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ABCDE Capital: Hong Kong Convention, rethink 3 hot track

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We tend to overestimate the short-term value of some technologies, while some tend to underestimate the long-term value of some technologies. These tracks may not be able to bring the investment machine purchase in line with the primary and secondary mark

Original title: ABCDE Capital: Hong Kong Convention, Rethinking 3 Hot Tracks

Recently, the Hong Kong conference was in full swing and the primary market picked up. ABCDE Q1 saw more than 100 items and experienced several particularly hot tracks in the market, among which the hottest include Appchain, ZK and Gaming.

Since the beginning of this year, some changes have also taken place in these three tracks, and we have also had a rethink, which is recorded in the Memo for your reference.

I. Appchain(especially RAAS, Rollup as a Service)

RAAS was a track that rose at the end of last year, which has a greater relationship with the release of OP Stack, but Appchain as a Service has existed for a long time, represented by Cosmos SDK. After Celestia proposed the modular blockchain, it became increasingly popular. RAAS can be thought of as a subset that has been hot recently.

Why might Appchain as a Service have been overhyped recently?

First, if you are a developer and want to build your own Appchain, you have the following options:

If your chain is EVM, then you can... .

1. Make a pure ETH side chain like Ronin (few people do this now)

2. Create an ETH side chain with Skale

3. Send a chain with Avax and connect the P chain of Avax

4. Send an EVM chain using Polygon Supernet

5. Make a side Chain based on BNB Chain with BAS

6. Create a Rollup Appchain with the OP Stack

7. Make a Rollup Appchain with Caldera (essentially Op Stack)

8. Make an L3 with Zk-Sync (expect to see it this year)

9. While writing, Arbitrum also released their Orbit, also an OpStack-like L3 infrastructure

10. There are also Opside, Stackr, Sovereign SDK and other projects under development

If your chain is non-EVM, then you can... .

1. Make a chain with Cosmos SDK, either self-reliant or share ATOM security (ICS proposal just passed)

2. Substrate is issued a chain, or bid for Poca slot, or access to octopus network, or no one to connect to, quiet time

3. Create a Rollup Appchain using Celestia's Rollkit, and use Celestia for DA. Settlement is optional

4. Create a Rollup Appchain with Dymension

5. Make a Rollup Appchain with Saga

6. Do an L3 based on Starkware (expect to see it this year)

7. There must be many more under development that I don't know or missed

Ever feel - "The options are just a little too rich?!"

Second, which apps are good for an Appchain? Remember the online article a few months ago about whether Uniswap should make its own Appchain and the debate

In summary, Uniswap as an Appchain has the advantages of transaction fees, token value capture, anti-MEV, resource exclusivity, etc., but with the user experience, security, and Debuff of reduced composability.

Overall, we don't see any plans or "ambitions" for Uniswap to make an Appchain.

Compound originally intended to use Substrate as a chain, but later gave up. Now Compound and Aave V3 are multi-chain deployment, so the possibility of making the substrate into an Appchain is not likely at present

As for Curve, it probably never was.

Only DYDX, which does not depend on composability, chose to make an application chain for Cosmos. This year's Q3 should see, perhaps the most anticipated Appchain after Luna. DYDX will also show a path to many builders -- if you have the lead in a track and don't have a high composability requirement, it makes Sense to build a "sovereign + high performance" Appchain on your own. Before that, you can first choose a general chain ecology as Dapp wretched development fight monster upgrade, wait until the level is high enough to fly solo.

This path is relatively feasible, for example, if a SocialFi DAPP based on Lens Protocol becomes so big and successful that Polygon can't handle it, It makes Sense to take that infrastructure and make it into a Rollup Appchain yourself. But in this Case, in the short term, the number of projects that can meet the above conditions to make a chain is probably less than the number of infrastructure that can make a chain...

Then there is the track that is naturally suitable for directly sending a chain to make an Appchain. This track project will be the largest user of the above infrastructure. For now, it seems unlikely that non-Cosmos Ecodefi will go this route until the inter-chain heterogeneous combinability problem is completely solved, and the most suitable track is undoubtedly Gamefi (including Onchain Autonomous World). For example, DFK and Crab based on AVAX, OPcraft popular recently, Curio with Caldera hair chain and so on.

Looking at my little Fox and Keplr purse, it seems that after Luna collapse except DFK and Osmosis, they didn't seem to have used other Appchain much, which makes me wonder that in this cycle, Do you really need "dozens of appchains or Rollup as Service" infrastructure?

Finally, the RAAS about the recent fires can be "lightly teased" alone.

1.1. OP series

At present, RAAS based on OP system are basically Fork OP Stack. There are no technical barriers. The code and documents of OP are neat and clear. Our technical guru of ABCDE could build an OP Rollup Appchain in less than one day after following the documents. Therefore, the value provided by this kind of RAAS to customers lies more in Sequencer, block browser and rapid deployment and other added values, with marketing ability far greater than technical ability

Then there is the Optimism and optimism that Appchain TPS, block time, usage fee and so on are completely homogenous, and there is no optimism about performance cost optimization, so theoretically unless OP is blocked, you can't get a "better experience" than OP universal chain on this AppChain. And the current shortcomings of OP, this kind of RAAS also completely inherit, such as the fraud proof that has not been put online yet...

But praise the OP Stack superchain vision. The more future Rollup chains are sent with the OP Stack or OP Stack Fork, the more likely it is that the OP Stack superchain will become something like a slot-free auction, with its own communication protocol, The vision of a fully asynchronous composable "boca-like" architecture is still far off, but the pie is real. OP also with the narrative of OP Stack with Arbitrum side of the raging Defi innovation fight an equal balance, the research newspaper wrote half Arbitrum also released Orbit, I said that such a big piece of fat Arb is impossible not to eat, sure enough to issue money + new project in one go, OP VS Arb again!

1.2. ZK series

Theoretically, RAAS of ZK series may improve the user experience of Appchain, because Zk-sync, Scroll and other ZKEVM routes focus on compatibility, so the circuit design will sacrifice some efficiency. There is no way to optimize for a particular Dapps. If RAAS can do separate circuit design or optimization for different DApps, the performance and experience of ZK Appchain will definitely be better than that of generic ZkEVM

However, there are few talents in the world who understand both ZK and blockchain. The few talents are mainly concentrated in Starknet, Zk-Sync, Scroll and Polygon. As for the Zk RAAS on the market at present, Basically taking the Alpha open source version of Zk-Sync to Fork you out of Zk-Sync. When Polygon, Scroll goes online and becomes fully open source, at most it will be a customer option. Do you prefer ZK-Sync or Polygon or Scroll? It's still Centos, it's still Debian visual

So, again, there are no technical barriers, BD is still king, and not as mature as OP series, after all, several ZK series Rollup official version has not been launched or is not fully open source, now available only some open source beta, bugs, experience and so on must not be as smooth as OP side. We hope to see ZK RAAS with individual circuit design or optimization for each Appchain in the future

Two dot ZK

If Appchain as Service is the representative track of modular block chain, then this year's block chain two prominent learning-modular and ZK.

The obstacles to ZK can be viewed in the following aspects

2.1 & have spent

Enlarge capacity

Needless to say, several major ZK-Rolllup main networks have been online this year, but after the online, in fact, there are a lot of problems

Degree of completion

At present, ZK-Sync, Scroll and Polygon are all EVM-compatible mainnets, except Starknet. However, Starknet also has a "son" named kakarot doing ZKEVM. The author learned from ZK experts in the industry that, in fact, the main network launch of several stars Zk-rollup is more or less like "rushing to the shelf", and the completion or maturity of each product has not really reached the traditional sense of "main network completion level". After going online, there will inevitably be a variety of problems on performance or bugs, and a high probability of the need to continue to upgrade patches and so on. A hint of this can be seen in the delays in the testing networks that were originally planned from last year to this year. The reason is that ZKEVM is "too hard" and it takes even the best engineers in the industry a lot longer to crack it than they thought. As for why are rushing to the main net this year, I want to be related to the OP side of the ecology is constantly rich, the main net is constantly upgraded and the pressure brought by stability, ZK system is not on, dayflower is cold, as long as basically can be used, we will go online. Just keep updating iterations later.

performance

The performance of the ZK series, at least at this stage, is to be expected. = of the OP department. Of course, it may not be obvious from the perspective of users, because it is confirmed on Sequencer for you ina few seconds and ZK proves what. In fact, it can be done slowly (usually it takes 10-20 minutes to finish a block). Users don't Care much about the real "Finality" of transactions on L1, nor can they perceive it. Circuit optimization, or hardware acceleration, which is now popular, is actually that 10-20 minute proof time, but it doesn't have any impact on the user experience, right

expense

The fraud certificate on the other side of OP is basically free, while the ZK certificate on your side requires a lot of computing power, which is all money... Of course, you can say that the data uploaded by ZK to L1 is less than that of OP, that is, the Gas cost to send to CallData is lower, but this reduced Gas is less likely than the extra money spent on Prover, especially after the Blob of 4844 comes out, the cost of uploading L1 is greatly reduced. The cost advantage on the OP side will be more obvious than now

safety

This is a matter of opinion. The traditional understanding is that ZK is based on mathematical proof, OP is based on economic game, math > Game, so ZK is safer than OP

This is certainly fine in the long run.

But that is not necessarily the case at this stage.

The so-called security means that the transaction is actually "terminated" on ETH L1. At present, ARBs are submitted every two or three minutes, and OP is about 10 minutes. For ZK, because of the time and effort required for proof, it will take 10-20 minutes, and it will take longer if the blocks are full. If the ecology is not prosperous enough and the blocks are not satisfied, it will take longer

As a result, although mathematics is indeed greater than game, but the current ZK system transaction end time is also much higher than OP system, which depends on the evolution of ZK algorithm, circuit optimization and hardware acceleration to continuously reduce the time of 10-20 minutes, if one day really can be shortened to 10-20 seconds that level (5-10 years later?) The ZK system will be able to beat OP, at least in the area of security

2.2. Middleware and Others

This is actually a lot of people are more optimistic about the expansion of the track, because the ZK to do the expansion is very "heavy" work, see the Rollup for several years before the main network online, while the middleware is relatively much lighter, and can perfectly play the characteristics of ZK

The hottest middleware track is Interoperability, of course. With ZK certification, they eliminate the need for third-party witnesses, greatly improve the safety of Bridges, and even open up ecosystems that are once separate and difficult to communicate with each other, such as between Layer2, Or EVM interconnects with Cosmos IBC and so on. The teams that are currently working on it are Succinct Labs (which just released their Telepathy product a few days ago, implementing a one-way ZK Bridge for ETH), Electron Labs (which originally proposed the concept of ZK-IBC), Polyhedra (ZK Bridge, ZK DID, ABCDE's first project).

Although this track is much lighter than Rollup, it is still a super hardcore + time consuming track. It is highly unlikely that we will see a two-way ZK bridge with satisfactory performance and safety this year. For interoperability based on ZK, we still have to figure out a 2-3 year timeline.

As for the rest of the ZK circuit, it's been a bit of a blowout this year, as anyone who's been to ETH Denver knows, and there are teams working on everything from on-chain safes to DID, prediction machines, and even AI and machine learning. I don't know, some of it does Make Sense, and a lot of it you'll wonder -- it looks like you don't need ZK to make it... All in all, there was a sense of the explosion of ICO in 2017, when blockchain was used as a hammer to find nails everywhere. At that time, there were all kinds of decentralized taxi hailing, decentralized Airbnb and other projects that seem ridiculous now. Only this time, blockchain was replaced by ZK. It feels like every track we want to take ZK and give him a makeover...

Three. Gamefi

Gamefi is probably the hottest track right now, not one of them. If you count all the events you've seen and talked about over the last few months, if you cut down to every sub-track, Gamefi is probably the most.

It's not hard to understand why. On the one hand, Vishen said years ago that finance and games would be the first two scenarios of blockchain.

On the other hand, Defi, storage, Socialfi and other attempts have made unsatisfactory progress in Mass Adoption. Although the myth of X2Earn is shattered, Axie and StepN make all insiders see the hope of "breaking the circle", and many even firmly believe that, Large-scale circle breaking, also have to rely on "games".

So all of a sudden, not only Web2 game developers began to pay attention to here, including some technical teams from big factories and well-known game studios, but also Web3 various original NFT, Defi and other ecosphere people began to consider how to "set a layer of Gamefi" on their own things. Ape's Dookey Dash was a relatively successful experiment some time ago.

But the Gamefi circuit is in a slightly awkward place right now. X2Earn's throes and death spiral have just ended. The right balance between motivation and gameplay is unknown. There is a general consensus at this stage that Free 2 Play, like running shoes and Axie, is no longer a model where you can buy NFT first.

What we've seen so far is the following groping patterns.

3A level -

Moving from one extreme to the other, if Axie is about Earn, the 3As are about Play, with varying degrees of emphasis. Light, such as the main Web3 circle, through NFT and other forms to attract Web3 players to enter to play, heavy, such as the main Web2 circle, from production to operation to the ground push completely go to the traditional Internet mobile games that set of model, simply put the trading system on the chain, even the wallet may give you built-in + no influence......

Casual and social --

Web2 We've all gone through the era of stealing vegetables, farms, and parking Spaces. Will Web3's Gamefi have the same era? Social, casual, and a little bit of Earn? Not sure about the future, but at least a direction that hasn't been explored much before. New X to Earn mode -- the Bet to Earn mode represented by PSI, also known as Risk to Earn, is simply put, Earn is related to your skills and proficiency, imagine a game similar to Web3 eat chicken. Each of the 100 players had to pay $1 to enter the game, and the winner took the $100 grand prize, which basically solved the Ponzi model that relied on the high growth rate of new players, and the inevitable death spiral that followed, as the economy basically became PVP. However, like triple-A, it needs to be highly playable to retain players, as the economic incentive for the average user becomes very small

Free to Own based on NFT --

As a representative of DigiDaigaku, APE Dookey Dash also has a similar Feel. In short, it is to attract players to hold NFT for free or at a very low price, and then find ways to constantly empower NFT. This requires a high level of suspense + mystery + marketing ability in the early stage of the team, as well as a high level of game development and production ability in the later stage, so it is a very high threshold route. In addition, the number of NFT in the early stage is often limited to 10,000, and how to expand the number of circles is not a small problem.

Nintendo Games --

Of course, TresureDAO and Gala are the examples. Gala's games are more "heavy" and TresureDAO's games are more "small games". After the Beacon hit, more similar small games will be attracted to its ecosystem. Web2 above small games have long been popular, Web3 can be successful copy, no one knows at present.

Defi gamification --

The DefiKingdom is the only defikingdom, its ambition is huge and its system is so complex that people can see the defiKingdom venture West on the chain again. However, after 21 years of Hype and with little progress to show for it, and a currency that has come back to where it started, Gamefi is a complex game that is deeply integrated with Defi.

Fully Onchain Game -- Fully onchain game --

This is probably one of the most hyped Gamefi categories at ETH Denver, for no other reason than the other categories have more or less the shadow of Web2.5. Only full chain games are Web3 games with full blockchain features, and some aren't even games at all. Call it Onchain Autonoumous World- autonomous world on chain. This may be the third truly "blockchain native" product after Defi and NFT. However, just as Defi (MakerDAO) and NFT (Crypto Cat) were born at the same time in 2017, but broke out in 2020,2021 respectively, the Fully Onchain Game is also in an extremely early stage of exploration, and may also need 3-4 years to win the highlight moment.

It is hard to say which one or several of these seven directions will be able to go to the end. Furthermore, there is a fundamental contradiction in the development of Gamefi. Although games are the easiest to attract users from the outside to the inside, the essence of games is to create a world divorced from reality, allowing people to temporarily escape from their busy work and life and enter the "pure land" of game paradise. However, the link to Web3 or the underlying blockchain makes Gamefi inevitably connect with the real world again through some form of financialization. Whether this connection will break the most essential "pure land" function of the game may be a question worth pondering.

To sum up:

Rethinking the three most popular tracks does not mean that we do not believe in these tracks. On the contrary, ABCDE believes in these three tracks for a long time, and has or plans to layout in these tracks. We tend to overestimate the short-term value of some technologies, while some tend to underestimate the long-term value of some technologies. These tracks may not be able to bring the investment machine purchase in line with the primary and secondary markets or short-term return on investment. And for us this LP 5-year exit period of long-term investment VC, time will be our best friend.