Dear readers,

Welcome to the weekly cryptocurrency summary from Gryphsis Academy. We bring you key market trends, in-depth insights into emerging protocols, and fresh industry dynamics, all aimed at enhancing your expertise in cryptocurrency and Web3.

Happy reading!

Market and Industry Snapshot:

Layer 2 Overview:

This week, the Total Value Locked (TVL) of all the Layer 2 platforms we track has decreased. The declines in Optimism, Base, and Starknet are the most pronounced, while Arbitrum and zkSync remain relatively stable. Standout projects like Cega, Hidden Hand, Rehold, Domani, and Cairo have experienced significant percentage increases in TVL.

LSD Sector Overview:

This week, the LSD sector remains stable, with a slight increase in ETH staking. The market share of cbETH surged from 0.3% last week to an impressive 5.3% this week.

RWA Sector Overview:

The RWA sector remains stable, with tokenized U.S. Treasuries recording growth. $NXRA, $INX, and $MPL are the top performers, while $GFI, $PROPC, and $EMP have seen declines.

Main Topics

Macro Overview:

• US Stock V.S. Crypto

Major Events This Week:

• Uniswap Android Wallet

Weekly Protocol Recommendation:

• Eclipse

Gryphsis Research:

• dYdX V4

Weekly VC Investment Focus

• Membrane Labs ($20M)

• Silks ($5M)

Twitter Alpha:

• @thedefiedge on catalyst.

• @cyrilXBT 5 tools to use

• @TheDeFISaint weekly L2 roundup

• @TheDefiDog's market updates

Macro Overview

The cryptocurrency market experienced a noticeable decline compared to stocks over the past week, with $BTC and $ETH dropping by 3.6% and 4.6%, respectively. In the coming week, closely monitor core retail sales, building permits, crude oil inventories, and comments from Federal Reserve Chairman Powell.

Major Events This Week

Seamless Trading Anytime, Anywhere: Uniswap Wallet Launches for Android Users

Uniswap, a leading decentralized exchange, expands its mobile business by launching the Uniswap Wallet for Android users. Previously, the Uniswap Wallet was successfully launched on iOS in April and quickly became one of the top three wallet downloads. The Android version is currently in testing, aiming to replicate the seamless trading experience users expect from the Uniswap decentralized exchange (DEX). The team has invited members of the DeFi community to test the wallet to ensure a refined user experience upon its wide release. 35,000 users have already expressed interest and joined the waitlist.

The Uniswap Wallet is designed with interoperability in mind, allowing users to easily switch between various blockchains. Initially, the wallet will support token swaps between chains such as Polygon, Arbitrum, Optimism, Base, and BNBChain, with plans to integrate more chains in the future. One of the standout features of the wallet is "swap protection." This feature ensures that transactions are directed to private pools by default, protecting users from potential front-running and sandwich attacks. Additionally, the wallet emphasizes a transparent fee structure, displaying gas prices upfront and allowing users to make informed decisions.

Moreover, the Uniswap Wallet not only provides a seamless user experience but also fosters trust and transparency within the community. Meanwhile, Uniswap Labs announced plans to open-source the wallet code. Additionally, audit results (including those from cybersecurity firm Trail of Bits) will be made public to ensure users are fully informed about the wallet's security measures.

While the iOS version of the Uniswap Wallet has proven its capabilities, the launch of the Android version is also highly anticipated. Uniswap Labs is taking a phased approach, gradually onboarding users from the waitlist and gathering valuable feedback. Those eager to become early adopters and access upcoming features can register on Uniswap's official website. As the cryptocurrency space continues to evolve, tools like the Uniswap Wallet play a crucial role in enhancing user experience and trust.

Our Take

In the rapidly evolving world of decentralized finance (DeFi), Uniswap has consistently been at the forefront, driving innovation and accessibility. Following the success of the iOS wallet, the recent launch of the Android version marks a significant step in expanding its reach. This initiative is not just about attracting a larger audience; it is a strategic move towards democratizing finance in regions where mobile connectivity surpasses traditional computing methods. The Android wallet, with its user-friendly interface and robust features, is poised to make DeFi trading as commonplace as any other mobile banking operation.

Beyond accessibility, the Uniswap Android wallet also demonstrates the platform's commitment to seamless and secure cross-chain interactions. In a world where cryptocurrencies are often siloed, the ability to easily swap tokens between different blockchains, such as Polygon and Arbitrum, is essential. This interoperability addresses a long-standing challenge, ensuring users are not confined to a single blockchain but can navigate the entire crypto ecosystem with ease. Furthermore, security is a critical concern in the DeFi space, which has been thoroughly addressed. The wallet's "swap protection" feature is a pioneering effort to shield users from potential trading threats, showcasing Uniswap's dedication to creating a secure trading environment.

Transparency is another cornerstone of Uniswap's approach. Uniswap's methodology not only fosters trust but also encourages the entire DeFi community to cultivate a culture of openness and accountability. Essentially, the Uniswap Android wallet contributes to the future of DeFi—a future that is accessible, secure, and transparent, ensuring the benefits of decentralized finance are open to all.

Weekly Protocol Recommendation

Orange Finance is an innovative protocol designed to optimize the benefits of decentralized exchanges (DEXes) with concentrated liquidity types. At its core, Orange Finance integrates a range of advanced strategies and features to enhance capital efficiency for liquidity providers (LPs).

The operation of the protocol is based on the following features:

1. Delta Hedging Strategy: This approach aims to protect liquidity providers from potential losses due to asset price fluctuations. In traditional finance, delta hedging is used to neutralize the price volatility of underlying assets, and Orange Finance cleverly adapts this strategy to the DeFi space.

2. Smart Liquidity: Smart liquidity is a dynamic mechanism used to determine the optimal price range for providing liquidity. It also adjusts the fee tiers based on current market conditions. By simulating volatility with models like GARCH and referencing parameters such as implied volatility and historical volatility, smart liquidity ensures that liquidity providers operate within the most capital-efficient range.

3. Automatic Rebalancing: Orange Finance recognizes the importance of maintaining optimal liquidity positions. To this end, the protocol features an automatic rebalancing mechanism. This ensures that accumulated fees are compounded automatically and liquidity positions are adjusted to maintain optimality. If asset prices exceed the set range, a rebalancing strategy is triggered, liquidating positions and reinvesting liquidity within the newly simulated range.

4. Fungible Liquidity Positions: To enhance flexibility and practicality, Orange Finance introduces fungible liquidity positions. By adhering to the ERC20 token standard, Orange LP tokens can be minted. These tokens can then be used for liquidity mining, incentivizing holders to provide concentrated liquidity within specific price ranges.

5. L2 Native and Multi-Chain Support: In the DeFi ecosystem, scalability and interoperability are crucial. Orange Finance is designed to be L2 native, meaning it is prepared to support frequent rebalancing operations without incurring high gas fees. Additionally, the protocol's multi-chain support ensures it can accommodate a wide range of trading pairs across multiple networks.

6. Dynamic Fee Settings: Orange Finance adjusts fees based on traditional financial markets. In times of increased market volatility, the protocol may set higher fees for liquidity pairs. This dynamic fee setting is achieved by actively monitoring market conditions and adjusting fee tiers accordingly.

Essentially, Orange Finance creates an ecosystem that combines advanced financial strategies with blockchain technology, aiming to redefine the standards for liquidity provision in the decentralized space.

Our Insight

Orange Finance stands out in the DeFi space by maximizing users' trading fee returns while minimizing risk exposure. At its core is its delta hedging strategy, which protects liquidity providers (LPs) from losses caused by asset volatility. With its "smart liquidity" feature, the protocol automatically adjusts price ranges to optimize capital efficiency for LPs. Additionally, it employs a dynamic rebalancing strategy that weighs potential fee returns against possible rebalancing losses, ensuring that capital is allocated only when returns justify the risk.

Another innovation is Orange's adoption of fungible liquidity positions through the ERC20 token standard. This allows Orange LP tokens to be used for liquidity mining. As the DeFi ecosystem evolves, particularly with the rise of L2 solutions, Orange Finance is poised to broaden its horizons, aiming to provide specialized LP services across various networks while catering to diverse liquidity pairs.

The DeFi space is rife with protocols leveraging CLMM LP positions, ushering in the narrative of "LPDfi." This trend encompasses a wide range of applications, from perpetual contracts and options to vaults and liquidity platforms. These protocols signify a new wave of DeFi creativity, with Orange Finance emerging as a particularly compelling participant due to its tailored yield and liquidity management approach. As "LPDfi" gains attention, we encourage enthusiasts to explore these avant-garde protocols.

Gryphsis Research Spotlight

Welcome to this week's Gryphsis Research Spotlight, where we share the latest insights from our team. Our dedicated research team continuously explores cutting-edge trends, developments, and breakthroughs in the crypto space. This week, we are excited to share our research titled "Delving into dYdX v4: Improvements in Tokenomics and Valuation Prospects," aimed at deepening your understanding of the evolving crypto world and sparking your curiosity.

Founded in 2017, dYdX is a decentralized perpetual exchange that seamlessly integrates lending, leveraged trading, and perpetual contracts. In 2021, after migrating its strategy to Starkware, dYdX cleverly addressed challenges related to TPS and gas fees. This move propelled the platform to achieve an astonishing 24-hour trading volume of over $800 million, making it a leader in the perpetual DEX market.

With the launch of version 4, dYdX embarks on a transformative journey. The platform has transitioned to a Layer 1 chain based on the Cosmos SDK. This shift provides the dual advantages of off-chain matching combined with on-chain consensus. Notably, this transition eliminates gas fees for placing and canceling orders, charging fees only upon trade completion. Furthermore, dYdX has realized its vision of complete decentralization in its governance structure.

In terms of tokenomics, v4 stands out compared to its predecessor. It introduces refined token standards, a more robust governance framework, enhanced discount features, generous trader rewards, strategic staking, and optimized gas and fee allocation methods, all of which amplify the intrinsic value of the token.

The platform's decision to align with Cosmos on its v4 is driven by several strategic considerations. Cosmos is renowned for its decentralization and high performance. Additionally, its structure possesses the ability to withstand potential regulatory scrutiny. The availability of USDC on Cosmos has changed the game, significantly enhancing dYdX's liquidity. Moreover, Cosmos promises better scalability and composability for dYdX, making it the preferred choice.

This article provides a comprehensive overview of the evolution of the dYdX protocol, elucidating its team, funding trajectory, business segments, and tokenomics. It highlights the marginal improvements brought by v4 relative to v3, emphasizing features such as the transition from Layer 2 to an alternative Layer 1, innovative order mechanisms, strategic elimination of trading gas fees, and a fully decentralized governance model.

While the transition to Cosmos offers numerous advantages, including enhanced decentralization, superior performance, regulatory flexibility, and fortified asset security through native USDC, it is not without challenges. The primary concern revolves around security, as users now need to trust a new set of validators on the dYdX chain.

In summary, dYdX v4 promises to empower the $DYDX token and bring substantial benefits. However, potential investors and users must proceed with caution and recognize the inherent risks associated with moving away from Ethereum. As with any investment, thorough research and expert consultation are crucial.

This section provides a concise preview of our detailed research on dYdX v4. We encourage readers to delve into the full report for a comprehensive understanding and expert analysis of this captivating topic!

Weekly VC Investment Focus

Welcome to our weekly investment focus, where we unveil the most significant venture capital dynamics in the crypto space. Each week, we spotlight the protocols that have secured the most funding.

Membrane Labs

Membrane Labs, a cryptocurrency trading and lending platform, has raised $20 million in Series A funding, with contributions from notable firms such as Brevan Howard Digital, Point72 Ventures, and Jane Street. Following past platform missteps and increasing regulatory pressure for transparency in the crypto sector, Membrane Labs aims to develop a robust trading infrastructure. CEO Carson Cook describes the company as a "settlement network" focused on enhancing transparency and risk management by integrating various trading components. While many advocate for a complete shift to decentralized finance (DeFi), Membrane Labs provides classic and smart settlement options catering to various institutional preferences.

https://x.com/Membrane_Labs/status/1712118472010801536?s=20

Silks

Game of Silks, a blockchain gaming platform simulating thoroughbred horse racing, has raised $5 million in its Seed 2 funding round, marking significant progress in the blockchain fantasy sports arena. Under the leadership of CEO Dan Nissanoff, Silks combines digital collectibles with real-world horse racing dynamics, establishing partnerships with entities like NYRA and FOX Sports. The platform was launched in June 2021 by Nissanoff and Troy Levy, supported by investors such as Taylor Made, with funding exceeding $10 million, rapidly reshaping the intersection of blockchain gaming and horse racing. With community membership reaching 25,000 and continuing to grow, Silks remains a focal point in both the blockchain and horse racing sectors.

https://x.com/gameofsilks/status/1712107411782140028?s=20

Protocol Updates

Polygon Labs proposes Layer 2 'ApeChain' to power ApeCoin ecosystem

Sei Labs uses Plaid's KYC solutions shortly after Layer 1's launch

BarnBridge DAO votes over response to SEC probe

Platypus Finance suffers more than $2 million exploit on Avalanche

Instadapp introduces lending protocol Fluid in testing phase, aiming for January release

Scroll appears to have gone live on mainnet, $500,000 bridged so far

THORswap resumes with updated terms to exclude users from sanctioned countries

GMX to receive largest share of Arbitrum's $40 million grant, Lido misses out

Industry Events

Ferrari to accept crypto for luxury car purchases

FTX estate stakes$122 million of Solana

MetaMask appears to have been removed from the Apple App Store

Tether promotes Paolo Ardoino to CEO role

Mastercard successfully wraps up CBDC pilot with Reserve Bank of Australia

CoinList launches multi-chain staking fund for U.S. accredited investors

Trezor unveils new crypto hardware wallets and backup solution

Galxe announces $396,000 refund to affected users following DNS attack

Twitter Alpha

There is a wealth of Alpha in crypto Twitter, but navigating through thousands of tweet threads can be challenging. Each week, we spend hours researching to curate insightful threads and compile a weekly selection for you. Let's dive in!

https://x.com/thedefiedge/status/1712074649121529949?s=20

https://x.com/cyrilXBT/status/1713302394358948224?s=20

https://x.com/TheDefiDog/status/1713305584114491775?s=20

https://x.com/TheDeFISaint/status/1713281633791492152?s=20

Upcoming Events

News Sources/References:

https://blog.uniswap.org/uniswap-wallet-android

https://www.theblock.co/post/256095/layer-2-zkevm-scroll-appears-to-have-gone-live-on-mainnet-500000-bridged-so-far

https://decrypt.co/201327/uniswap-launches-mobile-ethereum-wallet-android

https://blockworks.co/news/uniswap-wallet-ios-android

https://blockster.com/game-of-silks-raises-5m-in-second-financing-round

https://www.nasdaq.com/articles/game-of-silks-crypto-powered-horse-racing-startup-raises-$5m-despite-industry-funding-at-a

https://www.businesswire.com/news/home/20231011150909/en/Game-of-Silks-Raises-5M-in-Second-Financing-Round-Moving-Blockchain-Gaming-Investors-Off-The-Sidelines

https://www.coindesk.com/business/2023/10/11/crypto-prime-broker-membrane-labs-raises-20m-from-brevan-howard-point72-and-jane-street/

https://coinstation.vn/membrane-labs-raises-20m-in-series-a-fundraising-round/

That concludes this week's report. Thank you for reading this week's newsletter. We hope you benefit from our insights and observations.