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Bitget Newsletter: March 25, 2024

Bitget Newsletter: March 25, 2024

This week we discuss: $ARB unlock, The effects of the Dencun Upgrade, ERC-6551, Decentralized Science and Bitcoin ($BTC).

Arbitrum Token Unlock

Layer 2 platform Arbitrum has recently facilitated the unlock of 1.1 billion $ARB tokens, marking one of the most substantial token unlocks of the year so far. These tokens, valued at approximately $2.1 billion at the time of their release, were allocated to the core team and advisors of Offchain Labs, the company behind Arbitrum, alongside early backers of the firm.

These tokens were subject to a vesting schedule, meaning they were securely held within a smart contract until a set time elapsed. With the vesting period concluding, the token holders are now free to trade their tokens on various exchanges at their discretion. It’s for this reason that market participants often perceive such token unlocks as a bearish indicator, as the recipients of the tokens tend to liquidate their holdings promptly, aiming to capitalize on their gains.

This scenario seems to have unfolded with the Arbitrum unlock, as blockchain analysis firm Lookonchain reported that on March 18, at least 11 whales moved their tokens to exchanges immediately following the unlock. In total, these whales deposited 34 million tokens. At the time of writing, the price of $ARB is down by 15% since the unlock. It's hard to work out whether this bearish price movement was directly caused by the unlock or if it was influenced by the overall market downturn, though many speculate that it might be a combination of both factors.

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Looking ahead, another unlock of ARB tokens, totaling around 92 million, is scheduled for release on April 15. Although the scale is not as significant as the recent unlock we've observed, many are cautious about the forthcoming unlock schedule for $ARB. This caution is well-founded, it’s important for investors to stay on top of unlock schedules of token they own as it could effect the price significantly.

The Effects of The Dencun Upgrade

As mentioned last week, the Dencun upgrade officially went live on March 13. The upgrade has substantially lowered transaction fees across top layer 2 networks, with some reductions reaching as high as 98%. This upgrade, composed of nine Ethereum Improvement Proposals (EIPs), features EIP-4844, which has been instrumental in reducing costs by facilitating a new transaction format known as "blobs."

These blobs have chnaged the way transactions are processed, providing layer 2 networks like ZkSync, Starknet, Base, Optimism, and Arbitrum with a "dedicated lane" for their operations, thereby protecting them from the congestion and high fees on Ethereum's main network. Throughout this week, we’ve witnessed dramatic decreases in transaction costs, with reductions reported at 96%, 95%, 95%, and 65% for Base, Optimism, Arbitrum, and ZkSync respectively, underscoring a significant leap towards more affordable and efficient blockchain interactions within the Ethereum ecosystem.

The biggest winner of the Dencun upgrade seems to be Base, an Ethereum layer 2 solution incubated by Coinbase, as it witnessed a surge in user engagement. The network achieved a new low in transaction costs and a record-breaking daily active user count of 855,000. This surge in activity is attributed to the reduced transaction fees, which are now 99.9% lower than Ethereum's and significantly below those of other major layer 2 networks like Arbitrum. Nonetheless, the upgrade has been incredibly beneficial for the overall Ethereum ecosystem, marking a significant advancement towards the implementation of full danksharding. This is a crucial step in the ongoing development phase known as 'The Surge,' which is designed to significantly enhance Ethereum's scalability and efficiency as part of its comprehensive roadmap.

How ERC-6551 Looks to Revolutionize the NFT Landscape.

Recently, there’s been a lot of buzz around ERC-404 and DN-404, but now there’s a new player in town that’s capturing the blockchain community's attention: ERC-6551. This standard is not exactly the new kid on the block, having been launched on the Ethereum network on May 7, 2023. It looks to redefine the NFT landscape by embedding smart contract functionalities directly into these digital assets. ERC-6551 expands the utility of NFTs far beyond their traditional scope, empowering them to own assets, engage with decentralized applications, hold a variety of tokens, and carve out unique on-chain identities. Think of NFTs transforming from mere collectibles to robust, functional entities, all thanks to ERC-6551. These NFTs can now perform transactions, manage assets, and interact fluidly with the digital ecosystem, maintaining compatibility with the well-established ERC-721 standard.

ERC-6551 tokens are making waves across various sectors, including fashion, gaming, business-to-consumer (B2C) interactions, and decentralized autonomous organizations (DAOs). This innovative standard is enhancing the NFT ecosystem, providing new avenues for user engagement and asset utility.

In the Fashion World

The inception of ERC-6551 was catalyzed by the visionary team at Future Primitive, an on-chain product studio. They envisioned on-chain avatars that could possess their digital wardrobe, thus birthing a novel way for NFTs to own and trade digital assets. Imagine an NFT that can exchange its digital bag for an array of stylish hats, revolutionizing the concept of asset ownership in digital fashion. This opens up a realm where artists can collaborate, merging their creations into unique composite artworks, while maintaining a connection to the original creators, thereby enriching the digital fashion landscape with endless possibilities for creative synergy.

Transforming Gaming Experiences

ERC-6551 is redefining gaming, enabling avatars to not only collect assets and cryptocurrencies but also to engage in a secure exchange of these valuables. This enriches the gaming journey, offering players new incentives and enhancing character personalization. Through Token-Bound Accounts (TBAs), game developers can craft network playable characters, facilitating a new economy of in-game asset monetization and creating opportunities for NFT creators to reap rewards.

These are just a couple of examples of how ERC-6551 is transforming user interactions with NFTs. As time progresses, we're likely to witness an expansion in the variety of use cases for this token standard. The future developments are unpredictable, but they are certainly something to watch closely. One thing is certain: I am keenly monitoring the projects that integrate this standard, as I firmly believe it represents one of the most significant advancements in the utility of NFTs.

Is DeSci the Latest Trending Narrative?

Over the past few months I’ve noticed that many influential people within he blockchain space have been discussing decentralized science (DeSci) and the problems that the blockchain technology can solve within todays world of science. Upon researching this emerging narrative i came a cross a really interesting project that i wanted to bring to your attention.

Data Lake ($LAKE) has recently unveiled Consentify, heralding it as the first blockchain-based global DeSci (Decentralized Science) platform focused on patient recruitment and consent management. This innovation is significant for researchers and healthcare providers, presenting a system that is not only compliant with GDPR but also secured by blockchain technology, streamlining the management of patient consents and data. Researchers are empowered to publish their studies, create forms for data collection, and incentivize participation with $LAKE token bounties. Healthcare providers stand to benefit as well, as they can facilitate the data flow between patients and research initiatives, thereby accelerating medical innovation. Patients are given the power to manage their data and the choice to participate in research, with the added prospect of earning $LAKE tokens.

The $LAKE token act as a key to accessing Consentify, bringing new utility to the token by serving as an access pass, encouraging engagement, and unlocking various features of the platform. This is a very interesting project. DeSci is inevitable at this point, and the team at Data Lake seems to be tackling the problems associated with TradSci (traditional science). I recommend all of you reading this to look into DeSci as I feel it’s a sector that will perform very well during this bull run.

Bitcoin $BTC

As we wrap up this week's newsletter, I'd like to touch on the recent developments in Bitcoin. This week has been marked by an aggressive pullback in the market, introducing a wave of fear that many might argue was overdue. After the gains accumulated in January and February, the market seems to be balancing the scales, flushing out a significant amount of open interest.

It's not unusual for Bitcoin to undergo pullbacks as we approach a halving event. However, the burning question on everyone's mind is whether we've reached the local bottom. Pinpointing the exact bottom is challenging, but there's a growing sentiment that we might be in the vicinity of it. My perspective is that we're possibly at a juncture where Bitcoin could start its ascent towards the $75,000 liquidity mark (refer to the chart below). Nevertheless, it's important to brace for potential volatility on the climb back to all-time highs. Therefore, our advice remains consistent: practice prudent risk management to navigate the uncertain waters ahead.

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