💣 What happens when a protocol defies Gravity?

A weekly recap of the largest crypto events and narratives, with an extra dose of insight.

Here’s what we have for you:

• Circle dives into account abstraction

• Aevo Ribbon vault integrations

• Etherfi launches liquid restaking

• GRVT (Gravity) Exchange

• Uniswap interface fee switch

Gm raiders. For those that get out of the house, fall season is upon us. Get outside, get some steps in, and if you live in the northern hemisphere, I hope you are enjoying some beautiful fall foliage. Let’s take a look at what happened last week shall we.

On Monday, fake news that the SEC had approved a spot BTC ETF was circulated around Twitter, with Cointelegraph being the main culprit here. However, the SEC did in fact, do something this week, they dropped a lawsuit against key Ripple (XRP) executives who were originally on trial for violations of the securities act—another win for Ripple and crypto. Similarly, on the regulatory front but halfway across the world, Hong Kong’s Securities and Futures Commission updated its crypto regulatory framework with two additional investor protection measures.

In other news, Binance.US changed its terms of service so that deposits were no longer FDIC insured. In addition, users may only withdraw from the exchange through crypto or stablecoins. I think it’s safe to write off Binance.US completely between these ToS changes and the numerous SEC lawsuits it is facing. While Binance.US continues to struggle, Coinbase continues to launch new product after product, including its recent approval to launch perps trading, and the official launch of perpetual contract trading for BTC, ETH, LTC, and XRP.

-RektRadar

Alright, I know we’ve completely written off Polkadot. Some of you may not even know what it is. However, the token $DOT still has a massive $4.8B market cap, making it the 15th largest token today. Well, the TLDR of Polkadot is that it’s an interoperable blockchain network. Using some fancy design, it can connect to almost all blockchains today through a relay chain, which is responsible for shared security, consensus, and cross-chain interoperability.

To be honest, what Polkadot does is completely irrelevant to what I’ll be talking about, other than the fact that developers can use $DOT to bid for Parachains, which is this fancy type of chain that has shared security and is connected to a lot of blockchain networks. Anyways, about $410M of that DOT which was used to bid for parachains will unlock on October 24th. Another $129M will unlock on January 16th next year.

Large tokens unlocks are still important to keep track of. For example, investors and founders will unlock a large amount of dYdX come December 1, 2023, increasing the circulating supply by 83% in one day. Lets see how that holds up.

Bullish unlocks are probably a thing of the bull market. However, many traders could position themselves short before the unlock, and hence, the market could squeeze higher.

Circle dives into account abstraction

• Circle is deep into account abstraction. On Friday, Circle (USDC issuer) announced a suite of tools for building account abstraction enabled wallet experiences.

• Circle will offer a gas station, which as the name suggests, will provide gas to users. Developers can pre-fill an account with USDC and Circle will source and pay for transaction fees, with a 5% fee attached. If this takes off, it could be a huge revenue generator.

Aevo integrates Ribbon vaults

• If you remember Ribbon (now Aevo) and their options vaults, which executed cash secured puts or covered call strategies for users, those vaults are now traded & settled on Aevo.

• The TVL of Ribbon vaults has decreased greatly from the peak of the bull market, but Ribbon vaults used to be constantly front-run by market makers. The deeper books of Aevo should provide better returns for vault depositors.

Etherfi launches liquid restaking

• It’s still liquid restaking season, and us degens always crave this thing called “capital efficiency.” So ether.fi has gone ahead and released eETH, a liquid restaking token based on EigenLayer.

• The mainnet release is scheduled for November 6. Importantly, stakers will keep control of their keys, which is always important. Remember, not your keys, not your coins. Early stakers will earn loyalty points, so get in there lads.

Gravity defies gravity

GRVT (gravity) is a hybrid exchange that combines the best of CEXs and DEXs.

Its goal?

To build a Robinhood like user experience for derivatives.

Why are we talking about it?

Because GRVT is poised to become zkSync’s first Hyperchain. A hyperchain is essentially a rollup of a rollup, in this case, a Layer 3 (L3) validium. All rollups within the zkSync ecosystem will have interoperability with each other.

The hybrid exchange will launch its mainnet in Q1 next year, and promises 600K TPS (which I am very doubtful of) and less than 2 milliseconds of latency (which I’m even more doubtful of).

Why is it important?

Appchains. We’ve seen things that launch as appchains receive a boosted valuation from the community in recent months. And perhaps there’s a middle ground, where a protocol launches as an appchain but as a L3 on an existing rollup. You get all the customisation you want but also get to tap into the network effects of a given rollup ecosystem.

Uniswap interface fee switch

On Monday, Uniswap’s founder Hayden Adams announced an interface fee switch. The fee switch would introduce a 0.15% fee for swaps made from Uniswap’s frontend, including its mobile wallets and web interface that y’all are probably familiar with.

Don’t worry, the 0.15% fee won’t apply to every swap. Only tokens in a small list, including WBTC, WETH, ETH, USDC, and USDT will be subject to the 0.15% fee. In case you think this fee is outrageous, you can always skip it by using a non Uniswap front end, such as your standard aggregator.

How much will this interface fee switch generate for Uniswap?

Judging by this dashboard, Uniswap has made $142K so far, and if you extrapolate that out, it equates to ~$30M a year. Not bad. To be fair to Uniswap, they were entirely justified to turn on this fee. They only applied it to swaps that were made through Uniswap’s frontends rather than all trades on Uniswap. It’s important to remember that Uniswap Labs, the developer of the protocol, has technically made $0 to date. They have not generated a single cent of revenue for themselves. Eventually, a company needs to generate revenue to survive. You can’t live off VC money forever.

I know one group of people that won’t be too happy with this decision. UNI token holders. This is especially considering that UNI token holders have been trying to turn on a protocol fee switch for eons, to no success. If you think about value accrual, the value created from the interface fee switch is additive and is completely different from the protocol fee switch that token holders have been trying to turn on. However, value accrual from the same source is zero-sum. The same revenue generated from the interface fee switch can either go to token holders or equity holders, not both.

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