The popular public account “Orange Book” recently released an article titled “Crypto Impotence”. It describes a dreadful boredom spreading in the crypto world, similar to the Black Death, where no one knows its origin but gradually realizes its pervasive presence.
Indeed, in recent times, there haven’t been any significant technological hot topics worth elaborating on in the industry. The only topics generating buzz revolve around memes like Pepe, Trump, Jenner, and the last notable technical topic was probably the “Pandora” of tokenomics?
The primary market has also been affected, but thankfully, innovation is still happening. Although we haven’t witnessed any groundbreaking 0 to 1 developments, there are still noteworthy advancements from 1 to 10 in various sectors.
In this report, we will focus on the BTC, Solana, and Restaking sectors to explore the “1 to 10” developments in each.
1. BTC
The much-anticipated Rune didn’t bring the expected hype. If BRC20 or Ordi were surprises causing chaos, Runes is a collective “all set, just waiting for the wind” reception from Cex to Dex to Infra. However, as the saying goes, “what’s popular will die,” at least in the short term. Looking at the long term, protocols like Runes, Atomical, RGB&RGB++ hold the potential to inject new vitality into BTC’s asset issuance. The BRC20 upgrade two months ago clearly demonstrates efforts towards a more flexible functional approach, not to mention the ease of implementing native stablecoins based on BRC20.
Recently, the BTC ecosystem has seen several noteworthy projects in the past two months, such as UTXO Stack, Fractal by Unisat, Arch Network, and Quarry.
Fractal has a unique design concept that can be seen as a 100% BTC fork but with a block time reduced to 30 seconds. It may seem like a BTC testnet at first glance, but it has significant significance:
1. Fractal employs legitimate POW, SHA256, with market value and incentives, making it more stable than the BTC testnet (as those who have used the BTC testnet would understand). Additionally, it is faster with 30-second block intervals.
2. It engages in 1/3 joint mining with the BTC mainnet (mainnet miners can mine one Fractal block every 90 seconds), theoretically achieving 80-90% of the BTC mainnet’s security level.
3. Since it maintains complete consistency with BTC, various XXRC20 assets and infrastructure can seamlessly migrate without any code changes.
4. It enables more controversial opcode proposals such as OP_CAT and native verification of ZK.
5. It opens the possibility for script-based contracts based on plaintext.
6. While others may find this project strange, it seems fitting for Unisat to undertake.
Arch differentiates itself from various “aesthetic fatigue” BTC EVM L2/sidechains by introducing an indexer and decentralized Prover’s ZKVM to bring programmability into BTC. It functions as a 1.5-layer where transactions are triggered on L1 and the logic for various asset conversions is executed on Arch’s ZKVM, generating ZK proofs and broadcasting the results back to the BTC mainnet. It bears some resemblance to RGB++, relying on BTC mainnet transactions for triggers. However, RGB++ utilizes CKB Cell-based isomorphism, whereas Arch relies on an indexer+ZKVM implementation.
Quarry transforms BTC-based joint mining into an infrastructural form, effectively creating a mining or hash rate version of an “OP Stack” + “Eigen Layer.” In simple terms, Quarry allows for the swift launch of a POW chain, which can be jointly mined with BTC miners to ensure its security. Token rewards are distributed to participating miners, similar to the AVS rewards in EigenLayer. In a market dominated by POS, it remains intriguing to observe how much market share POW app chains like Quarry can capture.
2. Solana
The most interesting aspect of Solana recently is the concept of “modularity.” While ETH embraces modularity, Solana has been a representative of the single-chain camp.
Over the past few months, several modular projects on Solana have been discussed. Examples include MagicBlock, Sonic, Solforge, and Mantis.
MagicBlock focuses on an Ephemeral Rollup, emphasizing a “use and delete, burn after reading” concept. It should be noted that this concept was initially proposed by AltLayer22, or even earlier. However, it is no longer the main selling point for Alt Layer. As a project that focuses on the Solana full-chain game engine, this Ephemeral Rollup will likely be part of their solution.
Sonic, on the other hand, focuses on Gaming Appchains on Solana. It recently announced its funding and utilizes the HyperGrid Framework to easily launch an SVM Appchain for games. Sonic can be understood as the first L2 prototype, similar to XAI on Arb.
Solforge is a more general-purpose Appchain Stack, aiming to position itself as the SVM version of OP Stack or Arbitrum Orbit.
Mantis is an SVM Rollup for intent settlement, not limited to serving the Solana ecosystem. Similar to the EVM-related OrderBook Flow, Mantis facilitates settlement. Solver inherently possesses certain chain abstraction properties.
Several interesting points are worth observing:
1. Although Solana emphasizes high-performance single-chain architecture, it is said that when a game became popular in the first half of the year, its transactions accounted for 20% of the entire chain. This was with a daily active user count in the range of four to five digits. One can only imagine the burden if the user count increases significantly or if several similar gaming chains emerge. This may have catalyzed the notion of “modularity” in the Solana ecosystem.
2. Toly, who was initially against modularity last year, seems to have adopted a more neutral stance this year, as evident from his recent tweets.
3. Many members of the Solana Foundation are inclined to support modularity, and numerous developers believe it is an inevitable direction for Solana.
4. Kyle from Multicoin has always been an advocate for Solana and single-chain architectures. Reportedly, he is still opposed to the concept of modularity.
The next 6-12 months should be interesting for Solana’s infrastructure. Besides the rising popularity of modularity, the anticipated launch of FireDancer’s simplified version by the year-end and the complete version next year will bring improvements to Solana’s TPS and stability.
3. Restaking
Restaking has been the most popular sector in recent months, without a doubt.
However, it has come to my attention that many people are not well-informed about the differences between the two leading projects, Babylon and EigenLayer. Even some project teams I’ve spoken with have expressed confusion. Therefore, it is worth discussing them separately.
In simple terms, EigenLayer can implement relatively complex slashing mechanisms due to its inherent smart contract capabilities. For example, AVS EigenDA, the first prototype, was developed in this manner. It is not possible to achieve something similar to “BabylonDA” using Babylon because the BTC native chain’s scripting language does not support such complexity.
However, Babylon has its own black technology, EOTS (Extractable One-Time Signature), and the BTC timestamp protocol, which EigenLayer lacks. This gives Babylon confidence in being the unique Restaking platform on BTC, focusing on “native BTC Restaking,” which Eigen cannot achieve.
Naturally, the functionalities of native BTC Restaking are limited, covering two main aspects: preventing Long Range Attacks on POS chains using the BTC timestamp protocol and enabling POS chains to implement or bootstrap their POS security consensus. In short, if you want to launch a chain, come to me; if you want to develop a DAPP, head to the neighboring Eigen.
But, can you still use Babylon to create an AVS and realize something similar to EigenDA or an Oracle? The answer is “yes,” but you will need to use “extension packages” such as Chakra or SatLayer. By incorporating these projects’ built-in smart contracts, you can implement more complex slashing mechanisms and develop AVS DAPPs in genres like DA, storage, and oracles.
In more abstract terms, in terms of functionality, Babylon + Chakra/SatLayer = EigenLayer.
In the Babylon ecosystem, apart from the aforementioned projects that aim to make Babylon as “complex” as Eigen, there are others like Solv Protocol and Lorenzo targeting the LRT ecosystem similar to EtherFi and Renzo. On the Eigen side, with its inherent complexity, the stack or “extension packages” have evolved to a higher level. For example, Ethos focuses on the AVS Coordination/Interoperability Layer, while Aethos specializes in AVS Programmable Policy Layer. As Eigen’s stack becomes richer and its infrastructure more robust, Eigen may increasingly resemble an AWS, where various plug-and-play options can fulfill your desired “security level + infrastructure suite.” Whether you want to launch a chain or develop a storage or oracle DAPP, the choice is entirely yours.
P.S. I recently had a conversation with a financial analyst who mentioned that he had spoken with at least fifty to sixty venture capitalists. Some were interested in infrastructure, gaming, or Bitcoin, but there was one sector that all venture capitalists were looking at without exception. Can you guess which one it is?
The answer is: Ton…
However, investing in projects built on Ton is much more challenging compared to ETH or Solana. Just imagine if Notcoin had approached venture capitalists with a deck or demo six months ago, how many would have decided to go all-in on such a project?
If I have the opportunity in the future, I will write about Ton in the next research report.
