October 29, 2020 View Online
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Columbus day! Bond markets are closed but the stock markets are still operating – what does this mean for Bitcoin price? Whatever, just wrap it up using REN or Strudel and start farming the new lands like a settler.

In today’s edition: Layer 2 scaling, prediction markets, new cross chain bridges – just another week in crypto! Enjoy reading.

Curve Finance reveals Layer 2 solution with zkSync

Curve Finance is moving to layer 2 scalable solution for smart contracts zkSync
In big news for the whole DeFi community, Curve and Matter Labs announced a path for scaling Ethereum in a secure and decentralized way. A zkSync L2 smart contract capable testnet with a Curve stablecoin pool already running on it.

What is a ZK rollup? As Ethereum fills with more users and dapps, gas prices and transaction times are going up beyond levels of being sustainable. Scalability is in high demand, rollups are seen as the answer. A sentiment that was recently confirmed by Vitalik Buterin as the only choice for scaling on Ethereum. Notably, because a ZK rollup keeps intact all of Eth’s security and decentralization.

ZK rollups (ZKR) even with a single validator are considered extremely secure, because they rely on pure maths. There is no activity with an economic incentive to keep funds safe. Essentially, funds going through a ZKR are just as secure as on the underlying L1. For Curve, a protocol that moves millions, this is especially important. Furthermore, ZK rollups confirm quickly meaning it is a viable solution for token swaps - Loopring for example supports 7000 trades per Ethereum block.

The main issue with zkSync is that until recently it was extremely difficult to support any type of smart contract in a ZK rollup. It was seen more as a solution for making a one payment transaction.

Smart contracts in a ZK rollup? As we know innovation moves fast in DeFi, and with users starting to migrate to alternative chains such as Tron or Binance Smart Chain to avoid high gas fees for their farming strategies. It looks like Curve wants things to move even faster, and avoid losing users. Matter Labs is making this possible through their SNARK-friendly Zinc VM.

Developers can write their smart contracts in the Zinc programming language to use the L2 solution from day one. Furthermore, Zinc follows a simple Rust syntax which means that any Solidity or Vyper developer can learn the language in a couple of days. In fact, any smart contract written in Vyper can be ported over to Zinc almost line per line.

Importantly, all smart contracts on a zkSync L2 network can call each other in the same way as on mainnet. Meaning users will be able to expect the same composability that is powering the stacking of DeFi farming strategies - without all the high gas costs!

Catnip Exchange Makes Prediction Markets Usable

Catnip Exchange is making Augur prediction markets usable
Catnip Exchange is a simpler and lower-fee prediction market experience built on top of Augur and Balancer. A project by AugurDAO, a decentralized collective that aims to progress the use of open prediction markets. As a result, Catnip’s mission is to remove the friction that makes prediction markets too complicated for users.

Low fees and liquidity. The team uses foundry.finance to tokenize outcome shares in Augur markets, then deposits them in a Balancer pool. Essentially, they wrap it all up in their custom UI which enables you to place a prediction in the same fluid way of making a token swap. The result is transaction fees that are up to 10x lower than using Augur’s native UI and ~50% lower than on Balancer’s UI. Furthermore, there are zero settlement fees and half the swap fees found in competitors such as Omen or Polymarket.
Catnip Exchange Makes Prediction Markets Usable.
Simplicity… Catnip follows a similar UI to Uniswap which is a familiar sight to any DeFi user. It takes just two clicks to make a trade. At the moment, there is only one market, the 2020 U.S. presidential election. However, interest is growing fast with over $300k in liquidity in the market’s balancer pool.
  • Currently, if you have never used MetaMask or Ethereum, things are a bit more complicated. However, the team states they are working hard to improve it.
No Limits… Much like using any Augur market, there are no limits to how much you can trade on Catnip. Centralized prediction markets such as PredictIt will limit you to 850 USD per outcome. Furthermore, trading via Catnip Exchange is non-custodial along with decentralized market resolution via Augur. Decentralized betting just got accessible and interesting!

What is Strudel Finance? One way BTC to ETH bridge

what is strudel finance? Bitcoin to Ethereum one way bridge
Strudel Finance is the first one way trustless bridge linking Bitcoin to Ethereum. The project aims to remove the risk taken by centralized Bitcoin bridges such as renBTC or WBTC. Today the most popular wrapped BTC bridges hold vast amounts of Bitcoin in insecure multisig setups. Meaning one hack and the total value of these projects could collapse completely.

What is Strudel Finance? Strudel enables Bitcoin holders to tokenize their BTC onto Ethereum, allowing it to be used in the growing DeFi sector. When using the trustless Strudel bridge, users will burn their Bitcoin and mint vBTC. The idea is that this type of cross chain bridge does not lock up BTC in what Strudel calls the Void, which is usually controlled by large wall street like institutions.
Note that this bridge is one way and your Bitcoins will be permanently destroyed.

Strudel Pegging Algorithm. Strudel pegs BTC and vBTC on a 1:1 ratio, this is achieved through use of Balancer smart pool, a Uniswap pool, and securing liquidity for market making with DeFi farming incentives. Essentially, there are two pools that the Peg Manager contract can use to execute ring trades to keep the price pegged.

This works because vBTC has an in-built flash loan mechanism which the automated peg manager can call, so it can borrow vBTC.
what is studel finance BTC pegging
Furthermore, the Peg Manager can adjust the Balancer’s pool weights to facilitate bringing the price back to peg. As a result, the Peg Manager is continuously moving ETH by buying or selling between the two pools by flash-loaning.

vBTC price stability… Strudel protocol takes a unique market approach to keeping vBTC price in sync with BTC. Of course the big question is will it work? A tracker for the amount of BTC burned via the protocol would be nice, an easy way to follow if adoption is growing.
  • The team claims the pegging algorithm can guarantee the peg up to a price disparity of 300%. Anything over this threshold means vBTC would float free.
Strudel finance terra farms
Why take the market risk… Users can earn TRDL, the protocol’s governance token, as rewards for using the bridge and supplying liquidity for maintaining the price peg. Up until December 11th there will be a 4x TRDL bonus for early adopters. Remember this tech is very experimental and no security audit as of yet!

Ren, RenBridge, and RenVM: Everything you need to know

ren token, renbridge, renVM everything you need to know
Ren Review: everything you need to know about RenBridge and RenVM. Learn how REN token is powering cross chain liquidity in DeFi.

Also take note

  • DEGO Finance: the non-fungible token marketplace for DEGO NFTs is now live, the team announced the launch on Twitter today.
  • Binance Launchpad: Injective Protocol (INJ) will be the next token sale to happen on the platform, check it out.
  • Crypto Art: the first digital art in form of an NFT was sold at the Christie’s auction. It sold for $131,250 USD!
  • Elrond: eGLD listed on Japanese regulated exchange and international fiat on ramp Liquid Global.
The information provided on this email should not be taken as investment advice, financial advice, trading advice, or any other sort of advice. dExplain does not recommend the use of any decentralized application nor that any cryptocurrency should be bought, sold, or held by you. You should do your own research and consult a financial advisor before making any investments.

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