With the current emergence of rollups, alternative L1s, and Dapp-specific rollups, the liquidity has never been more fragmented.
Wondering why your DeFi coins aren’t pumping?
Here is why application unification > liquidity unification 🧵
The current bull market is different from the previous ones as the usual playbook isn’t happening anymore.
The market went from Bitcoin to meme season directly, leaving aside Ethereum, large caps, and altcoins.
We can all agree that DeFi had a cold start during this bull run, while the overall market cap and liquidity/TVL are growing.
Certain sectors have been much more successful than others, leading some to believe the bull run is over, while for others it hasn’t even started. twitter.com/899558268795842561...
The ever-extending creation of rollups, alt L1s, or dApp-specific rollups has been fragmenting liquidity like it never happened in the past.
Putting aside the memecoins and bot-rug tokens, we are reaching unprecedented expansion, whether in terms of liquidity or attention. twitter.com/493351331/status/1...
To solve this ever-growing issue, multiple projects have been trying to address liquidity fragmentation.
So far, no major results have been shown as the issue doesn’t lie in liquidity fragmentation but in dApp fragmentation.
The multi-chain and modular future we are going towards is impacted by the monolithic dApps.
The current interoperability solutions aren’t solving much through omni-chain token standards as liquidity pools have to be created on each chain, fragmenting a bit more the liquidity.
This highly impacts liquidity depth as $100 of liquidity spread among 3 pools is less deep than if it were in 1 pool, hence slippage, fees, and volume.
Some solutions, such as the Superchain vision, are working on the matter but remain limited to accepted OP-stack chains. twitter.com/171310473933511065...
For a few months, I have been following @skate_chain and their proposed solution to deploy a unified application where dApps would run on the same state across thousands of chains (EVM, SVM, MoveVM...).
Skate is aiming to have apps running on 100s of chains through a single state (actual status of an app at a specific moment - user data, liquidity, etc.).
Why is that important?
A dApp cannot communicate across chains if its state changes through a swap, for example.
This required an oracle to update it, or in case of traditional DEXs, an arbitrage has to be made.
This leads to huge inefficiencies in terms of capital, high dev requirement to deploy the proper state on each chain, poor UX and toxic flows like arbitrage or MEV.
There are currently 1,200+ DEXs, 380+ lending protocols, and 220+ derivative protocols, each deployed across up to 30 networks.
You can then imagine how many states must interact with one another, introducing immense complexity and incoherence.
Skate intends to solve this issue by providing a unique state using intents through Eigen Layer for fast finality.
Users will interact with the dApp and rollup by signing an intent which will be shared with the AVS and execute on the desired chain, no matter the chain language. twitter.com/134292384267574067...
You will be able to trade memecoins on Solana while only having funds on Base.
This will give birth to a chain-agnostic UX where people will not even notice on which chain they are trading or have to swap, bridge, get gas, etc to interact with a new chain. twitter.com/177099044282770636...
Multiple partnerships have already been made with projects like @SYMMIO, @phaverapp, @edgelayer, or @vertex_protocol.
The latter is worth noticing as before rebranding to Skate, Skate was called @Range_Protocol, one of the most efficient order book market makers on the market. twitter.com/177099044282770636...
They're the most efficient liquidity managers on Vertex with $250M of volume settled with $150k of capital (~$4M per day).
As a comparison, Elixir has ~30M of TVL and settles around $5M of daily volume.
Low TVL + high volume = high fees and APY.
Wondering how Skate users will benefit from it?
This comes as speculation, but as Skate will handle a single unified liquidity pool, they can actively manage funds.
Profits generated can then be redistributed to $SKATE stakers or buyback and burn?
Instead of continuing to have siloed liquidity across hundreds of new chains and dApps, Skate is working towards unification.
They would hence be working as a market maker at the chain level, solving liquidity AND dApp fragmentation.
Such efficiency could put Skate at a valuation similar to Elixir and Omni, between $800M to $1.2b FDV as it’s a combo of both in a more efficient way, opening the chain abstraction narrative.
The great part is that you can participate in their Nollie testnet and start training at the skate park.
🛹 🛹 twitter.com/177099044282770636...
Based on their success with Range, I’m confident that the team will be able to ship and make Skate a real success.
I will continue covering them as it's one of the most promising projects I've seen for a while, solving real key problems in the industry.
Tagging Skate chads:
@Slack jacket
@DeFiMinty
@0xTindorr
@Flowslikeosmo
@TheDeFISaint
@eli5_challenge
@jake_pahor
@rektdiomedes
@CryptoGideon_
@zerokn0wledge_
@0xAndrewMoh
@stacy_moor
@Axel_bitblaze6
@CryptoNikyous
@CryptoShiro_
@Haylesdefi
I hope you've found this thread insightful!
If you enjoyed it, I would really appreciate if you could RT the tweet below and follow me, @louround_ !
Cheers! 🥂 twitter.com/152900992018780979...
Sector:
From Twitter
Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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