Our Network: Issue #48

Coverage on Handshake, Polkadot, Celo, and Kadena.

Click here to join Our Network Alerts on Telegram.

This is issue #48 of the on-chain analytics newsletter that reaches 6000 crypto investors every week 📈

✨ Together with our partners:

1inch, whose v2 offers the best rates by discovering the most efficient swapping routes across all DEXes—swap on the customizable new UI. And also Aave, where you can experience DeFi: Deposit, Earn, & Borrow on Aave.

This week our contributor analysts cover Emerging Networks: Polkadot, Celo, Kadena and Handshake.

① Polkadot

Contributor: Bruno Škvorc, Technical Educator at Web3 Foundation.

  • On-chain governance remains a controversial topic in the blockchain space. With various DeFi projects adopting token-based governance wholesale and other layer-1 contenders attempting to implement their own native versions, Polkadot ran out of the gate with binding auto-enforceable tricameral governance, thanks in big part to its crazy cousin, Kusama network, paving the way. Since launch and decentralization, Polkadot has enacted 9 out of 12 referenda, 6 of which were runtime upgrades — changes to the blockchain’s core logic.

  • Polkadot’s on-chain treasury - another controversial topic in blockchain land - has seen a lot of action as well: so far, the Treasury has doled out almost 100,000 DOT (~$500,000 USD) in a completely decentralized way, averaging 6100 DOT (~$27,000 USD) per proposal.

  • Compared to its canary network, Kusama, Polkadot looks quite conservative - Kusama’s Treasury gave away over 57,000 KSM (~$1.5 million USD), averaging around ~$50,000 USD per project.

    Projects funded range from UIs and wallets to events and art installations, so interested teams are encouraged to apply. A comprehensive funding options video is available here.

  • Since inception, the validator and nominator communities (and thus economic security) of both Kusama and Polkadot have experienced incredible growth. Kusama, having started with 20 validators, grew to 700 backed by 2300+ nominators for a total of ~5 million staked KSM or a value of 175 million USD.

  • Polkadot went a step further in a much shorter time period, having gone from 20 validators with a few dozen nominators on each, to 233 validators and a total of 7000+ nominators. These economic actors have altogether staked a whopping 652 million DOT, or a total of around 3 billion USD value — 49% of all KSM and 65% of all DOT in existence is locked in the staking system at the moment of writing.

  • Unconventional blockchain features like on-chain identity and Kusama’s “Human Blockchain Project” have also flourished beyond expectations. Specifically, Kusama currently boasts 340 identities registered, while Polkadot has 257. These are mostly validators looking to increase their reputation factor by including real-world information about their setup on-chain so that potential nominators can know who they’re backing. Kusama’s funky Society (something akin to a DAO), which makes a blockchain out of people who tattoo themselves with the chain logo and the account index of the most recently added member, now counts 30 members with 5 more bidding to join! That’s 30 bodies with tattoos of a black canary bird out there in the wild.

    The Covid lockdown coupled with novel technology and a plethora of hackathons resulted in substantial developer adoption. Since the last Our Network report in January when Substrate had ~600 Github stars, over 2500 new developers have starred the repository, indicating a rapidly growing interest in this battle-tested blockchain framework. The Polkadot repository alone has gone from 150 to ~1800 in that same timeframe. Our two main hackathon events - Hackusama and the Gitcoin Hello World event (the largest Gitcoin event to date by participation) - had 503 and 1061 participants respectively.

② Celo

Contributor: Claire Belmont, Partner & Product at cLabs

  • Celo is a mobile-first platform with a native stable asset Celo Dollars (cUSD) and a mission to build a financial system that creates conditions of prosperity for all. Since the launch of the network on Earth Day, April 22 2020,  the number of addresses has grown to 30,000 and weekly active addresses to 13,000. The latter increased 500% since the beta launch of the Valora mobile wallet in early September and since then, the wallet has been used in over 46 countries.

  • Since mainnet launch, transactions have increased to over 1M, where over the months of September and October the primary use case was sending and accepting payments (~50/50 split). This was driven by the Grameen Foundation COVID-19 cash relief project in the Philippines during that period. More than 80% of the transactions over those months were via BeamAndGo, a Celo Alliance member that allows customers to pay for: food, medicine, supplies, mobile load, personal care, gadgets, gifts, and more at over 800 supermarket branches, 800 pharmacy branches, 2,000 gas stations, and 2,500 convenience stores in the Philippines. 

  • The network reached 15.8M cUSD (Celo Dollars) circulating supply, up 316% from 5M cUSD since its launch at the end of June. This value is collateralized by $244M worth of BTC, ETH, DAI, and CELO. See CeloReserve.org for a detailed breakdown of the collateral. 

  • Since the launch of the network, Celo has offset nearly 1,900 tons of C02 through a carbon offsetting on-chain fund, making Celo carbon negative. The proceeds of the funds are governed by CELO asset owners and currently go to Project Wren, which is a startup that helps individuals and companies offset their carbon footprint. Celo is contributing to the community tree planting project. See details here.

③ Kadena

Contributor: Tony Pham, Head of Marketing at Kadena

  • Daily transactions on Kadena's 20-chain sharded network. The Kadena public blockchain was successfully scaled in production from 10 to 20 chains. The varying colors represent chains 0-19. In August, the graph shows the 10 new chains going live. While chain 0 continues to have the most activity because of the applications running on it, transactions have been evenly distributed across the other 19 chains working in parallel.

Click here to read Part 2.

Our Network: Issue #48 (Part 2)

Coverage on Handshake, Polkadot, Celo, and Kadena.

Continued from Part 1.

  • Chain 9 processing more transactions from and to miners. Since last month, chain 9 has seen an increase in usage as mining pools have been distributing rewards on it. We anticipate seeing similar behavior as other participants on Kadena’s public blockchain migrate to various chains.

  • Sustaining adoption and interest in KDA. Following a spike in activity after the official listing of KDA on Bittrex Global, the project has maintained a steady momentum with regular product developments and partnership announcements. For example, at the end of August, the team announced that Kadena’s hybrid blockchain platform had scaled to reach 480,000 TPS. There are presently 49.2MM KDA coins in circulation.

  • Publicly available ASICs bring more mining output to Kadena’s public blockchain. At the end of October, Kadena informed our community of a 3rd party public ASIC becoming available for purchase. The difficulty chart clearly shows how the block difficulty, which is directly related to the hash rate, dramatically went up as miners began using the ASICs. 

  • The horizontal pink bands that appear around the same time at the bottom of the nonce analysis graph show the distinct nonce signature that an ASIC miner generates. There has been a 100% increase in network hash power since the release of ASIC hardware.

  • Announcement of multi-protocol decentralized exchange, Kadenaswap. The DEX from Kadena will leverage the Pact smart contract language to interoperate with major DeFi protocols and coins such as BTC, CELO, DAI, DOT, LINK, and ETH. The exchange will launch in stages, including the creation of native decentralized bridges to Ethereum and other networks such as Cosmos and Polkadot. Kadena recently announced partnering with Terra to bring the Luna stablecoin to Kadenaswap, furthering the DEX’s value as a bridge between popular protocols. Progress on Kadenaswap can be tracked publicly.

④ Handshake

Contributor: Steven McKie, Founding Partner at Amentum Capital; Developer HandyMiner/HandyBrowser

  • The first two updates on Handshake were very oriented towards mining hardware, hashrate, and price. There’s been a ton of growth on-chain and off for Handshake, so we’ll be sharing insights broadly across the ecosystem so you can get a better signal on the rapid maturity Handshake. Handshake is now 40+ weeks old, with no mining 51% attacks; no major on-chain bugs; 0 protocol consensus failures with the HNS namespace (we even got our own Yahoo). Mining chain difficulty has also reached a new ATH of over 700milion. (Source). 

  • The Handshake economy of scale is evolving at a rapid pace. If you’re familiar with the three body problem in mining from Anicca Research, you’ll see a similarly emerging mining economy of scale. Coupled with a decentralized naming economy, and all the composable economies of scales that follow it up the value chain, the Handshake network effect will be of the most lucrative and diverse we’ve seen in crypto to date. We’ve illustrated this concept using a repurposed version of their graphic to give you a 2D model of the naming/mining economy, so you can further understand its second order effects on actual states. (Source).

  • Many are unaware of Handshake’s complex to understand, but rather simple mechanism for minting and burning of the HNS asset. As new $HNS supply comes into the Handshake circulating supply, there’s a constant deflationary mechanism active which is burning $HNS as new names REGISTER into the  Urkel Tree. (Source).

  • With the launch of decentralized name servers, additional browser support coming from Puma Browser which will bring HNS to iOS and Android, and a new HS3-SE mining rig from Goldshell.com, it’s been a very productive Late-Summer/Fall for Handshake. If you want to follow weekly for updates on Handshake regarding the Tech/Community/Naming Economy, check out our community weekly newsletter “The Shake”.  The combined network hashrate has also now surpassed over 5PH, shattering my previous record of 3-4PH before the years end. (Source).

About the editor: Spencer Noon is Head of Investments at DTC Capital.

Our Network: Issue #47

Coverage on Yearn, Aave, Hegic, and Synthetix.

Issue #47 of the on-chain analytics newsletter that reaches 6000 crypto investors every week 📈

✨ Together with our partners:

1inch, whose v2 offers the best rates by discovering the most efficient swapping routes across all DEXes—swap on the customizable new UI. And also Aave, where you can experience DeFi: Deposit, Earn, & Borrow on Aave.

This week our contributor analysts cover DeFi: Yearn, Aave, Hegic, and Synthetix.

① Yearn

Contributor: Alex Svanevik, CEO at Nansen

  • YFI can now be used as collateral to mint Dai via Maker. In less than 24 hours, the Maker contract became the 4th largest YFI holder, with >4% of the YFI supply locked in Maker. (Source). 

  • So, was this fast rise driven by a rush of small YFI holders looking to collateralize their tokens and mint Dai? On the contrary; only 16 unique addresses have deposited YFI (via DSProxy contracts, as usual), and the top depositor accounts for >55% of the YFI deposited to Maker. (Source).

  • Where did these YFI tokens come from? Drilling down on the largest YFI depositor owning the relevant DSProxy, they were moved from Aave in batches of 100-200 YFI (visible in the individual token transactions below). (Source).

  • In fact, the flow of YFI out of Aave is a bigger trend that started in mid-Sep, while DeFi Summer was coming to an end. On September 17th, a whopping 8,356.08 YFI were sitting in Aave, and now it's down to 1,483.69. (Source).

② Aave

Contributor: Alexandra, Risk Manager at Aave

  • The chart below shows Aave’s Flash Loan volume broken down per asset and per week since the launch of the Aave Protocol on Ethereum mainnet, as well as the distribution across assets. To date, there have been $715M in Flash Loans resulting in $700k of fees going to reward depositors. 

  • The following charts show Aave’s weekly liquidations volume per collateral asset. The distribution of liquidations across assets shows USDC is the most liquidated collateral. There have been $68M in liquidations resulting in a $3.6M bonus for liquidators. Anyone can execute liquidations on the Aave liquidations UI, keeping the liquidation bonus. 

  • $3B of borrows have been originated on Aave, with the volume growing continuously. (Source: Dune Analytics query from johaya)

  • Almost 90% of the total LEND supply has migrated to AAVE so far, as well as 3M AAVE has been staked in the safety module. (Source: Aave Watch)

③ Synthetix

Contributor: Ian Cordts

  • The Synthetix exchange has generated over $8m in fees in the previous nine months, which works out to be a 1.32% APY on staking. While the exchange currently has 50 traders per day and nearly 5500 Ethereum addresses, the protocol hopes to attract more traders as they move to Optimism, Synthetix’s chosen layer-2 solution. This move will help to reduce fees using the exchange and allow Synthetix to offer more products.

  • Peak supply on exchanges coincided with a peak price of Synthetix on September 1st. Since then, supply has been in gradual decline, which could indicate people have stopped profit-taking and gone back to hodling. (Source: Nansen)

  • As the price of SNX went below $4 USD, whales stopped selling. Within the last month, they have begun to add to their positions, in addition to new entrants coming into the market. (Source: SNX Watch)

  • Synthetix still shows strong growth in the number of active stakers. The only plateau occurred at the recent peak for the overall DeFi market before continuing to rise. This, combined with 77.96% of SNX staked, lends credibility to a healthy ecosystem. (Source: Synthetix Stats, SNX Tools)

  • Finally, looking at the below chart we can see the total holdings of top holders. Even with inflation and the extra supply on the exchanges taken into account, we can see there wasn’t much profit-taking by whales on the recent run. Putting the information together paints a rosy picture for Synthetix; however, the protocol must work hard to keep a high active staking level. This will ensure that Synthetix doesn’t lose the liquidity built up over last year. (Source: SNX Watch)

Click here to read Part 2.

Our Network: Issue #47 (Part 2)

Coverage on Yearn, Aave, Hegic, and Synthetix.

Continued from Part 1.

④ Hegic

Contributor: Tempted, Hegician at Hegic

  • In the wake of the recent DeFi rollercoaster, Hegic, a new, novel and innovative decentralized options protocol has launched on Ethereum by Molly Wintermute. Hegic’s new and revamped protocol launched on October the 10th and is a venue where users can buy/sell both Bitcoin (wBTC) and Ether (ETH) put or call options. In recent times, centralized exchange options trading has begun to attract significantly more market participants and experienced rapid rises in volumes, growing ~6x since the start of the year.

Source: Skew

  • Just as decentralized exchanges (DEXs) appeared after the success of their centralized counterpart, given the backdrop of raising concerns around privacy and custody, decentralized options protocols followed suit. Where Hegic differs from its competitors is its unique liquidity pool design for writing options. There are three core participants of the Hegic network that eloquently interact with one another to create the Hegic system: option writers, option buyers, and staking lot owners.

    Hegic utilizes a novel bidirectional liquidity pool (LP) design, that allows ETH or wBTC to be provided as liquidity, used to sell both put and call options. Premiums paid by option buyers are paid to the LP, however, similarly profits from in the money options are paid out by the LP. Through embracing one of DeFi’s most successful and novel constructs, liquidity pools, in one month, Hegic has attracted $32m of liquidity that option buyers can now tap into. 

Source data: Etherscan

  • Traditionally, options trade in order books where writers can create options around fixed expiry dates and strike prices to sell into the market. However, due to the aforementioned LP design of Hegic, option buyers are granted the flexibility to set parameters (custom strike, custom size, expiry). This has enabled market participants to access depth that, to date, has not been available in decentralized order book protocols, in which liquidity is spread and allocated across specific durations and strike prices.

Source: Hegic Analytics

  • In aggregate over the first month of trading on Hegic, there have been ~900 options traded with a total value of almost $35m.

Source data: Hegic Analytics

  • The HEGIC token is the platform’s native token and has a right to claim a share of the protocol fees (1% of all options volume traded on Hegic). Fees are paid in the underlying option’s asset, which results in stakers receiving a yield in either Bitcoin (wBTC) or Ether (ETH). Whilst acquiring a staking lot requires 888,000 HEGIC, several staking pools have been created that allow for smaller HEGIC holders to gain access to the yield (jmonteer23, zLot, yearn finance).

Source data: Etherscan

  • With the early volume and value of options being purchased on Hegic, staking lot holders have been realizing a relatively lucrative yield (~50-70% APY) paid in wBTC and ETH. This has provided high incentives for HEGIC holders to participate in staking, resulting in staking lots accounting for ~65% of circulating supply.

Source data: Hegic Analytics

  • The decentralized options landscape is just starting to ramp up, especially in the wake of recent regulatory actions (FCA ban crypto derivatives trading for retail), privacy considerations (increased KYC/AML of centralized exchanges), and user fund security (centralized exchange withdrawal issues and vulnerabilities).

    Hegic is a new decentralized options market whose design is experimental but leverages DeFi native constructs and designs. The result is unmatched liquidity for options in DeFi, LP/writer premiums, flexible option design, and distributed protocol fees to stakers. Such characteristics can help grow the DeFi ecosystem by providing downside insurance (puts) for lending platforms (Maker, Aave, SNX), upside insurance (calls) for those exiting wBTC/ETH positions to farm with stablecoins, or the opportunity to develop options strategies for the growing money manager protocols.

    Disclaimer - Hegic is still in Beta and like a lot of DeFi is experimental, users should proceed with extreme caution and DYOR.

About the editor: Spencer Noon is Head of Investments at DTC Capital.

Our Network: Issue #46

Coverage on Nexus Mutual, PoolTogether, Opyn, Instadapp, and ETH Gas.

Issue #46 of the on-chain analytics newsletter that reaches 6000 crypto investors every week 📈

✨ Together with our partners:

This week our contributor analysts cover DeFi: Nexus Mutual, PoolTogether, Opyn, Instadapp, and ETH Gas.

① Opyn

Contributor: Wade Prospere, Community Contributor at Opyn

  • Opyn is a product and open protocol on Ethereum that allows users to buy, sell, and create options on any ERC20. In October, Opyn recorded its highest level of monthly users to date, reaching 539 users. This is an 18% increase from the previous high set in September. (Source)

  • On October 29th, Opyn recorded its highest TVL ever reaching USD $2.56mm. At the time of writing, Opyn had a TVL of USD $2.33mm. (Source)

  • UNI tokens launched on September 17th and the Opyn team issued UNI put and call options soon after. Due to the excitement around UNI’s launch, the UNI Oct 16th $2.5 Put and UNI Oct 16th $10 Call contributed to one of Opyn’s largest volume options ever. (Source)

  • Since the beginning of August, the value of total weekly trading volume of Opyn options has generally trended upward, peaking the week of October 26th with $3.7mm. This could be attributed to many factors, including the following: traders reacting to underlying asset volatility, investor uncertainty, or an increase in the number of unique Ethereum addresses holding oTokens, among others. (Source)

② Instadapp

Contributor: Thrilok Kumar, Smart Contract Developer at Instadapp

  • Instadapp’s flashloan (InstaPool) facilitated approximately $1.3B in flash loans for features like the Refinancing Tool, Leverage, and Debt Swap. The resulting flashloan volumes from InstaPool were roughly twice as high as previous editions. (Source)

  • More than 9000 DeFi Smart Accounts (DSAs) have been created, and several people are increasingly utilizing the platform to farm tokens and earn yield. Around 4000 more DSAs were created from the previous editions to this date. (Source)

  • The use of debt swap, collateral swap and leverage as part of yield farming strategies lead to approximately $429M of swap volume being facilitated by Instadapp’s DSAs. A major part of this volume was swapped through Kyber, Curve and 1inch. Around $201M of the volume was swapped from previous editions to this date. (Source)

  • Since the launch of the COMP tokens, around 24,778 COMP tokens have been farmed and claimed on the DSA platform by the users. However, there are more COMP tokens accrued but not yet claimed. (Source)

③ PoolTogether

Contributor: Leighton Cusack, Core Team at PoolTogether

  • PoolTogether is a protocol for no loss prize savings on Ethereum. Users of the protocol deposit funds into “prize pools” and randomly chosen winners are awarded the accumulated interest. The V3 of the protocol launched 14 days ago. In the first 14 days 2,509 unique deposits were made into the protocol, averaging 187 new deposits per day. The chart below shows total unique deposits:

  • In addition to unique wallets, another important KPI is total assets deposited. The more assets deposited the larger the weekly prize. In the first 14 days, $1.4 million was deposited and $1.15 million is currently deposited. This is notably higher than the V2 protocol which never exceeded $900,000 in total user deposits. The chart below shows total deposited capital: 

  • The final KPI is prizes awarded. The V3 of the protocol introduced the ability for anyone to add additional prizes to the pool. This proved quite popular and thus far over 30 tokens representing most major DeFi protocols have been added to the prize. Total prizes awarded by the V3 protocol already exceed $13,000 in the first two weeks. In comparison, the V2 awarded $35,000 over the course of 14 months.   

    Thus far, the average deposit size into the protocol is $753, as compared to other DeFi protocols PoolTogether tends to have smaller amounts of capital deposited by a larger number of unique wallets.

④ Nexus Mutual

Contributor: Richard Chen, Partner at 1confirmation

  • Nexus launched shield mining, a feature in which projects can offer their native tokens as bonus incentives for NXM holders to stake on such projects to open up new cover capacity. Keep Network was the first to participate in shield mining. Staking capacity on Keep’s contract maxed out in just a single day with over 225k NXM staked, making it the second most staked contract after Compound. Likewise this opened up over $6M in cover capacity on Keep. (Source)

  • Since its launch, Nexus has generated almost $2.5M (6k ETH) in fees from cover purchases. Most of the fees occurred on September 14th when SAFE farming launched and cover capacity on every contract immediately maxed out. (Source)

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