Renaissance Labs Report #2
created by Sara Liu @superpowerbullshit
created by Sara Liu @superpowerbullshit

“To be easy to market and consume, kitsch relies on formula. It does not encourage reflection or challenge conventions, but offers a stylized and prepackaged comfort, referencing ideas and images that are already familiar… Like kitsch, NFTs as a form of media can reflect our own values surrounding back to us.”

Read the full article here.

📍Abstracts

  • Miami installed a ‘Charging Bull’ statue, affirming the city’s crypto-friendly stance.
  • Axie Infinity raised $150 million to pay back victims of the March 2022 Ronin Network hack.
  • BAYC-affiliated restaurant opens in California.
  • Shopify will integrate Bitcoin payments via Lightning Network.
  • Bitcoin can now be used as collateral for homebuyers’ mortgages.
  • Solana NFTs can now be traded on OpenSea.
  • Meta is developing a new digital currency, “Zuck Bucks”, for in-app payments on Facebook and Instagram. In related news, Horizon (Meta’s metaverse platform) plans to take a 47.5% fee cut from virtual product sales. The company believes it is a “pretty competitive rate”.
  • Virgil Griffith (ex Ethereum foundation) was sentenced to 5 years in prison for: "conspiring to violate the US International Emergency Economic Powers Act”—delivering a presentation on blockchain technology in North Korea.

📚 Educational (th)reads

  • IceCube on NFTS.

    “If the people want it, you can make it happen… It's the ultimate ‘fuck you’ to the mainstream programmers of the world, and it gives the power to the people.”

  • Punk 6529 interview and summary.

  • 🧵’s on Inflation and Tokenomics.

📝 Discussions

What can we expect from $USN: the NEAR-native algo-stablecoin?

On April 20, the NEAR foundation will announce $USN, the NEAR-native algorithmic stablecoin.

As outlined by Captain Kole, one of the leading figures in the NEAR ecosystem, NEAR is ready for blast-off. Its technical capabilities are competitive against, if not better than, “ETH 2.0”, the existence of an EVM compatible Layer 2 (Aurora) encourages multi-chain integrations, and the continued increase in full-time developers and incentive funds ($800 million!) have primed the entire ecosystem for blast-off.

“Near utilizes a delegated proof-of-stake consensus mechanism that currently allows for 2500-3000 transactions per second. It consists of shards and validator seats (100 validators seats per shard) that grow linearly with network demand; therefore, lowering the barrier for entry and allowing for mass adoption in the future. The network optimizes for liveness over safety with Byzantine fault tolerance assumptions resulting in a sub 2 second finality for all transactions.

The biggest difference between Near and Ethereum 2.0 is that Near uses a single chain that shards each block instead of a beacon chain. This ensures data availability for consensus while mitigating shard level attacks. Dynamic re-sharding is expected to go live at the end of 2022, which will allow the network to maintain low transaction fees while enabling higher throughput. Meanwhile, this approach is environmentally friendly: Near was certified carbon-neutral in February 2021 by South Pole.”

So why is $USN such a big deal?

First, stablecoins are essential for growth. They not only serve as the backbone of decentralized finance, but also effectively enable all market activities, the trade of goods and services. Layer 1 coins are less suited to fill this role, due to their volatile prices and market perception as investment vehicles over everyday currencies. Therefore, we can expect the launch of $USN to increase the number as well as the variety of transactions occurring on the NEAR chain.

Second, we already know that the model works. The expected similarities between $USN and $UST, the algo-stablecoin of the Terra Luna ecosystem, have led to high hopes for $USN to emulate the success of $UST in driving demand and activity on Terra.

One thing to note, however, is that the popularity of $UST was driven by the Anchor protocol, a banking protocol that offered a stable 20% APY on all deposited $UST. While market sentiment on the protocol was mostly positive in the years past, recent scares about the depletion of its yield reserve have questioned the protocol’s sustainability.

In response, the Luna Foundation Guard topped off the reserve with $450M (Feb 2022) and also purchased ~$100M of Bitcoin to add to the reserve and dilute $UST dependency on $LUNA as the sole peg (April 2022). Anchor also implemented a dynamic earn rate to extend its runway.

Spurring forth from these recent events, $UST continues to seek market dominance. The question is, how much growth $USN can achieve in the face of the rapidly expanding $UST?

How fast is $UST growing?

On the multi-chain front: Anchor protocol will be launching on Polkadot & Kusama, and the Luna Foundation Guard also closed a $100M deal with the Avalanche Foundation to add $AVAX to the UST reserve.

$UST also aims to knock out its competitor, $DAI, via the new 4pool (UST, FRAX, USDC, USDT) on Curve Finance, which boasts the deepest stablecoin liquidity. Do Kwon, the founder of Terra, believes the 4pool will put an end to the Curve Wars.

For context, read more about Terra’s strategy here, and check out Bankless’ interview of Sam Kazemian (founder of FRAX) on the Curve 4pool:

Personally, the launch of $USN excites me. The NEAR ecosystem is evidently backed by some very big players that want to see it succeed, and the chain’s brief history suggests an inevitable flourishing.

We will soon find out the details behind such a gargantuan project, as well as what the NEAR foundation plans on doing differently after reviewing the history of $UST. But regardless of the long-term success of $USN, I am very much looking forward to taking full advantage of the promised 20% APY.

- Machiavelli

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