Users and stakeholders should remain vigilant and make informed decisions when engaging with Telegram Bots

Recently, Telegram Bots have sparked a lot of attention in the cryptocurrency industry. With the integration of artificial intelligence and social features, Telegram Bots have brought innovative development paths to the cryptocurrency industry. Bot projects like Unibot and Banana Gun, with their astonishing growth rates and new intelligent trading models, are attracting more and more followers. Currently, Telegram Bots have widely covered various fields in the cryptocurrency industry, including trading, airdrops, communities, and cross-chain operations, enriching the application scenarios in the cryptocurrency industry. However, with the emergence of more and more trading bots, the security of Telegram Bots has been questioned. This article will delve into the development status, opportunities, and risks of Telegram Bots in the cryptocurrency industry, in order to better understand the future prospects of Telegram Bots in the industry.<h1 class="PlaygroundEditorTheme__h1">Telegram Bot Trend: Unibot Leading the Trading Bot Craze</h1>With the booming development of the cryptocurrency industry, Telegram Bots are increasingly gaining attention as intelligent trading tools within the cryptocurrency community. As early as 2017, Telegram Bots already had the capability to automatically reply to messages and execute user commands. With the rise of the cryptocurrency industry, Telegram became the most commonly used instant messaging tool for cryptocurrency enthusiasts. In this context, Telegram-based trading bots gradually emerged, enabling automatic operations such as token exchange, copy trading, data analysis, automatic airdrop trading, and cross-chain asset operations.Among the numerous Telegram Bots, Unibot can be considered the most successful one. Since its issuance in May until mid-August, the price of Unibot's token UNIBOT has been on a skyrocketing trend, showing astonishing growth. According to Coingerk data, the price of UNIBOT climbed from a low of $2.46 to a peak of $236.98, an increase of over 95 times, and has now fallen back to $52.21. Unibot's success has triggered FOMO sentiment in the market and led to varying degrees of price surges in Telegram Bot-related tokens. Although the current market sentiment has cooled down to some extent, the total market capitalization of the Telegram Bot sector has reached a record $147 million, with the 24-hour trading volume surpassing $22 million. Unibot's founder, Ayden, previously worked at Apple and collaborated with a machine learning startup to create this powerful intelligent trading bot. Unibot claims to be the fastest Telegram Uniswap data monitoring tool, enabling lightning-fast data exchange and tracking. All users only need to pay a 1% transaction fee to use it. With Unibot, users can easily buy and sell tokens, copy trades from other wallets, get real-time information on newly deployed tokens, and monitor multiple token addresses. Additionally, users holding UNIBOT tokens can enjoy benefits such as reduced fees, advanced node reservations, MEV protection, and private transactions.Telegram, as the largest instant messaging software in the cryptocurrency community, currently has over 800 million active users. Although some of these users have already ventured into the cryptocurrency industry, there is still a significant portion that has not entered this field. Based on the cultural atmosphere of Telegram, these users are more likely to be attracted to the cryptocurrency industry compared to users on other social platforms. In the past, due to the high cognitive barrier and complex operational steps in the cryptocurrency industry, these users have stayed away from it. However, with the emergence of Telegram Bots, they now have a more convenient way to participate in the cryptocurrency industry. Bots simplify the process of buying and selling cryptocurrencies, allowing users to directly engage in related operations on their mobile phones, which is a significant boost for the entire cryptocurrency industry.Being one of the outstanding Telegram Bots, Unibot, with its advanced algorithms and robust infrastructure, is leading the trend in Telegram Bot trading. Its success also reflects the market's strong demand for convenient, secure, and intelligent trading bots. In the future, we can expect that Telegram Bots will further consolidate their position in the cryptocurrency industry and provide more users with convenient and intelligent trading services. <h1 class="PlaygroundEditorTheme__h1">Telegram Bot: The Bridge Connecting Web2 and Web3</h1>As we know, the goal of Web3 is to establish a user-driven decentralized internet. However, the user base of Web3 has been facing significant barriers to growth. In the Web2 era, social platforms like Facebook had 3 billion users, while both WeChat and TikTok had monthly active users exceeding 1 billion. However, as of today, the number of users participating in Web3 is less than 320 million, indicating that there is still a long way to go before Web3 can truly reach a user base of 1 billion.To encourage more Web2 users to participate in and use Web3, it is crucial to lower the barriers to entry for them. As the world's largest encrypted social software, Telegram has more than 800 million users and a highly active community atmosphere. Therefore, Telegram has long been seen as the most promising platform to address this issue. With the rise of Telegram Bots that integrate artificial intelligence and social features, the approach to solving this problem is actively changing. As an AI-powered application related to DeFi trading, Telegram Bots differ from traditional Web3 applications in that they perform various complex operations through simple text conversations. These operations include creating wallets, storing private keys, and conducting transactions, greatly reducing the learning curve for users. Moreover, with technological advancements and the widespread adoption of algorithmic trading, the Bot sector will have more opportunities for innovation and development. The application of machine learning and artificial intelligence technologies will make trading bots more intelligent and automated, providing more accurate trading advice and execution strategies. For example, through big data analysis and machine learning algorithms, trading bots can make more accurate predictions of market trends and price fluctuations, helping users make wiser investment decisions.In addition to basic asset management and trading functions, Telegram Bots can provide various value-added services. For instance, they can set price monitoring and smart order placement for different cryptocurrencies, offer market analysis and strategy recommendations, and even customize exclusive lightweight applications, providing users with a one-stop solution for their trading needs. At the same time, the decentralized nature of Telegram Bots presents opportunities for the future development of Web3. Currently, mainstream Web3 applications are primarily focused on PC platforms, with limited support for mobile devices and a relatively rigid user experience. However, the convenient mobile nature of Telegram Bots can serve as an entry point for Web3 applications on mobile, accelerating their expansion to mobile platforms. Additionally, developers can quickly build various decentralized applications on the Telegram platform through bots, enriching the Web3 ecosystem.Furthermore, through the perfect combination of social features and artificial intelligence, Telegram Bots allow users to engage in social activities and gather market information while executing various trading operations through trading bots. By leveraging the powerful data analysis and AI technologies of bots, users can optimize their trading strategies and enhance investment returns. In the future, as the cryptocurrency market continues to mature and user interest in digital assets increases, these trading bots that integrate social interaction, convenience, and intelligent features are expected to attract more users to this field. Telegram Bots are also expected to become the mainstream user entry point in the Web3 ecosystem, driving the development of the entire industry. <h1 class="PlaygroundEditorTheme__h1">Review of Hot Projects in the Telegram Bot Realm</h1>With the rapid development of the cryptocurrency market, the Telegram Bot sector has become a highly anticipated and popular field. In this sector, many projects utilize Telegram bots to provide users with various functionalities and services. These projects are characterized by their simplicity and integration with the Telegram social platform, offering users convenient tools for cryptocurrency trading, tracking, and analysis. Here are some of the popular Telegram Bot projects at present:Unibot: Unibot is the leading project in the Telegram Bot sector, serving as a bridge between Telegram and cryptocurrency exchanges. Through Unibot, users can directly trade on Telegram without leaving the chat interface. Additionally, Unibot offers features such as copy trading, private over-the-counter trading, and new token tracking, enabling users to conveniently engage in investments and transactions. Currently, the price of the Unibot token (UNIBOT) is $57.2.Banana Gun: Banana Gun ranks second in popularity after Unibot and is one of the most widely beloved Telegram Bot projects in the current market.Neobot: Neobot is a trading analysis robot that incorporates artificial intelligence. It scans indicators such as token liquidity, market sentiment, buy/sell ratio, and provides users with analysis and tracking services for early-stage projects. Additionally, Neobot can monitor malicious authorizations and on-chain large volume trading addresses to help users make more informed investment decisions. The current price of Neobot token (NEOBOT) is $0.0488.Wagie Bot: Wagie is a trading bot that supports tracking, trading, and replication on mainstream chains. It is compatible with multiple EVM chains such as ETH, ARB, OP, BSC, providing features like tracking whale wallets, replicating trades from whale wallets, and various types of trading orders (take-profit, stop-loss, limit orders) to help users engage in the crypto market better. The current price of Wagie Bot token (WAGIEBOT) is $0.1588.LootBot: LootBot is a robot designed for users participating in airdrops. It supports tracking and management of mainstream airdrop projects, automatically records participation history and rewards obtained, and can also monitor malicious participation and create isolated wallets automatically, providing a safer and more convenient airdrop participation experience. The current price of LootBot token (LOOT) is $0.26.Genie: Genie is an AI-based Telegram chatbot primarily designed to provide automated customer support for projects. It utilizes NLP technology and an automated Q&amp;A community to help project teams address common questions, expand their knowledge base, and improve user experience. The current price of Genie token (GENIE) is $0.005. <h1 class="PlaygroundEditorTheme__h1">Opportunities and Risks in the Telegram Bot Space</h1>The emergence of Unibot has sparked a craze in the Telegram Bot space. Although this craze has subsided recently, Telegram Bots have garnered widespread attention from institutions and investors as an emerging field. Currently, Telegram Bots are in a phase of rapid development, which presents both tremendous opportunities and significant risks.Opportunities in the development of Telegram Bots:1. Simplified trading process: The Telegram Bot space provides users with a simplified operational flow. Through conversations with bots, users can complete tasks such as wallet creation, deposits, withdrawals, and trading. Compared to traditional trading methods, the Bot space enables users to participate in the management and trading of crypto assets more conveniently, lowering entry barriers and attracting a broader user base.2. Comprehensive services: Telegram Bots go beyond basic asset management and trading functions and also offer a range of value-added services. For example, bots can provide technical indicator analysis, market predictions, price alerts, and more, helping users make more informed investment decisions. This comprehensive service satisfies users' demands for information and tools, enhancing user experiences and engagement.3. Strong community and ecosystem: Telegram, as a massive social platform, has a vast user base and active communities. In the Telegram Bot space, users can join different trading bot communities to share experiences and access the latest market developments. This community and ecosystem facilitate interaction and collaboration among users, providing robust support for the development of the Bot space.Risks in the development of Telegram Bots:1. Security concerns: With the increasing popularity of Telegram Bots, security risks become a significant concern. Users need to be cautious about potential scams, fraudulent bots, or phishing attempts, which can result in financial losses. It is crucial to exercise caution and conduct thorough research before interacting with any Telegram Bot.2. Regulatory uncertainties: The regulatory landscape surrounding Telegram Bots and the broader cryptocurrency industry remains uncertain in many jurisdictions. This uncertainty poses risks for the operation of Telegram Bots and can impact their development and adoption.3. Market volatility: The cryptocurrency market is known for its high volatility. Telegram Bots, being closely tied to the crypto industry, are also subject to market fluctuations. Rapid price movements and unpredictable market conditions can result in significant gains or losses for users.Overall, while the Telegram Bot space presents exciting opportunities simplifying trading processes, offering comprehensive services, and fostering strong communities, it also carries risks related to security, regulation, and market volatility. Users and stakeholders should remain vigilant and make informed decisions when engaging with Telegram Bots.

Telegram Bot

Neobot

LootBot

Banana Gun

Telegram Bot Paves the Way for New Developments in Cryptocurrency

So, the question remains - if Bitcoin and Ethereum are so great, why don’t more people use cryptocurrencies?

By&nbsp;Kingsley&nbsp;Bowen<h1 class="PlaygroundEditorTheme__h1">Introduction</h1>Bitcoin and Ethereum introduced step-wise improvements over traditional financial rails by settling transactions much more quickly (weeks reduced to minutes), limiting or eliminating third-party risk, and removing banking constraints like payment processor agreements, limited hours of operations, and international transfer overhead.&nbsp;Despite the cryptocurrency market dominance of Bitcoin and Ethereum by market capitalization, (~67% of total market cap), the total number of users of these blockchains remains low around 100s of millions relative to the total addressable market of global internet users at 5.18 billion.&nbsp;So, the question remains - if Bitcoin and Ethereum are so great, why don’t more people use cryptocurrencies?Beyond considerable technical knowledge and user experience hurdles that hinder all cryptocurrency networks and apps, first and second-generation blockchains (Bitcoin and Ethereum, respectively) lack native scalability, the ability to handle increased demand without harming user experience through longer time-to-finality or noticeably higher fees. Their ability to scale relies on third-party solutions such as the Lightning Network or “L2s” that add risk and necessitate even further education to use.&nbsp;Blockchain networks created with native scalability, deemed "third-generation" or "alt L1" blockchains, reduce network complexity by limiting or eliminating interfaces with third-party solutions, and ultimately lead to more secure, faster-finalizing networks more suitable for mass adoption through payments and decentralized applications (dApps).&nbsp;Before we dive into payments and dApps, let’s first examine the state of Ethereum followed by a comparison with third-generation blockchains broadly.&nbsp;<h1 class="PlaygroundEditorTheme__h1">Ethereum</h1>Ethereum mainnet consists of a single blockchain secured by 23.5m ETH (currently ~$38.7b), ensuring a high cost of network corruption i.e., strong economic security. However, when demand for Ethereum mainnet blockspace is high, single transactions can be cost-prohibitive for most users (&gt; $100).&nbsp;To improve Ethereum's mainnet scalability, many Ethereum ecosystem projects use L2 blockchains to make transactions less expensive. L2 blockchains inherit security from the base layer and execute computation on a secondary blockchain that later settles on Ethereum mainnet. This approach gives the Ethereum mainnet its tagline as "a global settlement layer," similar to a settlement bank in traditional finance.&nbsp;The L2 scaling design necessitates that the Ethereum ecosystem interfaces with several other categories of third-party solutions, including data availability solutions and middleware, to scale and interoperate. While these solutions address their respective problems, third-party interfaces introduce new risks, user experience issues, and delayed time-to-finality. Let's walk through the challenges in more detail before seeing how third-generation blockchains address them.&nbsp;<h2 class="PlaygroundEditorTheme__h2">Data Availability</h2>Data availability is the assurance that a block has been distributed and verified by all of the full nodes (the storers of the entire history of the blockchain) in the network. L2s require strong assurances that historical data is available but would slow down to L1 speeds if they downloaded all of the historical data. To address the data availability problem, solutions like Celestia, Avail, and EigenDA use cryptographic proofs to ensure data is available for L2 blockchains. These solutions become a dependency for proper L2 function, adding to the overall risk profile of the L2.&nbsp;<h2 class="PlaygroundEditorTheme__h2">Centralized Components</h2>L2s currently all have centralizing components, whether it be sequencers or provers. Centralized sequencers can alter transaction ordering (presenting&nbsp;<a href="https://www.thetie.io/insights/research/mev-maximal-extractable-value/" class="PlaygroundEditorTheme__link">maximal extractable value</a>&nbsp;opportunities) and censor transactions or users. Provers or proof generators demand computational resources that most people can't readily acquire, pairing down the number of potential provers. Centralized points of failure add to the risk profile of transacting on an L2 because they make the network easier to corrupt. Coinbase, for instance, is the sole sequencer for the Base L2, meaning Base could be censored by Coinbase or by US regulation.&nbsp;Some projects like Espresso, Astria, and NodeKit aim to address the centralized sequencer problem through shared sequencers. Other projects like Scroll, ZkSync, and Polygon are working to improve performance and reduce the computation demand of zero-knowledge proofs.&nbsp;<h2 class="PlaygroundEditorTheme__h2">Liquidity Fragmentation</h2>By scaling through L2s, liquidity generally moves from the L1 to the L2, where the decentralized applications (dApps) live. Less liquidity means more slippage and volatility for L1 users. dApps rely on third-party messaging layers and bridges like LayerZero and Axelar to unify liquidity, which add risk and impose trust assumptions of multi-signature wallets that are unknown to most users. Alternatively, L2 dApps could operate solely within the L2 and suffer from smaller markets.&nbsp;&nbsp;<h2 class="PlaygroundEditorTheme__h2">Securing Middleware</h2>Because there is no native messaging layer between L2s, asset transfers involving L2s are facilitated through third-party bridges. Most bridges must source their security (the cost to corrupt the network), making them a&nbsp;<a href="https://www.thetie.io/insights/research/cross-chain-bridging-current-risks-and-future-development/" class="PlaygroundEditorTheme__link">popular attack vector</a>. According to CoinDesk, In 2022 alone, bridge exploits accounted for over&nbsp;<a href="https://www.coindesk.com/consensus-magazine/2023/06/02/bridge-exploits-cost-2b-in-2022-heres-how-they-could-have-been-averted/#:~:text=In%20the%20evolution%20towards%20a,by%20employing%20multiple%20security%20measures" class="PlaygroundEditorTheme__link">$2 billion</a>.&nbsp;To address the middleware problem, solutions like&nbsp;<a href="https://www.thetie.io/insights/research/eigenlayer-the-restaking-collective/" class="PlaygroundEditorTheme__link">Eigenlayer</a>&nbsp;rehypothecate Ethereum stake to create customizable networks. In other words, Eigenlayer stakers stake on their choice Eigenlayer network and again in Ethereum using the same funds. While Eigenlayer has many other applications, one primary use case for Eigenlayer is to secure middleware infrastructure like bridges and messaging layers.&nbsp;In a recent blog post entitled&nbsp;<a href="https://vitalik.ca/general/2023/05/21/dont_overload.html" class="PlaygroundEditorTheme__link">"Don't Overload Ethereum's Consensus,"</a>&nbsp;Vitalik Buterin, co-founder of Ethereum, lays out the potentially catastrophic risk of ETH stake rehypothecation, especially if the application recruits Ethereum's social consensus. Such applications could lead to a network fork, causing severe penalties for Eigenlayer and Ethereum stakers and posing a security threat to both networks.&nbsp;<h2 class="PlaygroundEditorTheme__h2">Long Settlement Times&nbsp;</h2>Much like how services like Venmo or CashApp give the appearance of instant finality, L2s also offer the appearance of instant finality; however, transactions on L2s can only be considered final after they settle on the Ethereum mainnet. In other words, an L2 user may make a transaction, see the balance in their wallet change, and their transaction can still be reverted. The current finality time for an Ethereum transaction is ~15 minutes, giving the minimum time for any transaction to be considered final in the Ethereum ecosystem. At times, finality on the Ethereum mainnet has taken longer; in May 2023, Ethereum stopped finalizing transactions for about an hour.&nbsp;<h1 class="PlaygroundEditorTheme__h1">Third Generation Blockchains</h1>There are generally two ways third-generation blockchains have approached the scaling problem: monolithic architectures like Solana (a single L1 blockchain) and app-chain architectures (deploying many L1 blockchains) like Avalanche and Cosmos.&nbsp;Let's examine how third-generation blockchains address the problems mentioned above:<ol class="PlaygroundEditorTheme__ol1"><li value="1" class="PlaygroundEditorTheme__listItem">Data Availability&nbsp;- With L1s, full nodes can verify they have all the necessary data to produce the next block and that all the other full nodes have received that block.&nbsp;</li><li value="2" class="PlaygroundEditorTheme__listItem">Centralizing Components&nbsp;- By scaling through an L1, there is no need for sequencers or provers, so the network is as decentralized as the consensus allows.</li><li value="3" class="PlaygroundEditorTheme__listItem">Liquidity Fragmentation&nbsp;- Monolithic architectures already have unified liquidity within their ecosystem. App-Chain architectures currently fragment liquidity but can have a primary liquidity hub (like the Avalanche C-Chain) or, in the future, unified liquidity through a native messaging layer (e.g.,&nbsp;<a href="https://www.thetie.io/insights/avalanche-warp-messaging-and-the-future-of-interoperability/" class="PlaygroundEditorTheme__link">Avalanche Warp Messaging</a>&nbsp;or Inter-Blockchain Communication).&nbsp;</li><li value="4" class="PlaygroundEditorTheme__listItem">Securing Middleware&nbsp;- While monolithic and app-chain approaches rely on third-party bridging and messaging for external communication, they communicate within their ecosystems with minimal added risk. For external communication, only the funds in the bridge are at risk - not network stake.&nbsp;</li><li value="5" class="PlaygroundEditorTheme__listItem">Long Settlement Times -&nbsp;Many third-generation blockchains have fast settlement times, with the fastest having subsecond time-to-finality (Solana ~5 seconds, Avalanche ~1 second, Cosmos ~1-2 seconds).&nbsp;</li></ol><h1 class="PlaygroundEditorTheme__h1">Payments and Dapps</h1>Different blockchains offer advantages that are more optimized for certain use cases. There are many reasons people would choose to use Ethereum; it has the most mind share, the deepest markets, and great economics for Ether (ETH) holders. Some high-net-worth borrowers may readily accept longer finalization periods and higher fees as a worthwhile trade for access to Ethereum's deep markets.&nbsp;However, the prospect of mass adoption of blockchain technology through payments and dApps necessitates a different balance of trade offs.&nbsp;<h2 class="PlaygroundEditorTheme__h2">Payments</h2>Would money users prefer near-instant settlement or settlement that takes several minutes? Near-instant, of course. A near-instant settlement assures that once a user's wallet balance changes, it won't revert. In the case of peer-to-peer settlement, both parties benefit from knowing payment is near-instant and irrefutable.&nbsp;Money users also generally prefer a unified money management experience to a fractured one. For instance, managing money between multiple investment accounts, payment processors like Venmo and Paypal, bank accounts, loyalty rewards programs, gift cards, and credit cards can be very complicated. Splitting funds between L1s and L2s adds roughly twice the complexity , especially when users can pay considerable fees moving funds between them or wait significant amounts of time to move from the L2 to L1 (potentially weeks if moved natively).&nbsp;Beyond settlement times and unified liquidity, the ideal payment system has negligible transaction fees. A core benefit of cryptocurrencies is that peer-to-peer transactions are significantly more efficient and cheaper than in traditional finance. However, payments using Ethereum are largely untenable for the average person.&nbsp;&nbsp;With Ethereum, a user must either pay a mainnet gas fee to transfer funds to the L2 for "instant settlement" (and be subject to centralization risk and fragmented liquidity without native messaging) or use the L1 and pay mainnet user fees&nbsp;per transaction. Furthermore, the L2 payment system punishes those with lower fund balances because bridging funds from the L1 to the L2 can be expensive. Those with lower L2 balances will frequently be forced to pay this fee to bridge to the L2. Compare this undesirable payment experience to third-generation blockchains like Solana or Avalanche with negligible transaction fees (&lt; $0.01).&nbsp;<h2 class="PlaygroundEditorTheme__h2">dApps</h2>If you're managing your finances on-chain, you want to be certain about the state of the blockchain, which is sometimes in question for&nbsp;&nbsp;<a href="https://www.alchemy.com/overviews/what-is-a-reorg" class="PlaygroundEditorTheme__link">re-organizing blockchain</a>&nbsp;like Ethereum.&nbsp;Imagine you're an e-sports GameFi professional playing a tournament game. The winner of this game is rewarded the equivalent of $30,000. After months of practice and sacrifice, you win the game and the $30,000! Congrats! After several minutes, you recheck your wallet balance to show your friends and family, and it's gone. Ethereum had difficulties finalizing, the new version of Ethereum doesn't recognize you as the winner, and you're now out $30,000.Or imagine you're a DEX trader making profitable trade after trade by arbitraging small-cap tokens. After hours of trades, you check your wallet balance and realize you're missing hundreds of thousands of dollars due to a block reorg that invalidated some of your trades. All dApp users benefit from near-instant finalities to avoid block reorgs.&nbsp;In addition to finality, the price of transactions also affects the kinds of dApps that are accessible by the masses. We’ve already established that transacting on the Ethereum L1 is inaccessible for most people because of high fees, but dApps often require multiple transactions for a single user action, potentially multiplying transaction fees. For instance, a yield aggregator that routes through multiple sources may be accessible on a blockchain with low fees, but would be cost prohibitive for many on Ethereum mainnet.&nbsp;<h1 class="PlaygroundEditorTheme__h1">Conclusion</h1>In this article, we've covered how cryptocurrencies are a step-wise improvement in payments compared to traditional finance in terms of time-to-finality, risk reduction, and complexity, then evaluated the current state of Ethereum against third-generation blockchains using the same criteria. Finally, we covered the specific use cases, namely payments and dApps, where third-generation blockchains have a considerable advantage over Ethereum.&nbsp;So, let’s return to the question: why don’t more people use cryptocurrencies?&nbsp;The current market is dominated by platforms that have expensive and dynamic fees, long settlement times, and risk. Mass adoption must come from blockchains that are accessible to people with lower balances and demand less technical knowledge for robust operation and transaction. Third-generation blockchains generally provide an inexpensive, safer, and faster user experience that can scale to onboard the next generation of cryptocurrency users.&nbsp;

Ethereum

Beyond Ethereum: The Role of 3rd-Gen Blockchains in Driving Mass Adoption

The evolution of customer acquisition to a more sustainable “Community as a Service” (CaaS) model. A discussion around how lack of “number go up” sent us “questing”, and a bet that communities are the key to unlocking the next layer of value creation.

Acquiring users in crypto now is akin to the earliest men hunting in the depths of a multi millennia ice age: their tools rudimentary and their prey dormant. The early men wandered the tundra with little knowledge about their game, with only two outcomes: a successful catch or death by starvation or frostbite.For consumer crypto products, the story is the same as they begin their customer acquisition journeys: acquire users or die trying.2021 and 2022 marked a time when startups could combine a fundraising announcement with a subsequent NFT or token drop to capture and retain early users; a strategy executed well by a plethora of marketplaces, analytics tools, games, and Web 3 infrastructure, which allowed them to see early traction solely based on the performance of their token initiatives in the market.&nbsp; Whether it was digital and physical marketplace&nbsp;<a href="https://techcrunch.com/2022/05/03/americana-chip-turns-objects-nfts-funding-ohanian/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Americana</a>&nbsp;who saw their&nbsp;<a href="https://twitter.com/BowTiedGolem/status/1521333935950770177?s=20" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">NFT access</a>&nbsp;pass surge to a 0.25eth post-launch or once promising NFT marketplace&nbsp;<a href="https://www.coindesk.com/tech/2022/01/11/one-day-after-launch-opensea-competitor-looksrare-sells-over-100m-in-nfts/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Looksrare</a>&nbsp;which distributed&nbsp;<a href="https://finance.yahoo.com/news/looksrare-airdrops-token-entices-nft-220213000.html" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">12% of total token supply</a>&nbsp;to the NFT community in a vampire attack on OpenSea; both captured the attention of consumers for a short period but ultimately saw their user bases shudder in the long run.By no means are these two projects’ crypto’s biggest blunders, but what these dynamics boil down to is a general over-reliance on token and NFT releases as mechanisms for long-term customer acquisition and retention, especially with poor macro further suppressing the value extractive nature of these designs.To combat many consumer acquisition shortcomings, crypto companies and funds alike rushed to ensure they were actively investing in the best “loyalty” products. Projects flocked to “engage to earn” or “questing” platforms with market leaders&nbsp;<a href="https://galxe.com/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Galxe</a>,&nbsp;<a href="https://layer3.xyz/quests%5C" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Layer3,&nbsp;</a>and&nbsp;<a href="https://zealy.io/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Zealy</a>&nbsp;as a method to acquire, retain and instill “loyalty” within customers.These platforms, while interesting for top-of-funnel growth metrics, have served as temporary fixes and marketing crutches, having a negligent effect on a protocol or project’s chances of long-term growth and sustained customer acquisition. Most of these platforms focus on social vanity metrics by encouraging users to follow on social media or join a community. The reward mechanisms are inconsequential (with a small monetary upside and virtually zero social or reputational upside). The disconnect between quest and consumer is exacerbated by the inability to track future on-chain transactions, meaning customers cannot calculate the LTV of their lead generation.<h1 class="PlaygroundEditorTheme__h1">United Online</h1>Now, it’s no question that we are hurtling toward a future where&nbsp;<a href="https://www.investingcube.com/asset-tokenization-and-fractional-ownership-the-masses-will-invest-in-everything/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">everything is tokenized</a>. Network participants are inherently greedy and obsessed with financialization, a dynamic catalyzed by blockchain technology. In the same way that we tokenize, we will “communitify”. This is to say that for every commonality as humans, we’ll have an opportunity to share that commonality in a digitally native community through the redemption of programmatic assets. Whether it’s the music we listen to, the things we buy, or the school we attend, we can make these experiences immutable on chain and share in the spirit of online communities for every avenue of our lives. We’re seeing this trend flourish in the luxury markets as NFT companions for physical products bring buyers closer together.&nbsp; Louis Vuitton solidified this future with their recent soulbound&nbsp;<a href="https://nftnow.com/culture/louis-vuitton-announces-41000-treasure-trunks-nfts/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">NFT drop</a>, which will come with physical products but, more importantly, provide unparalleled access to a community of like-minded consumers. Shifting the emphasis from tradability to consumption fundamentally redefines the community, creating an exclusive group “inextricably linked” to its consumers.Here’s a fun edit from&nbsp;<a href="https://twitter.com/0xDesigner/status/1666431740141871104" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">@0xdesigner</a>&nbsp;alluding to our future as consumers and communities.<img class="PlaygroundEditorTheme__image editor-image" src="https://mirror.xyz/_next/image?url=https%3A%2F%2Fimages.mirror-media.xyz%2Fpublication-images%2FVPAb3jMH0NMCms7640-NY.png&amp;w=3840&amp;q=75" alt="@0xdesigner visualizes a shift in the post-purchase consumer experience" width="inherit" height="inherit">@0xdesigner visualizes a shift in the post-purchase consumer experienceAs&nbsp;<a href="https://twitter.com/shayonsengupta" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Shayon Sengupta</a>&nbsp;mentions in&nbsp;<a href="https://multicoin.capital/2023/04/06/multiplayer-mode/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Multiplayer Mode</a>, crypto is an inherently social technology and I’d like to take it one step further by saying crypto is hypersocial, it is tribalistic. As crypto participants, we all operate as tribes, each tribe originating from a commonality between members. As communities, we heed the warnings and harken to the advice of our compatriots. Often not acting without the consent or the recommendation of the group.To ignore the group is to ignore the ethos of crypto consumer behavior.Crypto native use cases like&nbsp;<a href="https://dev.mirror.xyz/unYe1NE7GIS7vahvFTRdhjrHKlaS6YYuuttrR6TpMHE" class="PlaygroundEditorTheme__link">Subscribe to Mint</a>&nbsp;pioneered by Mirror, Attend to Mint accelerated by&nbsp;<a href="https://poap.xyz/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">POAP</a>, and Interact to Mint via&nbsp;<a href="https://www.iyk.app/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">IYK</a>&nbsp;bring us closer to communities bound by NFTs based on actions, likes, dislikes, and desires. Digital fashion startups and luxury fashion have cemented mint to redeem as the&nbsp;<a href="https://www.nftparis.xyz/blog/fashion-forward-how-nfts-are-reshaping-the-fashion-and-luxury-landscape" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">future of their industry</a>. Thanks to platforms like&nbsp;<a href="https://www.medallion.fm/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Medallion</a>, we’ll be able to join tight-knit communities of our favorite artists or collect experiences with our future rising stars on&nbsp;<a href="https://www.teammercury.io/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Mercury</a>. All of these represent crucial groundwork for the prevalence of digitally native communities in our lives.With the advancement of Web 3 attribution, it will become possible to extract information about the products and brands that users purchase and endorse, the locations they have visited, the blogs they have read, and even the sports teams they support. Web 3 attribution allows a value capture not possible with current distribution monopolies. With new media models, users are measured in terms of the absolute value they drive and are rewarded with mechanisms like&nbsp;<a href="https://blog.spindl.xyz/p/cost-per-value-cpv-a-new-media-business" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">revenue share kickbacks</a>.These elements align with a future led by a new kind of model, a concept called “Community as a Service” (CaaS). In its simplest form, CaaS can be understood as where access to a particular group of people is valuable enough to be considered a marketable product. If we lean into the idea of communities, their tendencies and their unique role within crypto, we enable a future where boosting organic visibility, providing low-cost feedback and insights, enhancing brand credibility, and enabling targeted advertising campaigns, becomes significantly cheaper. \The future of customer acquisition revolves around monetizing communities with crypto rails streamlining and supercharging the value creation for consumers. In web 2 social consumer, the community onboarding process is rudimentary and generally disconnected from the brand itself. With Web 3 rails, the consumer experience shifts from a simple “Buy Now” to a more inclusive “Gain Access,” representing the principles of CaaS in its most rudimentary form, with the most powerful distribution platforms coming from these NFT-enabled groups. Crypto enables a value capture mechanism that allows communities to own, control, and track their influence. These dynamics will ultimately be too strong for brands, projects, and protocols to ignore, establishing CaaS dynamics as the future of customer acquisition in every direct-to-consumer vertical.<h1 class="PlaygroundEditorTheme__h1">The Caas Transformation</h1>The compelling thesis is that Web 3.0 and blockchain technologies will usher in an era of enhanced advertiser control, fairness, and decentralization. Still, without systems facilitating the creation of value and its equitable distribution among all value contributors, we’ve failed to maximize the underpinning premise. The CaaS monetization model is a first step in building on the community-enabling NFT infrastructure that has proliferated the space.Once commonalities and identifiers have been established, the trend will be driven by platforms that can aggregate communities, extrapolate data based on chain activity and identify areas of value add for communities to be rewarded. Builders will be inspired by community aggregation tools like&nbsp;<a href="https://twitter.com/brandon_galang/status/1667192139015507970?s=20" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">De.ID</a>, contribution tracking platforms like&nbsp;<a href="https://orangedao.notion.site/Welcome-to-Grove-f0d594431f6e4ee3ad28903dbeb4b3d7" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">OrangeDAO’s Grove</a>&nbsp;or streamlined ad networks like&nbsp;<a href="https://www.getwildfire.gg/" target="_blank" rel="noreferrer noopener" class="PlaygroundEditorTheme__link">Wildfire</a>&nbsp;that connect brands with Discord communities.While the concept is novel and has yet to be directly applied to a product or protocol design, builders will productize these trends that have underpinned the customer acquisition dynamics in a few forms, and we’ll see communities monetizing their social and technical clout, which will ultimately enhance customer acquisition and validate the CaaS business case.

POAP

Wildfire

 Galxe

The Future of Customer Acquisition and Community Monetization

Despite BTC setting a temporary yearly price high of $31.7k, the Bitcoin market remains constrained within an extremely tight trading range. Several metrics indicate a slow and steady capital inflow, with many resembling the choppy market conditions seen in the 2016 and 2019-20 periods.

Choppy and Sideways

Opportunities and Considerations of Ethereum’s Blockspace Future

Uniswap V4 will occupy a more important position in the competition between DEX and CEX, becoming the liquidity growth engine for the DeFi industry and leading the direction of the entire industry's development

On June 13, Uniswap released the draft code for Uniswap V4, which has caused a strong shock in the industry and has also become a hot topic in the past few weeks. As the largest decentralized exchange platform, Uniswap has consistently held over 50% of the on-chain trading volume, which is more than three times that of its second-largest competitor. The launch of Uniswap V4 will further solidify its position as the largest DEX in DeFi.In the documents "Our Vision for Uniswap v4" and "Uniswap v4 Core Whitepaper" released by Unwap, Uniswap Labs detailed the introduction of Hooks that enable AMM customization, Singletons that change the account framework and order logic, Flash accounting that greatly reduces gas fees, and Native ETH. These innovative features will bring greater freedom, better liquidity, lower fees, and more choices to DEX. At the same time, it injects a catalyst for DEX, which has long been in a weak position compared to CEX, accelerating DEX's catch-up with CEX in competition and will have a profound impact on the future development of DeFi. <h1 class="PlaygroundEditorTheme__h1">Uniswap leads the development of the entire DeFi industry through innovation</h1>The upgrade of Uniswap V4 has attracted the attention of many institutions. On one hand, the lawsuit by the U.S. Securities and Exchange Commission (SEC against the world's largest centralized exchange (CEX), Binance, has raised concerns about the future development of CEX among industry institutions. This has led to a greater preference for decentralized and censorship-resistant DEXs. Additionally, the most important aspect is that as an industry leader, each version of Uniswap released has set the direction for the development of DEXs, leading to imitation by successors and driving the overall prosperity and development of the entire DeFi ecosystem. Now, let's take a look back at each historical version of Uniswap.Uniswap V1, launched in November 2018, was the first official version. It provided trading between ERC-20 tokens and ETH and introduced the automated market maker (AMM) model, which automatically adjusts token prices and liquidity, making token trading faster, simpler, and low cost. This approach also inspired many subsequent decentralized exchanges and laid the foundation for the development of the entire DeFi ecosystem. During the same period, projects such as SushiSwap, Curve Finance, and Bancor borrowed from Uniswap V1's approach.Uniswap V2, launched in May 2020, further provided support for trading between ERC-20 tokens and introduced liquidity mining mechanisms, which incentivize liquidity providers to increase liquidity for trading pairs. With the liquidity empowerment of V2, projects such as Yearn.finance, AAVE, Compound, and Chainlink emerged during the same period.Uniswap V3, launched in May 2021, introduced concentrated liquidity and the concept of price-variant liquidity range orders (PLC). Concentrated liquidity allows market makers to manage funds more effectively, thereby increasing their profits and efficiency. PLC allows users to set upper and lower price limits for trades, allowing for finer control over transactions. During the same period, projects like Concentrated Liquidity and BarnBridge achieved higher efficiency and returns by utilizing Uniswap V3's concentrated liquidity and PLC features.Uniswap V4 is the upcoming new version. Although the specific launch time has not been announced, according to information released by the project, Uniswap V4 will be different from previous versions V1-V3. It will not be a technical innovation from scratch but will completely disrupt the infrastructure of DeFi. For example, V4 will provide token pools that can be autonomously created and managed, AMMs with customizable functions through "hooks," and a shift from the Factory/Pool model to a large contract framework. These innovations will further strengthen Uniswap as a decentralized trading platform and bring new changes and opportunities to the entire DeFi ecosystem. <h1 class="PlaygroundEditorTheme__h1">Uniswap has been leading the development of the entire DeFi industry through innovation</h1>The reason why the upgrade of Uniswap V4 has garnered the attention of many institutions is twofold. Firstly, the recent lawsuit by the U.S. Securities and Exchange Commission (SEC against Binance, globally, has raised concerns about the future development of CEX among institutional players. This has led to a growing preference decentralized and censorship-resistant DEXs. Secondly, as the industry leader, each version of Uniswap released has set the direction for DEX development, inspiring imitation from successors and driving the overall prosperity and growth of the DeFi ecosystem. Let's take a look back at the historical versions of Uniswap.Uniswap V1 was the first official version, launched in November 2018. It facilitated the trading of ERC-20 tokens with ETH and introduced the automated market maker (AMM) model, which automatically adjusted token prices and liquidity. This made token trading faster, simpler, and more cost-effective. Uniswap V1's approach served as inspiration for many subsequent decentralized exchanges, setting the foundation for the development of the DeFi ecosystem. During the same period, projects like SushiSwap, Curve Finance, and Bancor adopted similar approaches based on Uniswap V1.Uniswap V2, launched in May 2020, expanded support to facilitate trading between ERC-20 tokens and introduced liquidity mining. This mechanism incentivized liquidity providers to contribute liquidity to trading pairs. With the liquidity empowerment of Uniswap V2, projects like Yearn.finance, AAVE, Compound, and Chainlink gained prominence in the DeFi space.Uniswap V3, launched in May 2021, introduced concentrated liquidity and price-variant liquidity range orders (PLC). Concentrated liquidity allowed market makers to manage funds more efficiently, increasing their profits and efficiency. PLC empowered users to set upper and lower price limits for trades, offering finer control over transactions. During the same period, projects like Concentrated Liquidity and BarnBridge achieved enhanced efficiency and returns by leveraging Uniswap V3's concentrated liquidity and PLC functions.Uniswap V4 is the upcoming version, although the specific release date has yet to be announced. According to the information released by the project team, Uniswap V4 will differ from previous versions (V1-V3) not being a groundbreaking technological innovation from scratch. Instead, it aims to comprehensively disrupt the infrastructure of DeFi. For instance, V4 will introduce features such as the ability to autonomously create and manage token pools, AMMs with customizable functions through "hooks," and a shift from the Factory/Pool model to a large contract framework. These innovations will further solidify Uniswap's position as a decentralized trading platform and bring about transformative changes and opportunities for the entire DeFi ecosystem. <h1 class="PlaygroundEditorTheme__h1">Uniswap V4 may become an opportunity to solve the challenges faced by DEXs</h1>In the digital asset trading market, CEX (Centralized Exchanges) and DEXs (Decentralized Exchanges) are the two main exchange models. Due to issues such as lack of liquidity, poor user experience, high trading fees and costs, DEXs have long been struggling, with CEXs dominating the majority of the digital asset trading market. With the rapid development of DeFi, the challenges faced by Ds have gained increasing attention. In this context, the release of Uniswap V4 could be an opportunity to address these challenges. Through solutions, Uniswap V4 plans to improve the situation of DEXs from four aspects. Once successful, it will lead more institutions to participate and jointly solve the challenges faced by DEXs.Improving liquidity: Liquidity is one of the key issues for DEXs. Uniswap V4 enhances the customizability and liquidity of DEXs by introducing features such as Hooks and internalized MEV (Miner Extractable Value) profit allocation to LPs (Liquidity Providers). Hooks allow anyone to deploy liquidity pools using custom contracts, making Uniswap's more composable and scalable. The internalized MEV profit allocation to LPs incentivizes more LPs to participate in providing liquidity on Uniswap, thus enhancing liquidity.Enhancing user experience: Uniswap V4 introduces the TWAMM (Time-Weighted Average Market Maker) algorithm and limit order functionality to improve price discovery efficiency and users' trading experience. The TWAMM algorithm calculates prices based on time-weighted averages, reflecting more accurate market prices. The limit order functionality allows users to set upper and lower price limits, providing better control over trading risks. These features can improve user experience and attract more users to participate in DEX trading. Additionally, deploying liquidity pools using custom contracts through Hooks can meet users' diverse needs and greatly enhance user experience.Reducing trading fees: Trading fees are one of the most important factors for users when choosing an exchange. Uniswap V4 reduces trading fees through mechanisms such as the internalized MEV profit allocation to LPs and flash accounting. The internalized MEV profit allocation to LPs can increase LPs' income, thereby reducing users' trading fees. Flash accounting can reduce the costs of frequent trading, providing users with lower transaction costs and higher efficiency.Improving cost efficiency: Uniswap V4's Singleton architecture sets all LP contracts as a single contract, reducing gas fees for creating LPs and multi-hop trades (cross-pool routing trades), and greatly improving the efficiency of deploying contracts. Combined with flash accounting to reduce the costs of frequent trading, Uniswap V4 helps users achieve maximum benefits or value with minimal costs, while also providing a better foundation for the sustainable development of DEXs. <h1 class="PlaygroundEditorTheme__h1">Summary</h1>Uniswap is one of the key pioneers in the DeFi industry, constantly introducing innovative mechanisms to drive the development of the entire industry. Uniswap V4, as the culmination of these efforts, is a significant innovation for the DeFi and crypto industry as a whole. Uniswap V4 provides users with more freedom, higher liquidity, lower fees, and more enhanced and convenient services. These advantages make Uniswap V4 a more competitive trading platform and also promote the progress and improvement of the entire DEX industry.Although there is still a significant gap between DEX and CEX in terms of user experience, fees, and security, this gap is gradually narrowing with the continuous updates and improvements of the Uniswap version. It is believed that in the near future, Uniswap V4 will occupy a more important position in the competition between DEX and CEX, becoming the liquidity growth engine for the DeFi industry and leading the direction of the entire industry's development.

Uniswap V4

A Detailed Explanation of the Four Innovative Mechanisms in Uniswap V4

Uniswap V4: A Saga of Hooks, Bidding Farewell to Fork Swap

One of the emerging trends in the world of blockchain and cryptocurrency is the use of real-world assets to expand the on-chain credit.

RWA — Comparative Analysis of On-Chain Lending Projects

Projects are searching out more sustainable token models.

<a href="https://twitter.com/pt1mfv_?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">Paul Timofeev</a>In DeFi,&nbsp;liquidity is king.Liquidity refers to the ease of which an asset can be converted into cash. The more liquidity an asset has, the easier it is to cash out, and vice versa.In DeFi, liquidity is measured by&nbsp;price slippage, which refers to the difference between the expected price and the executed price when trading assets on automated market makers (AMMs) like Uniswap. Greater liquidity reduces price slippage, making trading more efficient and benefiting all participants involved. Therefore, projects in DeFi are motivated to create deep liquidity for their native tokens in order to accrue value and attract more users.However, a lot of TVL charts for L1s and dApps look the same – a rapid burst of liquidity and growth, followed by an imminent decline. DeFi has learned the painful lesson that capturing and retaining liquidity over time is a much greater challenge than building it up in the short term.As top market makers like&nbsp;<a href="https://www.bloomberg.com/news/articles/2023-05-09/jane-street-jump-pull-back-crypto-trading-amid-us-crackdown?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">Jane Street and Jump Trading</a>&nbsp;cut down on their involvement in the crypto markets, the need for designing sustainable token models becomes much more significant.<img class="PlaygroundEditorTheme__image editor-image" src="https://bankless.ghost.io/content/images/2023/06/Screenshot-2023-06-14-at-1.59.17-PM.png" alt="" width="inherit" height="inherit">Liquidity comes… liquidity goesLiquidity mining&nbsp;refers to the mechanism of incentivizing users to provide liquidity for a token with native token rewards. Pioneered by&nbsp;Compound&nbsp;and&nbsp;Synthetix, it has been the go-to mechanism for bootstrapping growth for DeFi projects.It doesn’t take long to observe that this practice is highly unsustainable over time – and a poor business model. Protocols are constantly fighting an uphill battle as they need to generate enough revenue to cover the costs associated with emissions. Observe the below profit margins for a handful of DeFi bluechip protocols from Jan - July 2022.<img class="PlaygroundEditorTheme__image editor-image" src="https://bankless.ghost.io/content/images/2023/06/Screenshot_2023-06-09_at_3.45.07_PM.png" alt="source" width="inherit" height="inherit">Take Aave, with the third-largest DeFi TVL, for example. Although they generated $10.92M in protocol revenue, they also paid out nearly $75m(!!) in token emissions, resulting in a $63.96m loss, or a -63.1% &nbsp;profit margin.DeFi needs to evolve away from the unsustainable designs that have failed to retain liquidity, and embrace&nbsp;stickier&nbsp;token models which incentivize long term participation and growth.&nbsp;Let’s examine some of the models which aim to optimize the state of liquidity today&nbsp;⤵️<h3 class="PlaygroundEditorTheme__h3">LP Gauge Tokenomics&nbsp;</h3>Curve Finance introduced the VoteEscrow model, which allowed $CRV holders to lock up their tokens to receive $veCRV, granting holders governance rights and boosted yield.While this model offsets short-term dumping and encourages long-term participation to an extent, it also reduces the liquidity of $CRV as many of the tokens are locked up (some even up to 4 years!)Rather than locking up native tokens, some protocols have built models which focus on locking LP tokens (these are receipt tokens which directly represent an LP’s share of a pool).The LP Gauge Model incentivizes liquidity providers to lock up their LP tokens in exchange for boosted rewards and greater governance power. In this model, traders benefit from this safety net of “locked” liquidity, LPs benefit from governance rights and greater rewards, and the ecosystem benefits from deeper liquidity.One project which has adopted this model is Balancer, with the launch of $veBAL tokenomics. Here, users who provide liquidity in the BAL/WETH pool receive $veBAL , which they can lock for up to 1 year. $veBAL holders earn 65% of protocol fees and can vote on pool emissions and other governance proposals.The growth in percentage of veBAL locked over time indicates strong demand for utilizing the system.<img class="PlaygroundEditorTheme__image editor-image" src="https://bankless.ghost.io/content/images/2023/06/Screenshot_2023-06-09_at_3.14.01_PM.png" alt="Screenshot 2023-06-09 at 3.14.01 PM.png" width="inherit" height="inherit"><hr><h3 class="PlaygroundEditorTheme__h3">Options Liquidity Mining&nbsp;</h3>Another alternative token model to ‘vanilla’ liquidity mining is&nbsp;options liquidity mining. Simply put, this is when protocols distribute liquidity incentives in the form of options, as opposed to native tokens.Call Options are financial instruments which allow users to buy an asset at a defined price (the&nbsp;Strike price) within a specific timeframe. If the price of the asset goes up, the buyer can use their option to buy the asset at a discount, and redeem it for the higher price, profiting from the total difference in price.<img class="PlaygroundEditorTheme__image editor-image" src="https://bankless.ghost.io/content/images/2023/06/Screenshot_2023-06-13_at_5.56.36_PM.png" alt="Screenshot 2023-06-13 at 5.56.36 PM.png" width="inherit" height="inherit">With Options Liquidity Mining, protocols can distribute liquidity incentives in the form of&nbsp;call options,&nbsp;as opposed to the native token. This model intends to better align incentives between the users and the protocol. For users, this model allows them to purchase the native tokens at a greater discount in the future. Meanwhile, protocols benefit from reduced sell pressure, and can customize the incentive conditions to align with their specific goals. For instance, creating long term incentives by setting longer expiry dates and/or lower strike prices.Options Liquidity Mining poses an innovative alternative to traditional liquidity mining. This model is still fairly new and untested, but one protocol looking to lead the way is Dopex. They&nbsp;<a href="https://blog.dopex.io/articles/ssov/introducing-call-options-as-incentives-a-new-approach-to-token-emissions-in-defi?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">recently announced</a>&nbsp;&nbsp;that they would be testing out a Call Options incentive model for their structured products, claiming that this model will bring greater flexibility, price stability, and longer term engagement compared to traditional incentive models.There is concern, however, that the process will discourage users overall. After all, DeFi has been conditioned to liquidity mining for so long, that introducing these extra steps can discourage users and draw them away from a project, especially if they don’t believe the token will actually perform well in the future.Will OLM help projects attract more long-term participants, or will the additional steps in the redemption process discourage users and, in turn, draw liquidity away?<hr><h3 class="PlaygroundEditorTheme__h3">Berachain&nbsp;</h3>Although the examples above present some interesting models for sustaining liquidity and users, they focus on the application layer.&nbsp;So what if liquidity incentives were addressed on a consensus layer?Berachain is an upcoming project which aims to do just that – build a sustainable incentive structure within the chain itself.This all starts with a “tri-token model” – a gas token ($BERA), governance token ($BGT), and native stablecoin ($HONEY).The novel Proof-of-Liquidity consensus mechanism enables users to participate as validators by staking their assets with Berachain in exchange for earning block rewards and LP fees.When users stake their assets, their deposits are automatically paired with $HONEY, the native stablecoin, on the native AMM. Users who also stake their gas tokens ($BERA) will receive governance tokens ($BGT). $BGT stakers receive protocol fees in turn and over time gather influence over emissions and other incentives within the ecosystem.So what is the magic here? In theory, this creates a positive flywheel effect where:<ul class="PlaygroundEditorTheme__ul"><li value="1" class="PlaygroundEditorTheme__listItem">more deposits = deeper stablecoin liquidity</li><li value="2" class="PlaygroundEditorTheme__listItem">deeper liquidity = more traders will come to use Berachain</li><li value="3" class="PlaygroundEditorTheme__listItem">more traders = more protocol fees = more rewards for $BGT holders</li><li value="4" class="PlaygroundEditorTheme__listItem">better $BGT rewards = more demand for $BGT</li></ul><img class="PlaygroundEditorTheme__image editor-image" src="https://bankless.ghost.io/content/images/2023/06/Screenshot_2023-06-12_at_3.45.57_PM.png" alt="Screenshot 2023-06-12 at 3.45.57 PM.png" width="inherit" height="inherit">This model incentivizes users to keep their assets within the Berachain ecosystem, as there are greater opportunities to earn yield than elsewhere. The beauty of this model is that the main beneficiary of the value generated by the chain is the ecosystem itself, rewarding committed long-term participants. Users begin to contribute to the liquidity of the native stablecoin as soon as they deposit, creating a natural liquidity mechanism off the bat. &nbsp;Furthermore, users who stake the $BERA they earn in block rewards, can earn the fees generated by activity on the chain, by holding $BGT. Protocols may start to accumulate $BGT in order to gain voting power for directing incentives to their specific assets, setting the stage for a potential Curve-Wars style ecosystem boom.The Curve Wars helped grow Curve into the DeFi behemoth it is today- will Berachain see a similar effect?Keep in mind Berachain has not launched yet, so this is all theoretical.<hr><h3 class="PlaygroundEditorTheme__h3">Moving Forward&nbsp;</h3>DeFi is still young and primitive, and there is a lot of work to be done in its current state. Creating sustainable economic frameworks is an important part of the process.One could argue that given how fundamental liquidity mining has been to DeFi, it’s impossible to move away from it completely.However, alternative frameworks like the ones described here demonstrate that liquidity mining can be optimized to sustain liquidity and users, and actually benefit the ecosystem for the long term.Next time you look to ape into a yield farm for your favorite DeFi project, make sure you take the time to understand the source of yield and whether or not it is sustainable for the long term.&nbsp;As a word of advice, if you don’t understand, you are the yield.

Liquidity

Bankless: Seeking a More Sustainable Token Model

The Sui mainnet has been up and running for nearly a month, and let me tell you, it’s been quite a rollercoaster ride.

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Choppy and Sidewayslg...

Opportunities and Considerations of Ethereum’s Blockspace Futurelg...

A Detailed Explanation of the Four Innovative Mechanisms in Uniswap V4lg...

Uniswap V4: A Saga of Hooks, Bidding Farewell to Fork Swaplg...

RWA — Comparative Analysis of On-Chain Lending Projectslg...

Bankless: Seeking a More Sustainable Token Modellg...

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