Original Authors: Franklin Bi (General Partner), Jonathan Gieg (Senior Platform Associate) and Nihal Maunder (Junior Partner)
原文来源:Pantera Capital
原文标题：Blockchain's "Dial-Up To Broadband" Moment
编译:Yvonne,火星财经
The time has come for cryptocurrencies to "go from dial-up to broadband".
The early internet was slow, clumsy, and unstable. When broadband replaced dial-up connections, new activities and products on the Internet exploded. The massive upgrade in bandwidth has unleashed the full potential of the global information network. Today, the same upgrade is happening on the blockchain network.
Over the past two years, the Ethereum ecosystem has expanded by about 10x driven by L2. L2 enables faster speeds and lower costs by batching transactions settled on independent blockchains (i.e., L1). This method of scaling is known as a "rollup".
Currently, the total transaction throughput of Ethereum-based L2 is over 140 TPS (transactions per second), while L1 has only 14 TPS (see chart).
The leading L2 at the moment is Arbitrum. Since its launch in 2021, Arbitrum has led the L2 space in all important metrics: from transaction volume and developer activity to on-chain fee revenue.
The L2 protocol is designed with Ethereum compatibility as a top priority. Users and developers can get the same experience of using and building on Arbitrum as they do on Ethereum, but at a lower cost and faster.
This makes Ethereum's scalability a big step forward. Over the past 30 days, the Arbitrum network has processed four times as many transactions as Ethereum. Ethereum's 7-day trading volume increased by 20% compared to a year ago, from 7.7 million to 9.2 million. Similarly, the L2 network's 7-day transaction volume increased by 850%, from 18.6 million to 163 million. The "broadband moment" of blockchain networks has arrived.
Arbitrum
At the 2nd Pantera Blockchain Summit in 2015, we gathered a small group of industry friends to our lakeside villa in Lake Tahoe. Among them was a professor at Princeton University named Ed Felten. Dr. Felten is a distinguished computer scientist and technology policy advisor known for his pioneering work in cybersecurity and digital content protection. However, it was his growing interest in Bitcoin that drew him to the West.
At the time, Ed Felten was actively engaged in Bitcoin research, often collaborating with other scholars, including two postdoctoral fellows, Steven Goldfeder and Harry Kalodner. The three of them continued to study the security of Bitcoin wallets until they turned their attention to the industry's most pressing problem: how to scale blockchain for mass adoption. A concept that Ed Felten came up with 10 years ago was key insights, and now it defines an entire class of scaling solutions: interactive fraud proof.
In 2018, Steven, Harry, and Ed publicly shared a research paper titled "Arbitrum: Scalable Privacy Smart Contracts". The paper is very simple and straightforward. But it takes a lot more effort to make this important work happen, so we reunite with Ed, who is now a co-founder of Offchain Labs with Steven and Harry.
After meeting the three founders of Offchain Labs, we discovered that their strengths go far beyond their technical brilliance. They brought:
- A strong passion for blockchain to build a better world;
- A strong commitment to open source development and the community;
- and a focus on creating the best developer experience for Web3 creativity to flourish.
From then on, they made a simple decision, wrote their first check, and eventually led a seed round in late 2018, kicking off the first day of Ethereum's scaling journey.
Arbitrum ecosystem
Since its launch in 2021, Arbitrum seems to have become the L2 of choice for leading Web3 projects and developers. Its early growth was largely driven by DeFi activity. Arbitrum has the third-highest trading volume of any blockchain, behind Ethereum and Solana.
Today, the fast-growing Arbitrum ecosystem includes:
● More than 500 projects (more than any other L2 project).
● More than 1,800 monthly active developers (more than Solana).
● $16 billion in assets bridged from other chains (among the best of all L2s)
● $3 billion worth deposited into Arbitrum's DeFi projects (3 times more than the next followed L2).
Many established teams have expanded from Ethereum and other L2 to Arbitrum, and have basically achieved greater success than any previous chain. For example, Uniswap is a market-leading decentralized exchange, and although it was originally built on Optimism, most of its L2 trading volume is now processed on Arbitrum. Recently, Uniswap's Arbitrum instance became the first instance to reach $1 billion in daily trading volume on L2.
One of Arbitrum's most remarkable strengths is its native team. From DeFi to gaming, the Arbitrum-first team has seen impressive growth across multiple verticals. Here are some of the leading projects in the Arbitrum ecosystem:
Defi
- Robinhood:投资平台宣布为Robinhood钱包用户整合Arbitrum DEX。
- GMX: Decentralized perpetual futures exchange with a cumulative trading volume of $190 billion.
- Camelot: A decentralized spot exchange with $12 billion in cumulative trading volume and 900,000 users.
- Radiant: A cross-chain lending protocol with more than $120 million in total borrowing.
Game
● InfiniGods: A mobile-first Web3 game studio that created King of Destiny with over 25,000 downloads worldwide.
● Treasure: A decentralized game publishing platform with a total market volume of $280 million and 150,000 players in more than 15 games.
● Hytopia: An open-source world inspired by Minecraft, with over 1.1 million players pre-registering.
● XAI: Web3 gaming infrastructure, with more than 100,000 daily transactions and more than 600,000 connected wallets.
Tokenization of real-world assets
● Kinto: A financial services-focused industry chain with KYC for users in more than 80 countries.
● Plume Network: A real-world asset tokenization protocol with more than 100 projects joined.
Arts & Entertainment
- AnimeChain: Decentralized anime IP ecosystem, partnering with Azuki, a top 3 NFT project.
- ApeChain: A dedicated network that supports two of the top three NFT projects, Bored Apes and CryptoPunks.
- RARI Chain: A creator-centric chain that executes NFT royalties.
- Reddit: Previously selected Arbitrum in the "Scaling Bake-off" of the Community Points Program.
As Arbitrum continues to attract top teams and projects, we believe the growth of its ecosystem will accelerate further. The roadmap includes key developments to expand the developer base and onboard new builders, including:
- Arbitrum Stylus: A custom programming environment for writing smart contracts in Rust, C, and C++, minimizing the need for aspiring Web3 developers to learn a new language like Solidity to start building on Arbitrum.
- Arbitrum Bold: An improved, permissionless version of fraud prevention technology that speeds up transaction processing.
From the cornerstone of DeFi to the thriving blockchain ecosystem, Arbitrum exemplifies its technical prowess and the high-quality community behind its rapid growth.
Data performance
Active community involvement, best-in-class developer experience, and technological breakthroughs have positioned Arbitrum as a leading contender in the L2 space. The data proves it.
Let's take a look at the basic metrics that drive L2 adoption:
TVL measures the value of assets deposited into the blockchain to support liquidity or lending activities. 39% of L2 rollup TVL is located in Arbitrum. Arbitrum holds $4 billion in its DeFi protocol, while its next closest rival, Last, has locked in $1.4 billion. This metric makes a lot of sense because TVL is an indicator of trading activity, liquidity, and the overall health of the project. A high TVL indicates that users are engaged and confident in the platform.
Compared to other L2 scaling solutions, Arbitrum revenue has been leading the way. While other chains' revenue-generating capacity fluctuates, especially in anticipation of token airdrops (as is currently the case with zkSync), the activity of the Arbitrum community ensures predictable revenue, unaffected by external dynamics. Arbitrum does this by carving out niches like DeFi, where they have cultivated protocols like GMX and Uniswap so that they can grow a brand that serves as the chain of choice for DEX swaps and Perp transactions.
Regardless of its current dominance, we believe that Arbitrum has the ability to continue to be the scaling solution of choice for Ethereum because of its focus on developer activities. As shown in the table above, Arbitrum has built the most attractive platform for developers looking to deploy decentralized applications. Users will ultimately gravitate towards the ecosystem where the best apps reside, and by doubling down on the developer community, we believe Arbitrum is ensuring its long-term sustainability.
CHANGES IN UNISWAP'S CAPITAL ALLOCATION
原文作者:Cosmo Jiang、Erik Lowe
原文标题：UNISWAP CAPITAL ALLOCATION INFLECTION
For us, a clear argument is that tokens are a new form of capital formation that is replacing equity in a generation of businesses. The emergence of protocols that generate real revenue, match the product market, and are guided by a strong management team with sustainable unit economics has enabled fundamentals-based valuation frameworks to be applied to digital asset investments. We believe we are at an inflection point for this asset class.
Sustainable governance through economic adjustment
Uniswap is one of the largest decentralized exchanges in the DeFi ecosystem, with $5.8 billion in TVL and generating $1.8 billion in transaction fees annually.
In February of this year, the Uniswap Foundation proposed a major overhaul of the protocol's governance system, which would allow token holders to receive a return on capital, directly linking the token to the protocol's value creation. If approved, a portion of the transaction fees will be distributed to token holders, but only to those token holders who actively contribute to the protocol by participating in the protocol's governance.
"This proposal aims to boost and strengthen Uniswap's governance system by incentivizing active, engaging, and thoughtful delegations. Specifically, we propose to upgrade the protocol so that its fee mechanism rewards UNI token holders who have delegated and held their tokens. ”
Erin Koen, Head of Governance, Uniswap Foundation, March 1, 2024
In our opinion, this is a big deal for both the credibility of the token and its current or future path to value accumulation. We believe that our views are becoming more and more correct. Following in Uniswap's footsteps, other revenue-generating protocols that may have previously been reticent now have templates for pursuing capital return plans. We believe this will further enhance the credibility of the DeFi ecosystem, and more investors will therefore tend to apply the fundamental valuation framework to digital asset investments.
To understand the details of corporate governance, it is important to note that this proposal was made by the Uniswap Foundation as a representative of the Uniswap DAO, which is responsible for managing the Uniswap protocol. The Uniswap DAO is a separate entity from Uniswap Labs, an American business based in Brooklyn, New York, whose team spun off more than a year ago as a third-party service provider for the protocol and was not involved in the decision. We can assume that the Uniswap Foundation conducted a legal analysis and determined that this is a path acceptable to regulators. Until then, legal considerations are likely to play a role in the prudent approach of returning the value of the protocol to token holders. The regulatory environment for DeFi is complex and ever-changing, but we see this as a positive sign for protocols seeking to implement a value accumulation mechanism for their underlying tokens.
Pantera's liquid token fund has invested in a number of protocols that have already begun working on Uniswap's proposal and are considering building their own similar value accumulation mechanism. We believe that this will be a positive and fundamental step forward for our investment.
Market reaction
In our view, the market's reaction to this news highlights the importance of appropriate economic adjustments and incentives for token holders, especially as this could translate into the long-term sustainability and continued growth of the protocol through strong governance. The trading volume of the UNI token rose by 60% a few hours after the initial news of the proposal was released, and is currently up 50%.
Who pays for the views?
原文作者:Erik Lowe
原文标题：WHO PAYS FOR THIS DRIVEL?
In November 2022, shortly after the collapse of FTX, the European Central Bank published a not-so-prescient article titled "Bitcoin's Last Stand," predicting that Bitcoin would soon be on an "irrelevant path." This is not the case. In fact, Bitcoin has 320% more trading volume than it was at the time of the article's publication.
In a recent blog post, instead of throwing in the towel, the ECB doubled down on some of the arguments cited in the 2022 article.
We'd like to take a moment to respond to these claims, including the other points they make in their latest blog post, to provide an alternative perspective.
ECB Opinion 1: Aside from dark web criminal activity, Bitcoin is hardly used for payments.
First, the misconception that Bitcoin is a useful tool for financing terrorism or money laundering stems from Bitcoin's early ties to the Silk Road and dark web markets. As the world learned about Bitcoin, it quickly became clear that an open public ledger was not the best way to move money discreetly. Bitcoin's traceability and traceability are coveted by financial fraud investigators. The U.S. Department of Justice was able to track down those responsible for the 2016 Bitfinex hack because of Bitcoin's public ledger.
Today's arrests, along with the largest financial seizure in the department's history, show that cryptocurrencies are not a safe haven for criminals. In order to maintain digital anonymity, the defendants laundered the stolen money through a labyrinth of cryptocurrency transactions, which was in vain....
"Today, federal law enforcement once again demonstrated that we can trace funds through the blockchain and that we will not allow cryptocurrencies to become a safe haven for money laundering, nor will we allow cryptocurrencies to become a lawless zone in our financial system....".
- 2015- 2015- 2015 Bya O.
According to Chainalysis' 2023 Crypto Crime Report, illegal activities through cryptocurrencies accounted for only 0.24% of transactions in 2022. Not to mention, according to senior legal officials of the Counter-Terrorism Committee Executive Directorate (CTED), cash remains the primary means of carrying out terrorist financing.
The ECB's second point that bitcoin is not a means of successful payment is actually correct. But they ignore one point.
Yes, Bitcoin's initial promise as a "peer-to-peer electronic cash system" was first and foremost to enable fast, inexpensive transfer of value without the involvement of a third party.
Another benefit of Bitcoin is that due to its limited supply, it should be a hedge against inflation and currency depreciation. Governments continue to print money, eroding citizens' hard-earned savings. Holding Bitcoin is expected to solve this problem – and it has solved this problem well, currently storing $1.4 trillion in global wealth. During the exploration phase, Bitcoin has become "digital gold" with a simple design that optimizes Bitcoin's robustness.
We should note that Bitcoin's layers, such as the dedicated payments layer, the Lightning Network, and the programmable layer stacks for smart contracts, may eventually enable payments in the future. Sometimes it is said that Bitcoin, like Fedwire, is the underlying payment layer for the final settlement of all transactions, while additional layers such as Lightning are similar to Mastercard or Visa. Layer 1 Bitcoin has proven not to be the preferred payment method for morning coffee, and certainly not for pizza. We believe that Bitcoin does not need to be a payment instrument. What can fill this gap are stablecoins built on a faster, higher-throughput network, whether it's Bitcoin Layer 2 or other blockchains. You can read more about it here.
ECB Opinion 2: Bitcoin is still not a suitable investment.
It is a peculiar way to say that an asset, especially one that has doubled in value almost every year over the past 11 years, "is still not suitable as an investment". In addition to this, in our view, the claims that Bitcoin does not generate cash flow, lacks the social benefits of items such as jewelry, or cannot be subjectively appreciated for its outstanding ability like a work of art do not disqualify Bitcoin as a suitable investment.
In fact, most stores of wealth or medium of exchange, including the U.S. dollar, have little intrinsic value. One might say that the government gives the dollar some value by requiring it to be used to meet tax obligations. But if you're really trying to get the true intrinsic value of the U.S. currency by melting the coin, for example, the value of its mineral composition, it's actually a felony. Some might argue that the dollar itself is a trust program, and that the U.S. national debt has reached record levels of GDP, so confidence in the value of the dollar may not be as rational as confidence in the value of Bitcoin.
There are also very important assets that have very little intrinsic value, such as Jackson Pollock's paintings. The actual value of the paint and canvas in a Pollock painting is $40. They are trading for $100 million because it is believed that in the future they will be able to sell at least that price or even higher. This is the case with Bitcoin, where people can store their wealth and expect it to be at least as valuable as it is, if not higher, in the future.
As for cash flow and dividends, protocols that generate real revenue are emerging, such as Uniswap, which allows traditional and more basic valuation frameworks to be applied to digital assets.
ECB Opinion 3: The price of Bitcoin is being manipulated.
In our view, concerns about price manipulation go far beyond reasonableness. It's like the outdated stereotype that Bitcoin is being used for illegal activities. In our view, the same is true for market manipulation. We have yet to see any evidence that the Bitcoin market is more manipulative than any other market of any size. Over the past 30 days, Bitcoin's daily trading volume has averaged $47 billion. In comparison, only one of the "Gorgeous Seven" stocks, Nvidia, surpassed this number. Bitcoin's total market capitalization is $1.4 trillion.
Smaller exchanges outside of the U.S. and Europe sometimes inflate their trading volumes, pushing themselves up the charts in an attempt to attack new customers. Fake volumes obviously don't have a directional impact on the market. On top of that, it is not present in the activities reported by regulated exchanges like Coinbase, Bitstamp, and others.
A new record for Bitcoin price action
原文作者:Erik Lowe
原文标题：NEW RECORDS IN BITCOIN PRICE ACTION
In February of this year, the price of Bitcoin saw its largest increase in history in a month. The price of a single bitcoin has increased by $18,600. It took nine years for bitcoin to reach this price for the first time in December 2017, up from $18,600 just a year ago.
In addition, Bitcoin also recorded the longest consecutive seven months of good performance in history. The previous longest streak was six months, with three occurrences in the last 14 years.
Regulatory Updates
原文作者：Andrew Harris
原文标题：A REGULATORY UPDATE
U.S. state regulators and federal courts continue to be active in the cryptocurrency space. The U.S. Securities and Exchange Commission (SEC) continues to investigate cryptoasset platforms, this time against Kraken. Binance has reached a staggering settlement with several regulators, including the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Department of the Treasury, but not with the SEC. In addition, the New York Attorney General has expanded the already serious prosecution of Genesis, Gemini and Digital Currency Group, and now charges investors with about $3 billion defrauded through lending programs.
Regulatory action outside of the courts continues at the state and federal levels. The SEC has sought to clarify the definition of "dealer" in the Securities Exchange Act of 1934, which will almost certainly require many cryptoasset market makers and trading firms to determine whether they need to register with the SEC and the Financial Industry Regulatory Authority. The U.S. Consumer Financial Protection Bureau (CFPB) has published a proposed rule that, if finalized, would bring certain large non-bank companies that facilitate "covered consumer payment transactions" through digital wallets, payment apps, and other payment features within the scope of the CFPB's regulation. The state of California has finalized a wide-ranging rule that regulates entities engaged in the trading of "digital financial assets" that could implicate many gaming companies and other cryptocurrency companies.
Gist:
- The U.S. Securities and Exchange Commission is continuing to sue crypto asset trading platforms, most recently Kraken, as well as the commission's prosecution of Binance and Coinbase.
- State regulators, especially in New York, are also active, with the New York State Attorney General recently expanding the scope of prosecution against Gemini, Genesis, and Digital Money Group. The trend of regulators taking action against cryptoasset market participants looks set to continue in the short to medium term.
- In addition to enforcement, federal and state regulators continue to propose and finalize rules that have a significant impact on cryptocurrencies. Recent examples include the Federal Savings Board's (CFPB) proposed rules for large entities that provide wallet and payment functions, the U.S. Securities and Exchange Commission (SEC) passing a final rule defining which entities, including cryptocurrency trading entities, constitute "dealers" under the Exchange Act, and California's wide-ranging new law around digital financial assets.