Research Roundup Newsletter [April 2024]

We present to you our latest issue of Research Roundup, featuring our deep dives into RWA tokenisation and yield-bearing stablecoins, the EigenLayer ecosystem, Bitcoin L2 developments, and many more.

May 10, 2024
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Welcome to the Monthly Research Roundup Newsletter!

1. Market Index

For April, the monthly price and volume indices were negative at -16.45% and -32.73%, respectively. The volatility index was positive at +0.88%.

Monthly Market Index [apr 2024]

2. Charts of the Month

Following Bitcoin’s halving, Bitcoin Runes transactions soared, accounting for over 50% of all transactions daily in the days after halving. This was driven by meme coin and NFT enthusiasts inscribing “rare satoshis”. Since its launch on the day of the Bitcoin halving, more than 2.38 million transactions – representing 68% of all Bitcoin transactions – involving Runes have been processed. The hype of Runes also drove the number of Bitcoin transactions to a record high of 927,010 on 23 April.

Charts Of The Month Market Pulse

The total value locked (TVL) of the DeFi sector almost doubled in the first quarter of this year compared to the previous quarter, surging from a Q4 2023 low of US$36 billion to a peak at nearly $97 billion in Q1 2024. To date, it has increased by 138% year-to-date to a two-year high of $104.21 billion.

DeFi’s recent explosive growth has been partially driven by Ethereum liquid restaking initiatives during the period. This has been echoed by other sources, attributing it to several catalysts in the sector including increased activities within restaking and liquid restaking. Liquid restaking has also emerged as a leading DeFi category, with approximately $10.35 billion of TVL.

Charts Of The Month Defi Weekly

The floor price of ‘Bored Ape Yacht Club’ (BAYC) NFTs has plummeted over 90% from its peak of 120+ETH to 11.6 ETH (approximately US$34,000) in the middle of April. This marks its lowest floor price since August 2021 and reflects a decline in the popularity of digital art NFTs. This drop brings BAYC’s floor price back to where it stood just months after its April 2021 launch. Despite this downturn, some BAYC NFTs have sold well above their floor price. For example, BAYC #830 fetched 504.3 ETH (US$1.92 million) in March.

Charts Of The Month Nft Weekly

3. Monthly Feature Articles

Rwa Yield

Monthly Feature Article | Tokenisation of RWAs & Yield-Bearing Stablecoins

The traditional finance (TradFi) and cryptocurrency markets have historically been seen as two distinct sectors. However, in the past few years, there has been growing interest and developments spanning across the two sectors — real-world assets (RWAs) being one of them. 

Tokenisation of securities has gained traction since, as major financial institutions like BlackRock and Franklin Templeton have entered the sector. Within this, tokenisation of treasuries is the most adopted form to date. At the same time, yield-bearing stablecoins are attracting investors, offering the potential to mitigate the volatility of native cryptocurrencies and receive relatively high interest similar to saving in the bank.

Our latest report covers the world of RWA tokenisation, specifically tokenised securities. It looks into the major players in the space, including BUIDL, before delving deeper into yield-bearing stablecoins. 

Key takeaways include:

  • Tokenisation of real-world assets (RWAs) is the process of converting RWAs into digital tokens by leveraging blockchain technology. Within this, tokenisation of securities and its application in yield-bearing stablecoins have gained much attention recently.
  • Tokenised treasuries are the most popular form of tokenised securities, currently a US$1.2 billion market, which has increased ~2.7 times in the past year. Players are broadly divided into Actively Managed Products (with portfolio managers) and Passively Managed Products which track an underlying instrument (e.g. ETF).
    • BUIDL, the first tokenisation product provided by BlackRock, has garnered a $385 million market cap since its launch in March 2024.  With USDC offering instant redemptions, it establishes an instant bridge between US treasuries and stablecoins. 
  • As the market develops and investors become more adept to the RWA concept, it is expected that tokenised securities will gradually expand to include new products.
  • Yield-bearing stablecoins satisfy yield-hunting crypto investors and open the gateway for traditional financial (TradFi) institutions to participate. They can be classified based on the yield-distribution mechanism: rebasing and non-rebasing. 
  • Yield-bearing stablecoins have also received criticisms since they add complexities to stablecoins by introducing different mechanisms of yield generation, and yields may not be sustainable. Players need to create competitive advantages, particularly when interest rates decline. 
  • RWA tokenisation signifies a bridge between TradFi and the digital asset space and is forecasted to be a $16 trillion market by 2030. While there are still limitations in the use cases of these tokens, the target is clear — to bring in more assets, users, and improve efficiency. It is clearly a trend with the potential for mass adoption.
Feature Reports Tokenised Treasuries And Credit
Feb 2024 Eigenlayer Restaking

Monthly Feature Article | Expanding Ethereum’s Frontier: The EigenLayer Ecosystem

Restaking on EigenLayer has spurred the growth of the liquid restaking and liquid staking token finance (LRTfi), with over US$8 billion total value locked (TVL) at the end of April. Leading this space, and Renzo collectively control 70% of the market share.

This report revisits the EigenLayer protocol, its ecosystem, and the restaking mechanism in greater detail. It also provides an overview of EigenLayer’s recently launched EIGEN token and examines the risks and challenges surrounding the EigenLayer protocol and LRTfi sector. Read more about it in our latest report: 

Key takeaways:

  • Restaking extends Ethereum’s security to other systems by allowing users to stake ETH and Liquid Staking Tokens (LSTs) to secure multiple systems and earn extra rewards by committing their staked ETH for additional slashing conditions.
    • EigenLayer pioneers restaking and has gained substantial growth, with over 4.7 million ETH (~US$15 billion) can be delegated to node operators.
    • Native ETH dominated EigenLayer’s pool with over 66% share. Amongst the LSTs deposited, Lido’s stETH had the lion’s share of 61%.
    • Node operators in EigenLayer assist in operating actively validated services (AVSs) software. They register and allow ETH stakers to delegate staked assets to them, providing various services to AVSs. commands a significant presence amongst operators, holding over half of the total staked ETH.
    • AVS is a system that requires validation and security through EigenLayer’s restaking. These systems go beyond Ethereum’s consensus and benefit from the additional security layer provided by restaked ETH. EigenDA is the first AVS with a 24% share (~1 million ETH) of staked value.
  • Restaking on EigenLayer has spurred the growth of liquid restaking and the liquid restaking token finance (LRTfi), with over $8 billion total value locked (TVL) at the end of April. Leading this space, and Renzo collectively control approximately 70% of the market share.
  • However, EigenLayer and LRTfi face challenges and risks:
    • The rapid growth of TVL could lead to a yield crisis due to a surplus of restaked assets compared to the security needs of AVSs.
    • Core functions like the fee system and slashing have not been launched yet, raising doubts about yield generation.
    • Other risks of EigenLayer include smart contract vulnerabilities, centralisation on Ethereum validators, and liquidity risks with LRT tokens.
    • LRT tokens are susceptible to depegging and losses due to various factors like security breaches and market conditions.
  • The liquid restaking market is growing, with novel DeFi strategies around LRTs. Despite the challenges, EigenLayer aims to address trust fragmentation on Ethereum and holds promise for unlocking new utilities in the future.
Feature Reports Restaking Tvl Share
Bitcoin L2 Development

Monthly Feature Article | New Development of Bitcoin L2s

Bitcoin has regained community interest since 2023 due to various catalysts, including the introduction of the Ordinals protocol and BRC-20 standard, the launch of Bitcoin spot exchange-traded funds (ETFs) in the US, and the fourth halving event in April 2024. Builders are excited about expanding Bitcoin’s scalability and programmability to accommodate a wider range of use cases.

To improve Bitcoin’s scalability and functionality, sidechains and rollups are key areas of development. Layer-2 (L2) technologies on Ethereum plus interoperability have enabled the reuse of existing tech stacks in many Bitcoin L2 solutions. Some projects have also explored novel approaches based on Bitcoin’s features and unspent transaction output (UTXO) model. 

In this report, we explore key developments in the Bitcoin L2 space, particularly looking into sidechains, rollups, and data availability (DA) layer solutions. 

Key takeaways:

  • Bitcoin has regained community interest since 2023 due to various catalysts. Builders are excited about expanding Bitcoin’s scalability and programmability to accommodate a wider range of use cases.
  • Bitcoin currently has the highest market capitalisation, while Ethereum has the largest total value locked (TVL). The market cap/TVL ratio for Bitcoin is 1,045, significantly higher than Ethereum’s ratio of 7.3. This indicates that Bitcoin has significant potential to further develop its scalability.
  • Sidechains and rollups are the main directions to improve Bitcoin’s scalability and functionality. Layer-2 (L2) technologies on Ethereum and improved interoperability have enabled reuse of existing tech stacks in many Bitcoin L2 projects. 
  • Sidechain implementations in the Bitcoin ecosystem vary; many are based on Proof of Stake (PoS) consensus and achieve Ethereum Virtual Machine (EVM) compatibility. Additionally, existing cross-chain solutions offered by Cosmos and Polkadot are also applied to build Bitcoin L2s. 
    • The TVL of sidechains surged by 181% year-to-date, led by the MAP Protocol with 21 times growth in the same period.
  • Similar to the rollups in Ethereum, Bitcoin rollups handle transactions off-chain and submit batches of transactions to the Bitcoin network. Zero-Knowledge (ZK) rollups seem more popular in terms of the number of projects under development or recently released.
    • Merlin Chain gained traction after its launch, with a dominant position amongst all Bitcoin L2s. The TVL surged by 9.5 times from US$11 million to around $996 million during April 2024. 
  • Most Bitcoin L2 projects are still in the early stages of development, with few having reached the level of maturity seen in Ethereum’s L2 solutions. However, the future of Bitcoin L2s is promising given the innovation and popularity of various projects together with Bitcoin’s rising adoption.
Feature Reports Bitcoin L2 Tvl Share

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4. Alpha Navigator

This institutional-focused report dives into macro trends, market-neutral pairs, style-factor screens, and events. Read the full Alpha Navigator report here.

  • Asset classes were mostly down in April. Cryptocurrencies led the drop, yet still posted significant positive year-to-date gains.
Alpha Navigator 1
  • BTC correlations with equities dropped in the past month. Its correlation with Gold was negative in April (was positive in March).
Alpha Navigator 2

5. Crypto Conference & Economic Calendar from Market Pulse

Crypto Conferences Calendar

Crypto Conference Calendar

Economic Calendar

Economic Calendar

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Research & Insights Team

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