The 23th edition of our curated newsletter.
In today’s newsletter we look at:
I’m Worried Nobody Will Care About Rollups
This year, Ethereum transactions became extremely expensive, and now, many users cannot afford to use Ethereum daily. However, a promised Ethereum scaling solution, rollups, is meant to fix the issue. Rollups are completely trustless mini-blockchains that obtain the security properties of the blockchain they’re built on. Leading rollups have received over $100M in venture funding, and every major DeFi protocol has committed to using one of these soon-to-launch rollups.
Although they might look good on paper, the article’s author is worried nobody is going to care much about the rollups since users already have fast, cheap, EVM-compatible blockchains that integrate smoothly with the Ethereum ecosystem.
We Live In A Mempool: Backrunning the MEV Crisis
The crypto space is considered fair, and many ecosystems rely on some amount of social consensus to maintain a good user experience. In theory, miners could make the network unusable to make more money.
The same goes for transaction ordering. While blockchains specify transaction correctness, they don’t have strict rules around transaction ordering, so miners are supposed to order transactions based on fees and timing. At the same time, miners want to make more money from fees and mine blocks as fast as possible. So when it comes to dealing with complex financial transactions with underlying value, things get tricky, and MEV becomes a big deal.
Since bootstrapping liquidity in DeFi protocols became a thing, the space has captured investors, users, and regulators’ attention and demonstrated clear signs of product-market fit. In Q2 2021, the trend continued, and most metrics were reaching new all-time highs mid-way through the quarter. However, as speculation in markets died down, DeFi protocols also saw activity decrease.
Although some asset prices may be depressed, DeFi fundamentals march on, providing the seeds of DeFi’s next leg of growth. Messari’s report highlights key performance indicators, market developments, and critical things to look out for during the rest of the year.
The long-awaited Alpha launch of Uniswap v3 on the Optimistic Ethereum (OΞ) mainnet is finally happening and ready to challenge traditional web user experiences. Optimism’s is yet to roll out additional scaling solutions, smart wallet EOAs (no” approves”, pay gas in any token), and decentralization of the transaction sequencing operation.
During the Alpha period, OΞ will support an initial throughput of 0.6 transactions per second. If Uniswap v3 sees equal usage to L1, OΞ will offer up to 10x transaction cost savings, and additional demand will drive gas costs higher. Transaction speeds will ramp up over the coming months while testing and optimizing the OΞ infrastructure. The ultimate goal of scaling is to meet the demand for low-cost, high-speed DEX trading fully.
Chain-reorgs-as-a-service has been the talk of the Ethereum town lately. The community discusses how it relates to MEV, the ETH2 merge, and other important ecosystem developments.
Flashbots, a research and development organization focused on MEV, has published a high-level overview of why they do not support reorg games and believe they are a net-negative for all actors in the space, including miners.
Something You Could Have Missed
This is a weekly newsletter curated by our Blockchain Lead Vyacheslav Akhmetov. We cover the most sparkling events in the industry and sharing more about our journey.