Beimnet Abebe, a guest from Galaxy Trading, shares insights on markets. The podcast covers topics such as bitcoin, ethereum, solana, ordinals, real-world assets, L2s, and crypto + AI. Other highlights include the overlap between crypto and AI, the current state of Layer 2 solutions, and bringing real-world assets onto the blockchain.
Layer 2 solutions, such as roll-ups, are gaining traction and adoption in the crypto space, with major corporations signing on and applications deploying at scale.
Layer 2 solutions provide faster, cheaper, and more scalable alternatives for the crypto ecosystem, with optimistic roll-ups leading the way and ZK roll-ups emerging as a potential alternative.
The ongoing development and adoption of Layer 2 solutions indicate a promising future for scaling blockchain technology, with the integration of real-world assets on-chain offering increased accessibility and democratization of value.
Deep dives
Layer 2 Scaling: Roll-Ups Gaining Traction
Layer 2 solutions, specifically roll-ups, are gaining more traction and adoption in the crypto space. Major corporations are signing on to these solutions, and applications are deploying at scale. Marketplaces like Magic Eden, OKEx, and Binance are becoming dominant players. Notably, Yuga Labs, the creator of the popular 12-fold collection, has embraced roll-ups and launched a scavenger hunt using ordinals. Although the NFT market is currently in a bearish state, roll-ups are still seeing volume and excitement. Infrastructure development is progressing, and upgrades like recursions and re-inscriptions are being explored to enhance functionality.
The Growing State of Layer 2s
Layer 2 solutions are increasingly being utilized to address the challenges of high fees, congestion, and slow transaction speeds on Layer 1 blockchains like Ethereum. These Layer 2 solutions provide faster, cheaper, and more scalable alternatives for the broader crypto ecosystem. Optimistic roll-ups have gained significant adoption, with projects like optimism and Arbitrum leading the way. ZK roll-ups are still under development, with Polygon ZK and ZK Sync emerging as the first ZK EVMs. While ZK roll-ups hold promise, they are still facing challenges in terms of adoption and usability. However, if they can overcome these hurdles and become technically competitive, they may present a viable alternative to optimistic roll-ups.
Advancing the Layer 2 Landscape
The Layer 2 scaling space is evolving rapidly with the ongoing development and adoption of roll-up solutions. Major corporations and projects are embracing these solutions to achieve scalability and cost-effectiveness. While there are still challenges and debates within the ecosystem, such as the viability of ZK roll-ups, the excitement and momentum around Layer 2 solutions indicate a promising future for scaling blockchain technology. As the infrastructure and functionality of Layer 2 solutions continue to improve, we can expect even more innovation and adoption in this space.
The emergence of real-world assets on-chain
The podcast episode discusses the trend of bringing traditionally off-chain assets, such as treasury bonds and private credit-related debt, onto the blockchain. This is primarily driven by the pursuit of higher yield opportunities on-chain compared to traditional finance. Real-world assets are being tokenized and issued on Ethereum, and to a lesser extent, on Polygon and ZK EVM. Traditional issuers are developing portals to facilitate the purchase of these assets, and some are available on decentralized exchanges. The integration of real-world assets on-chain poses regulatory challenges but offers the potential for increased accessibility and democratization of value.
The growth of real-world assets on Ethereum
The discussion highlights the significant growth of real-world assets on Ethereum, particularly in the form of money market funds and US Treasuries. These assets are primarily accessed through issuers' portals and are also available on decentralized exchanges. The availability of higher yields on Ethereum compared to traditional finance has driven the interest in these assets. The report emphasizes the sensitivity of real-world assets to interest rates and how their longevity will depend on the continuation of the higher-for-longer interest rate narrative. While the yields on real-world assets and DeFi are currently divergent, the expectation is that yields will converge in the long run.
Alex talks with all the members of Galaxy Research about bitcoin, ethereum, solana, ordinals, real-world assets, L2s, crypto + AI, and more. Alex also talks with Beimnet Abebe (Galaxy Trading) about markets.
This episode was recorded on Wednesday, September 13, 2023.
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