Bankless: 8 Optimistic Projects in a Bear Market

Dear Bankless Nation,

I know we’re all haunted by this hateful price action, but don’t forget our mantra: the market for cryptocurrencies is under construction. We are entering the greatest phase in the history of crypto development…

It all starts with these trends:

Bear markets enable CEOs to think clearly from first principles.

A cash-rich private market allows builders to spend less time fighting for survival and more time building meaningful technology.

There is plenty of new surface area to build on. In 2021, the whole new realm of web3 goes from 0 to 1 – this is the hardest part. Now we need clear-headed, well-funded companies to build big according to these blueprints.

There is a large number of engaged and interested users. The 2018 bear market was a ghost town. The 2022 Bear feels like a relative metropolis. Cryptocurrencies are reserved this time around. Its culture has also matured.

Today, I’m going to highlight 8 companies that are at the forefront of the crypto space.

They’re building some really cool stuff, you should know more.

Disclaimer: I’ve been exposed to all of the projects mentioned – either through angel investing or advising. That’s why I can dive into the details and strategies of each project.

There are many ways to get value from this article.

Large Investors and Allocators: Grab the Pulse of Emerging Startups. Startups make way, then the industry catches up in the hands of smart investors.

Airdrop Hunter: You can assume every project here will have a token (remember: be a real user, not a farmer)

Crypto Explorers: These projects cover ETH staking technology, professional L2, DeFi applications, and even projects that don’t exist on-chain. Cryptocurrencies are moving in all directions at the same time. You have to catch up!

Every project is a rabbit hole, so you have your work to do, go dig deeper!

– David

Table of contents

Choose your own adventure. Below is a quick summary with a link to the website you can view it, plus the full in-depth article title below!

1、Obol Network

Pioneering ‘Distributed Validator Technology’ (DVT) for liquid staking derivatives

2、Li.Fi

A ‘Bridge & DEX aggregator aggregator.’

3 、 Voltz

An interest rate swap AMM

4、Tracer

A derivatives meta-protocol

5、Blocknative

Infrastructure for the ‘Pre-Chain’ layer

6、Euler

Euler is a permissionless and governance-minimized money marketEuler

7、Aztec Network

Aztec is an L2 rollup with privacy features built-inAztec

8、Disco.xyz

Disco is your private data backpack for the Metaverse and the Realverse

Ready for a deep dive? Put on your wetsuit!

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1. Obol Network

Distributed Validator Technology (DVT)

Obol is number one because it has to do with my favorite thing to do: staking ETH.

Obol is the pioneer of “Distributed Validator Technology”, or “DVT”.

DVT is like having a multi-signature between a distributed set of validating nodes, enabling a new type of validator that can run across multiple machines and clients simultaneously and still behave like a single validator to the network.

DVT allows many computers to come online and jointly participate in private key signing, rather than having a backup computer on standby (in case the primary signing computer fails).

DVT allows you to combine multiple computers into a single staking network without the risk of accidentally slashing double signatures.

It works like this: All validators in the group agree on what they should sign, and once the vast majority of nodes produce these signatures, these are combined into a single signature for a “distributed verification” run by them together device” to use.

Shared validators are online 100% of the time as long as most computers in the group are online.

This technology democratizes the ability to create a competitive staking ETH infrastructure, helping to reduce network monopolies. Most people can keep their validators 98% uptime, but 99.99%+ uptime requires highly sophisticated knowledge and additional capital expenditures.

With DVT, achieving over 99.99% uptime is trivial for any population.

This is important as the LSD (Liquid Collateral Derivatives) wars unfold. stETH from Lido currently has a significant dominance that could turn into a self-reinforcing feedback loop as Lido specialises and optimises its validator network to outperform other alternatives through economies of scale , thereby saving operating costs and increasing yield relative to smaller LSDs.

Currently, Lido’s stETH has a significant dominance that could turn into a self-reinforcing feedback loop as Lido specialises and optimizes its validator network, saving operational costs through economies of scale , and an increase in production relative to the smaller LSD to compete with other alternatives. 

Obol’s goal is to level the playing field for staking networks, making it easy to achieve highly competitive validator runtimes while minimizing slashing risk.

Use cases for Obol:

The DAO will not trust a single member to stake its treasury ETH, but may trust a group of members to run validators together and share responsibility.

You and your partner may not have 32 ETH each, but you can pool all ETH and create a shared node.

Custodians may not trust a single staking operator that stakes their clients’ ETH, but they may trust a network of operators that collaborate through Obol technology.

How Obol Stands Out:

1. Obol will be integrated into every staking protocol and consumer staking software.

2. Every staking service company and protocol (Coinbase Cloud, Lido, RocketPool) uses Obol and DVT to spread their verification risk.

3. The quantity and quality of liquid collateral derivatives (stETH, rETH, etc.) have grown significantly and become extremely competitive.

4. ETH staking enthusiasts can become competitive through specialized and competitive service companies such as Coinbase.

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2.  LI.FI

L2 Bridge & DEX Aggregator

“9 bridges, 15 chains and all DEXs”

In the long-term development of DeFi, the number of assets and chains in DeFi will grow by an order of magnitude.

LI.FI is building a liquidity mesh network between every asset on every EVM compatible chain.

We already have DEXs like Uniswap and Sushiswap. We also have DEX aggregators like 1Inch or Matcha. We also have many EVM chains like Optimism, Arbitrum, Avalanche and Ethereum. We also have many cross-chain bridges between all these EVM chains like Connext, Hop and AnySwap. .

So, as a user, you own ETH on Ethereum, but you want to own BNB on Binance Chain. Or you have DAI on Avalanche and you want to own USDT on Polygon. Because there are 9 different cross-chain bridge protocols, and countless DEXs, there are more permutations from chain A with X assets to B chain with Y assets than you want to manage.

LI.FI automates all of this complexity. It finds the best route, the most liquid, the cheapest, and takes you and your money where you want to go at the lowest cost.

It is a DEX aggregator built on top of a bridge aggregator, making complex transactions very easy.

Try LI.FI here.

How the LI.FI game plan is winning DeFi:

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

2. The app integrates LI.FI’s tools to easily plug into the flow of funds throughout the crypto universe.

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

4. Li.FI becomes the solution to manipulate all applications in all chains without losing funds due to high fees or all the way down.

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3. Voltz

Interest Rate Swap  AMM ( Automated Market Maker)

Voltz is an interest rate swap AMM. Voltz uses the liquidity engine of Uniswap V3 to build an interest rate swap market.

The Voltz protocol allows the use of leverage to trade interest rates. With Voltz, you can trade “variable rate for fixed rate” or “fixed rate for variable rate”.

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Here’s how the two sides of the market work:

Fixed Rate Buyers (and Variable Rate Sellers)

1. Alice owns $10,000 worth of cDAI with a current variable rate of return of 10% APY

2. Alice doesn’t want to risk seeing the rate drop, so she prefers to keep the rate fixed for 90 days

3. Alice comes to the Voltz protocol and enters the 90-day cDAI pool, where the fixed rate is currently 10% APY

4. Alice deposits $10,000 worth of cDAI and locks up 10% APY for the next 90 days

Variable Rate Buyers (and Fixed Rate Sellers)

1. The current variable APY of cDAI is 10%, and the fixed interest rate of the Voltz protocol 90-day cDAI pool is also 10% APY

2. Bob believes the interest rate on cDAI will rise to 20% and wants to use his exposure to address this potential upside

3. Bob enters the swap by depositing $10,000 in DAI margin and choosing 15x leverage

4. This gives Bob a nominal exposure of $150,000 to the base rate of cDAI minus the fixed rate of the Voltz Protocol AMM (i.e. 10% in this example) when he enters the swap

Yield is probably the biggest use case for cryptocurrencies after money, and Voltz provides the infrastructure to build stronger, more expressive financial products around yield assets.

There is as a native Internet bond market, there is still a lot of room for the financialization of ETH (after the merger). Voltz is positioned to provide complex financial instruments around ETH or any yielding asset in DeFi.

provide liquidity

Voltz is a fork of Uniswap V3, making providing liquidity a core part of the Voltz system. Voltz LP does not provide liquidity in the price range, but provides interest rate liquidity in the interest rate range.

Same but different.

no impermanent loss

Voltz markets trade interest rates, not assets. Voltz LPs only need to submit one asset to the pool; therefore, LPs have no risk of impermanent loss because they only deposit one asset. IL risk is now “funding interest rate risk”, which is a different type of risk; see Voltz’s document for details.

Here’s how Voltz won crypto derivatives:

1. Voltz opened up DeFi to the huge interest rate swap market and devoured the 1,000 tons of interest rate swap volume that happens on TradFi every year.

2. New markets are created that allow traders to trade in a combination of interest rate risk on any asset with a variable rate of return.

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

4. Long-term game. Voltz Protocol Becomes a Promoteable Derivatives Protocol Beyond Interest Rate Swaps and Cryptocurrencies, Expanding into Global Derivatives Markets

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4Tracer

Derivatives Meta Protocol

Tracer is a meta-protocol for derivatives.

With so many possible derivatives, Tracer is making factory contracts (templates) for all of them.

Derivatives are already a popular product in cryptocurrencies, but current derivatives protocols have not unlocked the full capabilities of DeFi.

For example, dYdX is a popular perpetual market, but it is siloed and permissioned. It is basically a non-custodial centralized exchange, not full DeFi. This is true of most crypto-derivative protocols.

Tracer takes derivatives and injects them with the full power of DeFi.

I see Tracer as the “Uniswap of Derivatives”. Uniswap can make markets around any token, and Tracer can generate derivatives around any asset.

Every TracerDAO product comes with a factory contract. Using Tracer’s factory contracts, any price or data feed can be converted into options, swaps or futures products.

Insert Oracle  → Generate a derivative .

Permissionless market generation enables DeFi to have a new tool in the toolbox without having to require centralized perpetual providers to list new markets. It can be implemented on Tracer if the market demands it.

Product #1: Perpetual Pools

Cryptocurrencies love perpetual swaps. A perpetual swap is a derivative product that allows you to bet on price movements with very little capital. Essentially, margin trading.

But with Tracer, perpetual swaps morphed into perpetual pools, materializing a perpetual position into a token, unlocking that token to unlock the full potential of composable DeFi (something that dYdX or other perpetual markets can’t do).

Tracer’s recently launched Perpetual Pool V2 brings optimizations to the tokens in the pool, making them better collateral in DeFi, such as reducing volatility decay (good for long-term holding!)

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Tracer Factory Contract

Perpetual pools are just the tip of the iceberg of derivatives. Future Tracer products include options, interest rate swaps, futures and structured products.

Each Tracer derivative will come with its own factory contract. Factory contracts are where individual markets “mint” their coins. If you’ve ever minted coins on the Uniswap marketplace, you’ve interacted with Uniswap’s “factory contracts”.

TCR manages factory contracts. While each individual Tracer marketplace is meant to be ungoverned and trustless, the template for generating the Tracer marketplace is where DAOs step in.

In the same way that Yearn manages mining strategies, Tracer manages its derived templates.

If you believe in the argument that DeFi will completely replace all previous forms of finance, it’s hard not to be bullish on DeFi-native derivatives infrastructure, which offers the same products as TradFi but with all the benefits of DeFi.

TradDerivatives market valuation exceeds $1 trillion. Imagine what happens when you add financial composability to TradDerivatives.

How Tracer Wins Tokenized Derivatives:

1. TracerDAO’s tokenized derivatives greatly improve capital efficiency by combining in DeFi. Capital efficiency results in Tracer earning TVL because traders only have to do more within Tracer with $1 of capital.

2. Tracer’s factory contracts enable long-tail assets to gain access to complex derivatives, allowing them to gain market share and mindshare of the wider crypto community (as Uniswap has done).

3. Metaverse volatility becomes manageable, enabling DeFi vaults, DAOs, and individuals to think on long-term time horizons

4. Real world commodities (water, oil, real estate) can enter the global derivatives market, creating any new financial product unlike TradFi (short Manhattan, long Brooklyn! Short 2 bedroom apartment, long single family home! Short BAYC , long cypherpunks!)

5. Real-world commodities (water, oil, real estate) can enter the global derivatives market, creating new financial products unlike anything in TradFi (short Manhattan, long Brooklyn! short two-bedroom apartment, long Single Family Homes! Short BAYC, Long Cryptopunks!)

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5Blocknative

Real-time infrastructure of the front chain layer

Before transactions are executed in the blockchain, they are in a fringe state called a “mempool”, or pre-chain. Validators select transactions from the mempool, order them in a block, and add that block to the blockchain.

Mempools are a crazy, chaotic, and highly hostile place, and Blocknative is working hard to light up the dark forest of mempools. Its product, the gas detector, has become the new industry standard. Previous gas fee detectors looked at the average gas price of recent blocks to estimate the amount of gas needed to execute a transaction platform. This is a best guess at predicting future gas prices through historical data.

Blocknative’s gas fee detector looks at the gas fee of transactions in the mempool from a blockchain perspective, reading future data.

Blocknative’s gas fee detector demonstrates the true potential of blockchains – infrastructure for block producers to get a head start.

How Blocknative Stands Out With Transparency:

1. The mempool blockchain infrastructure becomes as complex as the actual blockchain explorer infrastructure;

2. Participants earn yield (which ultimately benefits ETH stakers the most).

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6Euler

Money Markets with Minimized Governance

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

License-Exempt Asset Borrowing or Loans

Euler allows lending and borrowing of any asset with an ETH Uniswap V3 trading pair. Euler uses Uniswap V3 as an oracle for asset prices, using a time-weighted average price algorithm.

Unlicensed asset listings are extremely risky for money markets, and we don’t want to use bad debt as collateral. Euler governance controls this risk through the fee layer. The Euler model is a huge optimization for asset availability and capital efficiency in the lending space.

Improve the clearing mechanism

Euler uses a Dutch auction-style liquidation mechanism. In Compound and Aave transactions, liquidators can obtain a certain percentage of collateral, and very large positions can bring huge returns to liquidators, but are not conducive to large savers.

Clearing costs are mostly fixed. The gas cost of liquidating a $100 million position is the same as the cost of a $1000 position. The payout for liquidation at Euler starts at $0 and slowly increases until the liquidator steps in and accepts the payout. This reduces the amount of over-collateralization required by depositors, as liquidation penalties are minimized, thereby increasing the capital efficiency of the financial system.

How Euler excels in lending:

1. Euler provides unprecedented lending opportunities for new assets;

2. Even assets that already have lending opportunities find higher utilization in Euler (and therefore higher fees);

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

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7. Aztec Network

L2 Rollup with built-in privacy features

The Aztec network is a unique L2 Rollup, Zcash as Ethereum L2.

The Aztec network acts as a privacy shield for ERC-20 token transactions and other DeFi interactions. Once the deposit is included in a Rollup block, the user generates a set of UTXO tickets representing the amount of the deposit token.

Once the Token enters the Aztec network, all subsequent transfers are confidential and anonymous. The identities of senders and receivers are hidden, transaction amounts are encrypted, and network observers cannot even see which asset or service the transaction belongs to.

Aztec Connect

Aztec Connect allows users to bring privacy-preserving ZK assets on Aztec to Ethereum’s public DeFi protocol.

Aztec Connect is essentially a V/P/N for Ethereum users. Like V/P/N, Aztec Connect hides the originator of transactions and fully protects user privacy, while reducing gas costs by batching user operations.

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8. Disco.xyz

Metaverse and Real World Private Data Packages

Disco opens up a whole new dimension in Web3. Will turn the financial Metaverse (the world we currently live in) into an interesting Metaverse (the land of dreams).

Disco is the Metaverse data package, the place to store social capital. Credentials for participating in DAOs, participating in DeFi applications, or certificates of completion of educational courses can be stored. Anything verifiable can be placed in your Disco packet and thus become something the Metaverse can interact with. With the Disco package, all the identities represented can be collected.

Disco packets are not subject to any set of private keys. Private keys for packets can be freely exchanged, identities tied to a single Ethereum address are unbound and removed from the global ledger with maximum transparency.

Data layer between Web2 and Web3

While Disco is a company serving VCs and DIDs, Disco is just one product among many. Disco is the first platform to leverage these standards in Web3 identity impersonation. The more people adhere to the standard, the bigger the network will become, kind of like ERC-20 and cryptocurrencies. The Web2 protocol can also use this technology. These technical standards are based on cryptography, and since VCs and DIDs are not on-chain, they are interoperable across the entire internet stack.

With this technology, we can finally shift the power structure of Web2 applications to a more user-centric one.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bankless-8-optimistic-projects-in-a-bear-market/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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