🤔 Who's Winning the War of L2s
GM and welcome to another edition of CoinStats Scoop! 🥂 Here’s an overview of this week’s newsletter:
The usual broader market update with insights on key token movements/announcements
Updates on this week’s impactful news and developments
Breaking down Coinbase’s new Base L2 & looking at the broad L2 landscape
Reading & thinking about the NFT marketplace war and the battle of BLUR vs OpenSea
Weekly wrap-up: predictions & takeaways.
Market Overview
The market was a mixed bag this week that unfortunately resulted in most tokens giving their recent gains back. Fortunately, as we’ve stated many times since the start of the rally at the beginning of the year, corrections are not only expected but healthy for the market. 💪
Markets rallied slightly throughout Sunday. BTC closed the week down at -3% and sits right at 23.5k while ETH lost 2.5% finishing the week above 1.6k. Even with the correction this week, the total crypto market cap remains comfortably above the one trillion dollar mark! Many alts across the ecosystem gave back more than BTC & ETH. This was expected as alts usually increase more when the majors outperform and lose more when the majors are red.
BLUR, the NFT marketplace token that was airdropped and took the market by storm two weeks ago, was one of the biggest losers this week as it retreated 31%. Still, the token was an airdrop (hello, free money 🤑) and began trading at around $0.30. Even with the correction this week, BLUR and many other tokens remain up multiples from where they were in recent memory. As Chris says below, crypto continues to show relative strength and sit comfortably in an overall uptrend despite the setbacks. 🌞
As usual, even when the majors and the broad market experience down weeks there are still numerous tokens that outperform. 💪 Having many crypto verticals really pays off!
Some of the best performing tokens this week were:
Stacks (STX, +27%), a BTC sidechain that benefits from the growing hype and momentum of BTC Ordinals (NFTs) taking off in recent weeks,
Ankr Network (ANKR, +31%) as partnerships with tech giants Microsoft and Tencent were announced,
Yearn Finance (YFI, +31%) as the yield-bearing vault protocol introduced yETH allowing market participants to gain exposure to a basket of liquid staking tokens in one token, and
BONE (+20%) as continued momentum and speculation builds towards their eventual L2 announcement.
News & Developments
Coinbase launches ETH layer 2 blockchain Base built on top of Optimism (OP)
Google Cloud announces a partnership with Tezos (XTZ) that will enable the tech giant to become a Tezos blockchain validator
Spotify, the world’s largest music streaming service, is testing NFT-gated access to specific playlists and songs
Mastercard announces partnership with Immersve that will allow users in New Zealand and Australia to make online purchases with crypto wherever Mastercard is accepted
Sei Labs, the developers behind Sei’s upcoming L1 network, are raising money that values the upcoming SEI token at $400 million dollars
Venture Capital firm Outlier Ventures is partnering with Aptos (APT) to launch a 12-week accelerator program in May
Kratos Studios, web3 gaming studio based in India, raises $20 million dollars at a valuation of $150 million dollars
Coinbase enables USDC trading for institutional clients in 70+ more countries as they expand trading access to the “most transparent stablecoin in the market that is backed by high quality reserves”
Tech giant Microsoft partners with decentralized web3 infrastructure provider ANKR to offer “a node service for enterprises in need of blockchain data access”
Jump Crypto, the trading and development firm that launched Wormhole bridge, retrieves 120,000 ETH previously stolen from them in the Wormhole exploit
Audius, the Solana (SOL)-based crypto music platform, has given users the ability to create accounts on their platform with their TikTok accounts
Dan Tapiero, famed for early involvement in crypto and success of his 10T Holdings, is launching a crypto private equity firm that is targeting a raise of $1 billion dollars to invest
Uniswap (UNI) enables users of its NFT platform to purchase NFTs with any ERC-20 token not just ETH
Base & The Current L2 Landscape
The biggest news of the week came from Coinbase: They announced Base, a secure low-cost developer-friendly Ethereum L2 built to bring the next billion users to web3! Base was launched as a live testnet, while its official deployment to ETH’s mainnet is upcoming.
The endless number of crypto protocols partnering with Base at launch 🙌
As for some of the highlights of Base’s tech stack & reasons why developers would want to build there, Coinbase outlines several advantages:
Secured by Ethereum — “built with the security and scalability you need to power your decentralized apps, it leverages the underlying security of Ethereum”
Powered by Coinbase — “easy to build decentralized apps with access to Coinbase’s products, users, and tools”
Big features, small fees — “offers full EVM equivalence at a fraction of the cost and is committed to pushing forward the developer platform”
Open source — “aims to be decentralized, permissionless, and open to anyone with the vision of creating a standard, modular, rollup agnostic Superchain powered by Optimism.”
Coinbase’s CEO Brian Armstrong announced Base saying that it's “an Ethereum layer 2 that will help improve scalability and usability of crypto, so we can bring economic freedom to 1B+ people. Base is a platform for developers to build the next generation of decentralized apps in the crypto economy. It is designed as a secure, low-cost, developer-friendly platform that enables anyone, anywhere, to build.” If you want more info on what Base is building, check out our helpful thread covering all things Base! 👇
While Base’s announcement was undoubtedly exciting, competition remains fierce throughout the entire ETH L2 ecosystem. As we know, Base is built on top of Optimism’s (OP) tech stack and should provide benefits to the overall Optimism ecosystem. 💪
Still, Optimism has much more going for it than just Base alone. ETH L2 continues to build a slew of products to scale ETH, including their recently announced Superchain and the entire Optimism Bedrock ecosystem. Besides Optimism and Base, there are numerous protocols and companies working tirelessly to scale ETH and build out the ETH L2 ecosystem.
The above picture from l2beat.com shows the top six ETH L2 scaling protocols by total value locked (TVL). As you can see, despite the excitement for Base and the broad Optimism ecosystem, Arbitrum remains the current king of ETH L2s! 🤯 Also, Arbitrum recently reached an impressive milestone: For the first time ever, the ETH L2 processed more transactions than the Ethereum mainnet.
While Arbitrum and Optimism’s recent growth has been incredible and beneficial to the entire space, we’re far from the endgame! The optimistic rollups (Arbitrum and Optimism) are currently in control of the race, but there is a slew of zero-knowledge rollups (ZKRs) that will drastically increase the competition in the coming months. Polygon, Scroll, Espresso, zkSync, StarkWare, Aleo, and Aztec plan to launch their zero-knowledge scaling solutions on ETH sometime this year.
Of course, it’s impossible to know who the winners will be, but one thing is certain: Ethereum and its ever-growing L2 ecosystem are hard at work scaling the base layer so users can benefit from higher throughput transactions and lower fees! 🤑
Read of the Week
“Get In Loser, We’re Unbundling Again” — Gaby Goldberg
On the heels of BLUR’s token launch and the ongoing NFT marketplace war between OpenSea, BLUR, and creator royalties, our read of the week covers the ongoing NFT marketplace battle and provides a look at the possible future of NFTs.
As the subtitle suggests, Gaby’s thoughts this week explore OpenSea as crypto’s ‘shopping mall’, aggregated liquidity, web3 loyalty programs, curating the buyers, and more. Gaby is a partner at the crypto venture firm TCG, one of the most active, hands-on investment groups in the space, so her views are important.
“When NFTs first took over consumer mindshare, OpenSea really was the best of everything…as crypto has continued to evolve, technology has increasingly become a commodity, and liquidity has no loyalty for consumer businesses…with better tooling, these (NFT) projects & companies now have greater ability to own the vertical businesses…I see a world where a new artist-focused NFT marketplace is spun up featuring top artists and up-and-coming projects, and the only buyers allowed on the site are those who have opted in to paying royalties on competing marketplaces.”
Tweets & Memes
Coinbase’s groundbreaking Base announcement post 👏
Your monthly reminder: Premium users pay no network fees on swaps ✨
Arbitrum’s massive growth continues 🙌
Wrapping Up
With that note of Arbitrum’s record-breaking day and the explosion of L2 growth, we'll conclude this week’s edition of CoinStats Scoop 💫
We covered the broad market and token news, talked about Coinbase’s launch of Base and the entire ETH L2 landscape, read and talked through the ongoing NFT marketplace war, and covered the most important developments of the week.
CoinStats will continue to guide you through the crypto and DeFi world. We'll see you next week for another edition of CoinStats Scoop! 😎
