded on exchanges and used in Decentralized Finance applications to provide users with liquidity. When a user wants to take it back, they can offer their LST to the stake protocol in exchange for this coin, and then protocol will destroy the LST.

If too long users are in a hurry to withdraw their liquid staking assets by trading on the exchange, it can lead to depeg. This was the case with Lido's Token last year, where the price of its liquid staking Token is lower than the price at which it can be redeemed – a kind of bank bank run.

Staking plays a central role in securing PoS Blockchains, and liquid staking has become one of the most important areas in the encryption space due to its fundamental utility of unlocking illiquid capital.

TVL in cross-chain liquid staking protocol account for more than 50% of all Decentralized Finance protocol TVLs. In that ecosystem, Lido holds about $28 billion in staked assets. But what does Lido do?

Becoming a validator on Ethereum requires at least 32 ETH (approximately $100,000 as of May 7, 2024) of staking, technical know-how, and comes with the risk of slashing. This makes solo staking (running your own validators) an unappealing option for a large longest number of users.

Ethereum does not support native stake delegation. This means that you can't directly stake your ETH with validators, but instead need an out-of-protocol service to facilitate delegation. Those with capital but lack the knowledge or intent can delegate node operations to stake-as-a-service offerings like P2P or stakefish, which charge a monthly service fee.

The dominance of the Lido has grown over time.

Those who don't have 32 ETH capital rely on platforms like Lido. Users can deposit ETH into Lido's staking pool in exchange for liquid staking Token stETH. The deposit pool is evenly distributed among 39 trusted and vetted Node operators. Lido charges a 10% fee on stake rewards, which is split equally between the Node Operator and the Lido DAO treasury.

Here are some numbers to help you understand Lido's scale:

• 27% of all ETH is staked. Of the ETH staked, nearly 30% is deposited into Lido.
• Lido's TVL is about $28.7 billion, more than 7 times that of on-chain's second-largest stake protocol ($3.71 billion for RocketPool).
• Lido accounts for more than half of Ethereum's total TVL and nearly one-third of all on-chain total Decentralized Finance TVL.

These numbers raise two questions.

• First of all, How did Lido become so dominant?
• Second, is this dominance healthy for Decentralization networks like Ethereum?

The answer to the first question lies in the interplay between Liquidity and Distribution.

The biggest value proposition of LST is instant liquidity. Users should be able to sell Tokens at the lowest possible Slippage (best price) at any time. Slippage is a function of the size of the Liquidity pair of LST with other assets (ETH, stablecoin) on the exchange.

The larger these pairs and the lower the slippage, the wider the adoption of LST.

Lido's stETH has the highest liquidity in LST. One can buy more than $7 million worth of stETH for less than 2% of the price impact (±2% Depth figure shown here) on ask price long exchange. For the second largest LST rETH, the same metric is less than $600,000.

The high Liquidity also helps to integrate into the lending protocol. Users often stake assets as collateral for loans. It has two functions. First, they can earn on the underlying asset. Second, it provides them with USD liquidity for their stake assets. These dollars can then be used for trading or increasing leverage by buying longer underlying assets (ETH or SOL) to stake and increase yield.

But when a user's long wick candle loan to an asset is liquidated, protocol need immediate Liquidity to prevent the Collateral from going bad (becoming undercollateralized). If the Liquidity of a LST is low, the likelihood of borrowing protocol accepting it as a Collateral will be drop. stETH is currently the largest lending asset on Ethereum protocol the most long supply on Aave.

The other half of the interaction is distribution. Users hold LST to earn additional yield or participate in the broader Decentralized Finance space. Therefore, the more long a protocol a LST can use, the more attractive it is to hold. Think of coins around the world. The more a regional coin is accepted, the greater its value.

Lido's LST (stETH) is like USD for stake assets. No LST in the Ethereum ecosystem is as widely accepted as Lido's stETH.

One can use stETH on the Synthetix perpetual marketplace on Optimism, on the Venus coin marketplace in BNB on-chain, or on Aave on Arbitrum. EtherFi, a stake protocol that owns about 4% of all stake ETH, only accepts ETH and stETH deposits. Similarly, even a new protocol like Morpheus, a peer-to-peer AI network, only accepts stETH deposits.

Liquidity and distribution reinforce each other. The higher the liquidity of LST, the more attractive it is to users. The long the number of users holding LST, the greater the incentive protocol integrate it. This, in turn, has led to wider adoption, with more long users depositing funds into Lido, generating higher Liquidity.

These compound network effects result in a centralized winner-takes-all market structure. Lido is a behemoth because it occupies this market on the Ethereum, which is the most long chain for Decentralized Finance activity.

Lido's network effect provides it with a huge moat. It's not easy to tear it apart (just ask the hundreds of Social Web upstarts who are trying to compete with Twitter or Instagram). New entrants need to have both deep pockets (to draw attention) and a unique value proposition if they want to compete with the behemoth of Lido.

But does this mean that Lido's dominance poses a threat to Ethereum's decentralization nature? Some, like the author of this article, think it is. As a Lido DAO that controls about 30% of the stake Ethereum, it may have too much influence on the network.

Given that Lido currently has only 39 node operators, there is a risk that operators will collude to carry out activities that are harmful to the health of the network. They can theoretically do transaction review and cross-block MEV extraction. If Lido continues to rise and takes up half of all stake ETH, they can start reviewing the entire Block. At two-thirds of the stake ETH, they will be able to finalize all Block.

LDO holders benefit from the 5% of the stake rewards retained by the DAO. Therefore, their motivation is to maximize the amount of stake held by Lido and the fees generated by their operators. Any decisions they make will serve that goal and not for the benefit of the broader Ethereum ecosystem.

This presents a basic principle - the problem of proxy. Lido is making changes to mitigate these risks.

1. First, they are working to increase operators, make them more geographically dispersed, and eventually allow any validator to join without permission. Second, there is a proposal to introduce dual governance into the protocol. Both stETH and Lido holders will have a say in the direction of the project.

However, despite these changes, Lido itself is tending to form a monopoly on Ethereum stake. This brings with it the long-term risks that we discussed.

Solana

The staking and LST landscape on Solana is very different from Ethereum. Solana's stake ratio (the percentage of SOL stake in circulation) is over 70%, much higher than Ethereum's 27%. However, LST only accounts for 6% of the stake supply (compared to more than 40% on Ethereum).

It's valuable to explore the reasons behind this difference.

• First and foremost, staking on Solana works very differently than Ethereum. Unlike Ethereum, Solana supports delegated attestation. This means that users can stake any number of SOL, with no minimum requirements, directly with validators stake, without the need to use third-party protocol. In fact, large long Wallet (including popular Wallet like Phantom and Backpack) allow direct stake through Wallet interfaces.

This makes it easy for users to stake their SOL locally. In contrast, due to Ethereum's lack of delegated stake, using a staking pool like Lido is the only viable option for large long stake.

• Second, the cuts on Solana have not been activated. This means that the choice of validators is not a critical issue and one can validators stake with any one that offers returns without taking risks. However, on Ethereum, slashing is active, which makes it important for validators to choose a staking pool solution like Lido for execution.

This also means that the return of staking a staking pool that is distributed to longest validators on Solana is not significantly different from the return of staking directly with one of the top validators.

• Third, the Decentralized Finance ecosystem on Solana is not as mature as it is on Ethereum. This means that even if users stake their SOL for LST, there is no longest protocol to take advantage of. Why take extra risks, such as smart contracts being hacked, when there aren't longing opportunities to make a profit? Instead, choose the simple route to stake directly.

The first generation of Solana LST – Marinade's mSOL, Lido's stSOL, or SolBlaze's bSOL – mimicked the strategy of liquid staking protocol on Ethereum. The problem is that the problems that Lido and its peers solve on Ethereum simply don't exist on Solana.

The best illustration of this is Lido's community vote after leaving Solana in 2023. The main reason is that the revenue generated is lower than the expenses (this is partly due to the fact that Solana is still in the post-FTX downturn). But I think another equally important reason is that Lido and Solana don't match culturally.

Going back to our discussion of Lido's dominance on Ethereum, one reason is that stETH is integrated into all major Decentralized Finance protocol and projects in the ecosystem. This does not happen automatically, but requires longest years of groundwork and building trust and goodwill within the ecosystem. Players within the Web3 industry will refer to these as business development (BD) efforts.

These networks cannot be easily replicated in new on-chain just because a protocol has been successful on-chain competition, especially given the tribal nature of Crypto Assets.

It is often assumed that technical standards are adopted purely on the basis of their efficiency. But the adoption at the bottom is often personal. This is clearly demonstrated by Marinade's dominance on the Solana stake, surpassing Lido.

In the first few months of Solana stake, there were two major players: Lido, a encryption unicorn backed by millions of venture capital, and Marinade, a self-funded project born out of Solana hackathon. However, Lido's stSOL has never surpassed Marinade's mSOL on TVL.

This is partly because Marinade's sole focus (and birthplace) is Solana. In contrast, Lido expands from its own network to another location.

Recently, with the revival of Solana, LST is making a comeback, spearheaded by Jito, the protocol we wrote about earlier.

Jito becomes the Solana native protocol as much as possible. Their 2023 Airdrop awakened Solana from its post-FTX slumber, creating a wealth effect and a resurgence of on-chain activity. With venture capital and the kind support of the community, Jito is following Lido's playbook and seeking to dominate LST on Solana.

1. Jito started using its governance token JTO to motivate JitoSOL Liquidity Liquidity on exchange. They have the highest APY, TVL, and volume of all LSTs on the Kamino Liquidity Bank.
2. Second, Jito is working with other top protocol on Solana such as Solend, Drift, Jupiter, and marginfi to deeply integrate JitoSOL into the ecosystem.
3. Third, it is expanding to Arbitrum by partnering with Wormhole, thereby enabling longest chaining and increasing the utility and attractiveness of JitoSOL.

Jito has the longest liquidity of any LST on Kanami

With Solana back in the game, JitoSOL's activities and Liquidity proliferated, and Jito perfectly scheduled the release and rise of JitoSOL. Not only did it become the dominant LST on the Solana, but it was also the protocol of the highest TVL in the on-chain.

By following Lido's playbook, there are early indications that Jito may also be copying Lido's results – completely dominant. If the current trajectory continues, it could be a very favorable outcome for Jito. However, given the debate surrounding Lido's impact on Ethereum's health, is Jito in a similar position, especially since they also have the most popular MEV solution on the on-chain, would it be beneficial for Solana? Maybe not.

Jito's ball is rolling, and given the complex nature of network effects, it's hard to stop once it's big enough. However, due to the debate over the final state of LST, which is still relatively early, a new force has emerged that could prevent Solana from reaching the same LST endpoint as Ethereum.

Dismantling Sanctum

The Sanctum team is the OG of the Solana liquid staking ecosystem. They first helped Solana create the first stake pool contract, which is now used by almost all LSTs (except mSOL). Before creating unstake.it (now Sanctum Reserve), they also ran a traditional stake pool called scnSOL.

Sanctum is fundamentally rethinking liquid staking with a mission to prevent Solana from going down the path of Lido's dominant stake protocol and to bring a vision with an infinite LST ecosystem.

At the heart of their product is unique insight. Sanctum's co-founders call it an open "secret" – LST is fungible. Let me explain what that means.

When you validators stake SOL, you create a stake account with SOL and then delegate it to validators. This way, validators don't have direct access to your SOL. This also means that staking is not instantaneous. stake account can only be activated at the beginning of epochs (and deactivated at the end of epochs).

Each epoch on Solana lasts about 2 days. Similarly, when you deposit SOL into a staking pool like Jito, a stake account is created and the stake is delegated to long validators determined by the protocol. In return, you get a liquid staking Token. Another way to look at this is that LST is a tokenization version of stake account.

This means that whether it's a stake account created directly to the validators stake SOL, or a stake account created when you deposit SOL into a staking pool, what's behind it is the same – locked SOL. This mechanism unique to Solana is the foundation of Sanctum's innovation in the liquid staking space.

Reserve and routing

Usually, when users want to redeem LST, they have two options.

1. They can interact with issuance protocol, deactivate their stake account, and wait for the cooling-off period (2-4 days) to end to get their SOL, or
2. They can trade through LST-SOL pairs on DEXs for instant liquidity.

Since users may hold LST first to reap the benefits of instant liquidity, they will prefer the second option. This means that LST without liquidity will be inefficient and unattractive to users. This benefits big players and makes it difficult for Newbies to create an attractive LST. Liquidity begets Liquidity.

Sanctum Reserve changes this equation by offering a completely new LST redemption method. Recall that LST is nothing more than a wrapper around the stake account that contains locked SOL. This means that LST can always be redeemed for its value in SOL, just not immediately.

Sanctum Reserve is a pool with over 200,000 SOL worth over $30 million. When users want to redeem LST, they exchange their stake account with Sanctum reserves in exchange for instant liquid SOL. Subsequently, Sanctum deactivated the stake account and received the SOL paid at the end of the cooling-off period.

As a result, SanctumReserve temporarily faces a shortfall in SOL for the duration of the cooling-off period and will eventually be recovered. Sanctum charges a dynamic fee based on the percentage of SOL remaining in the reserve pool. This ensures the effective use of SOL during periods of high liquidity demand.

Compared to traditional liquidity pools, Sanctum Reserve is a significantly more capital-efficient LST clearing method. In traditional pools, the SOL in the LST-SOL pair is deposited by users who would otherwise earn yield by staking it. In addition, each LST needs its own liquidity pool, which disperses liquidity across the ecosystem. The Sanctum Reserve frees up SOL in swap pairs to stake by providing a universal pool to liquidate any LST, while unifying Liquidity across LSTs – all with minimal slippage. In simple terms, all the liquid stake Token on the Solana benefit from Sanctum's reserves. But how do they get stake protocol to integrate them? This is where the router comes into play.

Sanctum's second product is the Sanctum Router, developed in collaboration with Jupiter. As you might guess from its name, it provides a mechanism to easily and efficiently swap between any two LSTs on Solana. When a user wants to exchange a LST, let's say JitoSOL for hSOL validators issuance by Helius, here's what happens behind the scenes:

1. Withdraw accounts from JitoSOL to a new account
2. Destroy JitoSOL
3. Deposit the new account into the Helius validator's account
4. Minting hSOL
5. Transfer the minting hSOL to the user's Wallet

All of this happens in a single transaction and benefits from the insight that behind the different LSTs are fungible accounts. The Sanctum Router combines Jupiter's routing system to ensure that any LST, regardless of its liquidity, can be exchanged for any other LST.

Together, Router and Reserve have exchanged more than 2.2 million SOL to date.

The existence of these two products has changed the landscape of small LSTs. They no longer need to rely on Depth liquidity pool to entice users to buy LST. Instead, they guarantee instant redemption and liquidity for holders, or a frictionless swap with low slippage between any two LSTs. This also makes LST more useful in the Decentralized Finance ecosystem. For example, borrowing protocol can rely on Sanctum Reserve to settle long wick candle loan to any LST.

Significant drop barriers to establishing a LST have sparked an innovation boom in Solana liquid staking areas.

Single validator LST

Since LST is just a stake account package, each validators can have its own LST. But what's the point? When stake locally, the APY of a large long validators is more or long less the same, which means that validators have no way to distinguish themselves. Earlier this year, as I delved deeper into the world of Solana validators, long validators told me that their biggest challenge was to attract more long stake.

LST, backed by Sanctum's Router and Reserve, provides them with a way to do just that. Issuance your own Token allows stakers to participate in the broader Decentralized Finance space and come up with additional ways to reward holders of staked assets.

Laine, one of the top validators on Solana, rewards laineSOL holders with additional block rewards (beyond the composition of APY), allowing holders to earn more than twice the local stake yield. Similarly, validators Juicy Stake recently issued a SOL to all Wallet Airdrop who hold at least 1 jucySOL.

Throughout the article, I've been mentioning that liquid staking is a tough start for small players. Japan's independent validators issuance's LST picoSOL went from $0 stake rise to $8.5 million in less than 30 days by becoming an active community member and sharing above-average rewards with holders. Recently, picoSOL has been integrated into marginfi, one of the top lending protocol on Solana.

By removing the burden of creating liquidity pools, LST allows small, newly formed, troubled, or ambitious validators to compete with big players. This makes the Solana validators set more decentralized and competitive. Ultimately, it also provides users with a more long validators option without giving up Liquidity and high APY selectivity.

Infrastructure releases LST

Infrastructure projects, such as Solana RPC providers Helius and Jupiter, have also released their own LSTs, but for slightly different reasons.

Solana recently transitioned to a stake-weighted implementation feature that "allows leaders (Block producers) to identify and prioritize transactions through stake validators agents as an additional Sybil resistance mechanism." This means that validators with 0.5% of the stake will have the right to transmit 0.5% of the packets to the leader.

As an RPC provider, Helius' main goal is to read and write transactions on-chain as quickly as possible. Given these network changes, the quickest way is for them to run their own validators. Helius validators do not charge commissions and pass all rewards to their stakes. For them, running a validator is an operational expense, not their core business. With hSOL LST and the right partnerships, they can more easily attract stake volume (Helius can also experiment with programs like RPC credit discounts to hSOL holders.) ）

Jupiter runs a validator for very similar reasons and releases JupSOL. The more long Jupiter's validators have stake, the easier it will be for them to send successful transactions to the Solana network, resulting in faster fulfillment of user orders. Like Helius, Jupiter passes all fees to stakes.

In fact, to attract more long stake, they commissioned an additional 100,000 SOL to increase JupSOL's earnings, making it one of the highest-yielding LST on Solana. Although JupSOL has been launched for less than a month, it has already attracted more than $150 million in TVL.

Project LST

We've also seen some experiments with Solana projects issuance their own LSTs.

For example, Cubik, a public funding protocol on Solana (similar to Gitcoin), recently released iceSOL LST with the help of Sanctum. All stake returns from iceSOL are used entirely to fund public goods on Solana. Therefore, for any Solana believer who holds native SOL, they can convert it to iceSOL without incurring any loss of coins while supporting public goods on the network.

Pathfinders, an NFT project on Solana, has its own LST called pathSOL. pathSOL holders will not only receive NFT minting Allowlist, but the LST will be locked in the NFT forever. If users wish to receive a refund of their minting price, they can redeem their SOL back by burning the NFT. At the same time, the Pathfinders team earns on all locked SOLs.

Finally, Bonk, one of the top memecoins on Solana, recently released their own validator and LST called bonkSOL. What are the benefits of holding? In addition to receiving stake earnings, holders can also receive $BONK Token as rewards.

It is conceivable that this trend will continue. For example, Tensor, where long SOL is idle in the bid, can launch tensorSOL and accept the Token as an offer as a way for users to earn more long (or add a gamification layer to give away the accumulated earnings as a lottery ticket).

SocialFi x LST

One of the most interesting emerging trends in the Solana LST landscape is the possibility for individuals to issuance their own LST.

One of the early proofs was fpSOL, issuance by Sanctum founder FP Lee. Those who hold at least 1 fpSOL can enter a private chat group with FP Lee (similar to Friend.tech Secret Key) while stake rewards for charity.

It's not hard to imagine that this will become more common, with influential individuals issuance LST as a safer option for their followers than NFT or memecoin. They can get distribution through social media (as in the PicoSOL example, it doesn't take long to attract staking), provide holders with exclusive benefits, and earn money by keeping some or all of the proceeds.

Sanctum Infinity

Sanctum's third product is Sanctum Infinity. It is a long LST liquidity pool that supports swapping between all LST in the pool. The team claims that Infinity has the most capital-efficient Automated Market Maker (AMM) design possible. Let's see how it works.

Whenever you want to buy 1 SOL worth of LST, you will always get less than 1 unit of LST. This is because LST accumulates stake rewards over its lifetime, and these rewards are reflected in its price relative to SOL. As of May 8, JitoSOL was valued at $162, while SOL was trading at $146. The JitoSOL/SOL ratio is 1.109, which means that it has provided about 11% return for SOL since JitoSOL's release. This rate will continue to increase over time.

Each LST has a staking pool account with two parameters: poolTokenSupply (total SOL deposited) and totalLamports (deposited SOL + accumulated rewards). Lamports are to Solana what sats to Bitcoin – the smallest unit of measurement. Dividing these two parameters gives us the stake ratio.

How Solana stores stake pool information

Sanctum Infinity uses this in-protocol information as an infallible on-chain Oracle Machine to provide perfect pricing data for every LST in the pool. Traditional AMMs rely on the ratio of asset pairs in their pool for pricing. This can be inefficient if liquidity is low or if there is a temporary imbalance caused by block trading. staking pool account information allows the Infinity AMM to price each LST perfectly, regardless of its Liquidity.

The Infinity Pool is currently an LST basket licensed by Sanctum. Users can deposit allowed LST into the pool in exchange for INF Tokens. INF accumulates stake rewards for all deposited LSTs as well as transaction fees for exchanges conducted within the AMM. Therefore, the INF itself is an LST but has an additional source of income.

Sanctum attempts to maintain the target distribution of different LST within the pool by dynamically changing the interchange fees from one LST to another LST in order to achieve good yields for INF holders, while also providing Liquidity for smaller LST startups. To do this, 20% of the pool is allocated to new LSTs, while the remainder is TVL-weighted to all other LSTs. Over time, the team's goal is to add more long parameters to the assignment strategy.

Infinity maintains the target allocation by dynamically adjusting the interchange fee from one LST to another LST until the target ratio is reached. The fee for each LST is divided into two parts: the input fee, which is the fee paid when exchanging the LST; The output fee, that is, the fee paid when exchanging into the LST. The total cost is the sum of both.

If I want to exchange JitoSOL (0.02% input fee, 0.03% output fee) for JupSOL (0.04% input fee, 0.05% output fee), I will have to pay JitoSOL's input fee plus JupSOL's output fee, for a total of 0.07%. By dynamically adjusting the input and output charges of the LST, Sanctum maintains the target allocation of the AMM pool.

Since its launch last year, Sanctum's product, TVL, has risen to more than $500 million, making it the fifth-largest protocol on Solana.

Future

The term "democratization" is often used in tech circles to describe how a process that would otherwise have a high barrier to entry becomes open to those who historically had no access to it. Sanctum has largely democratized liquid staking. A natural extension of this argument is often that Solana's staking ecosystem is more innovative than Ethereum's. I think there are longest nuances in this.

While Lido was growing, Decentralized Finance was still a junior division, and Ethereum itself, at the time, was transitioning from PoW (PoW) to PoS (attestation). There are too long variables and too few precedents. In contrast, Solana's staking ecosystem was built after Lido existed for longest years. As we've seen, Solana's developers did try to copy Ethereum's playbook. So, it's safe to say that they took inspiration from it.

But replication does not provide any competitive advantage. In this article, the story we see between Lido, Jito, and Sanctum is the story of how an existing player (from Ethereum) competes and is outpaced by a smaller, more flexible, and more localized protocol participant. Can Sanctum's advantage over Solana be sustained? We don't know. As with large longest innovation cycles, new players will emerge to compete with Sanctum's position in staking.

But one thing is clear: between Sanctum's reserves ($30 million worth of SOL) and their routers (integrated into Jupiter), Sanctum is growing into an entity outside of "yet another stake provider." There's value in that.

By Nancy, PANews

Recently, after the Blockchain identity platform Humanity Protocol announced that it had received $30 million in financing at a valuation of $1 billion, the CEO was revealed to have founded a unicorn company Tink Labs and went bankrupt, causing hundreds of millions of dollars of investors' funds to be lost. At the same time, Worldcoin, which also belongs to the DID track, is controversial due to the upcoming huge Token unlock, global regulatory setbacks, and the failure of OpenAI's blessing effect.

The new unicorn Humanity Protocol is off to a bad start, Worldcoin is mired in word-of-mouth and business development difficulties, and the two major $1 billion market capitalization unicorns in the DID track are facing a new test.

**DID protocol using ** palm recognition technology, CEO Zeng Zhi founded a former unicorn company bankrupt **

Humanity Protocol is considered to be the same track project as Worldcoin.

Established in 2023 as a Polygon CDK-based identity system, Humanity Protocol was developed by the Human Institute, Animoca Brands, and Polygon Labs to provide an accessible and non-intrusive way to build human proofs in Web3 applications. Humanity Protocol plans to launch a testnet in the second quarter of this year, and its waiting list has exceeded 510,000 people.

In terms of biometrics, unlike Worldcoin, which uses iris scanning, Humanity Protocol uses palmprint recognition, which is considered a less intrusive authentication scheme. However, iris recognition has the advantages of uniqueness, stability and non-replicability of identity recognition compared with palmprints, and has more advantages than other biometric technologies in terms of comprehensive security performance, and due to the high requirements for the accuracy and stability of this technology, the difficulty of development and the cost of research and development are also large.

In terms of complete ownership of user data and identity, Humanity Protocol, like Worldcoin, has introduced zk-SNARKs technology; In terms of financing background, Worldcoin has completed longing rounds of luxury financing, but its valuation of 1 billion has been realized in Series A financing, and Humanity Protocol has also completed longing rounds of financing. At present, Humanity Protocol has officially announced that it has received a $30 million seed round led by Kingsway Capital and participated by long 200 institutions including Animoca Brands, Blockchain.com and Shima Capital, and has raised about $1.5 million among a group of KOLs, according to PANews, the KOL round is valued at $60 million.

Not only that, but Humanity Protocol is just as easy to access on smartphones as Worldcoin. The project will release an app that uses a phone camera to scan palm prints for identity verification, and will later introduce another layer of security, using a network of palm veins and a small infrared camera for identification. In the future, this system is expected to be applied to the KYC process of financial platforms, and even to enter physical places such as hotels and office buildings through palm prints. In addition, Humanity Protocol plans to issue tokens to pay for verification fees.

Commenting on the launch of the project, Polygon co-founder Sandeep Nailwal commented that Humanity Protocol is not only truly resistant to Sybil attacks, but also natively integrates verifiable credentials into a network of Decentralization validator Nodes, laying the foundation for building a wider range of Blockchain and real-world applications.

After attracting market attention due to its high valuation, Terence Kwok, CEO of Humanity Protocol, was later reported by foreign media Protos to reveal that the smartphone company that had almost bankrupted its $1.5 billion valuation and burned $170 million of investors' funds.

It is understood that Terence Kwok founded Tink Labs, headquartered in Hong Kong in 2012, with 12 million users worldwide, and has received joint investment from FIH Group (a subsidiary of Foxconn Technology Group), Kai-Fu Lee's Innovation Factory and Meitu Chairman Cai Wensheng, mainly to provide hotels with smartphones for guests to use during their stay, with the goal of providing guests with an alternative to roaming fees to improve their hotel experience and sell the collected customer preference data. Interestingly, one of the reasons behind Tink Labs' acquisition of heavyweight shareholders is that Terence Kwok's father, Guo Desheng, is a former Goldman Sachs star private banker, and his major clients include Lee Shau Kee, Kwok Henian and other super-wealthy.

According to the Financial Times, Terence Kwok began to lose money for longest reasons, including aggressive expansion policies, roaming fees becoming cheaper and more popular, and hotels not wanting to pay for the phones he gave away, with losses of nearly $200 million in 2017 and 2018 alone, and then a liquidity crisis. SoftBank, an investor in Tink Labs, was concerned that the company was "moving funds from the Japanese joint venture to other regions to maintain operations," forcing the company to abruptly halt a major project, according to a former employee. Kwok allegedly struggled to pay its employees and contractors and eventually made mass layoffs before closing Tink Labs on August 1 of that year. In January 2020, Tink Labs' European division began liquidation, followed by bankruptcy proceedings.

The former head of HR operations at Tink Labs said, "I never thought it would last, but I didn't expect it to close so soon, Kwok only cares about 'making money.'" According to a previous report by Fortune Insight, Terence Kwok also said during the startup of Tink Labs, "Once the business fails, you can return to school, the opportunity cost is the lowest, and starting a business for three months is like studying an MBA." ”

Worldcoin** is about to unlock large Tokens, facing regulatory investigations in longest countries**

While Humanity Protocol is being hotly debated in the market, Worldcoin is in dire straits due to issues such as Token unlocking, regulation, and insider cash-outs.

According to the analysis released by Decentralized Finance researcher @DefiSquared on the X platform recently, Worldcoin may become the largest wealth transfer event in this cycle, and Worldcoin has a serious inflation problem, with a fully diluted market capitalization of Token WLD as high as $60 billion, which depreciates by 0.6% per day due to the token issuance of issuance and operator claims, and the unlocking volume of WLD will increase significantly in the next few months, which may lead to a large-scale sell-off.

According to @DefiSquared analysis, on the one hand, the supply of WLD will increase by 4% every day once Worldcoin's VC and the team's Token start unlocking. According to Token Unlocks data, WLD will face $31.5 million per day selling pressure starting July 24 (based on May 16 prices).

At the same time, not long ago, Worldcoin revealed on its blog that World Assets, a subsidiary of the foundation responsible for token issuance of the project, will sell 500,000 to 1.5 million WLD per week for private sale for the next six months, with a maximum value of $179 million at current value. @DefiSquared pointed out that this portion of the Token is equivalent to 16.7% of the existing circulating supply (based on 210 million Circulating Supply on May 16) and is sold at a discount, with this portion of the WLD Token supply being used to sell to counterparties for the benefit of the Foundation.

"Worldcoin's Token Economics model was designed from the start to be predatory to benefit teams and early investors. In December last year, the foundation even deliberately terminated the market maker contract (note: Worldcoin previously announced that it would terminate the protocol with 5 market makers on December 15, 2023), allowing the price to be squeezed up at a low Circulating Supply. "According to CoinGecko's latest research data, WLD is one of the four encryption projects with the lowest circulating supply among the top 300 market capitalization**. In this regard, @DefiSquared believes that this manipulative design of low liquidity and high valuation directly benefits insiders, as they can lock in shares through contracts and OTC Trading Hedging high valuations before unlocking.

In addition, @DefiSquared also noted that most long retail investors may not even know that Sam Altman (CEO of OpenAI) is no longer actively involved in Worldcoin and that the project has no relationship with OpenAI. According to a Bloomberg report in April this year, at that time, Worldcoin was looking for cooperation with tech giants such as OpenAI.

It is worth mentioning that Worldcoin is also facing regulatory bans or investigations in longest places around the world such as Spain, Portugal, South Korea and Hong Kong due to user data privacy issues, so Worldcoin's main supporters not only met with relevant governments to improve government relations, but also open source iris recognition inference system this year to enhance transparency and implement a new personal data self-custody strategy, and recently open source the new SMPC system and securely delete old iris code to help improve biometric data security. Similarly, for Humanity Protocol, it may also face regulatory issues arising from the collection of user data.

Author: Minta

1/n (continuous update) Open a post to record the secondary idea of Crypto & AI Web3 & AI Sector layering is similar to Web2, the data layer/Computing Power layer is the lowest infrastructure, then to the model layer, the service layer/agent layer, and finally to the application layer.

2/n Narrative From a narrative point of view, the lower the degree of standardization/homogeneity of the track, the greater the probability of alpha. For example, the Computing Power layer and GPU are homogeneous, so the Computing Power project side is mainly in the volume gameplay/GTM/Computing Power asset derivatives. The least standardized segments are: model layer, data layer, and agent layer.

3/n Model Layer The model layer is a track with very large variables, and the emergence of a new model can quickly change the market landscape. For example, OpenAI's GPT-4o opens up endless possibilities for new ways of human-computer interaction. Microsoft's release of Phi-3 and Apple's release of OpenELM on Hugging Face have both fast-tracked the process of mobile training. From a second-level perspective, large variables = high chance of non-consensus = high chance of alpha.

4/n Model Layer A good model platform has at least the following characteristics: 1. Model composability: support for longing large model rotation, rather than a single large model; 2. Need to understand/be compatible with the business logic of Computing Power resources; 3. Supervised Calculation/Model Scoring In summary, supporting the call of hybrid model libraries and Tools APIs, and being compatible with Computing Power resources, is the model platform that can cross the bull and bear.

5/n The current Top1 of the Bittensor Case model layer is undoubtedly Bittensor, in order to create an Incentive Layer, what exactly did Bittensor do right? A brief recap of Bittensor's Timeline (incomplete statistics): 1. Before October 23: Precipitating the community during the testnet; 2. Gradually open subnet registration in October 23: from the first batch of 9 subnets to 32 subnets; Gradually expanded to 64 subnets in May 24;

6/n Bittensor Case 3. Follow the ecological adjustment incentive model: from the universality of incentives to the survival of the fittest through incentives, such as: (1) The Halving time is advanced, and the first Halving is adjusted from 25 years to 23 years; (2) Tokenomics adjustment, the direct incentive distribution ratio of the subnet is completely left to the market to decide, adding more longer dimensions of the game; 4. Slowly form a flywheel effect

7/n Bittensor Case From a second-level perspective, the "wealth creation effect" that Bittensor has successfully created is very crucial. Several of Bittensor's decision-making inflection points have stepped on the Node of the time when liquidity surged. Successively expanding the number of subnets during Sep-Nov '23 to provide a large number of buys; At the same time, combined with its special stake mechanism, it has quickly promoted the pump of Token prices, and then attracted more long projects to register as subnet, forming a virtuous circle. Therefore, you will find that the subnet registration fee is the best weather vane for the $TAO price, and the subnet registration peak and the price peak always appear one after another.

8/n Bittensor Case As of this writing, the top 8 Bittensor staking are shown in the figure. The top 8 stakers have a combined Staking Rate of 61.2%, and the total Staking Rate of the projects is 84.61%. At present, MC is 2.5B, and it is estimated that MC can reach 10B+, and only need to predict the staking situation of large investors to complete the price estimate.

9/n Bittensor competitors For Bittensor's competitors of the same type, the problem of high entry barriers needs to be solved, and the current subnet registration fee of TAO is still not low; And it is necessary to rely on strong BD capabilities to roll out a large number of models in a short period of time, and do a good job of market capitalization management at the same time. Some of the early projects are:

@communeaidotorg, @zero1_labs, @arbius_ai, etc., are doing similar things, and if their ecology expands rapidly, it may be a good entry point.

10/n Bittensor competitors Take Commune as an example, which is the entrepreneurial project of the core builder of the TAO ecosystem, compared with TAO: 1. Commune has a lower barrier to entry, making it easier for Dev to register modules; 2. Commune's incentive system is greatly simplified/deleted, and decision-making relies on a simpler voting system; Overall, there are currently no projects in the second tier that can compete with Bittensor in the short term.

The 11/n model layer is not coin the project alternative @Nimble_Network a global orchestration layer is built to achieve general artificial intelligence operation and full-link access; @Gatling_X launched an EVM that supports computing scenarios; @ritualnet long a holistic approach, from incentivizing the network, to linking distributed computing devices, model hosting, sharing, inference, optimization, etc., to accessing the model's API layer, as well as censorship resistance and privacy.

In the wave of longing of digital assets, the NFT market has been at the forefront of innovation and change. Especially on the Solana network, an NFT marketplace called Blob is quickly attracting a lot of attention from the industry.

At the beginning of May, the Blob team successfully inscribed the rune "EPIC•EPIC•EPIC•EPIC" on the fourth Halving Block of the Bitcoin, which caused the Floor Price of the Blob NFT to soar to BTC.0699 in a short period of time. According to Magic Eden data on May 5, the floor price of the blob has reached an all-time high, reaching 0.07555 BTC (about $4807).

How BLOB, an NTF with its unique art style, gained popularity on Solana is what we will try to explore next.

If you're a regular Twitter user, you may have noticed a unique phenomenon these days: your timeline is occupied by a series of images adorned with explosive symbols 💥💥. These eye-catching images are often accompanied by short labels, such as #SendBlob or #BlobArmy, as if a mysterious force is rapidly spreading online, but the meaning behind these images remains a mystery to outsiders.

The images represent an NFT project that has gained a lot of attention on the Bitcoin network – BLOB, short for "Bitcoiners Love Bitcoiners." In the technical world, "BLOB" refers to "Binary Large Object", a term used to describe how large strings of data are processed and stored. More than just a digital collectible, the BLOB project was co-founded by @Elocremarc and @nurorealm, veteran members of the Ordinals community, to create a long community of scientists, artists, digital punks, and developer community leaders.

The highlight of the project is its free inscription strategy and unique approach to community engagement. Early on, the project team prioritized Ordinals OG members, artists, developers, and OG collectors in the Allowlist allocation, encouraging them to create and tweet BLOB artworks, so the wide spread of these works was one of the main reasons why BLOB quickly became popular. Many users have already received Airdrops from BLOB, and those who have not received them are also paying close attention, looking forward to the opportunity to publicly inscribe.

Each BLOB creation is not a simple static image, but achieves a unique dynamic effect by embedding HTML, CSS, and Java code directly on the Blockchain. This design allows BLOB artworks to dynamically retrieve inscription IDs and Metadata through recursive endpoints as they acquire and process Blockchain data in real time, bringing these artworks to life.

What's more worth mentioning is that BLOB is extremely interactive. The complex script allows these artworks to respond to the audience's participation, constantly changing and evolving, not only as a visual pleasure, but also as a new interactive experience. This is further confirmed by feedback from the community and longing media effects, making BLOB not just an NFT project, but an all-encompassing art and technology revolution.

BLOB has risen not only because of its novelty, but also because of the technological innovation and strong community support behind it. With the proliferation of NFT projects in the Bitcoin ecosystem, BLOB has broken through with its unique "grotesque" charm and innovative technology, indicating that it may become one of the most high-profile projects this year.

With the rapid evolution of the NFT market, projects such as Blob have become more than just collectibles of digital art, but also a fusion of community, technological innovation and cultural expression. The Blob project's success on the Bitcoin network, along with its unique interactive artwork, is a prime example of this integration.

Just as global tech giants are laying out the Metaverse and seeking to occupy a place in the next generation of the Internet, NFTs also play an important role in this process. As an emerging symbol of encryption culture, NFT is not only an object of investment, but also an expression of personality and identity.

In the future, as more long people begin to recognize and appreciate the unique value of this new digital asset, we can expect projects like Blob to not only compete with NFT projects in top markets, but also drive the growth and development of the entire market while providing more long value to users. Globally, as technology advances and communities expand, Blob and other NFT projects are expected to continue to demonstrate their unique charm and potential to lead us into a richer and more long digital future.

Author: Charlemagne

Compilation: Encryption Weibao

Pump theft incident lazy bag, thanks to the @0x_charlemagne brother for the wonderful analysis of the cause of the accident, here is the translation and add a little personal speculation of mine.

How does the attack work?

First of all, the attacker @STACCoverflow is not a bull Hacker god, but a former employee of @pumpdotfun. He has the Wallet account that Pump uses to create permissions for this feature for each Raydium transaction pair, which we call "hacked account". All Bonding Curve LP pots created on Pump before reaching the Raydium standard are called "reserve accounts".

An attacker borrowed a Flash Loans through @marginfi to fill up all the pools that had been created but were not filled enough to be in the Raydium state. Originally, the operation that would have occurred at this time was originally stored in the virtual pool "Preparatory account$Sol because it met the criteria of Raydium and would be transferred to this "hacked account". But at this point, the attacker siphons off the $Sol that comes in, so that none of the memecoins that are supposed to be on Raydium and locked the pool can go to Raydium (because the pool has no money)

So, whose money did the attackers hack?

To this @0x_charlemagne brother explained:

First of all, it's certainly not @marginfi. Because the money of the flash loan is returned in the same block, its purpose is only to trigger the operation of transferring money from the reserve account to the hacked account, and it will not be lost

Secondly, the earth dog that has been sent to Raydium in the past should not be affected because the LP has been locked (personal speculation)

The unfortunate thing should be that before this attack, all the unfilled pools in the entire Pump, all the users who bought in, their $Sol was diverted by the above attack. This explains why the damage could be as long as $80M (note: according to the latest information, the amount of damage is about $2 million).

Why does an attacker have this "hacked account" private key?

First of all, it must be the mismanagement of the team, this one has not been washed, and it is the same as Blast, the North Korean patriotic network development general.

Secondly, we can guess that this filling pool may itself be one of the previous jobs of this attacker. Just like when Friendtech V1 was launched last year, there were a large number of bots that snapped up your key, and in the first few days, there was a high probability that they would be the official own, which played the role of making a market for the key and guiding the initial popularity.

It is safe to speculate that at that time, in order to be able to do the initial cold start, Pump made the attacker responsible for filling the pool of coin with the project's own money (the estimated long was sent by himself, such as $test $alon) and let them go to Raydium and then pump to create attention. It's just that I didn't expect to become the key to the inner ghost in the end.

Lessons learned

First of all, imitation plates must pay attention, don't be stupid and just copy a fur, which means that someone will trade when the product is put there. To make a mutual aid disk, you have to provide an initial thrust.

Then be sure to do a good job of permission management and pay attention to security.

1. Cash trading of USDT was convicted of illegal business operations

On December 16, 2023, the Guangdong Provincial High Court released an article "This kind of price difference can't be earned!" This is a criminal case that has been adjudicated in 2022, and the article emphasizes that U merchants moving bricks to buy and sell USDT is equivalent to buying and selling US dollars, which is a disguised act of buying and selling forex, and once the amount exceeds 5 million, it constitutes the crime of illegal operation.

Prior to this, the crypto world's understanding of virtual money transactions as constituting a criminal offense was only that stolen money was received during the transaction, and it was presumed that they subjectively knew it, which either constituted the crime of aiding and abetting or the crime of concealment. (This is limited to discussing the crimes that can be constituted by pure U business)

However, the results of the case released by the Guangdong Provincial High Court mentioned above have shattered this perception.

The case occurred in February 22, A is a U businessman, often collect U from retail investors, and the collected U is sold to the acquisition party in cash, this time with the acquisition C agreed to pay money in Zhongshan City, Guangdong Province, and hand over U, because after the transaction, he will carry a large amount of cash, for which A also specially hired a bodyguard B. A and customer C exchanged about 814,000 U at the Exchange rate between RMB coins and US dollars on that day, for a total of 5.1 million RMB coins. As a result, on the way back from renting a car, A and B were arrested by public security officers at the checkpoint.

This is a typical U business offline face-to-face cash selling U case, the entire transaction ** did not involve stolen money, there was no Exchange currency, only the act of buying and selling USDT, was convicted of illegal business **, but the defendant did not appeal, the judgment has taken effect.

The trial court held that A and B used the form of buying and selling virtual money to buy and sell forex in disguise, and the circumstances were serious, constituting the crime of illegal business operation, A belonged to the principal offender, and B participated in the whole process as a bodyguard, and knew about it, and was an accessory.

In the end, A was sentenced to 8 months in prison and B in 6 months in prison for the crime of illegal business operation. In addition, the 5.1 million people's coins seized in accordance with the law were confiscated according to law, and Li Si's mobile phone was a tool for committing crimes in the transaction of virtual money and was confiscated according to law.

The trial judge held that:

*In accordance with the provisions of Article 2 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Criminal Cases of Illegally Engaging in Fund Payment and Settlement Business and Illegal Buying and Selling of Forex, those who carry out illegal trading of forex such as reselling forex or disguised trading of forex, disrupting the order of the financial market, and the circumstances are serious, shall be convicted and punished as the crime of illegal business operation in accordance with the provisions of Article 225, Paragraph 4 of the Criminal Law. *

In this case, defendant A used cash to acquire the USDT of retail investors in the "crypto world" at a price lower than the platform, and then resold it at the US dollar Exchange rate on the day to earn the middle price difference and profit from it. According to A's confession, in order to acquisition USDT reselling for profit, he even borrowed money from a bank, and the loan amount was as high as one million. This kind of behavior of converting large sums of money into US dollars through USDT will inevitably reduce the country's forex reserves, affect the state's macro-management of forex, undermine the sole legal status of the people's coin in the domestic market, and greatly interfere with the effectiveness of forex management and the stability of the legal Exchange Rate, disrupt the normal order of the financial market, and is an act of buying and selling forex in disguise, which should be punished.

Second, buy and sell USDT = buy and sell USD?

**Personally, I believe that there is a clear logical error in the inference of the above applicable legal provisions. I do not agree with the judgment that the act of buying and selling USDT is equivalent to illegal trading of forex. **

We first have to clarify what forex is?

According to Article 3 of the Regulations of the People's Republic of China on Forex Administration:

For the purposes of these Regulations, the term "forex" refers to means of payment and assets that may be used for international settlement in coin other than the following:

*(1) Foreign coin cash, including paper coins and minted coins; *

*(2) Foreign coin payment vouchers or payment instruments, including bills, bank deposit certificates, bank cards, etc.; *

*(3) Foreign coins securities, including bonds, stocks, etc.; *

*(iv) Special Drawing Rights; *

*(5) Other forex assets. *

**Obviously, USDT is not in this list. In addition, there are no laws, regulations, rules, normative documents and other documents in China that characterize USDT as forex. **

In addition, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, and other ten departments led by the Central Bank also defined virtual coins in the Notice on Further Preventing and Handling the Risk of Speculation in Virtual Money Transactions (924 Notice) issued on September 24, 2021, Article 1, Paragraph 1 of the Notice:

*(1) Virtual money does not have the same legal status as fiat coins. Bitcoin, Ether coin, USD and other Virtual Money have the main characteristics of non-coin issuance authorities, the use of encryption technology and distributed account or similar technology, and the existence in digital form, etc., and are not legally compensatory, and should not and cannot be used as coin in the market for circulation. *

** To make it clear, virtual money belongs to specific virtual goods, not coins, since it is not a coin, it is even less likely to be forex. Therefore, buying and selling USDT is not the same as buying and selling forex in disguise. **

**3. Does buying and selling USDT constitute an illegal business crime? **

The views can be seen from the typical forex cases related to virtual money jointly issued by the State Administration of Foreign Exchange and the Supreme People's Procuratorate:

Buying and selling virtual money constitutes the crime of illegal business operation Circumstance 1:

Using virtual money such as USDT as a medium to realize the exchange between RMB coins and forex constitutes the crime of illegal operation. The actor used virtual money as a medium, used the special properties of virtual money to circumvent national forex supervision, and realized the value conversion between people's coins and foreign exchange through the exchange of "*** RMB coins - virtual money - foreign exchange ****", which is a disguised purchase and sale of foreign exchange, and shall be investigated for criminal responsibility for the crime of illegal business operation in accordance with law. *

Buying and selling Virtual Money constitutes the crime of illegal business operation Circumstance 2:

• Providing virtual money perpetrators with illegal forex trading personnel colluding in advance, or knowing that others are illegally buying and selling foreign exchange, but still providing substantial assistance to them in realizing the conversion of local coins and foreign coins through trading virtual money and other means, constitutes a joint crime of illegal business operation. Providing virtual money trading services to persons who illegally buy and sell forex, but only have a general understanding of the criminal acts they help, and do not specifically realize that helping to illegally buy and sell forex can help pursue criminal responsibility for the crime of information network criminal activities. *

Only in the above two circumstances can it be determined that it is a disguised purchase and sale of forex, constituting the crime of illegal business operation. In the above-mentioned case of the Guangdong Provincial High Court, A's behavior model is only "people's coins-virtual money", which does not involve the conversion to US dollars, which does not meet the above situation 1 and has nothing to do with scenario 2.

According to Article 96 of the Criminal Law, the term "violation of state regulations" in the Criminal Law refers to violations of laws and decisions formulated by the National People's Congress and its Standing Committee, administrative regulations, administrative measures, decisions and orders issued by the State Council.

In other words, only those formulated by the National People's Congress, the Standing Committee of the People's Republic of China, and the State Council can be regarded as "state regulations". The "9.24 Notice" was issued by 10 ministries and commissions including the Chinese People's Bank of China, and the notice is a departmental regulation, not a national regulation. In addition, the "9.24 Notice" also clearly does not prohibit individual citizens from investing in virtual money, which means that ** buying and selling USDT does not violate national regulations, let alone constitute the crime of illegal business **.

IV. Conclusion

Therefore, I personally believe that ** buying and selling USDT does not constitute an illegal business crime. **In the absence of clarity in relevant laws and regulations, the criminal law shall uphold modesty, implement the principle of legality of crimes, and adopt relatively strict standards for criminalization, so as to avoid infringing on the legitimate rights and interests of citizens.

This is the motto of the judge in the case, which emphasizes that the law should be fair and just, and that everyone should be treated equally. But revisiting the case, is that really the case?

AUTHOR: JAY

Compilation: Deep Tide TechFlow

So, what's next for Ethereum? In this article, I talked about modular blockchains, database design, and quoted GCR to try to answer this question.

The argument for the innovator's dilemma can be summed up as follows: "Successful companies are often unable to adapt to paradigm shifts, especially when it comes to technological innovation. The reason for this is that they are overly focused on making their product a success, rather than trying to update and ideas that they are not familiar with."

In the world of Blockchain and smart contracts, we have made considerable progress over the past few years. Now, a million-dollar or $250 billion question is: What is the fate of Ethereum next?

Through this article, I will argue that Ethereum has peaked in 1) relative to the valuation of all encryption assets (ETH.D); and 2) relative usage and adoption. I'll start by exploring the concept of modular blockchain, comparing it to traditional database design principles, and then tie it all back to Ethereum and its future.

Modular blockchain

There is now a more principled way of thinking about what a well-functioning Blockchain is, and a reasonable way to decouple (and scale) the core components. This is the battle between monomers and modules.

The core idea behind Blockchain modularity is that there are four basic functions:

Perform. Determine the "after" status of the transaction. If I send Tokens to a specific Wallet, the execution layer will determine the relevant balance before and after the transaction.

Settlement. Determine if the submitted transaction is "legitimate". After sending the Token, the balance is xyz - Settlement determines if xyz is correct.

Consensus. Determine the final state after a bundle of transactions. This layer determines 1) the correct order for a given series of transactions, and 2) the final state after those transactions are processed.

Data availability. In order for any of the above three features to exist, there needs to be a prior state and an end state. The function of the DA is to provide state to the execution layer and update the state based on the end result of the Consensus.

As with any engineering problem, a "perfect" Blockchain only makes sense if well-defined use cases exist. The existence of this framework allows for more specialized Blockchain design, and Blockchain built for high-throughput games has very different needs than Blockchain that aims to become a global Decentralization Ledger. This frame of thought reminds me very much of the principles of database design, especially the debate around SQL versus noSQL.

Database design

Databases have been around for decades longer than Blockchain. Consensus on its design is that there is no such thing as a perfect database. Like longest engineering problems, everything needs to be weighed.

The framework for building scalable databases goes back to "What is the use case?" Before making a decision, I ask a few questions:

• What is the approximate ratio of read-to-write long less? On apps like Telegram or Slack, the read and write volumes are similar, while on Twitter, the read volume is orders of magnitude higher than the write volume.
• In a distributed system, there is a concept of consistency and availability. In other words, this can be rephrased as: Are we more concerned about inaccurate data or application downtime? Again, it depends on the situation. For fintech applications, consistency (accurate data) is long important.
• long old data is important vs. fresh data? How does this relate to read and write load? Does our database allow us to enforce a strategy to handle concurrent writes and reads? For example, my wife withdraws cash from my bank when I swipe my debit card, how can I prevent the classic Double Spending problem?
• What is the read mode? Do you need flexible access to your data, or do you often define data up front? Did you perform longest joins in different datasets?

In addition to technical considerations, it's important to understand the following:

• How many engineers long proficient in this technology? Longest engineers really want to build with this technology?
• If we want to fork the underlying code and make adjustments, is there a way to get positive support?

The future of Ethereum

Now to tie it all together in its entirety - there is no such thing as a perfect Blockchain. Good engineering is about trade-offs, and there is no one-size-fits-all approach. So, how did Ethereum become such a "dominant" platform? Why is Ethereum priced as if it were the perfect Blockchain? Finally, what's next for Ethereum?

**How did Ethereum become such a "dominant" platform? **

Four years ago, Ethereum was the first choice for building smart contracts platforms. Compared to every other platform, it has excellent development tools like Hardhat, CryptoZombies, etc. In addition, it has a loyal user base, and the chain and tokens are "Decentralization". At that time, centralized Blockchain was more likely to be a scam. ETH is also cheaper as an asset, which means lower gas fees.

Today, developers have more long smart contracts platforms to choose from, each with unique trade-offs. While scams still exist, they have decreased significantly compared to four years ago with more long talent and capital entering the space.

The reason for Ethereum's past success is also the reason why it will fail in the future. There was a time when Ethereum was the only viable smart contracts platform for developers. Legitimate use cases (Decentralized Finance, NFTs) provide ETH with a huge head start. But at this stage, the focus shifted to value accumulation (super-stable coins) and competing with Bitcoin as the internet's native default store of value (flipping).

The desire to become both a smart contracts platform and a decentralization "super stable coin" adds significant friction (higher gas costs, congested networks) to marginal users and developers. AS CONFUCIUS (AND GCR) SAID: THE MAN WHO CHASES TWO XTZ CATCHES NOTHING

**What's next for Ethereum? **

Users will flow to where the app exists and the cost is reasonable, while app developers tend to be more cautious and long-term. Because their overhead is longest larger than the users themselves. Developers will build on platforms where their applications have the potential for long-term rise and expansion.

Now look at Ethereum, which has an average transaction speed of 15-20 TPS and gas fees typically soar to $200. There are very clear limits to the applications that can be built on Ethereum, and these applications require very little interaction. For example, borrowing protocol is a good app on Ethereum because I might interact with it a few times a year.

But if I'm an app developer and I'm going to build an app that intends to scale to 100,000 or 1 million users and has a higher usage pattern, it's not feasible to build such an app on Ethereum.

This is becoming more and more evident as viable alternatives come to the fore.

• FriendTech is built on Base L2
• Pacman and the Blur team are considering launching their own L2
• DYDX uses their own specific AppChain

The modular blockchain framework provides a set of trade-offs that Blockchain can choose from. We're now in a state where support for Blockchain infrastructure along the point of the trade-off curve is starting to emerge.

Last but not least, there are incentives.

As Charlie Munger has always said, "Show me incentives and I'll tell you the results." The incentive structure built on Ethereum is inferior among other existing Blockchains. Venture capital firms and new L1 teams are very interested in building a strong, thriving ecosystem. As an investor, I wonder why my team is still building on Ethereum when Tokens are so decentralized and the ecosystem is already so crowded? Why not promote app development on the Blockchain I have a stake, where L1 valuations are longer lower.

The reply in this tweet makes things very clear.

ETH is no longer at the effective forefront of Blockchain design. No matter where you want to be on the trade-off curve, there are better options for smart contracts platforms, as do incentive structures. Unless Ethereum undergoes fundamental changes in the way its community and organization operates, its relative advantage in valuation and usage has peaked.

Source: Bloomberg

Compilation: Ning

KOL, for the encryption field, is undoubtedly a very special existence.

Because they often have a large following, under the influence of influence, they can often be used as a weapon to draw attention, but also a powerful object for being played for suckers. To use an inappropriate metaphor, KOLs can be both referees and athletes.

However, for encryption, an industry where sentiment and liquidity occupy an important position, KOLs who are closer to first-tier investors than institutions largely have more advantages than disadvantages, after all, the marginal cost of issuing coins is close to zero, but liquidity is priceless. Obviously, the project party also smelled this shareholder wind.

In recent months, there has been a lot of discussion about KOLs and VC, because KOLs tend to have shorter unlocking periods and lower valuation discounts, but compared to VC who not only have to invest a lot of real money but also share resources in sales, operations, and technology, it long seems that KOLs can only send a few tweets to end their obligations.

In this regard, some VCs complained, and even retail investors believe that KOLs are easier to obtain benefits in the Bull Market. But is that the case?

In the midst of various controversies, Bloomberg recently released an Depth Report on the KOL round, analyzing the advantages and challenges of KOLs, and the following is a full text compilation of Gyro Finance:

Back in March, the Crypto Assets market was booming, with Bitcoin continuing to hit record highs and billions of dollars flowing into Spot ETF. And among them, there is a special group of investors who cheer more than the other large longest investors.

At the time, the startup Monad Labs closed a new round of funding, valuing venture capitalists, including Paradigm, at $3 billion. Mona is already a very large fundraising project by Crypto Assets standards, but it has another distinctive feature — according to people familiar with the matter, some people known in the industry as "KOLs" are allowed to invest at just one-fifth of Paradigm's valuation.

These so-called "KOL rounds" are quite similar to the celebrity marketing cracked down by US regulators in recent years, and as digital assets rise from the bear market, "KOL rounds" have also sprung up like mushrooms and become a major spectacle in the encryption world. Investors who get preferential terms are more likely to be encryption authors or influencers than ordinary marketing targets for athletes or other celebrities than celebrity deals.

According to interviews with KOLs, entrepreneurs, and legal experts, KOLs typically receive longest favorable conditions such as valuation discounts and shorter lock-up periods in return for promoting Crypto Assets projects. In recent months, similar deals have become a source of controversy, with opponents focusing on inadequate information disclosure and potential risks to retail investors.

Several industry insiders with knowledge of such deals said that at least some start-ups did not require KOLs to disclose project affiliations when raising funds, which is a clear violation of US regulations.

Of course, there is no indication at this time that Monad Labs' financing violated any U.S. securities regulations. One investor said the company did not make any explicit requirements for KOLs, while CEO Keone Hon declined to comment on the lock-up terms and disclosure rules given to such investors.

San Francisco-based Paradigm, which runs one of the largest encryption venture capital funds, also declined to comment.

01, KOLs and Crypto Assets

Michael Selig, a partner at Willkie Farr & Gallagher LLP who specializes in securities law, replied in an email: "Including KOLs and influential industry influencers in a funding round, with the hope that these people will promote the Token of the project, could be scrutinized by U.S. SEC." ”

Part of the reason for the KOL round is the uniqueness of the Crypto Assets market. In encryption financing, digital asset startups typically provide equity to raise venture capital funds, while others raise capital through the sale of issuance Token or affiliated Token. The valuation of the project depends on the number and price of Tokens sold, similar to a stock sale, in which there are also hybrid funding rounds that mix Tokens and equity, such as the aforementioned Monad Labs.

Buying Tokens generally doesn't give investors the same protections as equity financing, but it does offer a clear advantage: investors can sell Tokens in as little as a few months, while equity investors are often tied up for years before liquidity events like IPOs occur.

In addition, the role that KOLs play in the Crypto Assets market is also very unique. Over the past long years, Crypto Assets has incubated a alts industry as celebrities, from celebrities to athletes to self-proclaimed experts, continue to promote projects online. In the ICO boom of 2017, having a large number of followers on Twitter may be a ticket to riches for authors, the specific operation is to get popular tokens at a discount in advance, and then sell them to get huge profits after the coin price rises.

02, the temptation of "making a lot of money".

It's important to note that to become an influencer investor, you don't necessarily need to have too long followers.

Simon Chadwick, co-founder of Crypto Assets platform Eclipse Fi, said: "Almost anyone, with some influence or community, can become a KOL. "For example, this could be someone who has 5,000 users on Twitter and writes a research report," he said. He was referring to the social media platform now known as X.

Eclipse Fi's main business is to assist projects in issuance Token on the Cosmos Blockchain. Chadwick mentioned that to make coin more convenient, the company has assembled a network of long 400 KOL investors that start-ups can take advantage of. "The potential for quick returns is so great that some KOLs try to set up longer accounts using fake social media accounts, which allows them to invest longer times in the same funding round."

Chadwick highlighted that KOLs who participate in this type of trading can receive a 20% to 50% discount, as well as a shorter unlocking period, in short, they can sell their tokens earlier than other investors.

The KOL round is indeed a blessing password. "Some KOLs have invested in hundreds of rounds and made a lot of long money." He said.

The U.S. SEC, as the regulator, has been cracking down on influencer marketing for Crypto Assets projects. In October 2022, Kim Kardashian agreed to pay $1.3 million to end regulators' allegations against her that she violated U.S. rules by promoting digital tokens by failing to disclose that she was an employee, although she did not comment on those allegations. Four years ago, the U.S. SEC fined Floyd Mayweather for failing to disclose similar Crypto Assets marketing plans.

Emily Meyers, general counsel and chief compliance officer at encryption venture capital fund Electric Capital, said she would caution projects against KOL funding in light of the SEC's prosecution of Kardashian, as well as similar cases last year, in which the SEC charged eight celebrities, including Lindsay Lohan, with being paid for undisclosed Token promotion.

The six accused celebrities, including Lohan, reached settlements without acknowledging or denying the SEC's charges.

At the moment, the SEC did not respond to Bloomberg's request for comment on the KOL round.

03. Pull up and sell?

Regardless of the regulatory implications, KOL rounds are undoubtedly controversial in the Crypto Assets space.

An encryption KOL who posts on X under the pseudonym CL and is a member of the early-stage investment group eGirl Capital admits that she has been receiving pitches from Crypto Assets projects lately to invest as a KOL. CL is not based in the United States, and she asked for anonymity due to the sensitive nature of the topic, which they have avoided because of potential reputational risks.

CL, which has nearly 200,000 followers on X, said the KOL deal surge was "an extension of the low-market capitalization Token Accumulation pull-up sell-off, but on a much larger scale."

Eclipse Fi's Chadwick said that in large deals backed by big VCs, KOLs are often willing to accept longer lock-up periods. But for this, they will ask for a higher discount rate in the transaction.

Orla Browne, head of corporate strategy at Dealroom, believes that because the details of KOL investments are often difficult to be transparent, the statistics of venture capital data do not separately list reports on KOL rounds.

In practice, they tend to take different forms, e.g. part of the deal outlines what the KOL should do in terms of promotion in the form of a written contract, while part of the deal is done through Telegram. Some of these are part of venture capital-backed financing, while others are more early-stage projects that are not yet mature enough to attract large wind investors. **

While the vast majority of long KOL deals are made up entirely of Token, there are also deals that combine equity with Digital Money warrants that have not yet been launched.

Bloomberg looked at a written contract for KOL financing, which stipulates that KOLs who invest at a discounted price must promote the project through podcasts and TikTok videos, among other things. protocol also mentioned that KOLs must disclose their affiliation with the project when promoting the project.

But longest projects don't choose to do that.

0xJeff said, "It's not a requirement. He is the operator of Steak Capital, a Crypto Assets consulting firm that lists KOL management as one of its services. It really depends on whether the KOL wants the community to know about their investment relationship and whether they are affiliated with the project or not. "OxJeff is similar to CL in that he asks to tweet anonymously and not use his real name.

04, uneasiness is spreading

Jed Breed, founder of Breed VC, said that large Crypto Assets projects usually don't have explicit requirements for KOL investors. Instead, the issuance's goal is to build a so-called "secret network" within the Crypto Assets KOL community. "I've never seen a venture capital deal go like this, where if you want to get this allocation, you need to do X, Y, Z and so on," Brad said. ”

Of course, there are also startups that are very hot and don't need to offer preferential terms to KOLs.

Humanity Protocol, which is building a Blockchain network that uses palm prints to verify identities, raised money from venture capital firms like Animoca Brands at a $1 billion valuation this month. KOLs poured in about $1.5 million in March, but their investment conditions were "the same as some venture capital firms" and the investment cap was only $25,000 each, Humanity founder Terence Kwok revealed.

Joshua Cheong, a product engineer at Parity Technologies who participated in Monad Labs' funding round as a KOL, said the company didn't ask him to advertise the project at the time of the investment. He declined to comment on the valuation and lock-up period.

According to OxJeff, KOLs in the U.S. are more cautious about SEC scrutiny, so they often choose to disclose their relationship with the project party when promoting a project or token. **

OxJeff believes that no matter where the KOL is located, the unease has begun to creep in across the community. This is in large part because "on-chain detective" ZachXBT, a Twitter user with nearly 600,000 X followers, has begun to publicly baash and expose KOL deals.

"I'd be lying if I said KOLs don't worry, and all KOLs are panicking at the moment," OxJeff said. Especially at present, there are countless KOL rounds long, and in long, they are not going well. ”

Words: Haotian

What do you think about @BuildOnCyber protocol upgrading to a layer2 public chain focusing on social networking - Cyber? After completing a series of staking and restaking community incentive activities, CyberConnect's new social public chain built based on the OP Stack was officially launched. What are the potential impacts of the new Cyber chain? Next, I would like to briefly share my thoughts:

1. How to build a popular social app and when it appears seems to be a random "emergence" event, and even if it suddenly explodes, it is difficult to escape the curse of a short life cycle. In my opinion, this is due to the past development of Social, either like Farcaster and Lens, the overall architecture of the communication protocol layer changes, relying on the adaptation of other chains and applications to integrate applications; Either Friendtech, Degen, etc., can only be driven by apps and communities, and eventually they will not be sustainable due to the cumbersome economic model.

And an exclusive social chain that focuses on user experience and designs a user retention mechanism for the C-side, and tries to motivate developers to build social applications for the B-side, may be the best solution to give birth to popular social apps?

2. Cyber quickly enters the layer2 field to make an exclusive social chain, and draws on the strengths of others in terms of technical architecture:

1. Choose to build based on the OP Stack and join the Optimism super chain family, fast chain is the appearance, more importantly, it can connect the resources behind the OP Stack Alliance, share users and liquidity (potential Airdrop);

2. The Altlayer-based RaaS service realizes the availability of DA data beyond the flexible integration Ethereum, which can significantly drop the cost of application construction and operation and maintenance in the initial stage.

In addition, CyberConnect's own CyberConnect protocol social graph, CyberDB Decentralization storage solution, identity authentication methods such as account abstraction (AA), Passkey, WebAuth, and Paymaster Gas are all beneficial to attract developers to develop applications. The key is that a social chain must have a low user entry threshold and an optimized product use experience, and when the chain becomes a unified entry layer, the original unified decentralized identifier (DID) mechanism of CyberConnect will be amplified and become a strong label for its social entrance.

3. The reason why Cyber wants to upgrade from a decentralization social protocol to a chain, in essence, the goal is to further gather a larger range of resources through the bottom layer of the chain, for example: when finally upgraded to EigenDA, the new Cyber chain will have continuous asset gain in Staking and Restaking.

Not only does it adopt the secure consensus layer of AVS, but it also introduces a re-staking mechanism to introduce LRT assets such as ETH, stETH, ezETH, and pufETH to the Cyber Chain. It realizes the implementation of the story told by Eigenlayer as a practical use case, and at the same time finds a new application scenario for CYBER Token to maintain the security consensus of the chain through the dual stake model, which is equivalent to upgrading the token model.

In short, the new brand story of CyberConnect from protocol to chain will obviously have a "gain" effect.

Although the impression of the "social chain" may eventually have to be deepened by the birth of several phenomenal social applications, the Cyber linkage OP Stack super chain, the Eigenlayer AVS re-staking model, and the depiction of a new entry layer story for its CyberDID will also lay the foundation for the development of its social chain in the imaginary shorts of the short-term resource aggregation narrative.

Author: Frank, PANews

The man who led the retail vs. Wall Street is back. Twitter user @Roaring Kitty (real name Keith Gill) was the initiator of the 2021 retail Airdrop that drove GameStop's stock price to a surge. On May 13, Roaring Kitty became active on Twitter again, posting a large number of small videos on Twitter and hinting at a new retail revolution in the community. (Related reading: GME short squeeze promoter Roaring Kitty returns after three years of "disappearing", will it usher in a new round of upward pumping?) ）

Affected by the news of his return, the MEME coin related to him also ushered in a wave of big pump. Among them, KITTY and GME are the tokens with the most direct correlation, and they are also the two Tokens with the most eye-catching market performance. GME (solana chain) has pumped up 257 times in the past week, and KITTY (BASE chain) has pumped up 157 times.

MEME CONJECTURE TRIGGERED BY A SMALL VIDEO

All of a sudden, Roaring Kitty once again became synonymous with wealth codes in the market, and retail investors began to focus on Roaring Kitty's Twitter content to try to discover new wealth codes. And he himself seems to be very keen on posting small videos, posting dozens of them every day. Some encryption users have launched relevant MEME Token based on their video footage, trying to rub the popularity of Roaring Kitty.

Roaring Kitty's videos are basically clips and splices of some movie clips, with a duration of less than a few tens of seconds, and there is no clear theme, but the overall content seems to be related to heroism and resistance. For example, the clip of the brave heart male protagonist shouting Freedom before being executed, or the scene of the Avengers against Thanos, etc. In addition, he will deliberately enlarge the subtitles of these videos and mark them in red or highlight some of the keywords.

PANew counted 46 keywords that appeared in Roaring Kitty's videos in the last few days, and found that the number of MEME coin created on Solana based on these keywords reached 202. This grand occasion is quite like Elon Musk's lead order on Ethereum.

NINETY PERCENT OF THE RELEVANT MEME IS UNTRADED

However, it may be that MEME players overestimated Roaring Kitty's MEME influence, and of the 202 MEME coin released from his videos, only one JUST UP Token was out of shape, pump 10 times in a short period of time after a Chinese MEME KOL's advocate, but as the popularity faded, the Token also quickly fell fall, and the price has now fall 94% from its high, with a market capitalization of only $16,000.

Longest of the other Tokens were not bought or sold after launch, and only 4 of the 202 Tokens had some transactions.

Why is there such long worthless Token being issued? The main factor behind it is from the Pump.fun this one-click coin tool makes the cost of coin lower and lower, in the past, it takes at least a few hundred dollars to issuance a MEME coin on the Ethereum, if the benefits of the coin can not even cover the cost, then this kind of keyword will not appear very long Token. The cost of issuing coins on Solana is now reduced to about $2, which is almost negligible for users who want to earn a pot of gold by issuing coins. As a result, it can be seen that almost all MEME coin related to Roaring Kitty were released on Solana.

Another reason is that Roaring Kitty's videos are posted very frequently, and there are longest keywords in one video. If you issuance Token all the keywords in the video, then hundreds of new Token can appear almost every day. These keywords also have little follow-up remarketing opportunities. In this regard, it is completely different from the MEME coin of Musk's previous TROLL and GROK, the keywords caused by Musk are generally mentioned repeatedly, and the keywords themselves represent an event or a product, which is random and developing. As time progresses, every time these keywords are mentioned again by Musk or there is some progress, it will affect the market performance of such MEME coin. Roaring Kitty's video footage doesn't have these characteristics, it's just wishful thinking on the part of retail investors.

Distraction is no longer difficult to get out of the golden dog

While the Solana and Base chains have caused a MEME coin hot state for nearly half a year, Cointelegraph reports that more than 1 million new Crypto Assets have been launched since April, including 640,000 on Solana and about 320,000 on Base. At the same time, Solana's DEX volume also exceeded $1 billion for several consecutive days. Behind this excitement, for MEME coin players, it does not mean that the opportunities are more long, but that the heat is more dispersed, and it is more difficult to find the "golden dog".

Taking Roaring Kitty as an example, this round of hot chases is not only focused on a certain on-chain, GME and KITTY have issuance in Solana, Base, and Ethereum on-chain, and they have nothing to do with each other. This leads to the popularity being dispersed across longest coins, and it is difficult for funds to concentrate on promoting a project to create a hot effect.

For the player, this also increases the probability of stepping on the pit. According to PeckShield monitoring, a GME MEME coin of the same name was instantly zeroed out by the project party dump, and $270,000 of ETH was robbed of the disk. And even the most direct Token of Roaring Kitty's hot spot has generally big dumped after a brief rally. The average falls are around 70%.

Overall, making money on popular MEME coin doesn't look like an easy task. In addition to hot spots, there are also issues such as the safety of the contract, whether there is a direct push behind it, and the timing of buying and selling. Otherwise, blindly chasing hot spots will not avoid the result of being play people for suckers.

Author: Deep Tide TechFlow

For sucker, paying attention to the advocate of all kinds of KOL bloggers is an important source of wealth passwords.

So KOL advocates orders, is it a winning general who always earns, or is it an accidental coincidence again and again?

Different bloggers have very different answers to this question. A 100-fold correct advocate, or a zero-down false recommendation, can become a very subjective survivor bias.

From the perspective of the entire industry, what is the final record of KOLs with orders?

In February, several researchers from Harvard Business School, Indiana University Business School, and Texas A&M University published a paper called "Crypto Assets Influencers."

The article examines the performance of encryption asset-related returns mentioned in approximately 36,000 tweets posted by 180 of the most prominent Crypto Assets social media influencers (KOLs) over the two-year period ending in December 2022, covering more than 1,600 tokens.

Key Results:

After using machine learning to classify tweets and track the tokens mentioned in the tweets and their subsequent price performance through longest statistical descriptions and tests, the key results are as follows:

1. Crypto Assets influencer's tweets initially with positive returns. But these tweets were followed by significant long-term negative returns, suggesting that the long-term investment value they generate is minimal. **
2. These tweets have the most pronounced impact when they have small coins, large Twitter followers, and self-proclaimed experts. **
3. The paper classifies Tweets using a machine learning approach and finds that the above result patterns are stronger when Tweets have a more positive sentiment or are associated with a "buy" recommendation. **

Data illustration

Tweets from Crypto Assets influencers show positive short-term return effects:

Tweeting advocate a coin has an average one-day (two-day) return of 1.83% (1.57%).

Crypto Assets projects outside the top 100 by market capitalization returned 3.86% one day after advocating orders

The earliest time earnings started to drop significantly was five days after the tweet was posted. The average return from day two to day five was -1.02%, suggesting that more than half of the initial pump was wiped out within five trading days.

From a longer-term perspective, the average cumulative return 10 and 30 days after the tweet was published was -2.24% and -6.53%, respectively. We further documented these negative after-the-fact returns, which were even more negative for low market capitalization Crypto Assets (where information and Liquidity issues were the most severe).

**A rough estimate indicates that an individual investing $1,000 to buy a non-top 100 encryption Token on the date of the Tweet and holding the investment for thirty days would incur a loss of $79 (7.9%), representing an annualized loss of 62.8%. **

What is an expert: When an influencer calls himself an expert, the post-event return is more negative; And when these experts have longest followers, the rate of return is worse. **

Overall, the findings suggest that the long-term investment advice provided by Crypto Assets influencers is, on average, unprofitable. Only by exiting the position immediately after the tweet is published can you profit from it, but this strategy may not always work due to insufficient market liquidity. Moreover, this act of selling immediately is contrary to the "never sell" culture in the Crypto Assets community. **

Think

The collective evidence in the paper suggests that investors should be cautious about following the investment advice of Crypto Assets KOLs, as large longing gains disappear shortly after tweets.

But the author of the article also admits that the evidence is not yet conclusive. Crypto Assets KOLs may simply benefit financially by chasing trends or promoting tokens that will earn them the most visibility and fans.

In addition, a more innocuous alternative explanation is that Crypto Assets influencer does believe that encryption asset will eventually experience a high level of rise. Influencers may also simply focus on recommending short-term purchases and assuming investors know to sell immediately.

Still, the paper's results provide a wealth of information, as they provide clear evidence that investment advice is unlikely to be useful if a person holds Token for more than a few months or even years.

At the same time, the paper suggests that regulators and the commercial media may prompt more long scrutiny of such behaviour to determine whether these activities are related to more long related conflicts of interest.

Addendum: The top 25 Twitter accounts mentioned in the paper (the table is the ranking 2 years ago due to the time of the paper's research)