Internet of Blockchain – A Quick Look

EXECUTIVE SUMMARY

Decentralization, scalability, and security have ever since challenged the idea of an open, decentralized network due to the problems of the first-generation blockchain Layer 1 Bitcoin, Ethereum, and their variants. While we’ve yet to see the upgrade of Ethereum 2.0, a new-gen Smart Contract Platform like Cosmos, Polkadot, Avalanche and LayerZero with promising proposes for the Internet of Blockchain. The term Internet of Blockchain refers to application-specific blockchains that co-exist and interoperate with one another. With several multiple-chain networks under development, it’s no certainty to forecast the winner of the scalability race between Smart Contract Platform. However, it is possible to dig deeper and explore the fundamental ideas underlying each one. 

Cosmos, Polkadot, Avalanche and LayerZero have critical distinctions at the protocol level (e.g., consensus method, economic security topology) that affect platform capabilities (e.g., inter-chain communications, token economics, types of viable applications) and how they grow their networks (e.g., validator participation, staking attributions). This article aims to  differences between these architectures and their trade-offs.

GETTING STARTED

To help our readers understand this topic of The Internet of Blockchain comprehensively, before diving into this topic of The Internet of Blockchain, we will walk you through a few jargons which will be used frequently in this article.

Trilemma of blockchain

A blockchain cannot possess all three attributes of scalability, decentralisation, and security.

  • Scalability refers to the ability of a blockchain to expand in the increased number of transactions and nodes
  • Decentralisation ensures that the decisions made in the network are not concentrated on one central entity
  • Security in blockchain involves two dimensions: liveness and safety. While liveness indicates that consensus among validators in a blockchain must finally be reached, safety guarantees that validators do not misbehave. In light of safety, there is accountable safety: when more than ⅔ of the network behaves honestly, the chain cannot be forked but if it does (and ⅓ of stake is burnt for such misbehaviours), the network can point out the identities of those ill-behaved entities

Consensus

Consensus is the agreement of the network on the validity of a transaction before adding it to the block.

  • Deterministic consensus is applied when there are voluminous flows of messages between validators to finalise the transactions. Once transactions are added, they cannot be reverted but forking the chain, thereby improving the network security. Also, since there is no waiting time for nodes to confirm that a transaction is valid, deterministic consensus helps lower the latency in transaction processing 
  • Probabilistic consensus indicates that the probability that a transaction added to the chain will not be reverted increases when the chain gets longer. Thus, transactions are not really “finalised” but are becoming more valid when more blocks are added to the chain. Moreover, probabilistic consensus does not require complex flows of messages between network entities, thereby enhancing the scalability of a blockchain 

Bridging Trilemma

First mentioned by Ryan Zarick, co-founder and CTO of LayerZero Labs, in order to build a blockchain bridge, a developer will face the trade-offs between these three properties:

  • Instant Guaranteed Finality, meaning that funds must be successfully transferred from the source chain to the destination chain
  • Unified Liquidity, indicating that multiple chains must be able to get access to a single liquidity pool for the sake of higher capital efficiency
  • Originality of Assets, specifying that the funds being moved to the destination chain must be the native (or the most liquid synthetic) ones being sent from the source chain, otherwise, users will receive synthetic assets that do not have much liquidity which then signifies the risk they have to incur

Light Client

A light client is a software or application that helps users interact with the blockchain without storing the entire data on it.


AVALANCHE

Overview

Unlike other blockchains, Avalanche has 3 separate networks to handle different tasks on the network: X-Chain for asset trading, C-Chain for smart contract creation, and P-Chain for overview platform coordination.

What problems does Avalanche solve?

Its consensus mechanism is leaderless directed acyclic graph where a node keeps querying other nodes for the validity of a transaction for a randomly determined number of rounds. There will also be a confidence counter that represents the number of times that a majority of the network accepts the validity of a transaction.

For example, the network must together agree on one of the two colours, gray and yellow. One node (denoted as node A) currently has gray as its choice. In the next round, if a majority of nodes being asked vote for yellow, and the confidence of A in yellow exceeds the confidence of A in gray, A will switch to choose gray. This process is repeated among all nodes until consensus is reached.

Decentralisation

Because this mechanism is leaderless and the number of validators being able to join the network is boundless, it satisfies the need of decentralisation for a blockchain.

Scalability

With the help of EVM subnets, it ensures the scalability of the network and allows customization on blockchain in an effortless manner which is suitable for enterprise adoption or instantiation of a new project but with different jurisdictions. 

Security

Since a node can always change its decision based on the accrued confidence level after each round, the equilibrium of the network remains unstable, thereby discouraging ill-behaved nodes from attacking the entire network. 

Drawbacks

A problem of Avalanche is that it does not have slashing. This may reduce the barrier of entry to become a validator, but also put the safety of its system at risk. Because decisions of a validator for a transaction on Avalanche can always be changed given enough confidence, it is hard to detect malicious actors in the network. In short, accountable safety is not satisfied.

Current status

At the time of writing, Avalanche has 19 subnets with 1,609 validators and more than 520,000 active addresses on all chains. 

The first subnet deployed on Avalanche is of DeFi Kingdoms, the famous game title that originated from Harmony. The number of unique contracts deployed on DeFi Kingdoms mainnet has reached 218, up by roughly 8 times since launch in March 2022. 

Recent upgrade

Apricot, the upgrade of Avalanche blockchain, has released Phase 5 in November 2021 with including major improvements especially for gas fees reduction. Most recently, transaction allowlist precompile was introduced on Avalanche, assisting in building a KYC/private subnet for enterprise or government adoption. 


POLKADOT

Overview

Officially launched in 2020, Polkadot aims to solve the interoperability issue of blockchain. It achieves this by (i) relay-chain, where Polkadot’s consensus, communication & information are coordinated, (ii) a network of para-chains, including blockchains to process transactions parallelly, and (iii) para-threads, functioning the same as para-chain but only used temporarily. 

What problems does Polkadot solve?

Security & Scalability

Para-chains on Polkadot inherit shared security of the relay-chain. Furthermore, the consensus of Polkadot has two separate mechanisms for block production and transaction finalisation. When producing blocks, there will be slots (to product blocks) that are assigned randomly to validators. On the other hand, validators will vote on the chain that they deem to be the most valid, and a chain that has more than ⅔ of validators voting for will have its latest block being finalised. This will help enable the scalability of the chain in a probabilistic manner but also ensure the security and the speed when processing transactions as of deterministic consensus.

Drawbacks

Currently, to be in the active set of validators of Polkadot, a newcomer must hold at least 1.75 million DOT, which is equivalent to $30M. Additionally, each chain only requires 5 validators, a tradeoff between scalability and security (as well as decentralisation). Polkadot also has a higher finality time (12-60 seconds), much longer than the speed of a few seconds compared to Avalanche or Cosmos. Also, parachain slots are limited, therefore also preventing other projects from building on Polkadot’s chains. 

Current status

At the time of writing, Polkadot has 14 para-chains, 15 para-threads with 297 validators, and more than 520,000 active addresses on all chains.

Each para-chain can be classified into 3 categories: DeFi, Smart contract platform, and Infrastructure. All of them exist to deliver a variety of products and enrich the diversity of the Polkadot’s ecosystem.

Recent upgrade

XCMv2 (the core messaging format between para-chains of Polkadot) Second Audit has been finished and XCMv3 is in the final stage of development. 


COSMOS

Overview

Cosmos is a network consisting of multiple independent parallel blockchains, called Zones, powered by the Tendermint Core consensus algorithms. These Zones link to Hubs – which function as the interoperation bridge between Zones. Hubs and Zones communicate with others through an inter-blockchain communication (IBC) protocol, similar to a virtual UDP (User Datagram Protocol) or TCP (Transmission Control Protocol) for blockchain. The vision behind Cosmos is to be the Internet of Blockchains, a network of blockchains able to interoperate with one another in a decentralised way while retaining its sovereignty.

Source: Cosmos.network

What problems does Cosmos solve?

A set of open-source tools such as Tendermint, the Cosmos SDK, and IBC allow developers to build custom, secure, scalable, and interoperable blockchain applications quickly. These tools have highlighted their ability to solve the obstacles of Scalability, Usability, and Sovereignty.

Scalability

Tendermint BFT manages the blockchain’s networking and consensus layers, giving the application layer to developers. The Tendermint BFT engine is connected to the application by a socket protocol (i.e., a data transporter) called the Application Blockchain Interface (ABCI). ABCI enables blockchain applications to be written in any language, thus making it easier to onboard potential developers to build on top of the Tendermint BFT engine while also freely adjusting their blockchains.

The three benefits of Tendermint for developers include simplicity, great performance, and fork-accountability.

Tendermint consensus allows the hub/zone to process thousands of transactions per second, with commit latencies of 6 to 7 seconds. Notably, there is no limit to the number of Zones and Hubs that can be created on Cosmos.

Additionally, another benefit of Tendermint’s consensus algorithm is simplified light client security, thus solving the scaling problems for Cosmos.

Usability

Cosmos SDK streamlines the progress of blockchain applications. This toolkit contains a series of pre-built modules (building blocks) from which developers can choose as desired for building a new chain.

Source: Cosmos.network

The Cosmos SDK has already been used to build many application-specific blockchains that are already in production. Among others, we can cite Cosmos Hub, IRIS Hub, Binance Chain, Terra or Kava and many more are building on the Cosmos SDK.

Sovereignty

Every Zone and Hub in Cosmos has their own validator set and different trust assumptions, which allows it to inherit the security and interoperability of the public Cosmos network without sacrificing control over its underlying service. The Cosmos architecture achieves this by using a global hub with regional autonomous zones, where voting power for each zone is distributed based on a common geographic region. For instance, a common paradigm may be for individual cities, or regions, to operate their own zones while sharing a common hub (e.g. the Cosmos Hub), enabling municipal activity to persist in the event that the hub halts due to a temporary network partition.

Source: Cosmos.network

The connection between blockchains is achieved through Inter-Blockchain Communication protocol (IBC). Once integrated, IBC allows zones and hubs to open communication portals between one another, serving as the information rails, meaning that blockchains with different applications and validator sets are interoperable. IBC is the cornerstone of this otherwise sprawling network of sovereign chains.

Source: Cosmos.network

Drawbacks

Decentralisation

Cosmos Hub is one of many hubs in the network, and there is no central hub or limit on the number of zones/hubs that can be created. Whilst Tendermint consensus is limited to around 200 validators before the performance starts to degrade, thus, reducing the decentralisation of the network. Limiting validators on the system leads to a high barrier to becoming a validator. Currently, a person needs a minimum of 47,231 $ATOM (~ $1M) to be in the active validator set of the Cosmos Hub

Security

The Cosmos ecosystems have a fragmented network structure in which distinct blockchains with diverse priorities can have their own validator set and connect with one another via bridges when necessary. This topology is criticised for being as secure as the weakest chain (when the most secured chain accepts assets from the least secured chain, it becomes less secure). However, the new IBC versions will use shared security mechanisms (see Billy Rennekamps’ speech).

Cosmos Hub’s utility

While IBC is a significant milestone forward for the utility of the Cosmos Hub, it will not be the only hub competing for the market of cross-chain transfers. Cosmos’ hyper-modular architecture allows other hubs to compete for a share in the market. This hub rivalry may affect (though somewhat) the outlook for the Cosmos Hub and ATOMs.

The idea for Cosmos ecosystem hubs is to become the one with the highest reputation, garnering the most transaction submissions and related fees for network stakers. However, decentralised protocols should strive towards being lean and efficient economic activity routers, which would limit the share of validator revenue earned by fees. Fee revenue might be further eroded by fierce competition among hubs. Despite its essential role in Cosmos’ genesis, the Cosmos Hub and its ATOM tokens are not privileged within the ecosystem.

Current status

Recent Upgrade

Theta Upgrade

Allowing other blockchains with Interchain Accounts to create and control accounts on the Cosmos Hub

Rho Upgrade

Allowing the Cosmos Hub to perform transactions natively on other chains

What next?

Cosmos development teams plan to add shared security to the Cosmos Hub. This feature will enable Cosmos SDK networks to obtain security from the validator set of the Cosmos Hub. The design for Cosmos’ shared security feature is less-defined relative to Polkadot.

At a high level, Cosmos Hub stakeholders will be able to delegate their ATOMs to secure different zones, earning fees and even incentives (e.g., the zone’s native token inflation) for each chain protected.


LAYERZERO

Overview

LayerZero is an omnichain interoperability protocol, competent for exchanging messages to any contract on any chain. It also permits user applications to have complete control over its architecture and interpretation. LayerZero is a messaging transport layer that allows smart contracts to interact with one another across chains.

Source: Medium

LayerZero is a User Application (UA) configurable on-chain endpoint that runs an Ultra Light Node (ULN). To transfer messages between on-chain endpoints, LayerZero relies on two parties: the Oracle and the Relayer, to transmit messages between on-chain endpoints.

Highlight solutions by LayerZero

The Bridging Trilemma

By providing direct transactions across all chains without having to rely on a trusted custodian or intermediate transactions, LayerZero satisfies the rule of native assets.

Regarding the unified liquidity property, allowing transactions to flow freely between chains provides opportunities for users to consolidate fragmented pockets of liquidity while also making full use of applications on separate chains thanks to the combination of two independent entities: an Oracle and a Relayer,

LayerZero is generalizable enough to run on any chain, across the full spectrum of security and scalability assumptions, thus meeting the need for instant guaranteed finality.

Relayer & Oracle

A cross-chain transaction consists of a transaction tA on A, a communication protocol between A and B, and a message m. As per valid delivery states, m is delivered if and only if tA is committed and valid. The key notion behind LayerZero is that if 2 distinct entities confirm the validity of a transaction (in this case, tA), then chain B may be certain that tA is valid.

Source: LayerZero.network

LayerZero accomplishes this by integrating two separate entities: an Oracle, which gives the block header, and a Relayer, which offers the proofs associated with the aforementioned transaction.

LayerZero utilises the security attributes of the established oracles (Chainlink and Band) with an extra layer of security via the open relayer system by splitting duties between the Oracle and Relayer. While this may appear to be a minor distinction at first look, its ramifications are far-reaching. For starters, it means that the worst-case security of this new network is still equal to that of the Oracle. If you select Chainlink as your oracle, every malicious action in the system is still reliant on first defeating the Chainlink DON. Even if the Oracle’s consensus is corrupted, it also requires the Relayer’s active collusion.

LayerZero Endpoint

The implementation of LayerZero Endpoint – the interface to LayerZero is a lightweight on-chain client, on multiple chains allowing cross-chain transactions. A LayerZero Endpoint is currently implemented as a series of smart contracts on each chain included in the LayerZero network. The core functionality of a LayerZero Endpoint is encapsulated in three modules: Communication, Validation, and Network. 

One key point of LayerZero Endpoint is that rather than replicating and storing block headers within the client, it delegates the task of fetching the necessary cross-chain headers and transaction proofs to off-chain entities: the Oracle and Relayer. This results in LayerZero Endpoints being incredibly lightweight, making them cost-effective even on expensive chains like Ethereum.

Source: LayerZero.network

In addition to the core modules, LayerZero Endpoint can be extended via Libraries, which are auxiliary smart contracts that define how communication for a specific chain should be handled. Each chain in the LayerZero network has an associated Library, and each Endpoint includes a copy of every Library.

Current status

LayerZero is now in beta and has launched across EVM-compatible networks like Ethereum, Avalanche, Polygon, BNB Chain, Fantom, Arbitrum, and Optimism, with integrations on Solana and Cosmos coming soon.

While the first application to integrate with LayerZero was Stargate – a liquidity transport protocol, it’s worth emphasizing that cross-chain lending, yield aggregation, and trading are only the beginning.

Recent Upgrade

Security Update

Implementing The Dome, a system that (at the relayer level) deflects all attacks from malicious external contracts rendering them useless..

CLOSING THOUGHTS

Blockchain networks that are diverse Cosmos, Polkadot, Avalanche and LayerZero provide remarkable infrastructures to support the internet of blockchains, demonstrating that the asynchronous heterogeneous network paradigm works effectively and is an enhancement over Bitcoin and Ethereum as they now function. They will eventually be able to support millions of daily active users and realize the user-owned and managed Web 3 vision.

Co-existence of these major architectures is healthy for a true decentralized internet, as they have their own design choices and tradeoffs in their own right. Based on the data across development activity and the total active addresses, Avalanche is currently take the lead. It is noteworthy that each platform has different priorities and limitations tailored to the specific circumstances they’ve outlined.

 

Kyros Research Team

Vietnam Cryptocurrency Market Report 2021 Highlights

Dear readers of Kyros Ventures,

After preparing and conducting research about cryptocurrency investments in Vietnam, the Kyros Ventures, Coin68 together with Ancient8 and GameMarketCap teams are honored to launch the official version of “Vietnam Cryptocurrency Market Report 2021” to all you readers, to those who are interested and would like to dive deeper into this emerging yet dynamic financial market.

Prior to getting down to the detailed content, let’s first warm-up with some fascinating highlights our teams have collected from the “Vietnam Cryptocurrency Market Report 2021”!

The number of newbies starting to join the market keeps rising

Year of experience

While in the H/ 2021 Report, just nearly 40% of survey respondents said that they participated in the cryptocurrency market recently, up to now this number has reached approximately 60%. 

The trend of mid-term investment is getting stronger, but the heat of this market has not yet to be cooled down

Trading Style

Different from the inclination to HODL which pervaded in the former half of 2021, other investment styles with shorter time horizons – based on day/hour or based on week/month have become more popular recently. Nevertheless, those who say that they will keep raising the allocation to cryptocurrency in 2022 still account for more than half of the total surveyees, not to mention that the number of these people has risen from which of the last 6 months.

Change in Crypto Allocation

Defeating Smart Contract platforms & DeFi, NFT & GameFi become the most anticipated trends from investors in 2022

Most Anticipated Categories in 2022

The captivation of smart contract platforms and DeFi cannot be denied as they are among the major “concrete skeleton” of this cryptocurrency market. Nonetheless, NFT and GameFi have risen to receive the highest expectation from investors with well north of 50% of votes when being asked about the dominant trend in 2022, an impressive boom compared to the humble figure of 18% in the survey from the former half of 2021.

Profit from GameFi

The large expectation in GameFi can be explained by the huge returns that investors have realized since more than 40% of GameFi investors in our survey claim that their capital has increased by two to five times when pouring their money into this sector. Notably, even when these investors suffer losses from GameFi, they do not intend to reduce their allocation to this cryptocurrency sub-field.


These are just a few noteworthy pieces of information gathered from the Vietnam Cryptocurrency Market Report 2021. Please download the Report here to read more of other amazing highlights!

CRYPTOCURRENCY MARKET REPORT – Q4 2021

Q4 is undoubtedly the most volatile period of the crypto market in 2021. Such events of BTC hitting new ATH in early November and then suddenly dropping below $50,000 in early December; notable technological changes of the blue-chips as well as new trends coming up are gradually shaping the way investors allocate their assets in this emerging and lucrative financial market.

Through the Q4/2021 Cryptocurrency Market Report, the Kyros Ventures Research Team hopes to give you an overview of remarkable highlights of the past 3 months so that you can make the best investments and projections for 2022!

BITCOIN Q4/2021

After the recovery period in Q3, at the beginning of Q4, the $BTC price, as well as the entire crypto market, has seen improvement. Numerous news about regulation benefiting $BTC along with new trends and products launched have driven more capital flow into the crypto market, thereby making $BTC reach its ATH at nearly $69.000 (according to Binance). The market capitalization has reached 3 thousand billion USD for the first time on November 10 (according to CoinGecko).

$BTC PRICE AND MAJOR EVENTS

Below are some significant events in Q4:

  • 1/10: the situation was more optimistic for $BTC when rumors about an ETF launch spread
  • 20/10/2021: when ProShares Bitcoin Strategy officially traded Bitcoin Futures ETF, $BTC price has continuously reached ATH until 11/11, for the first time in the history, $BTC price was set at roughly $69,000
  • 12/11/2021: Miami became the first city paying dividends for its citizens by $BTC when they buy its cryptocurrency 
  • 15/11/2021: Taproot, the first upgrade for $BTC since 2017, was officially live, helping the development of smart contracts on Bitcoin blockchain more convenient
  • 16/11/2021: $BTC started its “red fire” days when CFO of Twitter, Ned Segal, said that investment in $BTC just “doesn’t make sense right now”. Afterward, India became the next country banning $BTC while Biden’s administration, step-by-step, was completing their $BTC tax regulations. Even the information about establishing a “Bitcoin City” of El Salvador could not help the bear market 
  • 12/2021: News about the new COVID-19 variant, Omicron, once again threatened the global financial markets. Meanwhile, investors were getting impatient with the SEC when they kept postponing the approval for the $BTC ETF. Perhaps such delay has made Fidelity, a financial company headquartered in Boston, the US, quietly launch a spot ETF in Canada, not the country of origin

SUPPLY SHOCK CARRIES ON

At the end of Q4/2021, on-chain data still shows that Bitcoin’s circulating supply is contracting.

The total supply of Bitcoin on exchanges keeps declining tangibly and reaches its all-time low for the last 3 years despite positive price movement in Q4/2021. Particularly, at the end of Q3/2021, the amount of Bitcoin on exchanges was recorded low at 2.457.417, at the end of October and the beginning of November, when the $BTC price continuously reached new ATHs, there was no sign that Bitcoin was pumped to exchanges and reversed the trend. In contrast, the total supply of bitcoin keeps reducing considerably and went to a new all-time low on December 22, 2021 at 2.303.241 Bitcoin.

In the meantime, $BTC supply which is low in liquidity and does not circulate on exchanges keeps rising remarkably and currently stays at 76.13%, while nearly reaching 76.26% in May. As seen on the chart, the relationship between these 2 metrics (price and low-liquidity $BTC supply) has been relatively positive within the past 18 months.

Ending Q4, $BTC supply with low liquidity keeps hitting new ATH when long-term investors of Bitcoin continually buy more new $BTC when the market still witnesses low-volume selling sessions and liquidations of long positions.

ETHEREUM Q4/2021 OVERVIEW

In Q4/2021, we have witnessed a lot of “explosion” of new ecosystems: Solana, Avalanche, Fantom… There are many views that Ethereum is in danger of being surpassed. So, let’s take a look back at Q4/2021 to see what Ethereum is holding.

EIP – 1559

EIP – 1559 launched with upgrades that helped alleviate the problem of expensive fees on Ethereum with a “base fee” proposal.

Base Fee has remained relatively stable.

However, gas on Ethereum is still unstable and depends a lot on market circumstances. If there are times when the market is active or opposite (Panic Sell), gas fees on Ethereum still increase quite a lot compared to usual.

Up to this point, approximately 1.3M ETH has been burned, equivalent to a value of about $4.9B. This is a huge number.

Ethereum’s Total Revenue continues to outperform many other top blockchains.

ETH 2.0 BEACON PHASE

The number of people who believe in and support ETH 2.0 continues to increase, which is clearly shown by the amount of ETH participating in staking on the Beacon 2.0 chain. With the launch of ETH 2.0, many new projects to solve the staking problem on the ETH chain have been built and developed, of which the most successful is Lido Finance.

While not having a prominent boom like other small ecosystems, in general, Ethereum still has a certain growth with Total Value Locked continuing to reach All-time-high, over $155B. This number is about 9 times higher than the two following ecosystems, Terra ($18B) and Binance Smart Chain ($17B). It can be said that Ethereum still retains its certain values and maintains a stable position and growth momentum, despite the fact that there are many new competing ecosystems.

PROTOCOLS ON ETHEREUM

We will continue to understand deeper by looking at the evolution of protocols on Ethereum.

The top 10 protocols with Total Value Locked on Ethereum have seen a marked change, with Lending and AMM giving way to the Curve and Convex. Curve with its continuous integration, expansion, and increasingly streamlined tokenomics has attracted a large number of users, with Convex growing prominently in late 2021.

Lido Finance also entered the top 10 protocols with the highest Total Value Locked with the success of its Liquid Staking product. With gas costs still relatively high on Ethereum, Dex AMMs in general have difficulty maintaining their positions.

Regarding the number of users, in the last 3 months, Ethereum has continued to maintain a growth rate despite expensive gas fees. To explain this, we can find a number of reasons such as:

  1. Crypto is increasingly mass-adoption, so the number of participants experiencing crypto-related products, including Ethereum, also increases.
  2. Despite the expensive cost, Ethereum is still home to a large concentration of assets in the market with top projects.

In addition, there are quite a few protocols such as Curve, Sushi, and AAVE that are gradually expanding and developing on Layer-2 as well as other ecosystems. This both has the effect of reducing the load on Ethereum itself, but also creates the risk of liquidity and user fragmentation. If there is a truly more suitable and efficient ecosystem, Ethereum could lose a lot of market share.

THE BOOMING OF ETHEREUM LAYER 2

There are many solutions to approach scaling and gas problems on Ethereum, ETH 2.0 is an on-chain solution and Layer 2 is an off-chain solution.

In 2021, gas fee on Ethereum recorded the highest, this is a big challenge of Ethereum but a big opportunity for layer 2 solutions.

At the moment, Polygon is the most successful layer 2 solution, which completed the main legos in its ecosystem, total value locked got $5.5B at the end of 2021. However, other layer 2 solutions such as Arbitrum, Boba Network, Metis Dao also have solid growth recently.

New solutions like Starkware or zkSync are expected by the community. In Q4, Starkware successfully raised $50M in Series C round with the participation of Three Arrow Capital, a16z, Alameda Research,..; meanwhile zkSync closed the Series B round with $50M from a16z, Crypto.com, Bybit,….

BIG UPDATE IN NEAR FUTURE

In 2022, the most expected thing is the Merge phase of ETH 2.0 is the combination of Beacon and ETH 1.0. This means the whole status of Ethereum’s chain and smart contract will be deployed on Beacon’s chain using the PoS consensus. At the moment, the Merge phase is in testnet and if the combination is successful done, Ethereum network will come to the final phase – Shard Chain which help Ethereum scaling when assure the security of the network.

TOP 5 BREAKTHROUGH SMART CONTRACT PLATFORMS IN Q4

Not only in Q4/2021 but the entire 2021, fierce competition has been seen between different smart contract platforms to expand their market share as well as community trust. Besides those Layer 1 which have been exploding in 2021 and draw a lot of attention to themselves such as Solana, Avalanche, or Fantom, there are still many new ones worth anticipating with abundant prospects to grow in 2022. Let’s take a glance at these 5 smart contract platform tokens which have witnessed the strongest increase in price in Q4/2021 and demystify their ignition for the last 3 months!

KADENA

Kadena is a blockchain platform using PoW mechanism to enhance security for transactions but also ensure scalability and safety when deploying smart contracts. Different from other blockchains, Kadena uses its own programming language called Pact, designed to automatically detect bugs and help developers write smart contracts more securely.

In Q4/2021, Kadena has had many major events which help boost its Total value locked and attract more users to the ecosystem, remarkably:

  • The launch of wrapped BTC on Kadena in mid-August 
  • $wKDA – the wrapped version of $KDA to bridge to Ethereum is created, which also marks the initiation phase of Kadena to expand to other platforms such as Terra, Polkadot, Celo, Cosmos… 
  • Liquidity is expanded with $KDA being listed on Crypto.com and Gate.io
  • The NFT landscape on Kadena is gradually rising when UFO Gaming announced their plan to  build an NFT gaming platform on this blockchain and Marmalade, the first NFT platform on Kadena, is introduced in early December
  • At the beginning of November, Kadena has launched the Chainweb-Mining-Client software allowing miners to build their own nodes without going through a mining pool

It should be mentioned that the ecosystem of Kadena has still been in its initiation phase so far with the absence of major fields to attract more capital flow. Two notable fields – AMM (KadenaSwap, Andedak & Kaddex) and NFT have yet to see impressive milestones. Nevertheless, it is this newness that makes $KDA a potential investment for those new participants joining this crypto market or for those who have missed the enormous deals of the blue-chips such as $SOL, $AVAX, or $ATOM.

DUSK NETWORK

Dusk Network is a blockchain platform aiming at users’ privacy and is designed for financial applications with Zero-knowledge Proof technology.

In Q4/2021, the growth of Dusk Network is mainly driven because of these events:

PHANTASMA

Phantasma is a blockchain platform specializing in NFT and gaming with neutral-carbon certification.[1] Another special feature of Phantasma is its Smart NFT technology with outstanding attributes, such as:

  • NFTs are easily programmable and adjusted/upgraded
  • Many NFTs can be bundled together to create a new NFT
  • Projects can create NFTs which limit the time of usage for users, thereby allowing them to try a new product before deciding to make their purchase decision
  • NFTs are minted instantly, users don’t need to wait or pay substantially high fees to finalize the transaction
  • NFTs can be embedded with other assets to create a minimum value for itself
  • Creators can attach a secret link to another file which can only be opened by that NFT’s owner

A few catalysts for the rise of $SOUL in Q4 include:

  • Save Planet Earth (TickerL $SPE), a British-headquartered company established in 2021 with a vision to solve environmental problems and climate change, officially chose Phantasma to be the blockchain platform to issue carbon credit at the end of October. The resonance of this partnership has even lasted to the end of November when the first NFT-based carbon of Save Planet Earth is sold on the NFT marketplace GhostMarket
  • Facebook and other giant tech companies announce their plan to join the metaverse landscape. All NFT and gaming projects benefit from this hype, including Phantasma
  • The famous American filmmaker Kevin Smith minted his NFT on Phantasma and claimed that he would hold $SOUL until it reaches $4.2
  • New projects are built or expanded to Phantasma, namely Blood Rune, DeSpace, …
  • At the start of December, Phantasma announced a partnership with Polinate, a crowdfunding platform, and Netvrk ($NTVRK), a metaverse project

TERRA

Some major events on Terra ecosystem in Quarter 4 are:

  • Mainnet upgrade from Columbus-4 to Columbus-5 at the end of September. Main points in this upgrade include:
    • 100% income from UST issuance, the stablecoin of Terra, will be burnt to reduce $LUNA supply (for every $UST minted, 1 $LUNA will be burnt)
    • Prioritize mempool for oracle votes to help the price update when minting $UST more accurate
    • Transaction fees on Terra will be paid directly to validators or authorized entities instead of flowing to reward pools as previously, therefore increasing benefits for staking $LUNA
    • Functions of the Inter-blockchain Communication of Cosmos SDK will be integrated into Terra blockchain, helping $UST liquidity flow to other blockchain platforms on Cosmos such as ThorChain, Secret Network, … 
    • At the end of November, news about FED’s opinion on stablecoin regulation has driven the popularity of algorithmic stablecoin as $UST
    • Investors rushed into buying $LUNA to join the lockdrop event of Astroport on December 14. Particularly, this DEX has pulled more than 1 billion USD, half of which is $LUNA, to the Terra ecosystem

Hitherto, according to Defi Llama, the total value locked of Terra has even passed Binance Smart Chain to be in the top 2, right behind the most popular smart contract platform in the world Ethereum.

Nonetheless, tokens of DApps on Terra did not enjoy much of the rise of $LUNA. Only 5/13 tokens in this ecosystem (excluding stablecoins) saw positive price change ($ANC, $LUNI, $ORNE, $LOOP) since late September, based on the data on CoinGecko.

At the moment, nearly half of the TVL on Terra belongs to Anchor Protocol, the most used lending platform in the ecosystem.

With the current number of DApps of only about 150, it can be seen that the Terra ecosystem is yet to enter its maturity state. However, investors can expect a strong explosion of $LUNA in a near future after the 150 million USD-worth incentive program introduced in July 2021 is activated gradually to support projects built on this platform.

SECRET NETWORK

Secret Network is a blockchain platform allowing developers to write smart contracts freely but still ensuring the privacy of user data.

Below are some crucial incidents happening on Secret Network for the last 3 months:

  • Mainnet upgrade – Supernova – since the launch of Secret Contracts in September 2020. This is a big turning point for the ecosystem as it also includes the Inter-blockchain communication protocol of Cosmos to Secret Network blockchain
  • Binance announced the re-opening of $SCRT withdrawal. This has helped the total value locked on SecretSwap, the first AMM of this ecosystem, soar by roughly 30 times

GAMEFI: STRONG FUNDAMENTAL ATTRACTS BIG MONEY

One of the most explosive trends of 2021 that we cannot ignore is the GameFi trend. It all started in the summer of 2021 when Axie Infinity completed the transition to the Ronin sidechain and perfected its Play-to-Earn model. At the same time, when the Covid epidemic raged, hundreds of millions of people fell into unemployment. Axie Infinity “accidentally” became an effective solution to this difficult problem.

The phenomenon of Axie Infinity has brought a new breath to the cryptocurrency market and created the basis for a series of projects related to blockchain games to emerge and launch many new services, attracting an extremely large number of users for this market niche.

On-chain data from DappRadar show that the number of Unique Active Wallet – UAW (wallets) active on GameFi applications reached an all-time high of 1.5 million users on Nov. In addition, in 2021, the number of people active on GameFi applications accounts for 49% of the total number of people operating on decentralized applications.

As a matter of fact, when the attention and demand towards the GameFi market is too great, the supply will follow to catch up with this trend. A series of new GameFi applications were born and converted user bases from dozens of different blockchain platforms not only on Ethereum.

The need to build new game applications and game-related platforms and tools has driven money from top tier venture capitals to flow into this market niche when this is just the beginning, investors seem to see potential in every corner of this market. In addition to gaming units like Forte with a record investment of up to $725M, Solana Ventures and Meta (renamed from Facebook) are also watching and placing the first bricks enter the GameFi market.

NFT Q4/2021 OVERVIEW

NFT KEY EVENTS AND STATISTIC

It can be said that 2021 is a successful year for NFT, this technology is getting more and more attention with the participation of influential public figures, especially artists around the world.

“Think about it this way: The internet we have allows for the easy transfer of information. We costlessly swap copies of news articles, music files, video games, pornography, GIFs, tweets, and much more. The internet is, famously, good at making information nearly free. But for precisely that reason, it is terrible at making information expensive, which it sometimes needs to be. What the internet is missing, in particular, are ways to verify identity, ownership, and authenticity — the exact things that make it possible for creators to get paid for their work.” Ezra Klein

Let’s take a look back at some NFT market metrics for Q4 and 2021:

The floor price in Q4 is hovering around 1.05 ETH. The number of wallets holding NFTs also hit an all-time high on December 30 with 11.745 new wallets entering the market.

Compared to Q3, the trading volume on NFT exchange OpenSea in Q4 is not as impressive, but in terms of average price per NFT, we can see the growth of this particular token as collections NFTs have become a digital asset – a store of value that helps investors in their portfolio.

PUNKS & APES ARE TAKING OVER TWITTER

CryptoPunks and Apes (BAYC) are the 2 most famous PFPs (Profile Picture) collections in the crypto community. Following the trend developed by these 2 OG collections, there have been countless other collections of NFTs created for the purpose of placing user avatars.

NFT is a perfect piece for social networks. They can represent an individual’s digital identity and brand image, just like brands rely on brand identities, taglines, images, brand ambassadors, and more. As an intangible asset, the crypto community can also leverage NFTs in similar ways as NFTs can become part of a personal brand and cannot be sold or separated from the owner’s identity.

Imagine you live on the internet. The way the world primarily knows you is not through your face or your clothes—it’s through your digital avatar. Of course, you are willing to spend a lot of money on something like a CryptoPunk: It’s your face to the digital world. Plus, it’s the key to entering a small, unique internet club. Being a CryptoPunk owner as a crypto-native is the equivalent of being an Augusta National member as an old-school businessperson.

Ethereum co-founder, Taylor Gerring, purchased an NFT Bored Ape Mega Mutant Serum for 888 ETH ($3.6M). Regardless of whether you believe in NFTs or not, people are still spending millions on this asset class and no sign of stopping. They are not just JPEGs but also a way for people to assert themselves and identify their personal brand on social networks. In the hierarchy of needs of psychologist Maslow, this is the highest level of need that people want to be satisfied after other needs for physical, security, love, self-esteem have been satisfied..

Currently, the current floor price of BAYC has surpassed that of CryptoPunk, at 53.9 ETH ($215,350) compared to CryptoPunk’s floor price of 52.69 ETH ($210,515).

NFT ARE THE KEYS TO ACCESS METAVERSE

Emphatically attached to the achievement of NFTs and blockchain games, the viewpoint for the metaverse and virtual universes was at that point promising. In any case, later on Facebook’s rebranding event, the metaverse viewpoint detonated.

The NFTs and digital currencies connected with metaverse projects experience a genuine worth of examination, while the interest for this sort of dapps filled. In Q4, virtual world dapps have generated more than $402M in NFT trading volume, increasing 615% the numbers seen in Q3. Plus, the number of unique traders doubled quarter-over-quarter with more than 50.000 unique traders registered in Q4. 

Games like Roblox, or Minecraft, where the community can build on top of infinite virtual space, have been quite popular since the last decade. And Blockchain-based virtual worlds are starting to gain the same type of traction. 

The price on average for virtual lands in The Sandbox surged almost 500% from the end of October. In December, The Sandbox parcels were traded for $14.976 on average, a significant growth from October’s $2.500 average. Brands and celebrities like Adidas, Atari, The Walking Dead, Snoop Dogg, and Smurfs, have taken part in The Sandbox’s virtual world. (Dappradar)

The Fashion Street Estate in Decentraland sold for 618.000 MANA ( $2.42 million). In the same timeframe, digital lands inside CryptoVoxels, another blockchain virtual world are being sold for a price 25% higher than the ones registered in October. 

CELEBRITIES AND BRANDS GO NFT

Source: Dappradar

In the narrative for mass adoption, celebrities and brands have a solid voice. 

  • Fashion giants Gucci, D&G, and Burberry make their appearance in the space after launching their respective collections. 
  • Coca-Cola partnered with Decentraland to establish unique wearables, while Pepsi launched its first 1,893 NFT (The Mic Drop) pieces.

Source: Pepsi

  • NIKE, Inc. Acquires RTFKT – A virtual shoes company that makes NFTs and sneakers ‘for the metaverse’
  • Adidas reveals new NFT project with Bored Ape Yacht Club
  • Katy Perry launched her first digital collectible NFT on Dec 14 with Theta Network

  • Legendary basketball player Michael Jordan launched NFT platform for athletes, HEIR

2022 is still going to be a sublime year for NFT

  • NFT music will thrive with the participation of famous artists, especially as musical concerts are gradually allowed to reopen in some countries and more, specifically in the Metaverse.
  • Large companies will start to accept NFT more, not only in JPEG but also as a social token that allows holders to have certain privileges, such as participation in events, meetings, networking, membership, …
  • NFTs can be leveraged to tokenize both tangible and intangible assets. Each NFT can act as a publicly transparent, trackable certificated, for any given asset, recording its trading activities.
  • NFT will gain more utility in the world of blockchain and cryptocurrency. With major brands like Visa joining the NFT, the NFT is likely to be applicable to a wide range of industries.

WEB 3

Worldwide interest in the term “Web3” also reached all-time high on Google in December, increasing about 400% since the beginning of October. 

“Web3” is a term that covers the entire Cryptocurrency market. Web3 has become a proxy for new economic ideas on how the Internet should be architected, and how individuals should share in this value creation. The Web3 ecosystem now represents an expansive ecosystem of new ways for creators and communities to monetize, and new models for internet-native communities to collaborate. 

Chris Dixon called it 

“The internet owned by the builders and users, orchestrated with tokens.” 

Eshita described the Web1 -> Web2 -> Web3 evolution as Read-Only -> Read-Write -> Read-Write-Own.

Not only are individual investors interested in Web3, but ventures capitals are also giving certain favors. In Q4/2021, the amount invested in Web3 projects reached $1.19B, an increase of 320% compared to Q3. The number of invested projects also increased from 50 projects (Q3/2021) to 62 projects in Q4/2021.

Tesla CEO Elon Musk and Twitter Co-Founder Jack Dorsey ⁠—Two of the most famous tech billionaires in the world ⁠— also recently tweeted about the keyword “Web3”.

Currently, decentralization is not really clear. However, Web3 is still a huge technological leap forward from the current centralized platforms. The future will tell how the new web quality delivered by the Web3 infrastructure will accumulate value and meet user needs for decentralization, ownership, verifiability, and enforcement.

As we move to a decentralized data-driven web, one of the key challenges will be how users and developers can efficiently and cost-effectively bring blockchain data into applications. If Web3 is to be decentralized, then a robust, secure, and economical network infrastructure is essential.

DAO

DAO stands for Decentralized Autonomous Organization. DAO is an organization model but has distinct features compared to conventional models:

  • Autonomous: This is one of the most basic factors that distinguish a DAO from a traditional organization. DAO is independent of any government, organization, or individual. A DAO like MakerDAO, can completely allow users to access and interact with its protocol from anywhere in the world, as long as they have a computer, smartphone, and Internet connection.
  • Decentralized: Currently, DAO protocols such as Uniswap, MakerDAO, FWB, UniWhale … are all accessed through the Internet, but hidden behind that is that it is built on Blockchain platforms like Ethereum. Based on blockchain technology and cryptocurrency (coin/token), DAO can become decentralized.

The decentralization of the DAO is evident in many aspects such as:

  • Infrastructure: a DAO can be accessed on any computer, phone, but if it is built on blockchains like Ethereum, Avalanche, Solana… then it is completely decentralized in terms of infrastructure. No one can fake transactions on the DAO, because then the transaction will be rejected. Infrastructure decentralization is also reflected in the fact that crypto DAO, even if banned in one place, can still launch normally in all the rest.
  • Payment, transactions: DAO still using tokens and built on blockchains like Ethereum, so as long as Ethereum is active, DAO built on it can freely interact and transact with any individual or organization, just have ETH as a fee.
  • Governance: different from traditional organizations, most of them operate in a hierarchical model (for example, the Company will have a Board of Directors, Supervisory Board, General Director, departments/departments…), DAO operates in a simpler way, any member of the DAO is welcome to propose ideas and vote. Many DAO also has a reward system for members with effective suggestions and ideas.

Because of its autonomous and decentralized feature, DAO becomes a model that is very suitable for the goal that Crypto projects aim for. It can be said that DAO has become an inevitable trend in building the management model for Crypto projects.

THE DEVELOPMENT OF DAO

In Q4/2021, DAO has grown in both size and quality. Let’s take a look at the outstanding DAO in its field right below:

According to DeepDAO’s statistics, there are currently 188 officially active DAO, managing assets up to $12.1B. Most of the big-name and market-leading projects are operating under the DAO model such as UniSwap, AAVE, MakerDAO, Olympus, BitDAO, Lido…

The benefits of using the DAO as a governance model

  • Take advantage of the great human resources. Instead of having just a few people voiced, the DAO allows the whole community to participate.
  • Avoid waste, efficiency and sensory decision making.
  • Create democracy, fairness in participating in the project.
  • Remove barriers of geography, time, skin color, ethnicity…

For Example:

The Olympus DAO model that has exploded since October is a new model for DAO funding:

  • Giving opportunities to small investors to invest in the project early
  • The project has the opportunity to build a strong community foundation right from the start

The shift in fundraising for many projects: No more Seed, Private rounds with a large number of tokens. Fundraising projects through the community itself (Wonderland, Jade Protocol, Magnet DAO, …)

DAO IN 2022

With its advantages, DAO will continue to be a popular governance model in the Crypto world. This will be a motivation for infrastructure and service projects for DAO to have the opportunity to explode and develop faster. Besides, with more and more money pouring into the market, Investment DAO, Protocol DAO will continue to be the growth trend.

[1] Neutral-carbon certification is a certification for corporations whose net carbon emission reaches approximately zero. For Phantasma, this platform commits to keep its carbon emission to zero by reducing energy consumption when users mint NFT and purchasing carbon offset contracts to compensate for this carbon emission.

EPILOGUE

Q4 has concluded an exciting and challenging journey with the Cryptocurrency Market in 2021. $BTC has proved its position as a king when trust of long-term hodlers in this coin did not show signs of shrinking. About $ETH, this number one smart contract platform is still on its way of executing important improvements to solve the scalability issue without compromising security or decentralization of blockchain.

2022 is coming, and it is safe for us to expect a brighter 2022 with the crypto market with huge potential of NFT, Web3, DAO and new smart contract platforms. 2022 will be the year that witnesses more blockchain adoption throughout many fields of life including enterprise management, finance, art…

Lastly, our Research team would like to thank you for taking your precious time to read this report. Please stay tuned for further reports to be released in the coming quarters!

Kyros Research’s Quarterly Report – Q3 2021

The third quarter of 2021 marks a number of significant changes compared to previous ones. Not just with global regulation over Bitcoin or Ethereum upgrades, but many trends have become new use cases, improving market dynamics and as catalysts for future sustainable growth. Let’s rewind the time capsule to understand how far the crypto market has grown in the last three months in this Kyros Ventures Q3 2021 report.

Bitcoin overview

Q3 Price Outlook

After a 3-month long bearish market in Q2, Bitcoin and the cryptocurrency market bounced back during the third quarter in correlation with the many pieces of exciting news regarding cryptocurrency legislation around the globe.

According to Coinbase, after the 55% sharp decline from all-time highs at $64,800 USD in the second quarter, Bitcoin price in July sustained the bearish trend until it reached a $28,800 low and began a trend reversal. From there, Bitcoin price recovered strongly by 81.11% and closed 8 consecutive weekly candlesticks in a row before correcting from a local high of 53,000 USD in September. Ending Q3, Bitcoin stabilized at above 43,000 USD, which is an increase of 25.03% this quarter.

Historical Milestones in Q3

Quarter 3 remarked significant milestones in the development history of Bitcoin and the cryptocurrency market

  • July – The U.S Securities and Exchange Commission (SEC) continues to constantly call for Bitcoin and cryptocurrency regulation.
  • Aug 2 – Germany’s new law changes now allow “Spezialfonds” to store crypto assets
  • Aug 8 – Infrastructure Bill Amendment regarding unclear definition of “Broker”  is shutdown 
  • Sep 7 – Bitcoin officially becomes legal tender in El Salvador
  • Sep 8 – El Salvador Government buys “the dip” is now holding 350 bitcoins
  • Sep 24 – China’s regulators release a blanket ban on all crypto transactions and mining

Institutional Bitcoin Adoption

Large capital allocators continue to show interest towards Bitcoin and Bitcoin products.

No new Bitcoin was added to the Grayscale Bitcoin Trust during the third quarter and this entity is still holding 654,855 bitcoins, accounting for 3.12% of max supply.

MicroStrategy and its CEO, Michael Saylor continue to bet big on Bitcoin and added 8,957 Bitcoins (5,050 Bitcoins recorded in September and 3,907 Bitcoins recorded in August) to their balance sheet. At the end of quarter 3, MicroStrategy held a total of 114,041 Bitcoins.

No new Bitcoin was purchased by CoinShares, Tesla and Square during the third quarter.

Moreover, many major service providers and institutions caught up quickly to the rising demand of cryptocurrency products and have been adapting lately.

  • Vast Bank became the first chartered US bank to offer Bitcoin services
  • JPMorgan Chase submitted a Bitcoin ETF application with the SEC; Bank of America approved Futures Trading; Wells Fargo unveiled a private Bitcoin Fund
  • Twitter added Bitcoin integration to the new Tip Jar feature on IOS.
  • PayPal launched a cryptocurrency service, allowing British customers to buy, hold, and sell digital currencies.
  • U.S. Global Investors bought 566,389 USD worth of GBTC

Bitcoin Supply Squeeze

On-chain metrics at the end of the third quarter suggest that a bitcoin supply squeeze is under way.

Over-three-month HODL waves reached an all time high of 84.87%, meaning only 15.13% of Bitcoin circulating supply was moved in the last quarter.

Total Bitcoin balance on exchanges also confirmed this phenomenon, where total supply on exchanges witnessed a trend reversal around March, 2020 and until September 29, 2021 has reached the lowest amount of Bitcoin available in over three years with 2,457,417 Bitcoin.

Additionally, Bitcoin illiquid and non-exchange supply percentages increased sharply during the last three months. As observed from the figure above, these two metrics have shown a striking correlation with Bitcoin price for the last 18 months.

Ethereum Overview in Quarter 3

Hard fork London and EIP-1559

Q3 marked an important milestone in Ethereum’s evolution with the London Hard-Fork and numerous proposed updates. Among them, EIP-1559 is the most notable update with a proposal to improve transaction savings based on the network density and another proposal to burn a portion of Ethereum’s transaction to mitigate the impact of inflation on ETH price. As of October 1st, the record has witnessed a total of 409,669 ETH being burnt.

Ethereum price has had a strong recovery right before the London Hard Fork event and quickly rebounded to the 4,000 USD level. In addition, various indexes of the Ethereum network also experienced significant changes in Q3 such as Total Locked Value, Number of Individual Wallets, Amount of ETH 2.0 Staked and Average Gas Fees.

Layer 2 Overview and Arbitrum’s hype

The Layer 2 Scaling Solution on the Ethereum network in Phase 3 experienced a tremendous explosion of Arbitrum when the Arbitrum mainnet was completed and officially launched in early September. During this quarter, Arbitrum raised a total amount of 120M USD from a list of many well-known Cryptocurrency Venture Capitalists and the Total Value Locked on Arbitrum has reached 1.8B USD just 4 days after the mainnet.

Prominent Market Trends in Quarter 3

The GameFi Boom

GameFi (abbreviation of Game Finance which is a combination of Gaming and DeFi) has recently become one of the most prominent trends in the crypto market in Q3 and has risen to be a new craze that’s making games built on the blockchain to become popular. These games have attracted a lot of investors and players from even the traditional gaming market.

Axie Infinity has been the project to trigger this boom – the most popular crypto-based game and blockchain-using metaverse project. In July alone, Axie Infinity recorded nearly 200M USD in revenue, 16 times higher than the revenue in June thus pushing the cumulative revenue to grow 1,050%. Other than that, Axie’s capitalization also witnessed an increase from 315M USD to nearly 2.4B USD in just one month. The rise of Axie has helped a series of other blockchain games in the market to surge in capitalization during the July period.

According to the leading explorer Token Terminal, the total protocol revenue of Axie Infinity in Q3 had reached 800M USD marking an increase of nearly 5,000% compared to the second quarter of 16M USD, and therefore became the first game or dapp with the largest revenue in the world. Axie Infinity’s NFT assets recorded 1.8B USD in trading volume in Q3, up more than 1,400% compared with Q2 with only 118M USD (data from DappRadar). With the success of Axie Infinity (AXS), gamers have now had a whole new look in the blockchain gaming industry, especially towards play-to-earn games.

At the initial stage, most P2E games were developed on the Ethereum blockchain. There are many successful projects that have attracted a huge amount of players such as Axie Infinity, Decentraland, The Sandbox, and Sorare.

However, in Q3, Binance Smart Chain (BSC) has had a strong performance as there are more and more gaming projects that continue to flourish on the chain. Names such as CryptoBlades, MyDefiPet, Faraland or Mobox have recently gained a lot of attention in the gaming community.

The end of July marked a typical event as daily trading volume in Binance Smart Chain had tripled the amount of the previous period. This was mainly triggered by the craze of GameFi projects, especially CryptoBlades. CryptoBlades had ranked on the top of all games with the highest 7-day transaction as it reached 9.23M transactions around mid-August. In addition, CryptoBlades was also ranked #2 in terms of 30-day users of all games that have released tokens according to Dapp.

Apart from Ethereum and BSC, Polygon is also a name that has been in the spotlight in the GameFi world after launching Polygon Studios to develop its own Game & NFT ecosystem in Q2. Many NFT gaming projects are deployed on the Polygon network. Additionally, WAX, Enjin or Flow are also the top blockchains that are attracting many gaming projects.

The NFT craze

NFTs have been widely predicted by the community to become a major trend in the crypto market, and it came to fruition in Q3. August reported a record NFT trading volume of 5.2B USD, followed by September, also reaching an impressive figure of 4B USD. As a result, the Q3 NFT trading volume reached over 10.6B USD, up 704% compared to the previous quarter (DappRadar).

Among the NFT trading platforms, Opensea is the most popular with 7.4B USD in Q3 trading volume, accounting for more than 70% of the total market share. The runner-up was Rarible, which recorded 73.3M USD, while SuperRare came in third with 66.6M USD.

GameFi Trends has contributed significantly to the overall growth of the NFT market, NFT in-game assets recorded a trading volume of 2.3B USD in Q3. 

Another major contributor is digital collections or NFT avatars, the most prominent names CryptoPunks. In Q3, CryptoPunsk’s trading volume reached approximately 360,000 ETH (equivalent to 1.3B USD), up nearly 400% from Q2’s 75,000 ETH. On peak days in early September, the floor price for an NFT CryptoPunk was almost half a million USD (Dune Analytics statistical data). We have also witnessed many Punks traded for millions USD in Q3.

Besides CryptoPunks, the BAYC “ape” collection has also become very popular in the NFT market. Peaking on August 28, BAYC’s daily trading volume reached 53M USD. In addition, many NFT collections also contributed to the craze of Q3, namely a few: Meebits, Pudgy Penguin, CyberKongz, Loot, etc. with daily trading volume of up to millions of USD. 

The explosion of new ecosystems

Regarding the development of top blockchain platforms besides Ethereum, Q1 witnessed the strong growth of Binance Smart Chain followed by Polygon in Q2. By Q3, many new ecosystems recorded outstanding performance and became the spotlight in the market.

During Q3, the price of blockchain platform tokens surged significantly such as LUNA, AVAX, FTM, SOL, NEAR and these tokens continuously reached new all-time highs.

After a long period of infrastructure building, new blockchain platforms are ready to receive the inflow of money. In Q3, the Defi space experienced the releasing of many incentive programs to support the development of the ecosystem from building better infrastructure to encouraging projects and users participating in. Celo started with 100M USD, after that Avalanche, Algorand, Harmony, Fantom, Hedera, Kava and Cardano also launched their own incentive programs to attract liquidity with great value of money.

Due to the incentive program, the total value locked also changed significantly, money continuously poured into new ecosystems in Q3.

Notable among these new ecosystems are Avalanche, Solana and Fantom with steady growth in both market capitalization as well as TVL. All of them have already completed their core products in the ecosystem:

  • Bridge
  • Exchange (AMM/DEX)
  • Lending protocol
  • Yield farming products

With the more mature ecosystems reinforced by incentive programs; Solana, Avalanche and Fantom had witnessed a great movement in Q3.

Solana (SOL)

The Solana ecosystem experienced an impressive quarter thanks to the “Solana Season” Hackathon which took place during May and June. After the Hackathon, a series of new projects gradually appeared on Solana and achieved a huge growth, typically Saber (SBR) and Sunny (SUNNY). Although both of them are newbies in the ecosystem, they rapidly achieved the highest total value locked on the Solana ecosystem.

At the peak in Q3, Saber achieved a record in TVL with over 4.15B USD. Sunny’s TVL also surpassed 3.4B USD from zero within 2 weeks. The TVL of the entire Solana ecosystem reached a record on September 12th with 12.2B USD, nearly 20 times higher than on July 1st, making Solana the 3rd largest blockchain platform by TVL, just behind Ethereum and BSC.

Additionally, the game sector on Solana also made a mark with the token launch of Star Atlas, a space war game. After listing, 2 tokens of this game which are ATLAS and POLIS, they achieved a ROI, at all-time high, of 194 times and 134 times, respectively.

Avalanche (AVAX)

The Avalanche ecosystem recorded a breakthrough when the Avalanche Foundation announced Avalanche Rush, a liquidity mining program to introduce more applications and assets to its growing DeFi ecosystem. Soon after that, the TVL on Avalanche ecosystem quickly reached more than 2B USD in just 10 days, which was an increase of 570% (data from DefiLlama).

Moreover, in September, the Avalanche ecosystem has gained outstanding growth momentum, when it successfully called for 230M USD in  investment, which included participation from many famous venture funds: Polychain Capital, Three Arrow Capital, R/Crypto Fund, Dragonfly, CMS Holdings, Collab+Currency and Lvna Capital. The TVL of Avalanche continuously grew and reached a height of nearly 4B USD at the end of Q3.

Many tokens on the Avalanche ecosystem made a record growth during Q3, notably TraderJoe (JOE) and Teddy Cash (TEDDY).

Fantom (FTM)

Fantom Foundation also launched an incentive program valued at 370 FTM to promote DeFi and GameFi development in the Fantom ecosystem. Due to the incentive program, TVL on Fantom witnessed huge growth reaching 2.07B USD at the end of Q3, increasing 984% since July 1st (data from DefiLlama).

Besides, projects in the Fantom ecosystems also had an outstanding surge in capitalization in Q3.

Furthermore, Fantom’s game and NFT sector also had a bright spot in Q3 when Andre Cronje, founder of Yearn Finance, was actively building 2 products: RarityGame (Game) and Artion (NFT marketplace) at Fantom and promises about NFT bridge between Fantom and Ethereum.

Vietnam solidifies its position in the crypto market

Vietnam became the brightest name in the global market in Q3. Many studies reflect that Vietnam is leading in the crypto and DeFi adoption. These impressive numbers are shown in the video below.

In order to have an overview about the Vietnamese cryptocurrency market, let’s take a look at the Vietnam Blockchain & Crypto map in the infographic below.

Epilogue

The third quarter ended with strong growth of the entire market and opened up huge potential for GameFi, NFT, and new ecosystems. The crypto market was more refreshing and ready than ever for further growth in the last quarter of the year and beyond. Let’s embrace all challenges and opportunities ahead with Kyros Ventures.

Research Team

Blockchain Gaming Landscape

After two months of correction, the cryptocurrency market has been bouncing back and more active recently, led by the blockchain gaming trend. After DeFi, blockchain gaming is on its way to be the next big cryptocurrency market trend in the future. 

Let’s dive deeper into the blockchain gaming landscape with Kyros in this article.

A signal from the Vietnamese investor community:

According to The Vietnam crypto market report H1.2021 made by Kyros Ventures at the beginning of July 2021, there are three main trends expected by the Vietnamese community:

  • Blockchain platform
  • Ethereum and Layer 2
  • NFT and Blockchain gaming

Many investors expect NFT and Blockchain gaming to be one of the key trends in the second half of 2021. In addition, the most expected NFT tokens to rise are game or game-related such as AXS, ALICE, ENJ, SAND, MANA, CHR, FLOW,…

Undoubtedly, the performance of the above tokens is far from the rest of the NFT market in particular and the cryptocurrency market in general.

Axie Infinity is the leading project of the NFT-gaming trend. Let’s take a look at the rising of Axie Infinity in the below video produced by Kyros Ventures:

Besides Axie Infinity, many games have received much awareness from the community, such as:

  • Alien World
  • Crypto Blade
  • My DeFi Pet
  • X World Game

Blockchain gaming ecosystems:

There are many projects on the gaming segment, which are built on various blockchain protocols. However, most of the popular games are built on widespread blockchain such as:

  • Ethereum
  • Binance Smart Chain
  • Polygon
  • WAX

Ethereum and Binance Smart Chain:

Ethereum is the leading ecosystem from the number of products and capitalization perspective. Some of the most popular blockchain games have been built on Ethereum like:

  • Axie Infinity
  • Decentraland
  • The Sandbox

Nonetheless, Binance Smart Chain also shows that it is a robust gaming ecosystem that has the ability to compete with Ethereum. Games on BSC are mainly brand new projects, but they have acquired more users compared to Ethereum.

Crypto Blades has had approximately 700,000 users in the past 30 days (July 9th – August 9th), nearly three times more than the top game on Ethereum, Axie Infinity (according to the data provided by DappRadar).

Polygon and WAX:

Polygon and WAX also have a diversified gaming ecosystem. On top of that, the two’s advantage is very low on-chain fees:

  • Fee on WAX: 0$
  • Fee on Polygon: 0.0001$

At the moment, Polygon hosts as many NFT gaming projects like Ethereum and BSC, yet its user base couldn’t compete with the two juggernauts.

Unlike Ethereum, BSC, and Polygon, WAX is a blockchain protocol focusing on NFT and games with zero blockchain fees. Alien World, built on WAX, owns the most significant number of players in the blockchain gaming space, with nearly 1 million users in the past 30 days.

Enjin:

The ecosystem of Enjin is worth taking a look at because it is a pioneer in the blockchain gaming sector. Completely different from the above ecosystems, Enjin isn’t a blockchain protocol having a smart contract but providing a solution to simplify the NFT application for game products instead.

At present, there are a lot of games powered by Enjin.

In addition to the large ecosystems above, several ecosystems in the process of development are also worth noting, such as:

  • Solana
  • Flow
  • ThunderCore
  • Chromia

Blockchain gaming studios:

Many gaming studios are focusing on blockchain right now, some familiar names such as:

  • Animoca Brands
  • Dapper
  • Lucid Sight
  • Sky Mavis
  • Antler Interactive
  • Everdream Soft
  • Horizon

Types of games:

Although it has been developed for a short time, blockchain gaming also has diversified types of games:

  • Sport
  • Card
  • Battle Royale
  • Building
  • Tower Defense
  • Action
  • Turn-based

If you are a blockchain enthusiastic and interested in games, why not try some games below:

Kyros Ventures Team

Highlights from The Vietnam Cryptocurrency Report H1 2021

After comprehensive research conducted by the Coin68 and Kyros Ventures Team, the Vietnam Cryptocurrency Report H1 2021 is now published.

The team has collected a lot of interesting information and would like to share it with all of you in this report. Before going into the finer details, let’s take a look at some of the key points in the report!

Opinions on Vietnam market

Vietnam is on its way to becoming one of the biggest crypto markets in the world with favorable economics and environments, outstanding developers, and great innovators in technology.

Vietnam investors

The cryptocurrency market went through a major bull run in early 2021, bringing waves of newcomers into the market. Nearly 40% of survey respondents said that they have just entered the market in 2021. Yet this group of people expect very high returns from crypto, mostly to double/triple their initial investments or even higher.

Trading behavior

Long-term trading or “HODL” has become more and more popular among the Vietnamese crypto investor communities over time. 

The Vietnam Cryptocurrency Market Report 2020 showed that HODLing was the least chosen trading style, accounting for only 25%. The majority was for the short-term or mid-term. The latest data, however, shows that 50% of respondents are long-term investors.

Download the full report on the banner link below.

Perspective on Bitcoin

This is probably the part that many people are looking forward to. At the time of writing, Bitcoin keeps moving sideways around the 30,000 USD area. Many investors fear that the market will fall into a long-term downtrend. 

According to the report, the majority of respondents have had a positive view towards the Bitcoin price especially in the long term. Some even expect that the Bitcoin price would surpass 100,000 USD in the near future.

Future market trends

Most investors expect the Altcoins season would arrive in H2 2021.

The most promising trends voted by our community are Blockchain platforms, Ethereum and Layer 2, NFT and Blockchain games. Blockchain platform coins are expected to bring high profits to investors in H2 2021.

Perspectives on NFTs

NFTs, especially the blockchain gaming segment, are flourishing in just a short period of time. The survey demonstrates that more than half of the respondents are hesitant about participating in the NFT market because they don’t understand the value of NFT or how it works and the initial investment is just high. However, when being asked which segment of NFT to invest in, the majority chose Blockchain games.

Blockchain gaming platform tokens are also the most bullish NFT tokens in the report.

This is just an overview of the report, there are still many other interesting insights waiting for you to discover. Download theVietnam Cryptocurrency Market Report H1.2021now for more high quality information!

Kyros Ventures Team

Kyros Report: NFT Market in 2021

The record was set

On March 11, 2021, a digital artwork named “Everydays – The First 5000 days” was sold for $69 million and made Beeple, the painting’s creator, own one of the top 3 most expensive auctioned artworks of any artist currently alive.

Within the past few months, the emerging world of NFTs has accelerated rapidly to reach new heights of success due to the increased uptake from the blockchain community, talented artists, celebrities, and athletes worldwide all hoping to make their mark on this digital frontier. Recently, the two most prominent crypto exchanges – Binance and FTX, have announced the launch of their NFT marketplaces. 

These findings show that NFTs are becoming widely acknowledged and are constantly growing. However, it must also be questioned whether NFTs are a  “here to stay” trend and will it become the breakthrough technology that brings crypto and blockchain to the masses? Let’s delve into the big picture of the current NFT ecosystem to get a better understanding as we enter a new era in NFT Blockchain Technology.

NFT market overview 

Figure 1: NFT Ecosystem

An NFT (Non-Fungible Token) is a unit of data held on certain blockchains like other tokens but is individually unique and not interchangeable. The original concept for NFTs dates back to 2015, but it wasn’t until 2017 when the first projects began to appear on the Ethereum blockchain under the ERC-721 standard. Over the next two years, more NFT standards were accepted and utilized. 

NFT can represent various physical assets such as photos, videos, audio, paintings, or any kind of digital data. Thus, NFTs help to transform data into verifiable assets that are easy to trade on the blockchain.

An NFT is dynamic as it is made up of various segments, as displayed in Figure 1.

  • Infrastructure: blockchain protocols used to restore and transfer NFTs
  • Gaming: Games using the NFT standard. These include role-playing strategy games, trading card games, or any fun-based gaming experience incorporating NFTs
  • Metaverse: Parallel digital universes which offer a set of unique experiences to users
  • Arts & music: Projects featuring famous artists or musicians to generate digital masterpieces
  • Sports: This features personalities from the world of sport most often connected with real-world players and teams such as Formula 1 teams, football clubs, basketball teams, etc.
  • Collectibles: Project whose primary function is to issue collectible items intended to be collected
  • Marketplace: Platforms to buy, sell and auction NFT
  • Domains: It consists of unique domain names created on the blockchain
  • Others: NFT Wallet, NFT Defi, NFT-focused fund, and NFT News and Analytics.

Market capitalization

Market Capitalization represents the total value of assets present in a market. The NFT ecosystem has had an explosive development over the past year. The video below will show a visualization of this growth.

NFT in details

Infrastructures and Game studios

Currently, Ethereum is still the leading blockchain protocol for NFTs as it hosts the highest number of projects, with over 50 currently running on top of it. WAX, a fork from the EOS blockchain, ranks second with more than 35 projects. New blockchains entering the space are BSC, Polygon, and Flow. It worths mentioning Chiliz, which is fully dedicated to the sports fan token segment.

Despite its dominance, Ethereum’s transaction fees remain a persistent problem as it tends to skyrocket far too regularly. Today, performing any transaction on the network can prove rather costly. Users will have to pay approximately $21 for each transaction which is much higher than other blockchains such as Binance which costs approximately $0.45, Flow $0.02, Polygon $0.0001, and WAX which has no gas fee.

Figure 3 also displays major NFT gaming studios and their products. They have more potential than other kinds of segments within the NFT ecosystem to engage with your everyday normal people. Thanks to the solid base of many blockchain protocols, game creators now have more opportunities to leverage their products through this technology. Recently there have been some big blockchain-focused game studios that have entered the current market including Dapper, Animoca Brands, LucidSight, and EverdreamSoft (Figure 2)

Figure 2: Top NFT Infrastructure and Game Studios

Games and Metaverses

From the gaming market’s standpoint, this market reflects a mature segment that is well developed yet still looks favorable with a high probability for significant growth in the coming years. In addition, this segment has rapidly driven the growth of the NFT ecosystem and now has very compelling liquidity of its assets. 

Currently, the most played game on Ethereum, Axie Infinity, is continuously evolving by adding new features and game modes. Developed by Sky Mavis – a Vietnamese game studio, Axie has attracted thousands of newcomers to blockchain technology from developing countries with nearly 90,000 active wallets and about 22,000 daily users. However, it is God Unchained that currently holds the highest sale value of $22 million while the number of sales reached 569,561 in total (figure 3).

Besides the gaming industry, the more established Metaverses focuses on virtual world-buildings and in-game experiences. Decentraland is currently leading this segment as its sale values account for $62.2 million, making up 58% within its whole market. Despite its dominant position, Decentraland is confronted with challenges by other players like The Sandbox and CryptoVoxels. They offer a vast array of supporting assets to the market including names, wearables, and various objects in the form of ERC-1155 tokens.

Figure 3: Top NFT Projects in Games and Metaverses

As reported by Newzoo’s global games market research, by the end of 2021 there will be approximately 2.9 billion gamers worldwide. Blockchain technology, via NFT’s, gives property rights to gamers. For the first time, gamers can now take ownership of the digital assets they acquire in games. This is enormous as it represents the final stage in the evolution of free-to-play gaming. As gaming is the largest entertainment medium globally with a consumer audience almost as big as the global population, NFTs can leverage this fertile land to bring mass adoption into the blockchain space. A few names to watch: My Neighbo Alice, Derace, X World Games, My Defi Pet, and Ethermon.

Collectibles, Art, and Sports

NFTs peaked in sales on May 3 when $102 million worth was sold in a single day. And the crypto-collectibles market made up $100 million of those sales. Figure 4 illustrates this exciting upshoot in the NFT ecosystem and presents a compelling argument for a very fruitful future for NFT Arts, Collectibles, and Sports.

NFT collectibles like CryptoPunks, Meebits, and CryptoKitties have so far proven to be the most resilient assets and are still the largest of the seven markets ranked by NonFungible.com. Data collected in Figure 5 shows that CryptoPunks still reigns in sales with a value of nearly $400 million and $25,532 in average transaction volume which is far ahead of the other two competitors.

Figure 4: Top NFT Projects in Collectibles, Sports, and Arts

The Sports segment has all the hallmarks of a growing platform in its infancy whose development looks very promising over the next few years, with buyers showing increasing interest. The total sales value of assets traded is exploding having almost reached $600 million, which is surprisingly exceeding the Collectibles segment. The top three contenders of the Sports segment are NBA Top Shot, Sorare, and Topps MLB.

From the NFT Arts perspective, the market still remains very limited. At the moment a common pattern amongst buyers is to build a collection and they are here for the long run. The most prominent in this segment is Hashmasks with the highest sales value of $50.4 million, followed by Art Blocks and KnownOrigin with $20.5 million and $6.4 million respectively.

According to the annual Art Market Report from Art Basel and UBS, the traditional art market is worth about $50 billion in 2020 and has reached new heights in 2021. Although the NFT art market volume is still relatively small compared to this, it has a lot of room to grow in the future.

Marketplaces

The marketplace is the backbone of every ecosystem, and its development explicitly reflects the general landscape of NFT ecosystems and the particular segments in it.

Figure 5 points out that at this moment, Ethereum is still the top NFT blockchain. In particular, OpenSea outperforms the rest of the market, capturing $48.5 million in sales volume with more than 22,000 users in the last 30 days. However, Binance Smart Chain with its minimal transaction fees and speed of transactions has allowed BakerySwap, AirNFTs, and Treasureland to push the limits of the NFTs capabilities so much better. It is also an omission not to mention WAX which is labeled the “King of NFTs brand.” It is now working towards a fairer and more equitable NFT ecosystem that can allow the general public to collect affordable NFTs. The users of WAX are giant compared to any other blockchains in the marketplaces accounting for nearly 420,000.

Figure 5: Top NFT Marketplaces

Domains

This segment presents a great diversity of projects and uses cases; however, one should notice that the segment is mainly driven by the Ethereum Name Service, Unstoppable Domains, and Handshake. 

The context of these projects and their markets, with the sheer numbers and remarkable names, can explain their constant growth and expansion through all the NFT ecosystems. As demonstrated in Figure 6, millions of domain names are registered on these platforms with more than $10 million in sales value. ENS takes first place with $7.01 million calculated at the beginning of June 2021. Nonetheless, Handshake has acquired more names registered than the rest of the market, gaining around 53.7% overall. 

The ecosystem of these domains is highly diverse, ranging from wallets and browsers to exchanges and other kinds of applications. However, ENS once again proves its dominance and popularity with 231 integrations, quadrupling Unstoppable and being nearly twelve times bigger than Handshake.

In line with ReportLinker, the global domain names market is forecasted to reach 512.3 million domain names registered by 2027. This number is tremendous and if NFT domain names can take only 5% to 10% of the market share, the whole NFT domains market will grow more than twenty times compared to today.

Figure 6: Top NFT Domains

Binance NFT

The NFT sector on Binance Smart Chain is still in its infancy with consistently increasing growth and adoption which is closely followed by global companies around the world. And recently, Binance, the world’s largest crypto exchange, has launched its own NFT marketplace on the 24th of June 2021. As stated, this marketplace “will bring together artists, creators and crypto enthusiasts from around the world,” and it will then “ become the premier destination for NFTs and digital collectibles across mediums, from visual arts and gaming to music and sports.” 

We had a sneak peek at the first iteration of the Binance NFT marketplace on launch day, displayed in Figure 7.

Figure 7: Lineups at Binance NFT Marketplace on launching day 

With the weight it possesses in the space, Binance is predicted to form a new trend in the market. And one day, when unique and irreplaceable assets are issued as NFTs on the blockchain and globally adopted, these names in Figure 8, with their partnerships and developments on BSC, could make several remarkable achievements.

We are all waiting to see the long-term evolution of this new ecosystem after this exciting start.

Figure 8: NFT Projects on top of Binance ecosystem

Where will it go and What awaits us?

The Non-Fungible Token industry is an extremely young sector rapidly expanding in trading volume, liquidity of assets, and the number of new users over time. Yet we are only at the very dawn of starting to explore how many industries can utilize NFTs. 

The massive acceleration during the second half of 2020 with the adoption of many mature use cases and structured projects indicates that its development is about to speed up dramatically. 2021 is poised to be an eventful year as several major realizations about the NFT ecosystem have enabled it to move on to the next level. 

NFTs have opened a new opportunity for the digital economy where virtual assets can be verified and traded in just one click. It is no longer just a speculative industry; it is now a value generation industry. When compared to the traditional market, NFTs market share is still negligible. Yet with the inevitability of the digital revolution, there is little doubt the world of NFTs may soon become mainstream and disruptive to both new and established industries. What remarkable milestones are awaiting the NFT ecosystem in the future? Only time can tell.

Kyros Research’s Quarterly Report – Q1 2021

The Big Picture

  • Bullish momentum continues to rule the market sentiment throughout the first quarter of 2021. The total market cap soars 144% from $787B to $1,919B in Q1, 2021, according to Coingecko.
  • Institutional sector participation in the market marks all-time-high (ATH) with several public firms and investment funds that either announce Bitcoin investments or launch cryptocurrency products.

Institutional Investor

  • Network effect has passed onto institutional investors on Bitcoin in 2021 with a large wave of adoption (Figure 1). Joining forces with Grayscale, Square and MicroStrategy, Tesla did not only add Bitcoin into its balance sheet but also allowed its users to purchase Tesla cars by Bitcoin. The institutional adoption continues to spread like wildfire, in the context of highly-concerned global economic status post-Covid-19.

Figure 1: Bitcoin Mass Adoption in QI/2021

  • Grayscale, for the first time in the past 3 years, has added 5 new tokens into its investment product lines, providing indirect access to crypto for accredited US investors and institutions (Figure 2). The latest batch includes Basic Attention Token, Chainlink, Decentraland, Filecoin and Livepeer. In the meantime, the largest institutional Bitcoin-hodler also expands its current portfolio of existing crypto assets, accumulating a higher stake of those coins’ total supply.

Figure 2: Grayscale holding over coins’ supply

Bitcoin

Figure 3: Bitcoin Price Returns in Q1 & Q2

The Summer Time

  • Figure 3 depicts that Quarter 1 2021 has seen the best return since 2017. The market size is double with bullish sentiment carried over from the second half of last year.
  • Quarter 2 has been a pivotal period of the crypto cycle ever since 2017. Either carrying on the previous bullish momentum or cooling down the bear, crypto summer brings a fresh vibe for new trends. Q2 2017 was the start of the peak half a year later. Q2 2018 marked the market’s second rebound before the crypto winter. Q2 2019 was the best performed season for that year. Q2 2020 witnessed a great recovery from  Black Thursday. Forecasting Q2 2021 from a limited dataset would not be a piece of wise advice, yet a green quarter can be the modest expectation.

The Trillion-Cap Assets Universe

  • Bitcoin market capitalization has surpassed the 1 trillion USD mark for the first time ever in the last quarter. The next milestone for Bitcoin is Silver before achieving its ultimate goal, e-Gold (Figure 4). 
  • Needless to say, Bitcoin was the best-performer among the trillion cap asset universe in the first quarter of 2021. The cryptocurrency skyrocketed 102%, with the market cap finishing the first bullish round at 1.1 trillion USD.

Figure 4: Bitcoin among other trillion cap assets

Ethereum Challengers

  • The second-largest cryptocurrency, Ethereum is on the right track for its potent network upgrade, the eth2.0 staking event. At the end of Q1 2021, the total staked Ether reached 3,611,147 ETH, equivalent to $6.7B or 3.13% of the total circulating supply.  

Polkadot

  • Polkadot has risen as one of the most competent Ethereum challengers. Figure 5 depicts how the ecosystem’s public awareness has grown. The Google search trend for “Polkadot” keyword peaked twice in the first three months of 2021. Correspondingly, DOT price reached ATH in late February.

Figure 5: Polkadot Price vs. Google Search

  • The Polkadot ecosystem has expanded rapidly in many aspects. More and more wallets now support Polkadot with respect to the rising demand from the users, which also explains why the quantity of multi-chain wallets already outnumbered that of Polkadot-only wallets in the ecosystem (Figure 6). That is not to mention the fact that the project is still under development for its fully functional mainnet.

Figure 6: Polkadot-supported wallets 

Binance Smart Chain 

  • The next candidate for an Ethereum-challenger title is Binance Smart Chain (BSC). Daily transactions of BSC have surpassed Ethereum for the first time in Quarter 1, 2021 (Figure 7). Since then, it continued to perform well and ended up almost 3x over Ethereum on the metric.

Figure 7: Daily transaction on Ethereum and Binance Smart Chain

  • BSC’s flagship, PancakeSwap, also surpassed Uniswap, SushiSwap, and Curve to be ranked as the top 1 Decentralized Exchange (DEX) by 24h volume. All of these achievements have contributed largely to upward demand pressure on the price of BNB, the utility token of the BSC ecosystem. As the result, BNB marketcap has passed Tether and Cardano to be the top 3 biggest altcoins, following Bitcoin and Ethereum, for the first time since the inception.

DeFi

  • Following the trend of 2020, DeFi is still on fire. The Total Value Locked (TVL) in DeFi platforms has almost tripled since the beginning of the year, reaching nearly 65 billion dollars in both Ethereum and BSC. The pie is still growing; no one seems to be eating each other’s piece, just yet.

Figure 8: TVL on Ethereum and Binance Smart Chain

  • As Figure 8 demonstrates, Ethereum is still the dominant player when it captures $51.5 billion in total economic value, quadrupling that of BSC at the end of March. Meanwhile, BSC has risen as an ideal protocol for DeFi projects, proved by its escalating TVL from just a few million to now $13 billion, and that seems to be just a start.
  • According to the leading explorer DappRadar, there are 4764 Dapps in the crypto space, 46,5% of which are running on top of Ethereum, while BSC is a home for 276 dApps or 5,8% of the pool. However, BSC looks more ‘DeFi-focused’. Out of 503 DeFi projects, 33,2% is based on Ethereum while 41,4% uses BSC. In summary, despite Ethereum’s adoption being more impressive, BSC is still a redoubtable challenger in the DeFi corner.

DEXs

  • Without DEX, the DeFi greenfield would never have taken the spotlight for 2020. Thus, the year of 2021 is undoubtedly the right time for DEX to mature and possibly become mainstream. With optimized usability, deeper liquidity, and emerging composability, the DEX ecosystem is as strong as ever.

Figure 9: Monthly DEX volume (source: Dune Analytics)

  • Figure 9 points out that DEXs have already processed more transaction value in Q1 2021 than all previous periods combined. Notably, the volume hit ATH of nearly $77B in February, carrying on the exponential growth momentum. In the Ethereum-powered DEX sector, Uniswap represents more than double Sushi’s volume, gaining around 50% of the market share (Figure 10).

Figure 10: Top DEX volume in Q1 2021 (source: Dune Analytics)

  • February also marks the highest-ever level of monthly revenue for Ethereum miners, roughly half of which has come in the form of transaction fees. The revenue numbers reflect the price of ETH, which exceeded the $2000 mark briefly this month. Data collected in Figure 11 shows that, for the first time, Ethereum miners have brought in more than $1 billion in revenue for the month of February.

Figure 11: Ethereum miner revenue in Q1 2021

Scaling Solutions

  • Despite its burgeon, the DeFi ecosystem is in somewhat of a bottleneck crisis, as more and more projects are developed and launched on the Ethereum network with growing transactions’ volume, causing gas fees to skyrocket. The good news is that a group of layer-two (L2) scaling solutions has already bloomed around Ethereum. They are offering variable avenues to scale Ethereum for the mass. A variety of L2 models is displayed in Figure 12.

Figure 12: Ethereum scaling solution model

  • Layer-2 protocols are perhaps the greatest hope for Ethereum devotees at the moment. In short, layer-2 chains operate on top of the Ethereum mainchain but function in a much more efficient way with drastically reduced transaction fees and a few-second transaction speed. One such Layer 2 technology is rollups, which take much of the burden of computation and storage out of the blockchain, utilizing it just for its security sake.
  • Figure 13 mapped out many projects inheriting L2 technology in which the cutting-edge ZK-Rollup technology is well-positioned to be a leader. Overall, as long as Ethereum block space is expensive, scaling solution demand is still high.

Figure 13: Ethereum scaling solution map

NFT 

  • Well-known since 2017 with the CryptoKitties phenomenon, NFT segment silently exists alongside other crypto major trends for years. Covid19 seems to be a catalyst for NFT frenzy in Q1 2021. From art, trading cards to music and other collectibles, things are now on a digitizing trend when offline exhibitions, concerts or auctions have found it hard  to cope with social distancing situations. 

Figure 14: Crypto art market share in Q1 2021

  • Figure 14 shows how well Nifty Gateway is dominating the marketplace for the crypto art segment. Following up are SuperRare and Foundation. 
  • Meanwhile from the  NFT sales from projects’ point of view, we have the major names including NBA Top Shot by Dapper Labs, CryptoPunks, Hashmasks, etc. (figure 15) The all-time sales boom matched with their impressive market cap growth up to 1800% in Q1 2021. The rise of these projects aligns closely with how well the relevant traditional market is transforming into digital. NBA Top Shot is an example. Partnership with NBA and NBA Players’ Association was a crucial milestone in the sport NFT field and blockchain industry as a whole. One successful case will lure a gigantic wave of adoption because nothing can bring people together better than sport.

Figure 15: NFT collectibles market share in QI/2021 

We hope you enjoyed a little journey back to the first start of 2021. A road is still long and time is all we’ve got. In an unpredictable world like crypto, nothing is certain. Trade responsibly, and we look forward to another lookback in the next quarters!

Kyros Infographic: Vietnam Blockchain & Crypto Map

Vietnam has marked itself as one of the most potential lands for crypto development, with achievements from not only international investments but also local entities. With the start of 2021, Kyros Ventures would like to showcase the Vietnamese Crypto Map, presenting the overall crypto ecosystem that Vietnam has built up over the past years. This map will guide you through the Vietnamese Blockchain & Crypto landscape, including the leading faces in fields of exchange, wallet, Dapps & DeFi, Stablecoin, Media, and so on.

Vietnam Blockchain & Crypto Map, presented by Coin68 Media and Kyros Ventures

TomoChain, KardiaChain, Axie Infinity, and Kyber Network are Vietnamese projects that stood out both locally and internationally. Not only did these projects experience growth on their technical side with a full set of new products, but they also attracted a large community of supporters all around the world.

List of the most popular projects in the blockchain and crypto industry in Vietnam, voted by the Coin68 readers.
Source: Vietnam Cryptocurrencies Market Report 2020

International exchanges have been very active in Vietnam, with famous names such as Binance, Huobi, OKex, and FTX. Wallet and exchange services developed by Vietnamese (Coin98, FMX) have also marked their footprints with unique product features and an easy-to-use interface. English was no longer a language barrier for those who are enthusiastic about crypto as Vietnamese materials are now available. 

In terms of legislation, Vietnamese laws have banned cryptocurrency as a form of issuance, provision, and payment. Vietnam is currently under the researching phase of different CBDC models, especially using the one from China’s DCEP. However, Stably and VND are 2 Vietnamese projects with high potentials. 

While the government takes careful legal steps, Vietnamese and other users can still learn about blockchain and crypto from formal universities such as RMIT Vietnam, University of Technology, and FuniX, a unit of FPT University.

List of the most favorite trading platforms in Vietnam. Source: Vietnam Cryptocurrencies Market Report 2020

In addition, specialized media channels are becoming a rising trend after the boom in quantity from the peak of 2017. Coin68 is a great example of a reliable source of information, regardless of the market being uptrend or downtrend. Using our expertise and speed in catching up with the latest trends, Coin68 is confident to be your gateway to wider knowledge in blockchain in general. 

More specifically, in the past year, Vietnam is proud to introduce the first generation of crypto investment funds, Kyros Ventures, a venture capital fund developed on the solid foundations of Coin68. The fund has been supported and invested in more than 30 large and small deals, contributing to bringing many quality international projects to Vietnam.

Overall, 2020 has been a very successful year for the blockchain & crypto market in Vietnam. We have a positive look at 2021, the year of the Ox, and look forward to the creation of many more new projects and new aspects to the blockchain industry.