Key developments have brought our initial STX thesis into further focus. We will elaborate later, but at a high-level, demand for Bitcoin block-space has solidified, increasing the demand for the product STX is building. We believe Stacks is building a place to explore more elaborate BTC-denominated utility, with the intention of converting to a true Bitcoin L2 once this is technically enabled. The Stacks developer team is on track to undergo the Nakamoto upgrade before the Bitcoin halving in April. Despite these positive developments, attention on STX has declined as several other more immediate catalysts have played out elsewhere in the space. The thesis has strengthened but attention has waned just before several key milestones are set to play out in succession, leaving us with a unique opportunity.
On the Bitcoin front, demand for blockspace has remained strong, Bitcoin network average gas fee has spiked 50x this year (vs Ethereum at 2x). Ordinals have continued to develop, further displaying the desire to do more with Bitcoin than just hold it. Additionally, BTC dominance has risen as Bitcoin has strengthened its position as a global macro asset and demand for alternative SOV’s has increased. Demand has been mainly driven by BTC’s more consistent price performance as an SOV as well as broader regulatory clarity due to an expected US spot BTC ETF approval. The combination of forces has increased the demand for the product STX is building: a performant, flexible and secure BTC-denominated environment to explore more complex BTC applications. The longer-term vision is to eventually convert to a true Bitcoin L2 when it becomes technically possible.
Transaction Count on Bitcoin Network

Revival of BRC-20 & Ordinals Transaction

Growing Bitcoin Dominance

Meanwhile STX has largely been overlooked for the last several months as continuing development toward Nakomoto has absorbed all the Stacks developer resources. The STX developer team has completed Mockamoto, a key milestone to bring Nakamoto node and RPC endpoints online. This puts the team on pace to launch Nakamoto Mainnet by April as they look to time it in unison with the Bitcoin halving. In our view this upgrade will be the most important of several compelling catalysts. Right now, STX is somewhat cumbersome to use as block times mirror BTC L1 and there is no support for bridged BTC due to security issues. After the upgrade STX will be dramatically faster with 5 second block times (vs current block time of ~10–30 minutes) and will also support sBTC, a secure and efficient version of wrapped Bitcoin that is natively integrated with Stacks consensus. The STX ecosystem has remained resilient with several strong and expanding teams building in the space despite the current technical limitations. We are very excited to see what develops once the network is meaningfully upgraded with Nakomoto, together with sBTC. Stacks switches to being secured by 100% of BTC hash power after this upgrade, bringing it closer to a Bitcoin L2.
Overview of Stacks Ecosystem

Several additional upcoming events will direct attention to STX. Firstly, we expect Bitcoin spot ETF approval in January, which will generate Bitcoin-centric attention as well as advertisements by many of the largest financial institutions in the world. This will most directly impact BTC but is likely to also spill over into other Bitcoin laterals like STX. Secondly, Stacks is expanding their footprint globally with a recent partnership with Spartan Capital in Singapore and DeSpread in South Korea. They will run a marketing campaign to raise awareness for Bitcoin L2s in the first quarter of ’24 with a focus in South Korea, Singapore, Hong Kong and Dubai. Thirdly, STX will announce several key milestones toward the Nakomoto upgrade in March that should start to gain traction in the coming weeks with the second Nakamoto testnet is expected to be launched by January. Lastly, new Bitcoin L1 tools like BitVM can enable a trust-minimized way to transfer between Bitcoin L1 and L2, bringing Stacks even closer to the vision of true Bitcoin L2. Earlier, such support at Bitcoin L1 required changes to Bitcoin L1 (hard to do) but with BitVM no changes to Bitcoin L1 are needed.
Nakamoto Key Milestones

The relative valuation of STX vs BTC as well as STX vs other L1/L2 ecosystems are now at compelling levels. By April, Stacks will likely have finally completed the Nakomoto upgrade allowing it to offer the first fully performing BTC-denominated ecosystem. Simultaneously we will be approaching the BTC halving while Stacks ecosystem will be in the middle of their Bitcoin L2 awareness campaign. This should provide a favorable environment for STX to narrow its valuation discount relative to these other assets. STX currently trades at 0.15% the FDV of BTC while Ethereum L2’s trade at an aggregate of 10% of ETH’s FDV. A discount is sensible, but the size of the current discount is illustrative of the potential upside for STX as it improves its capabilities with the Nakamoto upgrade and progresses toward becoming a true BTC L2.
STX Relative Value Charts

Imagining what sort of applications STX will enable is complex. However, there are several that we are excited about. Before delving into specific examples, there are a couple key points to note here. Most of these applications are currently possible in some other format but have yet to gain strong adoption. We believe they will have more success once available on STX for several reasons. The first is community; STX is a strongly BTC-centric community, and these users are already in the mindset of experimenting with BTC, or they would not be STX users in the first place. This contrasts with something like wBTC that exists on ETH but within an ETH-centric community. The second is incentive; Stacks ecosystem entities are planning to put up compelling initial incentives to attract BTC to their applications. One such proposal is looking at an automated BTC yield on all BTC that bridges to STX and will be large enough to provide a 2–3% yield on an initial $100M of TVL. Third, with the Nakamoto upgrade Stacks not only settles existing block transactions on Bitcoin but will upgrade to 100% BTC reorg resistance. Stacks plans to eventually convert to a true L2 when possible, providing an added incentive for those in the BTC community to explore applications within the STX ecosystem.
After Nakamoto, once fast blocks and sBTC are enabled, STX will be able to provide a performant BTC denominated NFT marketplace. This could be used for more efficient ordinal trading or its own unique L2 NFT collections. Further, the sBTC peg can be extended to lock ordinals on L1 and use them on Stacks L2 instead, which would provide a faster, cheaper, and more programmable way to trade ordinals. Additionally, there is room to explore more traditional DeFi applications with sBTC such as lending (e.g., Zest team is already building this in advance on STX). A sBTC denominated swaps market for other sub tokens will also be enabled and ALEX has built the foundation for this already. Each of these different applications can be explored all while generating an automatic yield. It is not hard to envision this offering gaining a foothold and providing an ecosystem for novel utility.

#Bitcoin #Stacks #BTC #STX

Chainlink, as a leading decentralized oracle network, plays a pivotal role in providing real-world information to blockchain networks. Its position as an essential solution for numerous projects is well-established.

Building upon their remarkable achievements facilitating over $7 trillion in transactions in 16 networks since 2022, Chainlink is now gearing up to unlock the full potential of the oracle network through an upgrade to ‘Chainlink 2.0’.

This article delves into Chainlink’s objectives for its 2.0 upgrade and examines the existing solutions it offers to revolutionize the blockchain industry.

Read more here: https://research.despread.io/reports-chainlink

#Blockchain #Oracles #Chainlink $LINK

From simple PFPs to NFTs functioning as game characters and AI-Powered NFT that morph based on user activity, the NFT market continues to evolve, while NFT Infrastructure lags behind. The most significant challenge lies in the inherent ‘chain dependency problem’ plaguing NFTs.

Havah solves this problem by utilizing Icon Loop's BTP protocol. Currently, Havah supports NFT transfers between major chains, such as Polygon, BNB Chain, Klaytn, and their own mainnet, Havah.

Their plans entail establishing connectivity between various small and medium-sized chains, with the ultimate goal of bestowing greater freedom upon NFT projects.

By doing so, Havah aspires to become a pioneering "NFT multi-sidechain" for NFTs spanning across all chains.

To realize this ambitious objective, Havah has adopted strategic approaches centered around tokenomics and dapp building. Delving into their comprehensive strategy and mainnet blueprint, detailed insights can be gleaned from the comprehensive DeSpread report.

Read more here: https://research.despread.io/reports-havah

On May 17, account abstraction gained a lot of attention after VISA announced that it had deployed two Paymasters on the Ethereum Goerli testnet.

Since Vitalik's ERC-4337 proposal in 2021, there has been an ongoing technical discussion about account abstraction, mainly due to its potential to revolutionize the blockchain payment systems.

In this article, we'll take a look at account abstraction and the innovation it can bring to payment systems, focusing on the case of VISA.

Read the full research here: https://research.despread.io/account-abstraction

Focusing on Key Changes and Current Status

The Shanghai Upgrade, the largest Ethereum upgrade in nearly half a year since last year's The Merge, successfully went live on 12th April.

The Shanghai Upgrade is significant because it enables ETH withdrawals nearly two years after the launch of Ethereum's staking feature, and given Ethereum's current stature and scale, we expect ETH's liquidity along with withdrawals to have a significant impact on the overall crypto ecosystem.

In this article, we'll take a look at the key changes brought about by the Shanghai upgrade and where we stand a week later.

Read the full research here: https://medium.com/despread-global/ethereums-shanghai-upgrade-and-beyond-79a8eebb622a

#Ethereum #Shanghai #ETH

Thoughts on the ideal game tokenomics

Game tokenomics has been primarily focused on creating a sustainable in-game economy through a "faucet and sink" system.

However, adding tokens to a game may not be justifiable unless the virtual economy is extensive and structured like the real-world economy.

The real potential of game tokenomics lies in utilizing tokens to motivate positive actions from investors and players outside the game.

Check out Do Dive's thoughts on implementing an ideal game tokenomics system in this article.

Read the full research here: https://link.medium.com/MU50fiWV3yb

#Web3 #web3gaming #tokenomics #Binance #DeSpread

Focusing on Joe V2’s new AMM Liquidity Book

With the airdrop of the $ARB governance token to arbitrum mainnet users on March 23rd, the competition between DEXs to capture the liquidity that has been poured into the Arbitrum ecosystem is fierce.

In the midst of all this, one protocol has emerged as a dark horse with steep TVL growth and high fee reward rates, and it's Trader Joe!

In this article, we'll take a look at Trader Joe's upgraded version, Joe V2, and its new AMM Liquidity Book.

Read the full research here: https://link.medium.com/WENOYdsc3yb

#TraderJoe #Arbitrum #DEX

Japan’s crypto market that turned crisis into opportunity



On February 5th, the Korea Financial Services Commission released guidelines for the issuance and distribution of security tokens.

Before the Korean security token market gets off the ground, we'd like to take a look at a country that is already regulated and active through legislation.

In this article, we'll take a look at the history and current state of the Japanese security token market.

Read the full research here: https://link.medium.com/cxSNIQza3yb

#blockchain #STO #Japan

Tokenomics paradigm shift and insights from Treasure DAO

[Table of Contents]

- Introduction

- A paradigm shift in tokenomics

- Innovative Web3 gaming platform, TreasureDAO

- It’s a token business after all

Read the full research here: https://link.medium.com/pQqFlUR92yb

#blockchain #Web3 #gaming #MAGIC