Nothing Research

One of the main themes of Ethereum's current technological updates is to repay the 'technical debt'.

Previously, when we were sharing Ethereum technologies, many people asked what exactly is technical debt.

Last week, this EIP-7999, which was personally promoted by Vitalik, is a great case; it aims to resolve the technical debt of Ethereum's multiple coexisting fee models.

As we all know, the normal gas market of Ethereum was formed after EIP-1559, which is a model of base fee burning + tips for miners.

However, after EIP-4844, Ethereum created the Blob to make L2 cheaper and faster, which contains a lot of cheap transaction space (after all, it will be deleted after a few months), so it has another set of fee models aimed at L2.

This is a standard technical debt; when launching L2, it chose simplicity over elegance and added the Blob mechanism in a patchwork manner.

This means that gas fees are currently operating in a dual-track system.

The way to repay the technical debt now is to unify these two gas fee markets, directly introducing a maximum fee (max-fee), where users can directly specify the maximum amount they are willing to pay.

This maximum fee will be delegated to an algorithm of the nodes, which will allocate costs between various technical components based on actual requests and real-time block conditions.

In this way, the two major fee markets are unified, and it can further reduce the learning costs for users.

However, this needs to be completed through a hard fork, which should be included in the next or the next-to-next upgrade.

In fact, there is also a lot of traditional development technical debt, which usually swings between 'deriving redo' and 'adding a patch', and considering the workload, it often ends up choosing to add a patch.

The result is that the code and functionality become increasingly bloated, eventually leading to a situation where no one dares to touch it easily, and the only option is to keep adding patches.

So, technical debt should be repaid in a timely manner.

MicroStrategy's latest issuance of this STRC has become the largest financing of an IPO in the US this year.

The definition of STRC is quite complex, fully known as Variable Rate Series A Perpetual Extendable Preferred Stock; loosely, it can be understood as a type of bond.

Initially, the issuance amount was 500 million USD, ideally oversubscribed by 5 times, raising 2.5 billion USD, surpassing the historical 1.7 billion USD of the American natural gas energy giant Venture Global, marking the largest energy IPO in American history.

Of course, oversubscription by xx percent is also common and sounds better from a communication perspective.

However, 2.5 billion real cash has indeed been injected into the Bitcoin market.

For this STRC, the initial interest is 9%, approximately twice the yield of US Treasury bonds, which is still quite attractive.

The initial par value is $90, and the future guaranteed official redemption price is $101.

Its price is designed to maintain around $100 $ in the long term, thus providing an advantage regarding capital gains tax upon redemption.

In the past, MicroStrategy hoped to issue bonds with very low interest that could eventually convert into MicroStrategy stock. However, STRC cannot be converted into stock, which is why Saylor mentioned that issuing this stock would not dilute MicroStrategy.

Additionally, STRC has a very high priority, ranking above STRK and STRD, and only below STRF.

STRC has a very strong capital preservation ability.

According to the Swan Bitcoin mentioned Saylor's conference call, the dividends of these preferred stocks (including STRF, etc.) remain quite safe even when Bitcoin drops by 80%; even in extreme declines of 90%-95%, theoretically, dividends may be temporarily suspended, but they will ultimately be made up.

Moreover, STRC is prioritized over the other two stocks on this basis. To be honest, although it has only been a few years, it is now completely unimaginable to feel Bitcoin dropping back to $11,000.

So some people say that this STRC is a bond with Bitcoin exposure; we believe it is more like a super wide dual-currency profit product. If Bitcoin rises, you get high interest; if Bitcoin crashes (-90%), you get Bitcoin.

But in any case, Saylor is still amazing; he always manages to design new play styles to attract new money, then resonates upward, bringing new highs.

This content is jointly published by Nothing Research, Ebunker, and Ourbit.

Cryptocurrency ETFs are becoming more and more common

For example, this one promoted by Bitwise is an index composed of a basket of 10 cryptocurrencies. (Although several CEXs have tried to launch them unsuccessfully over the past few years)

The current status is that the SEC first approved it, and later instructed to postpone, so it has not been able to be listed for a long time.

In addition, from this 10 index, you can see many clues.

First is America first
So you can see XRP, SOL, SUI, LINK, Avax, and even DOT

PS: Moreover, compared to SUI, Aptos, the leader of Facebook's trio, seems to be lagging behind.

Secondly, exchange tokens are excluded.
It's a pity for BNB, as it is actually an important part of the cryptocurrency market.

Finally, among PoW tokens, there is a preference for LTC, but not for BCH and Doge, indicating that PoW does not have an extra advantage.

Grayscale's GDLC index is even more conservative, with only 5 assets:

But it still conforms to this general rule:

(1) America first
(2) No platform tokens accepted
(3) PoW does not have a special advantage

Of course, the situation with Grayscale GDLC is similar; it was first noted by the SEC and then paused.

According to analyses from relevant insiders, it seems that a certain commissioner within the SEC opposed the proposal, leading to the suspension, with the reason for opposition being that a standard needs to be established before these index ETFs can be launched.

Observations and personal views from Nothing Research Partner BonnaZhu, the following content does not constitute any investment advice.

As a meaningful attempt, it is good, and the Conflux team has put in a lot of effort for this, but based on the current yield/risk/liquidity combination of this RWA product, it is quite difficult to scale on-chain:

- Fixed 8% annualized
- 3 months without liquidity

This has already discouraged most funds, and purchasing this product requires cross-chain transactions, which further reduces the incentive. There are many opportunities in the market that offer higher yields with instant liquidity, and if one simply aims to break even on 8%, buying Ethena Labs' sUSDe would be sufficient.

After all, these are not assets like U.S. Treasuries and U.S. stocks that inherently have excellent off-chain liquidity and strong consensus; to achieve good 'sales', the yield expectations must be sufficient, exceeding the on-chain native yield opportunities during the same period. Huma Finance and GAIB are two relatively good examples, as if you look at their PT yields on RateX and Pendle, they are basically 13-15%.

If the yields cannot be made very high, then at least the liquidity of the assets must be relatively good. However, for an underlying asset that fundamentally has little liquidity off-chain, this seems a bit too harsh; who would come up with this money?

But the reality is, if a certain underlying asset is very difficult to design a RWA structure that meets on-chain capital's preferences for yield/risk/liquidity, then that asset may not be suitable for on-chain at this stage; at least, it certainly will not be particularly welcomed.

Issuing RWA is somewhat like doing investment banking; although the compliance of product architecture is crucial, merely focusing on approval and implementation while neglecting the 'sales' aspect will ultimately lead to inefficiency.

In fact, investment banks are quite profitable
It relies on their meticulous consideration in product design
If a product does not make money and cannot be sold
Then it certainly will not be made.