A monthly review of what's happening in the crypto markets enriched with institutional research on the most important topics in the industry in cooperation with the Swiss digital asset specialist, 21Shares AG.
Although the month started off with all-time highs, it was a red November for most of the top crypto assets by market capitalization. Bitcoin saw a 7% drop in price month over month, after recording a new high at around $69,000 on November 10. This drop could in part be explained by the continuation of the Chinese crackdown, followed by the speculation of an EU-wide ban on Bitcoin mining.
Other possible factors could be attributed to Omicron, the new Coronavirus variant, as well as the holiday season pushing people to sell to support their expenditures as the world prepares for the implications of the supply-chain crisis. On a brighter note, Avalanche pushed towards another all time high and Solana held "Breakpoint" an industry conference in Lisbon, both of which we will delve deeper into for this monthly review.
Tapping on that root
The long-anticipated Taproot Bitcoin upgrade finally activated on November 14, paving the way for enhanced user privacy, transaction and automation efficiency. The upgrade is composed of three building blocks: the Schnorr Signatures, Taproot, and Tapscript. Offering a more secure, lightweight and flexible type of cryptographic signature, Schnorr Signatures (BIP340) is designed to guarantee that single and multi-signatures and even smart contracts transactions look the same on the blockchain. This would improve user privacy and reduce data load, fundamentally supporting scalability. Meanwhile, Taproot (BIP341) executes a new way to send Bitcoins called Pay-to-Taproot (P2TR), combining both Pay-to-Public-Key and Pay-to-Script-Hash which would give users better privacy and more flexibility. To utilize both aforementioned building blocks of the upgrade, Tapscript (BIP342) is created to improve the programming language of Bitcoin. Developers will have Tapscript to thank when implementing future upgrades more seamlessly.
This is especially good news for countries, like El Salvador, using Bitcoin as a legal tender as the upgrade aims to reduce network space and computational power to leap towards mass adoption. If other countries like Zimbabwe plan to follow suit, it will be good news for them too.
Avalanche in a rush
As the charts were all red, Avalanche recorded an all-time high at $146.22 on November 21. Avalanche is one of the Layer 1 blockchains complementing Ethereum to onboard billions, functioning as a platform for decentralized applications and custom blockchain networks. Avalanche’s selling point is having a transaction output (higher than Ethereum) of up to 6,500 transactions per second while not compromising scalability and decentralization.
The performance of its native token AVAX can be attributed to several activities the Avalanche network has been up to since September.
- On November 1st, the Blizzard Fund was announced to offer more $200 million funding to encourage developers to help build applications on the Avalanche network. The fund will prioritize four key areas: DeFi, enterprise applications, NFTs and culture applications. The funds will be used for equity investments, token purchases, partnership efforts, technology and business development.
- A strategic alliance with Deloitte was announced on November 16 to counter risk more efficiently by building stronger disaster relief platforms using the Avalanche blockchain. This new disaster recovery platform is said to help state and local governments easily demonstrate their eligibility for federal emergency funding.
- AVAX’s high performance could also be on the back of Avalanche Rush, a program it announced back in August to lure in users on its network. Avalanche Rush is an incentive mining grant and airdrop program with up to $180 million in AVAX tokens from the Avalanche Foundation that seeks to deploy DeFi applications on the Avalanche platform. The program rewards its users for lending or borrowing with DeFi with interest on deposited tokens.
Solana Breakpoint
From November 7 to 10, Solana held a three-day conference in Lisbon, Portugal. Solana has one of the most vibrant and dynamic ecosystems out there. About 2,000 attendees came together to discuss the future of finance, digital ownership, governance, trading, social media and online communities. There’s a handful of important events that happened during the conference:
- Initially aiming for $50 million, Reddit’s Founder Alexis Ohanian launched a $100 million fund, together with Solana Ventures and SevenSevenSix, to support the development of web3 social media.
- Brendan Eich, the creator of Javascript and co-founder of Brave Browser said that Brave would integrate Solana and make it the default for DApp support.
- Render Network’s founder Jules Urbach announced that her company would also start integrating both Solana and Metaplex. Render has been using blockchain to render animations and graphics for the likes of HBO, Netflix, and Disney. With a Solana integration, they'll be able to use the same rendering power on a phone or tablet to bring their audience a photorealistic metaverse.
- Neon Labs announced that it’s bringing Ethereum Virtual Machine (EVM) compatibility to Solana, made possible thanks to a $40 million round of funding they raised.
- Crypto wallet analysis company, Nansen, is also launching Solana Dashboards, which makes Solana Nansen’s first non-EVM platform.
ENS airdrops responsibility
Ethereum Name Service (ENS) is a distributed, open and extensible naming system based on the Ethereum blockchain. ENS is similar to DNS, the Internet’s Domain Name Service, it converts long wallet addresses into readable names like alice.eth.
Building on the core principles of decentralization, ENS announced that it believed the space had matured enough to pass on its governance to its community and is now accepting applications for Decentralized Autonomous Organization (DAO) delegates this month. This delegate model will allow the community to select their leaders supporting the growth and longevity of ENS. The creation of the DAO also brought about the genesis of the ENS governance token.
https://twitter.com/BrantlyMillegan/status/1458167830675922951
The token distribution was structured in a manner well received by the community, with the largest beneficiaries of the airdrop being the early registrants of a .eth domain. After the initial frenzy of the free five-figure airdrop, the community was aptly reminded that they were not airdropped free money, they were airdropped responsibility.
Decentralized Identifiers (DIDs)
The concept of self-sovereign identification systems on the blockchain through decentralized Identifiers (DIDs) is not a new concept, but ENS provides a very personable and relatable way for Ethereum users to develop their on-chain identity - exceed the use cases of IP and email addresses. You can even set your own NFT as your avatar.
In the coming months with the development of DIDs we can expect access to on-chain credit, public storage, messaging and decentralized credentials to take a solid hold. Alchemix Finance, a self-repaying loan protocol hinted at the functionality of delegating your credit to those you deem worthy.
The future access to decentralized finance applications in the form of urban transport apps, health care and car insurance will see the use of DID to authorize sign-ins with zero-knowledge proofs to cryptographically verify your data. Your personal information such as your driver's licence, credit card details and health records will be used to sign in, transact and obtain services without handling your personal data to the likes of Google, Apple or Facebook.
Riot on the Binance Smart Chain
Users on Binance Smart Chain (BSC), a DeFi blockchain competing with Ethereum, have been experiencing malfunctions primarily due to the reduction of block time to 3 seconds as opposed to the average 13 second block time on Ethereum. On November 17, BSC’s user traction reached an all time high, recording 14.7 million transactions. Users are accusing Binance of throwing its community under the bus for more profit. The raging BSC community took their frustration to Github, one user called the blockchain a lost cause.
Developers are complaining about:
- The lack of code review
- Zero response to bug reports, especially those about non-syncing nodes
- Zero beta testing, making the blockchain pile into chaos.
This could have been one of the main causes for the drop of Binance’s native cryptocurrency, Binance Coin (BNB). Frustration can drive developers (back) to build their apps on Ethereum or other ecosystems such as Avalanche or Solana and essentially abandon BNB.
A week later, one of BSC’s developers responded to the aforementioned Github thread, apologizing for the lack of transparency and communication for each release. They said that these errors are mainly due to the upgrade being put in place. According to the developer, the sync speed in many nodes has improved now. More architecture-related improvements are under their way to be proposed as new BEPs soon.
