Which Blockchain Should I Build On?

Plus: $1.5B Wyre shuts down, DeFiLlama DEX aggregator

January 04, 2023

GM 👋🏻 - Happy hump day. For many people, today is the first work day in 2023. Let's make it count! We're starting the year strong with SBF pleading not guilty, Wyre (once valued at $1.5B) plans to shut down, and DeFillama is out to get everybody's lunch. Let's dive in 👇

In Today's Email:

What Matters: $1.5 billion Wyre shuts down ‎‍🚪
Case Study: AppChains, a trend or a necessity? 🪐
Features: DeFiLllama DEX Aggregator 💱

WHAT MATTERS

$1.5B Wyre Shuts Down

State of play: A crypto payments company, Wyre, has told employees that it is shutting down. Founded in 2013, the company was almost acquired by Bolt for $1.5 billion before the deal fell through in September 2022.

Wyre had raised a total of $29.1M across nine rounds of funding. It was supposed to have returned a substantial amount of money to its investors in what would've been one of the largest non-SPAC deal. The fact that it shuts down four months after the deal fell off is largely concerning. We don't know how many other crypto companies are in similar positions, financially.

Why it matters: We don't know how many more of this will be revealed in the next few quarters. Contagion is slow. 3AC, Terra, Celsius, FTX, and Genesis problems have a material impact on almost every company in crypto, sometimes undetected until the last moment.

This is fucking ridiculous.
I've long advocated to my friends that there needs to be a custody service in crypto where funds are segregated and custodied by disinterested third parties and only allow the founders to draw down against meeting certain conditions precedent.
— wassielawyer (@wassielawyer)
5:15 AM • Jan 4, 2023

For builders: Investors will require more responsibilities and enforce more control over you. No longer should you have singular access to all the funds raised without any standard risk management practices? You won't be able to raise capital without showing that you're mature, composed, and implement proper controls over your own organization. Things are getting back to normal.

For investors: More controls are necessary over founders. It can be difficult to implement and enforce certain controls and best practices during the mania. Money was literally thrown around. You can't get into rounds if you're complaining too much. We get it. The environment has since changed. Even if it's difficult to implement across jurisdictions, there are decentralized ways to ensure that founders can't just run away with the cash, or irresponsibly gamble it all away.

CASE STUDY

AppChains: Is It a Trend or a Need?

State of play: There are many blockchains out there. More than a dozen Layer 1 projects, another dozen of Layer 2 projects, and potentially some Layer 3 projects have begun emerging. It's getting trickier than ever for founders to decide where to build and for investors to crystallize their theses. Perhaps, the solution is not to pick any? 🤔

Currently, there are two options for web3 founders.

Build on Ethereum: Enjoy the existing infrastructure and community, but more importantly, the multi-billion dollars that are ready to bridge over to your project. You might run into some scaling issues, but hey, that's why we have L2! You just need to further fragment your dApps into smaller chains, confusing your end users that aren't crypto savvy. Doesn't that sound ideal?

Build on alternative L1s: Enjoy the grant and praise that you would be getting from the L1s founders as they hope that your project can be the killer app that brings a lot of users to their ecosystem. You might need to worry occasionally whether the L1s are really tested for uptime and complex functionalities; and oh, VCs can also dump the L1s coins to oblivious, destroying the morale of the community.

Cosmos and the modular stack is the prob the only meaningful brain drain Ethereum have ever received
It's one hell of a powerful nerdsnipe that Solana, Cardano, and other alt L1s dont have
— Scott Sunarto (@smsunarto)
9:30 PM • Dec 27, 2022

What's happening: More successful dApps realize that they need to have more control over the underlying infrastructure they're built on. Whether it's because of scalability or financial issue, we're seeing this trend emerges as founders realize the importance of focusing on products first and foremost.

dYdX: Top DEX in Ethereum with $100B+ in trading volume stated that it will move to Cosmos for its V4 to optimize decentralization and trading flow.
Axie Infinity: The top P2E gaming project had to spin its own Ethereum layer 2 side chain in June 2020. It's still bigger than ever.

For builders: Building on Cosmos allows you to focus on your core products. You can be creative and have more control over your tokenomics while not needing to worry about blockchain consensus. The downsides are your lack of access to Ethereum and EVM-compatible universe massive amount of capital moving around in the crypto space.

For investors: Understand where the audiences are for the products of the companies that you back. This is critical when choosing where to build. There are optimizations and tradeoffs that founders need to make, ideally with your guidance. Think again whether this founder with this product can adapt and move to any chains if necessary.

FEATURES & GOVERNANCE UPDATE

DeFiLlama DEX Aggregator

DeFiLlama

DeFi juggernaut DeFillama doesn't stop shipping 🚢 - it was known for aggregating DeFi data, before expanding into LlamaPay, LlamaNodes, LlamaNews, and now... LlamaDEX.

This is a big deal. DeFiLlama is vertically integrating. It has a free website that becomes to go-to-platform for users that want to assess DeFi analytics. Now, it's building products on top of its existing audience 🗣️

Why it matters: The open-source nature of crypto, specifically DeFi protocols, makes it easy for other players to compete. This can be used maliciously, like faking a $7.5B in TVL, or in DeFiLlama's case, superbly, by providing end users with a better product experience. Although DeFiLlama is not charging any fee as an aggregator, it can still capitalize on the user awareness, website traffic, and some revenue-sharing incentives that a few DEXs have.

u know llamas are based when u havent even uploaded a logo yet but ur app has already surpassed metamask, coinbase and reached #2 😏
— strobie reeeee 🍓 (sql arc) (@0xstrobe)
1:29 PM • Jan 3, 2023

Other notable feature updates:

PaintSwap launches V3.
Tonic DEX launches perpetual trading in NEAR.
Avalanche launches subnet messaging.
Sushi to deprecate Kashi, MISO
Sushi passes new tokenomics.
Convex updates cvxCRV staking dynamics.
gTrade launches on Arbitrum.
Insrt Finance goes live.
Timeswap launches V2.
Gamma Strategies launches on Arbitrum.
Mean Finance goes live.

QUICK BITES

SBF pleads not guilty.
US regulators issue crypto warning to banks.
SBF's lawyers ask court to hide his $250M bail co-signers.
Core Scientific shuts down 37,000 Celsius rigs.
Genesis-DCG class action arbitration case from Gemini clients.
Winklevoss vs Silbert spars over frozen funds.
Bahamas Regulators fires back to FTX new leadership.
Indonesia to launch its own crypto exchange.
UK's crime agency creates new crypto unit.
Defillama launches a meta DEX aggregator.

MEME & NOTEWORTHY READS

@DataFinnovation's thread on BUSD on BSC was often unbacked.
@10kdiver's thread on Gambler's Ruin.
Tyler Cowen's Bloomberg opinion piece on the dangers of crypto regulation.

— CMS intern (@cmsintern)
7:50 PM • Jan 3, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.