Written by: Jaime Lao

Edited by: Cyrus Ip and Sidney Lo

Ethereum’s Layer-2 (L2) ecosystem has been growing rapidly in the past year. And within the landscape, Polygon, in particular, caught our eyes. With its massive developer and user base, perpetual stream of high profile partnerships, and strategic acquisitions, it’s a force to be reckoned with in the L2 and zero-knowledge (ZK) ecosystem. This article will dive into its scaling solutions, ecosystem, valuation, and recent on-chain activities.

Introduction

Capital inefficiency and price discovery are the two main hurdles that create illiquidity for NFT assets. Users can only recently deposit their previously illiquid assets into the DeFi ecosystem to generate income and provide liquidity. Today, we will look into the state of NFT lending, which is a crucial part of the financialization of NFT, and the solution to the illiquidity problems of NFTs. We will start by illustrating two major types of lending models and then elaborate on our prediction within this space of the crossover between NFT and DeFi.

Traditionally, an illiquid asset refers to an asset that cannot be easily sold or traded without a significant discount. Real estate, collectible automobiles, antiques, and art collectibles are some common examples of illiquid assets. Trading of these assets usually takes months or potentially longer to find a buyer. For this reason, since the 1970s, intermediaries such as banks and auction houses have provided liquidity to an exclusive audience so people can extract value from their illiquid assets by using them as loan collateral.

Today, non-fungible tokens (NFTs), an emerging asset in the crypto space, are facing similar issues. NFTs consist of digital data stored on the blockchain, representing property rights, uniqueness, and a level of illiquidity comparable to fine art and collectibles. While we can sell fungible tokens like BTC and ETH almost instantly in the market, it takes much longer to sell NFTs in any secondary market. As a result, NFT lending protocols have emerged as a liquidity solution for this digital asset.

Written by: Jaime Lao

Edited by: Cyrus Ip and Sidney Lo

Introduction

Welcome to the first article of our Back to Basics Series. In the midst of this bear market, we will be deep diving into some of the blue-chip protocols and their native tokens that we believe have already shown value and why these protocols could potentially outperform the market on the long-term horizon. The first piece of the series focuses on Uniswap.

Written by: Jaime Lao

Edited by: Cyrus Ip and Sidney Lo

Introduction

Move-to-earn (M2E) game STEPN has been on our radar for quite some time now. The Solana-based project gamifies running activities and allows users to earn in-game currency simply by walking, jogging, or running.

Overview

There is no doubt that 2021 was a remarkable year for non-fungible tokens (NFTs), however it appears that things were just starting to heat up. From the rise of blue-chip collections like Bored Ape Yacht Club (BAYC) by Yuga Labs to the explosive trading volume witnessed across marketplaces, it’s clear that fascination with NFTs shows no signs of stopping. Data from Nonfungible.com found that NFT trading volume jumped 200x from US$82.5mm in 2020 to US$17.7bn in 2021. Since the beginning of 2022, the global trading volume of NFTs grew from US$17.7bn to US$55bn — up 222.2% in just four months.

As a leading full-stack proprietary venture capital firm, Newman Capital has built a strong expertise in the world of NFTs. This fast-growing sector in crypto is an area that is maturing exponentially and our team is tracking its developments daily. In this article we’ve highlighted five critical areas that have emerged which we believe will drive growth in the NFT space as the landscape evolves and diversifies.

I. Recent Market Activities

Over the past weekend, many discussions have been circulating around the highly anticipated Yuga Labs x Animoca Brands Otherside land sale. As the currency powering the Otherside metaverse, ApeCoin experienced high volatility leading up to the Otherdeeds mint date due to speculation around how much APE was needed to mint each NFT and how many NFTs could be minted per KYC’ed wallet. The intensive market demand led to the burning of nearly US$180mm worth of ETH gas fees, generating largely negative sentiment and criticisms across Crypto Twitter and media platforms.

Post-mint, Yuga Labs publicly apologized on Twitter and promised to refund gas fees for unsuccessful minters whose transactions failed due to the gas war. Along with the remedy, the company proposed the need for migrating to its chain in order to properly scale and encouraged the ApeDAO “to start thinking in this direction.” Whether the chaos resulting from the sale were due to flaws in the Ethereum blockchain is arguable, however it is apparent that ApeCoin has always been the center of discussions due to its connection with the premium BAYC NFT.

In the same weekend, leading NFT marketplace OpenSea announced it would be accepting ApeCoin (APE) payments on its platform, alongside other tokens like ETH/WETH, SOL, USDC, and DAI. As of January 2022, BAYC trading volume surpassed US$1bn. APE gained its recognition and social currency as the token linked to the BAYC ecosystem. As long as BAYC continues to maintain its relevance, we foresee that ApeCoin utility and adoption will only increase in the NFT/metaverse space, potentially allowing it to become one of the most influential tokens in Web3.