Is it toilet paper or magic scroll? Scroll mainnet dynamics insights👀

Although the native token has not yet had a TGE, Scroll’s reputation in the airdrop farmer community has been ruined due to the two scandals of the early “electronic beggars” and the recent “open airdrop”.

For any L2 project, the relationship with the airdrop farmers is relatively complicated. They have some collusion, such as cooperating to brush data to meet the requirements of VC and CEX, cooperating to open up early block space needs and build LP initial liquidity, and there are also stages of mutual harm. For example, during the airdrop, in order to maximize the benefits of the project, the project needs to trade between the team, VC, CEX and airdrop farmers, and the airdrop farmers are often the victims.

This is mainly because the L2 War has actually ended. OP general Rollup leading projects such as Arbitrum, Base, Optimism, etc. have fully utilized their first-mover advantages and operational capabilities, and have divided up the incremental market share of Ethereum's parallel expansion.

ZK Universal Rollup, which has always been promoted as "technically better", is no longer able to build an application ecosystem with large-scale, real and active users in the face of the remaining scarce ecological resources.

The typical life cycle of a ZK Universal Rollup project is as follows:

L2 token airdrop expected ➡️Airdrop Farmer enters the market ➡️Generate beautiful L1<>L2 block space Gas price difference income ➡️Unlimited PUA activities expand Gas price difference income ➡️Cancun upgrade DA fee dropped by 2 orders of magnitude, Gas price difference income dropped sharply ➡️The passive profit mode is over, and TGE airdrop is forced ➡️Airdrop Farmer dumps tokens, withdraws DEX LP, withdraws TVL and leaves the market, L2 on-chain ecological data collapses ➡️L2 projects enter the stage of living by selling coins

This is true for ZkSync, Taiko, and Scroll.

However, Scroll, which relies on "Ethereum orthodoxy" and "good personal relationship with Vitalik Buterin" to survive, may not care about the "noise" from the market and the emotional feedback from the airdrop farmer community. They still do things their own way.

Let’s try to maintain a rational and calm mindset and observe how Scroll works through on-chain dynamics.

1⃣ According to the L2 milestones recorded on the L2beat website, in order to maintain the operation of PUA economics and squeeze as much gas fees as possible from airdrop farmers, the Scroll team, which has always boasted of its Ethereum equivalence, delayed the deployment of the Cancun upgrade on its L2 to April 29. Other mainstream L2s such as Arbitrum, Zksync, Starknet, OPtimism, etc. were deployed within two days after the Cancun upgrade.

As shown in the chart, Scroll’s on-chain profits easily surpassed Arbitrum in March and April of this year, with revenue of $3.63 million in March and $3.21 million in April.

2⃣ Unlike other L2 TVLs that are mainly ETH, WETH, WBTC, and stablecoins, Scroll's current $1.26B TVL is mainly Restaking assets, including $306 million in Stone, $129 million in solvBTC, $117 million in weETH, $122 million in pufETH, and $74 million in rsETH.

Faced with fierce external competition, Scroll has a serious lack of real active users in its ecosystem (the recent average daily Tx is only between 200,000 and 400,000). Therefore, it has to use its BD capabilities to cooperate with the LRT project and use the mechanism of stacking points to attract Restaking assets to increase TVL.

As shown in the figure, the inflow of Stone, the largest component of Scroll TVL, is very discrete, indicating that it is related to specific events or activities rather than normal user behavior.

It is worth noting that compared with bare assets such as ETH, WETH, WBTC, and stablecoins, Restaking assets are much worse in terms of liquidity, security, and value-derivation capabilities. In a sense, they are "dead assets" and serve more to support the TVL facade.

3⃣Scroll is proud of its ZK Rollup security and complete equivalence with ZKEVM.

However, the Scroll mainnet is still in Stage 0, and the upgrade-refusing exit window mechanism, escape hatch mechanism, and Rollup crash recovery mechanism have not yet been deployed.

Since the token has not yet been TGE, Scroll has not yet built a DAO governance mechanism, and the contract upgrade authority is currently controlled by a centralized multi-signature address. It is expected that after the token TGE, it will be handed over to the newly established ecological DAO organization.

The good news is that Scroll's ZK Proof validity proof system has been deployed on the mainnet. This enhances the system security of Scroll Rollup, but it also makes Scroll pay high Proof verification costs, with the highest verification fee paid to L1 (Ethereum mainnet) in March reaching $2.43 million.

To this end, Scroll carried out the Curie upgrade in July, which successfully reduced the cost of Proof verification by significantly compressing the state data. At the same time, Scroll is also actively exploring the ZK coprocessor network to further reduce the cost of generating and verifying ZKP.

In summary, Scroll’s poor operating status can be described in two words: “born at the wrong time” and “the harder you work, the more unfortunate you become”. Although the Scroll team managed to survive in the harsh market environment after the Zksync airdrop by delaying the deployment of the Cancun upgrade and using the strategy of stacking Lego points to siphon Restaking assets, and finally met Binance’s listing standards, it delivered a result to VC and the community, which is truly commendable from the perspective of the primary market.

But from the perspective of the secondary market, Scroll, which has neither a real ecosystem nor new narratives, has turned from a magic scroll into disposable toilet paper at the moment of TGE.

The end.