Weekly Recap
March 2, 2024

Crypto Fundamentals #66

Robinhood announces partnership with L2 Ecosystem Arbitrum

Jimmy Zheng
COO
Alex Weseley
Research

Gm to everyone at ETHDenver this week! This week, Elon Musk sues OpenAI, Telegram to share ad revenue with channel owners through Toncoin, Gemini to Return $1.1 Billion to Earn Customers, Hong Kong to expand Chinese CBDC pilot.

🌞 Robinhood announces partnership with L2 Ecosystem Arbitrum

💫 L2 Roll-up Blast goes live on mainnet

The week saw huge gains across all major tokens as average and median WoW prices increased by 17.4% and 18.3%, respectively. The Bitcoin ETF saw record daily inflows on Wednesday with the BlackRock IBIT product netting ~$612mm in a single trading day. Memecoins have also seen a meaningful run-up over the past week with large-cap memecoins such as SHIB and PEPE seeing triple digit WoW gains (125% and 232x%, respectively).

https://www.coingecko.com/en/categories/meme-token

Numerous “dino-coins” (tokens that were popular in prior crypto cycles) saw huge growth as well, with Cardano seeing a ~28% WoW price increase. Meanwhile, the S&P 500 and Nasdaq Index grew by 3.6% and 1.6% WoW, respectively, as the S&P 500 index added Super Micro Computer (SMCI) and Deckers Outdoor (DECK) to its index. Appliance maker Whirlpool Corp (WHR) and regional banking company Zions Bancorp (ZION) will leave the index and move into the S&P 400 mid-cap index.

🌞 Robinhood announces partnership with L2 Ecosystem Arbitrum

Robinhood, a well-known online stock and cryptocurrency brokerage firm, has recently announced a partnership with Arbitrum, a leading Ethereum-based layer-2 (L2) network, to enhance the functionality of its Robinhood Wallet. This collaboration, unveiled at ETHDenver, aims to simplify the user experience for those new to blockchain and DeFi, particularly by optimizing swaps on the Robinhood Web3 Wallet. The focus of the announcement is on the ability of Robinhood Wallet users to access Arbitrum swaps through decentralized exchanges. This is a major move in the direction of widespread crypto adoption. Robinhood reported 12 million monthly active users in Jan 2023. They gave users exposure to crypto through their brokerage app starting with Bitcoin and Ethereum back in February 2018.

A major problem that the blockchain industry has been vying to solve over the past several years is how to simplify onboarding. For users new to the Ethereum ecosystem, seeing that they have to spend $10+ to swap tokens can be scary and a turnoff from crypto altogether. Layer 2s help mitigate this problem with lower transaction fees: on Arbitrum it costs about $0.27 to perform a swap, according to L2Fees. Robinhood’s familiar name and feel could be a great onboarding source for their users to start interacting with DeFi on Layer 2s. According to the press release, Arbitrum and Robinhood will continue to work together to support access to cross-chain swaps and other campaigns that lower the barrier to entry to web3. The partnership will continue to find ways to abstract away the technical complexities of blockchains such as bridging.

Arbitrum is currently the largest layer 2 solution by TVL and DEX volume (with ~$3bn of TVL and ~$4bn of daily trading volume in Feb 2024), according to Artemis data. Robinhood choosing to partner with Arbitrum was likely driven by Arbitrum’s robust DeFi ecosystem, deep liquidity and high trading volumes, which would enhance the experience of any trader onboarded into the platform.

The announcement of the partnership led to a surge in Arbitrum's ARB token, which jumped more than 11% moments after the news was released. This positive market reaction underscores the significance of the collaboration between Robinhood and Arbitrum. By leveraging Arbitrum's L2 solutions, Robinhood will allow its users with an efficient and user-friendly way to engage with swaps and other DeFi activities.

💫 L2 Roll-up Blast goes live on mainnet

Blast, the layer 2 rollup developed by the team behind the NFT platform Blur, officially went live on February 29, 2024, marking a significant milestone for the network. It attracted significant attention and funding prior to its mainnet launch in November 2023 when it opened its bridge for one way deposits. Based on DefiLama data, TVL on Blast reached a peak of $2.3 billion on Feb. 29th, the day mainnet went live. Since then, funds have been moved to other Blast addresses.

Blast has uniquely positioned itself as an L2 protocol that provides native yield on ETH and stablecoins. Native ETH yield is achieved by providing ETH yield from staking on L1, initially using Lido, and transferring it to users via rebasing ETH on L2. As for stablecoins, when a user bridges a stablecoin to Blast they receive USDB, Blast’s native auto-rebasing stablecoin whose yield comes from Maker’s onchain T-bill protocol. USDB can be redeemed for USDC when bridging back to L1. In the future, the community will have the ability to supplement or replace completely the sources of yield, currently Lido and Maker. The native yield aspect of the protocol has been the topic of hot debate in the community with some questioning whether it constitutes ‘ponzinomics’ or represents a genuine yield.

Blast is also uniquely positioned in the optimistic rollup space as they intend to programmatically share gas revenue with dApps. According to Artemis data, competing optimistic rollups have been generating around $5-6m in weekly fees, or about $300m in annualized fees. DApps can use this to subsidize gas fees for their users and create a superior user experience.

The launch of Blast Mainnet launch unleashed nearly $2.3 billion in crypto that had been previously locked up, providing liquidity and access to the funds for its users. The mainnet launch signifies a transition from a preparatory phase, where the network was accumulating deposits and building its user base, to an operational phase where users can actively engage with dApps on Blast. This transition is crucial for demonstrating the network's capabilities and its potential to enhance Ethereum's scalability and efficiency.

Detailed dashboard for people who love more numbers in smaller font:

Note: Revenue represents fees that go to the protocol’s treasury or are returned to tokenholders via a burn mechanism (source: Token Terminal). Weekly commits and weekly dev activity as of 2/10/24.

The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments.

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