Gryphsis Cryptocurrency Weekly: BTC Breaks 42K for the First Time This Year, Cryptocurrency Market Cap Exceeds 1.5 Trillion USD
[2023.12.04 - 2023.12.10] Since the collapse of Terra, the price of Bitcoin (BTC) has surpassed $42,000 for the first time, marking the first breakthrough since April 2022; additionally, the price of Ethereum (ETH) has also exceeded $2,200.
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Welcome to the weekly cryptocurrency summary from Gryphsis Academy. We bring you key market trends, in-depth insights into emerging protocols, and the latest industry developments, all aimed at enhancing your expertise in cryptocurrency and Web3.
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Market and Industry Snapshot:
Layer 2 Overview:
Last week, Layer 2 saw significant fluctuations, with zkSync Era showing the most notable growth at 8.04%. Protocols like Cryptex Finance, RubyDex, YearnFinance, and DefiEdge demonstrated remarkable TVL growth rates.
LSD Sector Overview:
In the LSD sector, Ethereum staking and deposits have both increased, with the staking rate breaking through the recent hovering boundary to reach 24%. However, the total withdrawal amount is also on the rise. In terms of market share, all blue-chip LSD amounts have increased, with swETH showing a significant growth of 21.45% this week.
RWA Sector Overview:
Last week, the overall value of real-world assets (RWA) decreased by 9.09%, with 24-hour trading volume falling below 100M. Additionally, RWA tokenized treasury saw a slight increase, but the value of tokenized US Treasury bonds dropped by 2.22%. Notable growth tokens include $ELAND, $TIA, and $EMP, while tokens like $WECO, $MPL, and $IXS experienced significant losses.
Main Topics
Macroeconomic Overview:
- US Stock V.S. Crypto
Major Events This Week:
- BTC Surpasses $42K for First Time in 2023
Weekly Protocol Recommendation:
- Chainflip
Weekly VC Investment Focus
Curvance ($3.6M)
Babylon ($18M)
Versatus Labs ($2.3M)
Twitter Alpha:
@crypthoem on Avalanche's RWA
@pikachu_crypto on $JTO
@0xAndrewMoh on Base Alpha
@0xAndrewMoh on MYX Finance
@TheDeFISaint on SCWs
Macroeconomic Overview
This week, the stock market showed slight growth, with SPX and NASDAQ increasing by 0.21% and 0.69%, respectively, which is relatively small compared to the significant rise in the cryptocurrency industry. In the coming week, major events to watch include core CPI, PPI, the Federal Reserve's interest rate decision, and the Swiss National Bank's interest rate decision.
Major Events This Week
BTC Surpasses $42K for the First Time This Year, Driven by "Panic Buying," Pushing Cryptocurrency Market Cap Over $1.5 Trillion
Since the collapse of Terra, Bitcoin (BTC) has surpassed $42,000 for the first time, marking the first breach since April 2022; Ethereum (ETH) has also crossed $2,200. According to CoinDesk index data, Bitcoin's price has been testing the $40,000 level in recent days, finally breaking through this level on Monday (December 4).
This surge has also driven up cryptocurrency stocks, including cryptocurrency exchange Coinbase (COIN) and Microstrategy (MSTR), as well as Bitcoin miners Marathon Digital (MARA) and Riot (RIOT), all rising over 10%, while other top ten cryptocurrencies saw smaller gains.
This new high for Bitcoin has also pushed the total cryptocurrency market cap to over $1.5 trillion. Analysts indicate that bets on lower interest rates, expectations for a spot Bitcoin ETF, and "panic buying" have all contributed to this surge.
BTC has been under significant resistance at the $38,000 level for most of November, and after breaking through, BTC rose 5.8% in the past 24 hours. Ethereum (ETH), BNB, and ADA saw gains of 2%-3% on the same day, while XRP's trading remained relatively flat.
The rise of Bitcoin and the indirectly driven increase in cryptocurrency market cap signify the end of the crypto winter that began with the collapse of Terra in May 2022, ushering in a new bull market for the cryptocurrency industry.
Weekly Protocol Recommendation
Welcome to our weekly protocol segment—here, we focus on protocols that are making waves in the crypto space. This week, we have chosen Chainflip, a cross-chain protocol that supports native value chain interactions.
In the past, asset conversion for users evolved from centralized exchanges (CEX) to innovative decentralized exchanges (DEX) like Uniswap, marking a new era of on-chain trading. However, as ecosystems have become richer, the demand for cross-ecosystem asset interactions has grown, leading to the emergence of cross-chain bridges and liquidity protocols like Wormhole and LayerZero, resulting in a series of cross-chain aggregators that integrate various bridges and liquidity protocols to form diverse cross-chain paths, helping users convert different assets across ecosystems.
Chainflip, however, differs from such solutions by focusing on the conversion of native assets across chains. It does not require asset wrapping or complex paths, providing liquidity directly on supported chains to facilitate trading. If Uniswap is a single-chain Swap AMM protocol, Chainflip can be understood as a cross-chain AMM protocol.
Currently, Chainflip is still in the testnet phase, allowing cross-chain interactions between Ethereum, Bitcoin, and Polkadot. However, the mainnet is about to launch, accompanied by the following updates:
→ Swapping launch: Supports BTC trading
→ LP incentive program: Offers $1M LP incentive to encourage liquidity providers
→ Integrations with Squid & Axelar
→ Zellic audit completion
→ More chains, wallets, & aggregator integrations
Chainflip's protocol has the following features:
Decentralization: Chainflip supports the exchange of native assets, with corresponding pools on each supported chain, eliminating the need to aggregate other bridges or liquidity protocols for native inter-chain value conversion.
Security: It has its own POS validation network to maintain network & asset security, requiring over 2/3 of nodes to confirm any transaction state changes, thus ensuring overall security. It can also be referred to as a "Cross-Chain Liquidity Network."
In addition to having its own POS validation network, its Just In Time (JIT) AMM mechanism is also noteworthy. This mechanism is based on Uniswap V3.
Essentially, it is a (hybrid) liquidity pool that allows LPs to update their liquidity prices before executing cross-chain trades. If an LP successfully changes the price and captures the user's trade, they win the transaction and earn fees. LPs can aggregate liquidity from the public order book and make their offers, allowing LPs to compete with each other to minimize slippage and provide precise pricing, thereby reducing user slippage losses.
Token Economic Model:
Chainflip's native token $FLIP adopts an elastic supply mechanism, with an initial supply of 90M $FLIP. However, due to its POS mechanism network, validators can earn additional block rewards in $FLIP, effectively incentivizing and maintaining network security. Since the emission rewards are related to the number of tokens staked by validators, it is estimated that there will be an inflation rate of about 6%-22% annually.
However, users are required to pay transaction fees in USDC for every trade on Chainflip, and these accumulated USDC will be used to buy $FLIP and burn it, thereby controlling inflation through buy pressure and a burning mechanism.
Our Insights
Currently, the trading platform focused on native inter-chain assets is dominated by THORchain, along with Maya, a fork project of THORchain, focusing on cross-chain trading. We provide a brief comparative analysis of THORchain and Chainflip.
From ecological data: Currently, THORchain has a TVL of 1.051 Billion, while Chainflip only has 133.32M, a tenfold difference; the 24-hour trading volume of the token $RUNE is nearly 40 times that of $FLIP, indicating higher liquidity; however, in terms of token staking, over 131.93% of $FLIP is staked, while the staking amount of $RUNE is only 34.9%.
Source: Defillama
Source: Defillama
From a product perspective, THORchain currently supports multi-chain swaps, including many native assets across THORchain, Ethereum, Avalanche, and BSC, offering significant space; however, Chainflip is still in the testnet phase, supporting only three chains and their respective tokens (3). Therefore, in terms of product maturity, Chainflip still has a long way to go, although Chainflip slightly excels in product experience such as wallet connections.
In terms of ecological financing, THORchain has completed four rounds of financing, with an estimated total financing amount of $5M, excluding details of strategic financing. Investors include Delphi Digital, Multicoin Capital, and X21 Capital; Chainflip has raised $2.2M, completing two rounds of financing, with a total of $16 million raised, led by Framework Ventures with participation from Blockchain Capital and Pantera Capital. From the perspective of available funds and team resources, Chainflip may have stronger support for its development.
However, due to the different stages of development for both, the above analysis is for reference only, and we will focus on Chainflip's future growth potential.
As mentioned above, in terms of the staking ratio, the total number of staked tokens/circulating tokens is 1.31, considering its own POS mechanism network and the unique token emissions coming from validator rewards. Validators need to stake tokens, and the proportion of block rewards they receive is linked to the number of tokens staked. Therefore, it can be seen that validators will generally re-stake the emissions they receive to obtain higher emissions.
Additionally, with the upcoming mainnet updates such as Swap functionality, liquidity incentives, and the token buyback and burn mechanism, it is evident that Chainflip is attracting users to participate in the ecosystem while staking tokens to control selling pressure.
Overall, Chainflip currently serves as a cross-chain native asset exchange protocol, with a mature product mechanism and good user experience, but a slow delivery speed. It strongly controls circulation at the token level, and with the upcoming mainnet features (LP incentives), it may effectively attract a wave of users.
https://www.panewslab.com/zh/articledetails/8847uif5.html
Gryphsis Research Focus
Welcome to this week's "Gryphsis Research Focus," where we share the latest insights from our team. Our dedicated research team continuously explores the cutting-edge trends, developments, and breakthroughs in the crypto space. This week, we are excited to share our newly released report, so let's dive in!
Kava was originally a DeFi Hub chain for CDP full-chain lending, later transitioning to a chain developed with Cosmos SDK that is EVM compatible, allowing users to seamlessly interact with ecosystem assets on an interoperable chain.
Currently serving as the stablecoin Hub chain of Cosmos, it holds $72.5M in USDt in its treasury, playing a significant role in the DeFi space within Cosmos.
We have briefly summarized Kava's historical events and corresponding candlestick charts:
Kava has disclosed nearly $5M in financing, with investors including Binance Labs, HashKey, and others. It issued $KAVA on October 16, 2019, selling 40% of the initial supply to investors through multiple rounds of private placements, while 6.25% of the total supply was publicly sold on Binance Launchpad at a price of $0.46, raising a total of $3M.
Kava mainly consists of the following DeFi services:
Kava Staking: Retail holders of $KAVA can delegate their assets to nodes for staking and earn rewards.
Kava Lend: Initially called Harvest, then Hard Protocol, and finally renamed. It allows users to deposit various ecosystem assets like BTC, XRP, BNB, BUSD, and borrow other assets. The ecosystem not only provides basic interest rate incentives for borrowers but also mining incentives in $KAVA.
Kava Earn: As a DeFi yield strategy, it incentivizes users to lock $bKAVA to earn high APY, thereby increasing Kava's TVL.
Kava Mint: Renamed from the Kava CDP protocol, it allows users to collateralize cross-chain assets to mint the stablecoin USDX.
Liquid Staking: Staking held $KAVA to receive $bKAVA, with the system depositing the staked $KAVA into the Earn mechanism for higher returns.
Kava Swap: An AMM model swap mechanism that allows users to seamlessly trade various assets across different blockchains or earn additional rewards by providing liquidity.
Currently, Kava's total TVL is $340.67M, with a stablecoin market cap of $129.06M and a daily trading volume of $1.44M. There are over 116 protocols deployed on it, with a high proportion in the DeFi category. However, based on protocol rankings, Kava's native DeFi services dominate, with the top five primarily covered by Kava Lend, Kava Mint, Kava Earn, etc., and there are no standout independent protocols like Blur on Arbitrum.
Its structure consists of Cosmos Co-Chain and Ethereum Co-Chain, both built on the Tendermint consensus engine. The Ethereum Co-Chain allows developers to deploy or directly migrate applications to Kava using Solidity, while the Cosmos Co-Chain communicates with the entire Cosmos ecosystem through the IBC protocol, with both connected via the Translator Module.
Kava is divided into Kava IBC (Cosmos environment) and Kava EVM (EVM environment), where:
1) Cosmos to EVM:
The native internal bridge launched on Kava14, as a Cosmos SDK module, can be integrated into various applications and wallets. It allows users to transfer Cosmos assets in ERC20 form to the EVM environment, enabling asset transfer.
2) EVM to Cosmos:
Currently, Kava EVM allows cross-chain interactions with Kava IBC, Osmosis, Injective on the Cosmos side, and Evmos on the EVM side, crossing $USDt and $ATOM.
However, we can see that Kava's asset transfer on the EVM side is weak, with the only supported Evmos chain not being part of the Ethereum ecosystem; it is also a Layer 1 that is compatible with both EVM and Cosmos. Therefore, Kava has not fully realized its interaction with the Ethereum ecosystem. Currently, only Stargate or other cross-chain aggregators support it, with limited internal support.
Kava adopts a dual-token economic model, with the governance and staking token $KAVA and the stablecoin $USDX.
$KAVA: A widely used ecological token, serving as a staking token for POS, inflation rewards, transaction fees, voting, governance, and more.
$bKAVA: A liquid staking derivative token that allows staked $KAVA to retain liquidity.
$wKAVA: A wrapped token of $KAVA with ERC20 properties.
$USDX: The system's native stablecoin, primarily used in the CDP protocol, allowing users to obtain USDX by staking tokens for higher liquidity, similar to DAI in MakerDAO.
In the upcoming K15, it is clearly stated that the inflation rate will be eliminated, meaning that the circulating token amount will be the maximum supply. No new $KAVA can be created, and the plan is to permanently reduce the inflation rate to 0 by December 31.
The surplus of $KAVA mainly comes from native project emissions, transaction fees, and the foundation. This portion of $KAVA as ecological fees will return to the community rather than directly to node validators. The community will decide how to use these funds (burn or reinvest), further enhancing the network's decentralization.
As a result, the total supply of $KAVA will only decrease, and as $KAVA serves as ecological fees and holds governance rights, the demand will gradually increase with the growth of the ecosystem.
Kava, as an interoperable chain between Cosmos and EVM, relatively supports EVM assets on the Cosmos side weakly, but still holds advantages compared to other competitors. Particularly, it has $72.5M in USDT (EVM) stablecoin assets in its treasury, providing a foundation for future interoperability with the Cosmos ecosystem.
Moreover, in the current context of the prevailing "application chain" narrative, whether it is Layer 2 Stack or Layer 1 like Cosmos & Polkadot, ecological development will always rely on interoperability. As an interoperable chain, Kava will serve as a middleman for DeFi services between major EVM application chains and Cosmos application chains in the future.
It is worth noting that $KAVA, as an ecological & governance fee token, will achieve 0 inflation on December 7. In the context of expanding application scenarios, halting supply-side output will undoubtedly trigger a demand-side explosion, and combined with its formal cooperation with DWF, we believe $KAVA can bring more surprises in the future.
Full report: link.medium.com/g2r17wtNlFb
Weekly VC Investment Focus
Welcome to our weekly investment focus, where we reveal the most significant venture capital dynamics in the crypto space. Each week, we will highlight the protocols that have received the most funding.
Curvance
Curvance is a DeFi protocol that provides users with efficient yields, supporting Ethereum and many other mainstream public chains. Curvance announced the completion of a $3.6 million seed round financing, backed by Offchain Labs, Wormhole, and prominent investors. Curvance co-founder Chris Carapola stated that Curvance will use the raised capital to expand its value proposition, providing DeFi users with a more accessible money market experience.
https://x.com/Curvance/status/1732052722969718843?s=20
Babylon
The Bitcoin staking protocol Babylon raised $18 million in Series A funding co-led by Polychain Capital and Hack VC. Babylon is a new protocol aimed at allowing Bitcoin holders to stake on proof-of-stake blockchains and earn rewards. The protocol plans to launch around the "next Bitcoin halving," expected in April 2024. Babylon is already integrating with Cosmos Hub and the Polygon network. Other investors in this round include Framework Ventures, Polygon Ventures, Castle Island Ventures, OKX Ventures, and Symbolic Capital.
https://x.com/babylon_chain/status/1732766789241634838?s=20
Versatus Labs
Blockchain scalability startup Versatus Labs (formerly VRRB Labs) completed a $2.3 million seed round at a valuation of $50 million. The company previously focused on developing a Layer 1 network but has now shifted to blockchain scalability. Versatus Labs is currently focused on Ethereum and is building a "stateless Rollup"—LASR, aimed at improving scalability. Versatus Labs founder and CEO Andrew Smith stated that LASR can serve as Layer 2, Layer 3, or Layer 1 offline execution environments. Investors in this round include NGC Ventures, Republic Crypto, and Hyperithm.
https://x.com/VersatusLabs/status/1732449189051707738?s=20
Protocol Events
TON blockchain slows to a halt as Ordinals-inspired protocol sees surge in activity
Uphold launches self-custody wallet that supports XRP token
BitDegree Joins Forces with Leading Web3 Companies to Educate the Masses About Web3
Merit Circle DAO seeks to grow ecosystem with Immutable partnership
Xion rolls out testnet based on 'generalized abstraction'
Industry Updates
US defense authorization bill leaves out crypto provisions
Senators propose a bill to expand Treasury sanctions powers and address crypto.
Republican presidential debate sees candidates discuss SBF, Binance, CBDCs and Gary Gensler
Terraform Labs asks judge to let jury decide if UST and LUNA tokens are securities
JPMorgan CEO Jamie Dimon tells Sen. Elizabeth Warren that government should shut down crypto
Twitter Alpha
There is a lot of Alpha in crypto Twitter, but navigating through thousands of Twitter threads can be challenging. Each week, we spend hours researching to curate insightful threads and bring you a selection of the best. Let's dive in!
https://twitter.com/crypthoem/status/1732525315174301740?s=19
https://twitter.com/pikachu_crypto/status/1732609637550047521?s=19
https://twitter.com/0xAndrewMoh/status/1732350340937527296?s=19
https://twitter.com/DeFiMinty/status/1732441094011437560?s=19
https://twitter.com/wacy_time1/status/1732466207713095845?s=19
Upcoming Events
News Sources:
https://foresightnews.pro/article/detail/6116
https://www.panewslab.com/zh/articledetails/ph4354siz6kv.html
https://www.theblock.co/post/266518/bitcoin-staking-babylon-series-a
That concludes this week's content. Thank you for reading this week's report. We hope you benefit from our insights and observations.
You can follow us on Twitter and Medium for real-time updates. See you next time!
This weekly report is for informational purposes only. It should not be considered investment advice. You should conduct your own research and consult independent financial, tax, or legal advisors before making any investment decisions. Past performance of any asset does not guarantee future results.
