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Bull markets can be long, but the craziest phases of the market tend to be relatively short and difficult to sustain. Hello everyone, I am Pepe. As for Bitcoin, we mentioned before that 70% of the circulation has not moved in the past year. The chips on the market are much less than we thought. In addition, Grayscale has bought coins this year, various loans have locked coins, and the price has risen and is reluctant to sell. The surge is also a manifestation of lack of liquidity. It’s just that this time is the opposite of 312, there is not enough selling. However, time can alleviate the liquidity problem. The output of 27,000 BTC per month is about 860 million US dollars. If it continues at the current growth rate, it means that more funds will have to flow in to maintain it. As for Ethereum, there are actually many ancient whales on Ethereum. For example, when the 2.0 mortgage test was launched, many coins from 2013 to 2014 rushed in. However, compared with Bitcoin, there are more chips in circulation, and more growth still depends on ecological needs, whether it is ICO in 2017 or DeFi in 2020. One limitation of the rising ETH is the gas fee. The following is a screenshot of the gas fee during the peak period of the past two days: To maintain an instant transaction (500gwei), depending on the different consumption of the contract, it costs $10 for a normal ETH transfer, $20-30 for sending erc20 tokens, and $50-60 for a uniswap transaction. To make a financial deposit or redemption in Yearn, it costs nearly $100 in handling fees. The growth of ETH price has a dual impact on gas fee. On the one hand, GWEI is denominated in ETH, and the growth of ETH naturally leads to an increase in gas fee. On the other hand, the booming market promotes the growth of on-chain transaction volume, triggering more intense gas bidding. But such a situation is actually difficult to maintain in the long run. An ordinary transaction fee of one thousand or two thousand dollars a year will swallow up countless traders' profits, not to mention this transaction of dozens of dollars. Transactions under the current state can only be said to be more of speculation. They are betting on doubling their money in a day and don't care about the cost of hundreds of dollars in and out. There are also big investors who don't care about this transaction fee for transferring hundreds of thousands of U. But over time, it is hard to say that they will not discover their true nature as workers in the mining circle. No matter what, the surge in gas will be a blow to the ecosystem. For example, Uniswap. The popularity of Uni last year came from the fact that there was no threshold for listing coins, but the high transaction fees may stifle the trading volume of many small coins (from this perspective, try not to participate in new coin speculation on Uniswap if the gas fee has not returned to normal). Therefore, for Ethereum to steadily move its market value to the next level, the most urgent task is to reduce these transaction costs. While eth2.0 is still a year or so away and it is still unknown when the eip1559 proposal will be implemented, layer2 seems to be a more immediate solution. This is why the concept of the second-layer network has become popular again recently and some tokens have instantly soared and doubled. Regarding the second-layer network, Vitalik Buterin also published an article today: https://vitalik.ca/general/2021/01/05/rollup.html Regarding the second-layer network, literally speaking, it means putting frequent transactions outside the chain or in a specific smart contract, which is equivalent to building another layer of transaction network on Ethereum, and finally recording the settlement verification results on the Ethereum chain. The main specific solutions that can be seen at present are: State channels, Plasma, sidechains, cross-chains, and rollups. State channels, Plasma, and sidechain cross-chain have certain similarities. They all put transaction information outside the chain for processing. However, the state channel requires both parties to the transaction to be in the same channel at the same time, and it is impossible to transfer money to traders who are not in the system; Plasma generates another chain. Mortgaging eth to the contract can generate peth for trading on the Plasma chain. Compared with the state channel, it can interact with users outside the system, similar to wbtc. As long as the other party has an erc20 token such as peth and the transaction record on the p chain, the original eth can be redeemed. Plasma was actually proposed 18 years ago, but like the Lightning Network, it is difficult to see the results of its implementation, including the state channel. A practical problem is that it is not easy to maintain absolute trust and security. In a system like this, it is necessary to rely on a trusted role, the operator of the channel or Plasma chain. How to ensure that they treat all transactions well from beginning to end? If a margin mechanism is required, it means that the system has become more complicated. Based on this, it now seems that Vitalik prefers the Rollup solution. What is Rollup? Its principle is this: for smart contract platforms like Ethereum, its accounting method is not like Bitcoin's UTXO model, but the coin issuance contract manages a ledger. Each transfer is the addition and subtraction of the corresponding address value. What we see for each address is a displayed value in the coin issuance ledger. For many simple transaction transfer records, the information can be compressed. Rollup is equivalent to using a specific smart contract to compress and store all users’ ledger information in a binary tree, as shown below: This is a data structure, and you only need to understand the general meaning. In this way, plus storing only the minimum necessary information, such as Alice has 50 coins, Bob has 100 coins on his account, and so on, a binary tree is more than enough to store the ledger information of all users of a dex exchange. Each transaction in the contract is equivalent to a state change of the ledger record. In Rollup, all current state changes can be integrated into one transaction and passed to the chain. There is a role here called relayer, which collects, verifies and packages all users' current transaction records and sends them to the Ethereum chain. This transaction requires normal gas fees, but because it is a merged transaction, the cost allocated to each user is less. For example, the handling fee paid by the on-chain transaction relayer is 50U, and the transaction includes the transaction records of 100 users in the rollup, then the handling fee allocated to each user may be only 0.5U. It is in this way to reduce the on-chain cost. In addition, depending on the verification method, Rollup is also divided into ZKrollups and Optimistic rollups. Due to space limitations, we will not expand on this here. The above roughly understands the classification of the second-layer network. Now let’s take a look at some of the main concept coins currently available: Loopring is a decentralized trading protocol based on the old-fashioned technology, and it is also a successful overseas project. It has now used the ZKrollups mentioned above to implement the second-layer network DEX. The website is: https://exchange.loopring.io/ This time, the V2 version also changed the original order book model to the most popular automatic market maker model in DEX. Affected by the recent popularity of the second-layer network concept, LRC's growth has also exploded, with a growth of 157% in the past 7 days and 50%+ in the past 24 hours. It has increased more than 20 times from the low point in 2019. However, compared with the booming ICO in 2018, there is still 80% distance. With the current market value of 570 million US dollars, I don’t know if it is still overestimated. At least looking at their V2 version data, it is not impressive, and there is only some volume in the main trading pairs with ETH and WBTC. Although layer 2 has strong demand and is a hot concept, actual user migration is likely to be a slow process, especially since you still have to pay high gas fees when transferring in and out of their contracts. So even if it is implemented now, it may still not be able to truly alleviate the problem of high on-chain transaction costs, especially when liquidity and trading pairs are insufficient. Of course, no matter what, after two or three years of downturn, the team can still continuously update its products and has a place in the Ethereum ecosystem. We should still applaud them. We hope that Loopring can launch more new products that adapt to the market this year. In addition, they will also launch some mining activities recently. If you are interested, you can pay attention to the official updates. 2. Injective Protocol (inj) This is Binance's IEO project in October this year. It also claims to be a layer2 DEX, but its implementation adopts a cross-chain approach, using cosmos at the bottom layer to cross over to Ethereum. Whether the IBC of Cosmos has been implemented is still a question, so I will temporarily classify this project as "air", and what's interesting is that 82% of the chips are still controlled in the official address (which should include the locked part of the fundraising round): Therefore, this inj is currently pure speculation. The price performance in the past month is not bad, +170%. Those who like speculation can pay attention to it. In addition, in terms of speculation, if the market can stabilize and give the copycat a chance to perform, you can take a look at the IEO projects in the past two years. This is a second-layer network dex that has been implemented and can realize private transactions. It is headquartered in London and adopts a more traditional order book model. It has a governance token called NEC, but it seems that no one is interested in it. The AMM exchange based on zkrollup will start liquidity mining tomorrow. Basically, all the hot concepts are included. This company has been doing publicity and releasing soft articles in China recently. You understand. However, judging from this situation, it is estimated that there may be more than one small-cap new coin adopting this concept this year. 5. Some are not so popular matic-sidechain mode expansion, but it is not clear whether its positioning is to expand itself or Ethereum. OMG — Plasma technology used to build a second-layer payment network Skale — Sidechain Network 1. For the second-layer network, from the perspective of implementation, the market will be more inclined to rollups (of course, you need to be careful about those who try to take advantage of the popularity, as the security of the contract is hard to say). There are still some technical bottlenecks in state channel plasma. As for side chain and cross-chain, there is a lot of hype, but the actual implementation has not been seen yet. I personally feel that there are still some bottlenecks here, including the problem of wbtc we mentioned before. In fact, anything involving cross-chain involves not only technology, but also issues of immediacy and liquidity. If not properly resolved, it is easy to have security issues. This may be why we have to talk about layer2. The concept is clear, but there are not many relatively pure targets. 2. Even if rollup is adopted, whether it can be promoted in the market is still a big problem. It also needs the support of mainstream wallet resources. I feel that traffic entrances such as Uniswap may be more acceptable to build a second-layer network. I see that SNX and CRV platforms are working on this. 3. Of course, as long as the Ethereum scalability problem exists, there will be market space for these concept coins. For example, OMG performed well today, so from a speculative perspective, related concept coins, whether they can be implemented or not, are still worth paying attention to this year. Warm reminder: The above content is for reference only, please do not use it as a basis for investment directly. The digital currency market is risky, so please participate with caution! |
