Lao Bai, a fan of the public account “Orange Book,” recently published an article titled “Crypto Impotence.” The article discusses the spread of a boring trend in the crypto world, comparing it to the Black Death, as no one knows exactly where it originated, but it has become pervasive.
Indeed, in recent times, there haven’t been many noteworthy technological developments in the field. The only topics generating heat are centered around memes like Pepe, Trump, and Jenner. The last major technological hotspot was probably the “Pandora” of token coins.
The primary market has also been affected, but luckily, innovation is still happening. While there haven’t been any groundbreaking 0 to 1 advancements, there have been many 1 to 10 advancements in various fields.
In the previous research report, the focus was on ETH and the new ideas for modular storytelling across different layers. In this report, let’s take a look at the “1 to 10” advancements in the BTC, Solana, and Restaking fields.
1. BTC
The highly anticipated Rune did not bring the expected excitement. While BRC 20 and Ordi were pleasant surprises, Runes seemed to be a collective “all set, just waiting for the wind” ceremony from Cex to Dex to Infra. However, as the saying goes, “anything that becomes popular will die,” at least in the short term. Looking at the long term, protocols like Runes, Atomical, RGBRGB++, etc., have the potential to inject new vitality into BTC’s asset issuance. The upgrade of BRC 20 two months ago has also clearly aimed to be more functionally flexible. Not to mention that it has become much easier to implement native stablecoins based on BRC 20.
In the BTC ecosystem, the most noteworthy projects in the past two months, besides the previously mentioned UTXO Stack, are Fractal, Arch Network, and Quarry.
Fractal has a very “unique” design concept. Essentially, it can be seen as a 100% fork of BTC, but with a block time reduced to 30 seconds. You might ask, “What is this?” Isn’t it just a BTC testnet? Litecoin, BCH, and BSV have their own characteristics, but this is a 99% mirror chain. What’s the point? How is security ensured?
In fact, there are several significant points:
1. Fractal uses the same POW, SHA 256, as BTC, has market value, and incentives. It is more stable than the BTC testnet (for those who have used the BTC testnet, you’ll understand) and faster (30 seconds per block).
2. It has 1/3 joint mining with the BTC mainnet (the mainnet miners can mine one Fractal block every 90 seconds), theoretically achieving 80-90% of the BTC mainnet’s security.
3. Because it is consistent with BTC, all kinds of XXRC 20 assets and infrastructure on BTC can seamlessly migrate without any code changes.
4. It can implement controversial opcode proposals such as OP_CAT and ZK native verification opcode faster than the BTC mainnet.
5. In the future, it can implement contract-based on-chain encryption through scripts.
6. While others might find this strange, it seems perfect for Unisat to do.
Arch, unlike various “aesthetically fatigued” BTC EVM L2/side chains, brings programmability to BTC through an indexer and a decentralized prover in ZKVM. It can be seen as a 1.5-layer where transactions are triggered on L1 and various asset conversion logics are executed in Arch’s ZKVM, ultimately generating ZK proofs and broadcasting the results back to the BTC mainnet. It has similarities to RGB++, which relies on BTC mainnet transactions to trigger operations. However, RGB++ uses homogenous bindings based on CKB Cells, while Arch relies on an indexer + ZKVM for implementation.
Quarry has transformed BTC-based joint mining into an infrastructure form, essentially creating a “OP Stack” + “Eigen Layer” for miners or computational power. In simple terms, through Quarry, you can quickly launch a POW chain that can be jointly mined with BTC miners. The security is ensured by the hashrate of BTC miners, and the token rewards are given to the participating miners, similar to EigenLayer’s AVS rewards. In a market dominated by POS, it is worth observing how much market share POW Appchains like Quarry can capture.
2. Solana
The most interesting aspect of Solana recently is the concept of “modularity.” It is well-known that ETH has embraced modularity, while Solana has always been the representative of the single-chain camp. Over the past few months, there have been several projects discussing modularity on Solana, such as MagicBlock, Sonic, Solforge, and Mantis.
MagicBlock focuses on an Ephemeral Rollup, which emphasizes a “use and delete, burn after reading” approach. This concept was first introduced by AltLayer 22, but it is no longer the main selling point of AltLayer. As a project that focuses on the Solana game engine, this Ephemeral Rollup should be part of their solution.
Sonic, on the other hand, focuses on a Gaming Appchain on Solana. They recently announced their funding and have an architecture called HyperGrid Framework that allows games to easily launch an SVM Appchain. Sonic can be seen as the first L2 prototype, similar to XAI on Arb.
Solforge is a more general-purpose Appchain Stack aiming to be an SVM version of the OP Stack or Arbitrum Orbit.
Mantis is an Intent settlement layer SVM Rollup that is not limited to serving the Solana ecosystem. It can settle transactions related to EVM using an OrderBook Flow, similar to how Solver inherently possesses certain chain abstraction properties.
There are several interesting points worth observing:
1. Although Solana focuses on high-performance single chains, it is said that when a game became popular in the first half of the year, its transactions accounted for more than 20% of the entire chain. This was the case with only four or five digits of daily active users. It is hard to imagine the load Solana would have to bear if the number of daily active users increased or if there were several similar game chains. This may be an important catalyst for Solana’s move towards modularity.
2. Toly himself seems to have shifted from opposing modularity last year to a more neutral attitude this year, as can be seen from his tweets.
3. Many members of the Solana Foundation lean towards supporting modularity, and many developers believe that modularity is inevitable for Solana.
4. Kyle from Multicoin has always been an advocate for Solana and single chains. Apparently, he still opposes the concept of modularity.
The next 6-12 months will be an interesting observation period for Solana’s infrastructure. In addition to the growing trend of modularity, the launch of a simplified version of FireDancer before the end of the year and the full version next year will bring improvements to Solana’s TPS and stability, which is also highly anticipated.
3. Restaking
Restaking has been the hottest trend in the past six months, without a doubt. However, many people don’t fully understand the differences between the two leading players in this field, Babylon and EigenLayer. Even some project teams have doubts about this, so it’s worth discussing separately.
In simple terms, EigenLayer can set relatively complex slashing mechanisms because it inherently has smart contract capabilities. For example, the first AVS EigenDA was developed based on this. If you want to use Babylon to create something similar to “BabylonDA,” it’s not possible because the scripting support on the BTC main chain is not capable of handling such complexity.
However, Babylon has its own black technology, such as Extractable One-Time Signature (EOTS) and the BTC timestamp protocol, which Eigen does not have. This is why Babylon has the confidence to pioneer native BTC restaking and why Eigen cannot achieve this.
Of course, the functionality of native BTC restaking is limited. It mainly covers two aspects: helping POS chains prevent long-range attacks through the BTC timestamp protocol and helping POS chains implement or cold-start their POS security consensus. In short, if you want to launch a chain, you can come to me. If you want to develop a DApp, please go to Eigen.
But what if you insist on using Babylon to create an AVS to implement something like EigenDA or an oracle? The answer is, “Yes, it’s possible,” but you need an “extension package.” For example, Chakra or SatLayer can be used to “add a layer” on top of Babylon and implement more complex slashing mechanisms using the built-in smart contracts. With this, you can develop AVS DApps in genres such as DA, storage, and oracles.
To put it more abstractly, in terms of functionality: Babylon + Chakra/SatLayer = EigenLayer.
In the Babylon ecosystem, besides the aforementioned projects that aim to make Babylon as “complex” as Eigen, there are also projects like Solv Protocol and Lorenzo that target the LRT ecosystem, similar to EtherFi and Renzo. In the Eigen ecosystem, because it is inherently “complex enough,” the Stack or “extension package” has already reached a higher level. For example, Ethos focuses on AVS coordination/interoperability layers, while Aethos focuses on AVS programmable policy layers. As Eigen’s Stack becomes richer and its infrastructure becomes more complete, Eigen may become more like AWS, where you can achieve the “security level + infrastructure suite” you want with just a few clicks and drags. Whether you want to create a chain or develop a DApp in storage or oracle, it’s entirely up to you.
P.S. Recently, I chatted with a financial analyst who said that he has talked to at least fifty to sixty venture capitalists. Some are interested in infrastructure, gaming, or Bitcoin, but there is one sector that all VCs are looking at without exception. Can you guess which one?
The answer is: Ton…
However, investing in Ton is much more challenging than on ETH or Solana… Just imagine if Notcoin had come with a deck or demo to VCs half a year ago, how many VCs would have decided to go all-in on this project?
If I have the opportunity in the next research report, I will write about Ton.
