It’s a bear market. You’re down bad financially, mentally, emotionally, physically, spiritually. It’s ok, we’ve all been there, etc. etc. etc. Look, I’m not your therapist. You’re going to have to figure that shit out yourself. What I can offer are a random syntax of words that may or more not take your mind off your current losses and focus on what’s really important: the tech behind your future losses.
So instead of you making more unsound financial decisions, whining, and ruining my Twitter timeline, let’s talk some tech.
I have no positions or financial exposure to any of these protocols (as of writing)
I was not paid to write any of this
I have no idea or projection on how any prospective tokens will perform
I am not telling you to buy anything, ever
I’m in it for the tech (for now)
My incentive for writing this is to claim clout if they do well and to sound smarter than I actually am
Most of the info is pulled straight from the project docs/mediums and I’m just oversimplifying/interpreting it here. Remember, my main goal is to sound smart, not produce any actual original content. Go google the project docs if you don’t like my interpretations.
Ok now that all of that’s clear, here are some projects I find thought-provoking and innovative that deserve more attention in this noisy bear market:
CrocSwap is a decentralized exchange consolidated in a single smart contract that supports both concentrated and ambient liquidity. The protocol is a major step forward in DEX development and will likely be the most efficient AMM on the market when it goes live. It achieves the efficiency through multiple compounding design choices:
Single smart contract. All the liquidity pools are consolidated at one smart contract address. Unlike other DEX’s which have to hop between multiple pools and smart contracts to execute swaps, CrocSwap can execute it all with the one smart contract, producing major gas savings for traders and users/protocols launching their own liquidity pools with CrocSwap.
Dual liquidity model with both ambient and concentrated liquidity. Ambient liquidity is liquidity provided over an unlimited range while concentrated liquidity is liquidity provided over limited ranges. Think UniSwap V2 and UniSwap V3 stacked on each other. This enables LPs to have the optionality of having the fungible and more composable ambient LP tokens or choosing the concentrated liquidity range, all within the same smart contract, which prevents liquidity fragmentations as seen in Uni V2 and Uni v3.
LP fees are autocompounded, so no need to waste gas on collecting and redepositing fees
Fee tiers for liquidity pools. LPs can now customize their liquidity preferences based on their market views. Low fee tiers are advantageous for LPs in low volume/volatility conditions due to the tier being cheaper for the trader, so majority of volume and fees will be conducted here. High fee tiers are advantageous for LPs in high volume/volatility conditions due to the slippage minus fees being cheaper for the trader.
JIT liquidity protection. JIT stands for Just-In-Time liquidity, a popular MEV tactic in concentrated liquidity pools to add extremely precise liquidity at the exact price of an incoming DEX swap order, before the swap is executed in order to collect all of the LP fees on the swap. JIT liquidity dulls much of the incentive to provide passive liquidity by extracting most of the fees from the pool. CrocSwap combats this with protocol and individual pool level options to add thresholds to restrict JIT liquidity flow.
How the complex fee tiers, dual liquidity model, and protocol governance plays out will be exciting to see. This might be another MEV playground to monitor when it goes live.
Alkimiya is a market/protocol for blockspace structured products, or consensus capital markets. The hottest commodity this bull run was blockspace. as evidenced by the crazy ethereum gas fees, and the rise of alt-L1s to fill the demand for blockspace. Miners and validators set up shop to provide the blockspace, and in return are rewarded with block rewards and fees. But the miners/validators are also exposed to the price of the underlying asset, which introduces unpredictable volatility, especially in Proof of Stake networks where validators need to own the underlying token to validate the network and receive the rewards. The volatility means the block producers aren’t even guaranteed to make profit for the risk they take on, which prices out smaller miners/validators, a potential threat to the decentralization of the networks.
Alkimiya introduces commodity swaps for hashpower and blockspace. Buyer pays the block producer a fixed stablecoin payment, vested over duration of the contract in exchange for all the validation rewards/fees over the same duration. This fulfills the need for block producers to hedge their directional exposure and lock in operational expenses, while giving speculators a market to speculate on blockspace demand.
Blockspace swaps introduce a new, unique competitor to staking derivatives. Current staking derivatives force validators to take on directional exposure. Selling a staked asset locks in the price for future validation rewards/fees, but this also forces validators to choose their entries and exits with their staked asset hedges. Imagine being a validator and needing to be constantly updated on the market to time your hedges, this is suboptimal. Alkimiya allows block producers to focus on just block producing.
That said, while it’s pretty nice in theory, in practice, swaps are pretty complex products that might not garner a very liquid market. Composability is also in question due to swaps having different expiries which can make it more difficult to build on. Maybe implementing something like ERC-4626 for the vaults can make them more composable? We’ll see, it’s still early. Alkimiya currently has hashpower swaps and vaults live in v1, with blockspace swaps/vaults coming later.
Nomad is a general messaging layer that enables smart contracts to communicate cross-chain. The most basic implementation that everyone knows about is liquidity bridging, so sending tokens cross chain. As a general messaging protocol, it unlocks an even broader array of possibilities such as cross chain lending, cross chain gaming implementations, and a bunch of other composable features that no one has even thought of. The use cases are more or less the same as its competitors LayerZero, Wormhole, IBC and the other general cross chain messaging protocols. The Bridge Wars deserves its own article tbh but that’s a discussion for another day.
So what makes Nomad different? All of these bridges/messaging protocols make various tradeoffs to secure market share. You can debate about the nuances of this but I think for the casual observer the speed, cost, trust assumption trilemma framework should be enough to get a general idea about bridges (other factors such as liveness as well, but too complex for this piece). For example, if you really really oversimplify it (and I emphasize oversimplify, don’t crucify me), LayerZero makes trust-assumption tradeoffs while maximizing speed and keeping costs low. IBC makes cost tradeoffs while focusing on speed and trust-assumptions. Nothing wrong with it. Nomad makes the speed tradeoff while optimizing for cost and trust/security.
Nomad uses an optimistic model similar to optimistic rollups, where off-chain Watchers have 30 minutes to dispute messages. I’m not going to deep dive the mechanisms because it would take an entire article in itself, you can read the docs here. The optimistic design guarantees that fraudulent messages submitted by dishonest actors are always known before they are processed in the 30 minute latency window, and that any one honest actor can challenge the fraud in that window. Or in other words, a 1-of-n model where any 1 out of an unlimited number of Watchers can challenge fraudulent messages. Nomad is probably the most trust-minimized cross chain messaging design I’ve seen so far. A caveat is that Nomad currently requires Watchers to be whitelisted, which isn’t perfect, but should decentralize over time.
Of course, the obvious downside of Nomad is that the 30 minute latency is a major annoyance for users, who mostly only care about speed and cost these days. The increasing rate of bridge hacks should probably push more people to care about security and trust assumptions over time and Nomad has a good design to attract the more risk averse users. Just a guess, but I think the 30 minute window will likely be decreased eventually as more Watchers are onboarded and the system is streamlined. Also, Nomad has a partnership with Connext that kind of fixes the latency problem, using Connext’s fast liquidity and local verification to get liquidity in a few minutes instead of Nomad’s 30 minutes, more details here.
Remember, cool design don’t mean good token. And to be crystal clear, I’m not calling for any of them to dominate their verticals. I just think they’re cool/unique designs that need to be talked about more. If you’re mad at me for not writing about your bags, I don’t care. You’re mad because your bags bad. Anyways, I might write more of these and make it a series if I feel like it and/or see any other cool tech. As always, NFA etc. etc. You can reach out to me on Twitter if you have any questions/feedback. Cheers.
Remember, cool design don’t mean good token. Haha
great article ser