Bankless: 8 Promising Projects in the Bear Market

Source: Bankless

Original Author: David Hoffman

Compiled by: Katie Gu, Odaily Planet Daily

Recently, we have all been focused on the plummeting price trends, but let's not forget that Web3 is in a building phase.

The bear market allows CEOs to think from a fundamental perspective, spending more time creating meaningful technology. With a large influx of new crypto users, there are many new areas to build. In 2021, the Web3 space grew from 0 to 1. Now, we need clear-headed and well-funded companies to scale according to the blueprint.

Today, I will focus on 8 projects at the forefront of the crypto world. They are developing some very cool products.

1. Obol Network------Distributed Validator Technology (DVT)

Official Website: Obol.tech

Obol is a pioneer of "Distributed Validator Technology" (DVT). DVT can run simultaneously on multiple machines and clients while still operating like a single validator on the network. DVT allows many computers to go online and enables all computers to participate in private key signing collectively.

This technology is beneficial for creating competitive ETH staking infrastructure and reducing network monopolies. Obol aims to make validator uptime more competitive while minimizing risks, providing a fair competitive environment for staking networks.

Obol Use Cases:

• DAOs may not trust a single member to stake their treasury's ETH, but they might trust a group of members to run a validator together and share responsibility;

• Members may not individually own 32 ETH but can pool all ETH together to build a shared node;

• Custodians may not entrust their clients' ETH to a single staking operator, but they might trust a network of operators collaborating through Obol technology.

How Obol Stands Out:

1. Obol is integrated into every staking protocol and consumer staking software;

2. Every staking service company and protocol (Coinbase Cloud, Lido, RocketPool) shares validation risks through Obol and DVT;

3. The quantity and quality of liquid staking derivatives (stETH, rETH, etc.) have significantly increased, becoming competitive;

4. ETH staking players can compete through specialized and competitive services like Coinbase.

2. LI.FI------L2 Cross-Chain Bridge and DEX Aggregator Aggregator

Official Website: LI.FI

Linking "9 Cross-Chain Bridges, 15 Public Chains, and All DEXs"

With the long-term growth of DeFi, the number of assets and chains in DeFi will grow exponentially. LI.FI is building a mesh liquidity network between every asset on every EVM-compatible chain.

LI.FI has DEXs and DEX aggregators and supports many EVM chains such as Optimism, Arbitrum, and Avalanche. LI.FI has also established many cross-chain bridges between all EVM chains. With 9 different cross-chain bridge protocols and countless DEXs, the trading routes from Chain A (Asset X) to Chain B (Asset Y) are dazzling.

LI.FI automatically selects the best trading routes, using the most liquid and cheapest fees to allocate assets at the lowest cost. LI.FI is a DEX aggregator built on top of a cross-chain bridge aggregator, simplifying trading.

How LI.FI Stands Out in DeFi:

1. LI.FI becomes a mesh network of liquidity between assets and chains in an infinite asset, multi-chain world;

2. Applications integrating LI.FI's widgets can easily access capital flows across the entire crypto world;

3. The complexity of holding assets across multiple chains is eliminated;

4. LI.FI becomes the solution guiding all applications across all chains without losing funds due to high fees or downward trends.

3. Voltz------Internet Interest Rate Swap AMM

Official Website: Voltz.xyz

Voltz is an interest rate swap AMM (Automated Market Maker). Voltz utilizes Uniswap V3's liquidity engine to establish an interest rate swap market. The Voltz protocol allows leveraged trading of interest rates. You can swap "floating rates for fixed rates" or "fixed rates for variable rates."

Yield may be the most attractive aspect of cryptocurrencies, and Voltz provides an infrastructure to build stronger and more expressive financial products around yield-bearing assets. Compared to the native internet bond market, the financialization of merged ETH still has significant room for development. Voltz's positioning is to provide complex financial tools around ETH or yield-bearing assets in DeFi.

How Voltz Stands Out in Crypto Derivatives:

1. Voltz opens up a massive interest rate swap market to DeFi;

2. Creates new markets allowing traders to comprehensively trade any asset's interest rate exposure at variable returns;

3. The global interest rate market is no longer driven by central bank policies but is driven by the supply and demand dynamics of DeFi;

4. Long-term play. The Voltz protocol becomes a scalable derivatives protocol that transcends interest rate swaps and crypto technology, extending to the global derivatives market.

4. Tracer------Meta-Protocol for Derivatives

Official Website: Tracer.Finance

Tracer is a meta-protocol for derivatives. Derivatives have become very popular products in the crypto space, but current derivatives protocols have not unlocked the full potential of DeFi. Tracer injects the core of DeFi into derivatives.

I think of Tracer as the "Uniswap of derivatives." Uniswap can trade around any token, while Tracer can generate derivatives around any asset. Each TracerDAO product comes with a contract. Using Tracer's contracts, any price or data can be transformed into options, trades, or future products.

How Tracer Stands Out in Tokenized Derivatives:

1. TracerDAO's tokenized derivatives significantly enhance capital efficiency through composability in DeFi. Capital efficiency allows Tracer to capture TVL, enabling traders to achieve returns with just $1 of capital in Tracer;

2. Tracer's contracts allow the long tail of assets to access complex derivative products, enabling them to capture market share and attention from a broader crypto community (like Uniswap);

3. The volatility of the metaverse becomes manageable, allowing DeFi's treasury, DAOs, and individuals to consider issues from a long-term perspective;

4. Real-world commodities (water, oil, real estate) can enter the global derivatives market, creating new financial products.

5. Blocknative------Real-Time Infrastructure for the "Pre-Chain" Layer

Official Website: Blocknative.com

Transactions exist in a state called "mempool" (memory pool) before they are executed on the blockchain, which is the pre-chain layer. Validators select transactions from the memory pool, order them in a block, and then add that block to the blockchain.

The memory pool is a crazy, chaotic, and highly adversarial place, and Blocknative is working to illuminate the dark forest of the memory pool. Its product—gas detectors—has become the new industry standard. Previous gas fee detectors would look at the average gas price of recent blocks to estimate the gas required to execute a transaction. This was the best guess based on historical data to predict future gas prices.

Blocknative's gas fee detector views the gas costs of transactions in the memory pool from the blockchain's perspective, reading future data.

Blocknative's gas fee detector showcases the true potential of blockchain—the infrastructure for block producers to seize opportunities.

How Blocknative Stands Out in Transparency:

1. The memory pool blockchain infrastructure becomes as complex as actual blockchain resource management infrastructure;

2. Participants earn yields (ultimately benefiting ETH stakers the most).

6. Euler------Permissionless, Governance-Minimized Money Market

Official Website: Euler.finance

Euler is a money market protocol, like Aave, Compound, or Rari. While Euler faces fierce competition, it also has some unique highlights. Euler combines the asset availability of Rari Fuse pools with the capital efficiency of a single shared liquidity pool model from Aave or Compound.

Permissionless Asset Borrowing or Lending

Euler allows any asset with an ETH Uniswap V3 trading pair to be borrowed or lent. Euler uses Uniswap V3 as an oracle for asset prices, employing a time-weighted average price algorithm.

For money markets, the risk of listing permissionless assets is significant; we do not want to use bad debts as good collateral. Euler governance controls this risk through a fee layer. The Euler model optimizes asset availability and capital efficiency in the lending space significantly.

Improved Liquidation Mechanism

Euler adopts a Dutch auction-style liquidation mechanism. In Compound and Aave transactions, liquidators can receive a certain percentage of collateral, and very large positions can yield huge returns for liquidators, but this is not favorable for large depositors.

Liquidation costs are mostly fixed. The gas cost of liquidating a $100 million position is the same as that of a $1,000 position. In Euler, the rewards for liquidation start at $0 and then slowly increase until a liquidator intervenes and accepts the reward. This reduces the excessive collateral required by depositors, as liquidation penalties are minimized, thereby improving the capital efficiency of the financial system.

How Euler Stands Out in Lending:

1. Euler provides unprecedented lending opportunities for new assets;

2. Even assets that already have lending opportunities can find higher utilization rates in Euler (thus also higher fees);

3. Generally, more assets can gain more opportunities in DeFi, increasing the net utility of the entire DeFi space.

7. Aztec Network------L2 Rollup with Built-In Privacy Features

Official Website: Aztec.Network

Aztec Network is a unique L2 Rollup, serving as Zcash for Ethereum L2.

Aztec Network acts as a privacy shield for ERC-20 token transactions and other DeFi interactions. Once deposits are included in a Rollup block, users generate a set of UTXO receipts representing the number of deposit tokens.

Once tokens enter the Aztec Network, all subsequent transfers are confidential and anonymous. The identities of the sender and receiver are hidden, the transaction amount is encrypted, and network observers cannot even see which asset or service the transaction belongs to.

Aztec Connect

Aztec Connect allows users to bring privacy-protected ZK assets on Aztec to public DeFi protocols on Ethereum.

Aztec Connect essentially acts as a VPN for Ethereum users. Like a VPN, Aztec Connect hides the initiator of the transaction and fully protects user privacy while reducing gas costs through batch processing of user operations.

8. Disco.xyz------Private Data Pack for the Metaverse and Real World

Official Website: Disco.xyz

Disco opens up a whole new dimension in Web3. It will transform the financial metaverse (the world we currently inhabit) into an interesting metaverse (a dreamland).

Disco is a metaverse data pack, a place to store social capital. It can store credentials for participating in DAOs, engaging in DeFi applications, or completing educational courses. Anything verifiable can be placed in your Disco data pack, becoming an object that the metaverse can interact with. With a Disco data pack, you can collect all the proofs of identity it represents.

Disco data packs are not bound by any single private key. The private keys of the data packs can be freely exchanged, unbinding identities tied to a single Ethereum address and removing them from the maximally transparent global ledger.

The Data Layer Between Web2 and Web3

While Disco is a company serving venture capital and DID, Disco is just one product among many. Disco is the first platform to leverage these standards in the role of Web3 identity. The more people comply with this standard, the larger the network will become, somewhat like ERC-20 and crypto tokens. Web2 protocols can also utilize this technology. These technological standards are based on cryptography, and since VC and DID are not on-chain based, they can interoperate across the entire internet stack.

Through this technology, we can ultimately transform the power structures of Web2 applications into a more user-centric structure.