Software engineer, Web3 lover, crypto addict.

padaw3n

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How Aave, one of the largest lending platforms, launched a protocol called "Lens Protocol", a permissionless, composable and decentralized social graph that facilitates the creation of a Web3 social platform.


Social network goes 3.0 

Last May 18, Aave, one of the largest lending platforms, launched a protocol called "Lens Protocol", a permissionless, composable and decentralized social graph that facilitates the creation of a Web3 social platform.

It uses existing concepts of social networks and merges them with new Web3 concepts around ownership by implementing NFTs as a core element of the protocol.

The protocol is open source and allows developers to build their own social platforms on top of it.

## What is a social graph?

A social graph is a diagram that illustrates interconnections among people, groups and organizations in a social network. Today all traditional social media like Facebook, Twitter, Instagram are centralized since all of your interactions are hosted in the company’s servers.

So this type of social graph is centralized and private, meaning all users depend on the platform's algorithms and policies and content creators do not truly own anything published on these platforms. There is no portability. Your profile, friends, and content are locked to a specific network and owned by the network operator. If you wanted to leave Facebook today for a competing social network you would need to start building up your social graph from scratch. A herculean task that many are not willing to take upon them.

Lens Protocol corrects this by building a decentralized, non-custodial social graph built on top of the Polygon blockchain that any application can plug into. Rather than being owned by large tech corporations, it is designed to allow creators to own the connections with peers.

![Screen Shot 2022-07-19 at 2.47.31 pm.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Screen_Shot_2022_07_19_at_2_47_31_pm_14b4e27e47.png)

## How do users own a social graph?

NFTs form a crucial element within the protocol, allowing the social graph to be composable and permissionless. Every post, every follow and every “like” is tokenized as an NFT and it is ownership over this NFT that gives you control of your content. Nearly all content within the protocol thereby also becomes “ownable”.

Thanks to an open social graph owned by the user any application can connect and can build a user interface. Each application using Lens benefits the entire ecosystem in that it contributes towards the further development of the social graph. Creators no longer need to worry about losing their content, audience, and livelihood based on the whims of an individual platform's algorithms and policies.

Concretely, what benefits do end-users get? For example, users can switch from one application to another while keeping their content as well as their subscribers. Lastly and perhaps most importantly, Lens Protocol is fully open source and anyone can build their own apps on top of the protocol.

## What features does Lens Protocol have?
Lens has the functions of a traditional social media like having a profile, commenting, resharing a post, and more. Users will own everything, as these key functions are powered by NFTs.

![Untitled (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_1_82051e14d8.png)

## CREATE PROFILE

Profile NFTs are the key element in the protocol. It's ownership over this NFT that gives you control over your content. These dynamic NFTs contain the history of all posts, mirrors, comments, and other content you create. An address can contain multiple profile NFTs, and a profile NFT can even be owned and operated by a DAO through a multisig wallet!

![Untitled (2).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_2_a69cf72c7b.png)

## POST / COMMENT / MIRROR

Publications are the lifeblood of the Lens Protocol. Profile owners can publish pictures, music, videos or other content stored on either a decentralized protocol such as [IPFS](https://ipfs.io/) or [Arweave](https://www.arweave.org/), or a centralized storage provider like AWS S3.Publications are posted directly to a user's ProfileNFTs.There are three publication types: Post, Comment and Mirror.

**Post** is the standard publication type, akin to a regular post on traditional social media platforms. A post is composed of a collection module and a reference module. The collection module contains the logic that allows other users to mint the publication in an NFT. The reference module contains the logic that determines who can comment and mirror the publication.

![Untitled (3).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_3_a2f4520fee.png)
![Untitled (4).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_4_413a15cb07.png)

**Comment** is a publication type that points back to another publication, whether it be a post, comment or mirror, akin to a regular comment on traditional social media.  Like publications, comments live in the user's Profile NFT and therefore are wholly owned by the user. A comment can have a reference module conditions. As comments are linked to a publication they are subject to the original publication's Reference Module conditions. For example a publication may have a referral module that limits comments to only those accounts that follow the author of the original publication.

![Untitled (5).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_5_15bc4263cb.png)

**Mirror** is a publication type that points to another publication. It’s like retweeting on twitter. They also are subject to the terms of the original publication's reference module. Like comments a publication can for example have a reference module that limits the mirrors to the accounts that follow the original poster.

## FOLLOW / COLLECT

Lens offers two types of Profile Interactions.
![Untitled (6).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_6_0b7e8837d5.png)

**Follow NFT** – When you follow someone, you’re granted a follow NFT. Each of these NFTs has a unique token ID that comes with innate rarity & utility. Example : The first 1000 followers have one vote each or a profile could attach a follow module that requires a user to pay 5 MATIC to receive a Follow NFT.

These are NFTs with integrated voting and delegation capability. They have built-in governance capabilities, such as vote delegation, to allow for the creation of Social DAOs using Lens Protocol. These unique traits can be used to limit voting to your most loyal fans in governance. Of course, like other NFTs they can also be sold and transferred on an open-market.
![Untitled (7).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_7_b1674a4f43.png)

**Collect **- Like what you see? You can collect publications from people you follow. A new form of self-expression, curate your collection, and show off what you love. This collect feature enables anyone to collect your content based on the price, size, and time limit you set ! So collects allow creators to monetize their content. Creators can also make their collect modules to add even more functionality!

## Lens developer garden:

You can Explore the developer garden where you can learn more about the key features of the protocol and how they work: [text](https://l.messenger.com/l.php?u=http%3A%2F%2Flens.dev%2Fgarden&h=AT0h5R2fDWPT9yuu9pO5KF7IpviEnb3J0mZLCAgoGZ2JCiffiDnN6KS9r2Bkg5S7XocDlzp5nCadjj2xZqVrPnRvv6ylwbDrwEhaVBDNW4Z_tASP_ussT5wF_lTMZvQSOag)

## Garden is growing

There are already some application running on lens protocol like:

[LensFrens](https://www.lensfrens.xyz/): Discover and follow other lens profiles based on similar Web3 footprint.
[Lenster](https://lenster.xyz/): Lenster is a decentralized, and permissionless social media app.
[Phaver](https://phaver.com/): Share-to-earn decentralized social app for the most interesting feed on your phone
[Alps Finance](https://app.alps.finance/#/login): Decentralized social trading network. Build your DeFi investing community and reputation today!
[Refract](https://refract.withlens.app/): Your crypto-friendly link board. Discover new projects, highlight interesting articles and share new ideas.

[Here](https://lens.xyz/#apps) you can find more apps powered by lens. 

![new.jpeg](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/new_53787b2c20.jpeg)

## Conclusion

Lens Protocol seeks to solve the major problems of existing social networks like centralization of data and missing portability of profiles, followers and content. It takes the basic functionality of a social network but brings in lots of new cool stuff. In particular new ways for creators to monetize content and communities to rally together. Imagine every sub-reddit and every Twitter community was a DAO with native coordination tools at disposal, that’s Lens in a nutshell. Developers also seem to love it. With all these new features Lens protocol has nothing to envy traditional social networks, on the contrary it’s only getting started and has its best days ahead.

## Sources: 
[https://medium.com/@bitsnbyte/lens-protocol-the-decentralized-social-media-platform-73461dd332fe](https://medium.com/@bitsnbyte/lens-protocol-the-decentralized-social-media-platform-73461dd332fe)
[https://tokenizedhq.com/lens-protocol/](https://tokenizedhq.com/lens-protocol/)
[https://github.com/aave/lens-protocol](https://github.com/aave/lens-protocol)
[https://mirror.xyz/lensprotocol.eth/YG9iFIs2emVFRtj3JqY95Dk6opNqM0aC9YoM-Ppp5as](https://mirror.xyz/lensprotocol.eth/YG9iFIs2emVFRtj3JqY95Dk6opNqM0aC9YoM-Ppp5as)
[https://docs.lens.xyz/docs](https://docs.lens.xyz/docs)


@rosstothefuture

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How web3 technology will benefit the betting industry

Azuro Protocol: Can the betting industry benefit from web3 technology?

Azuro has recently announced the mainnet launch of their decentralized betting protocol on Gnosis Chain and the first frontend [bookmaker.XYZ](https://bookmaker.xyz) has connected to the protocol, but with hundreds of new web3 projects popping up every week, why is this news important?

Betting today is broken and is built on negative incentives that put the bookmakers and players at odds with each other. It is common in the betting industry for players to be treated unfairly by having their accounts restricted or winnings withheld for winning too often. Bookmakers go to great lengths to ensure they have the upper hand over the players and use extensive cumbersome KYC procedures in an attempt to delay or refuse large withdrawals. With no single overarching governing body to protect the players, they are often left without a solution and often have to reach out to 3rd party mediators for dispute resolution. 

In the same way DeFi disrupted traditional finance, Azuro aims to decentralize and democratize the betting industry. The use of smart contracts creates a level playing field for both players and bookmakers and allows for a trustless, transparent, and permissionless betting experience that is simply not possible in web2. 

Previous efforts have been made by reputable web 3 projects to build on-chain betting, but all attempts have failed to reach a critical level of adoption up to this point.

## The Past
In 2015 Augur, a decentralized prediction market, became the 1st ever ICO on Ethereum selling 8.8 million REP coins and raising over $5.5 million. This was an exciting time for blockchain and the betting industry but sadly the hype was short-lived as the project subsequently failed to deliver a quality user experience (UX). 

Even after 5 years of working on improving the UX, they had still not managed to design a solution that could scale. 

This led to other teams such as Polymarket having a crack at prediction markets by trying a different approach as well as pivoting away from sports betting to focus on politics or cryptocurrency-related outcomes. However, none of these projects really managed to deliver a compelling product, provide a good UX and attract enough users to their platforms. Stefan George the co-founder of Gnosis and investor in Azuro summarized it well:

“Early projects like Augur, Gnosis, and Polymarket lacked a critical understanding of sports betting, which is still the biggest market for applying the solutions that these teams were building.”

**A hybrid team of sports betting veterans and Web3 pioneers**

The Azuro team has a history of working directly in the traditional betting industry with experience in online betting, sports media, and gambling industry payments. The wealth of knowledge that the team brings to the project is unparalleled and will be key to the success of the protocol. Spotting the differences between early Web3 prediction markets and a  traditional sportsbook led the team to rethink the current peer-to-peer design and come up with something radically new.

The main problem with a peer-to-peer design stems from the fact that you are reliant on market makers to create the market, price the market, and seed initial liquidity before there is anything for players to bet on. The design is inefficient and leads to little to no markets & a lack of liquidity behind them. Prediction markets currently are closer to betting exchanges such as Betfair, which although popular with bettors, betting exchanges make up only ~1% of the total market with the majority favouring sports books.

## The Present
Azuro took inspiration from the AMM architecture used by DEXs (such as UniSwap) and adopted their peer-to-pool approach. This design can scale easily and allow for virtually an unlimited amount of liquid betting markets at any point in time. This also meant that the role of the market maker could now be split up into two separate roles: 

1. A Liquidity Provider, who seeds the initial liquidity behind the markets

2. A Market Creator, which is a combination of Odds Feed Providers and Oracles that create markets & price markets.

Unfortunately, due to the specific use case, Azuro couldn’t simply use an existing AMM design. One of the key issues with a Classic Liquidity Pool (as utilized in e.g. Uniswap V2 and V3) is that it requires the existence of two assets X and Y in the pool at all times. 

With Azuro, it would not be this straightforward, as that clarity doesn't exist in sports betting where the liquidity in the pool gets allocated to multiple betting markets, and until those are resolved — it is unclear what amount of $ they will return to the pool. Therefore, they needed a design that could handle a more complex requirement for liquidity provision, which led to the creation of an all-new liquidity pool design – [The Liquidity Tree](https://azuroprotocol.medium.com/introducing-azuros-liquidity-tree-a-new-liquidity-pool-design-for-specialized-prediction-markets-625d68be4727).

**bookmaker.XYZ The First Truly Decentralized Sportsbook Is Live**
In June 2022 the Azuro protocol was officially deployed on Gnosis Chain, an Ethereum sidechain with 5-second block speed and fees at a fraction of those on Ethereum, with 500 transactions costing approximately $0.1. Shortly after the first betting site  [bookmaker.XYZ](https://bookmaker.xyz/) connected to Azuro.

More details are available [HERE](https://azuroprotocol.medium.com/bookmaker-xyz-the-first-independent-frontend-connected-to-azuro-is-live-2d53799f32e8)

## What NFTs bring to Betting
One of the main problems of previous Web3 prediction markets’ was the lack of traditional betting features such as multipliers/parlays which allow players to add multiple bets to one slip for a larger return. These are one of the most popular types of bets in traditional betting, and other solutions have failed to provide them. 

The current betting UX on prediction markets is much closer to trading than it is to sports betting, where players buy fungible ERC-20 tokens representative of certain outcomes and sell them to realise a profit/loss depending on the result. This of course is not the desired UX and Azuro will use NFTs to provide critical features like accumulator/parlay bets and multiple outcome bets. 

Being able to mint bets as NFTs allows for secondary markets for bets as collectibles, bet cashouts (selling bets to other players before the outcome has been decided), and gamification. Metadata associated with the NFTs can be used to reward players for betting on specific events (think sign-up bonuses), create leaderboards, and also improve liquidity provision for future events/markets.

**Democratizing the Betting Industry**
The Azuro protocol will be managed by a DAO that will soon be opening up to token holders allowing them to vote on future changes to the protocol, including adding new features, how and where to spend the treasury (e.g. how much money is contributed to combatting addictions, supporting education, sports for children, etc.), how problematic markets are resolved (e.g. alleged fixed games or other).

However, the day-to-day management of Azuro is not the main intention of the DAO. Azuro aims to democratize the betting industry and shake off the bad reputation that has come from years of unfair treatment of players. Players and bookmakers are often at loggerheads with each other and with no committee at hand, the resolution is often unjust. The DAO will be at hand to help resolve these matters fairly and unbiasedly.

For the DAO to operate Azuro will be releasing a governance token - $AZUR. Azuro was always intended to be a pure token project to democratize the industry itself through open community ownership and governance and therefore actual, sufficient decentralization.

**Even More, Features Coming To Azuro**
There will be many more developments from Azuro and more updates to the protocol to provide an unrivaled UX. Plus, in the coming years as the team aims to expand beyond sports betting and into the metaverse.

Updates to the protocol will bring a richer betting on-chain experience bridging the gap between traditional UX and decentralized betting by providing accumulator/Parlay Bets, an NFT bets marketplace, additional events & markets, and Live/In-Play Betting.

Azuro aims to be the first to supply the ability for games to provide betting as a key piece in in-game economies by plugging into Azuro and tapping into its liquidity. Furthermore, Azuro’s liquidity pools will soon be open for anyone to lock in their money and become the “house” and earn substantial yields generated from the revenues of the pools (and thus completely uncorrelated to the broader crypto or financial markets).

Azuro is also currently working on an SDK to make building on Azuro as simple as possible for frontends, so the ecosystem can grow to fulfil its mission as the base layer for decentralized betting.

To try out the first betting front-end built on Azuro head to - [bookmaker.XYZ](https://bookmaker.xyz)
Follow the links below to join Azuro’s communities and stay up to date with their progress.

[Twitter](https://twitter.com/azuroprotocol) | [Discord](https://discord.gg/azuro) | [Telegram](https://t.me/azuroprotocol) | [Website](https://bit.ly/39e1qEY)




Kubesqrt

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The Optimism ecosystem is getting a lot of hype at the moment. Polynomial is in a prime position to capitalize on this with their new option vaults.

Polynomial The New DeFi Derivatives Powerhouse Built on Synthetix

Polynomial is one of the new exciting projects having launched on Optimism in recent weeks. So what is it, yet another option protocol or something more?

In short: Polynomial is the first **option-selling vault to use an on-chain AMM to execute strategies**.

In the past, options were used almost exclusively by traditional financial institutions and only accredited investors had access to this opportunity. This excludes most of the retail investors, just think about the WSBets crowd with Robinhood etc. With the emergence of DeFi, projects started democratizing many financial instruments and derivatives like options in particular. First on centralized crypto exchanges and later through on-chain option protocols.

First iterations of option exchanges were focused on just buying and selling options peer-to-peer. This requires some sophistication on behalf of investors as options are more difficult to understand than, for example, your typical yield farm on top of a spot exchange like Uniswap. Nevertheless those yield farms turned out not to be sustainable in the long run, as their yield came mostly from governance token emissions (aka inflation) leading many projects into a downward price spiral over time.

Structured product vaults solve both these problems, producing organic yield and abstracting away the complexity of option trading away for end-users. However, until recently option selling vaults were still in need of a **centralized market maker** buying these options from the vaults ( e.g. Deribit or Binance).


By leveraging Lyra Finance, the first highly liquid and composable option AMM in DeFi, Polynomial was able to build vaults that are easy to access, produce high yields (15-55%) and don’t rely on market makers for liquidity.

For those who want to jump (“ape” in crypto jargon) in this new product, we’ll put together a comprehensive guide, which includes the basic know-how around options and allows you to skip the countless complicated explainers you’ll find online from traditional sources.

## WTF are Options?
If you don’t come from a financial background just like me, options can be quite overwhelming. Let's try to break them down in an easy to understand way. Options are derivatives, financial contracts that - as the name suggests - derive their value from other financial assets.

There are basically two different kinds of options, call options and put options, both of which I will explain later in detail. Options are contracts that allow the holder to buy or sell an asset (in TradFi mostly stocks, in crypto mostly BTC and ETH) at a certain price (which is called strike price) within a predefined time frame (called expiration).

So why would someone want to do that? There are basically two use cases for options:

1. Limit risk exposure. This is basically the objective of option buyers. To hedge the downside (FUD in crypto jargon) of an asset, the investor will buy put options. To hedge the upside (FOMO in crypto jargon) of an asset, the investor will buy call options.

2. Gain additional yield on an asset. An investor can sell options and collect premiums to gain yield on their assets (this can work for both the bullish and bearish outlooks).

This second option is what Polynomial is engaging in to produce yield for its users. It sells options on behalf of depositors.

**Call options**

The option seller (also called writer, owns an asset, for example ETH) gives the option buyer the possibility to acquire at a certain strike price. There can be two possible outcomes:

1. The asset price doesn't reach the predefined strike price until expiration. In that case the option seller can keep their assets and the so-called premium, which is the price paid for the option in the first place. Outcome 1 is called **“out of the money”** (OTM) in financial jargon.

2. The asset price reaches the strike price before expiration. The option buyer can exercise their right (note here they can, but are not obliged to do so, hence the option). The outcome 2 is called “in the money” (ITM). Note that there is a difference between American style options (which can be exercised any time before expiration) and the European style options (which can only be exercised on the expiration date).

![pasted image 0.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_83bdde3dcf.png)


**Put options**

The option seller (which deposits a collateral, e.g. USD) gives the option buyer the possibility to sell their asset (for example ETH or BTC) at a certain strike price. There are exactly the same possible outcomes of 1) OTM and 2) ITM for put options, as for the call options that we covered above.

![pasted image 0 (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_1_d369e5fbf6.png)


**Risks**

Option sellers are exposed to multiple risks. Options are complicated and selecting the correct strike price can be quite difficult. The most obvious risk for the seller is to miss out on possible upside. Option buyers on the other hand only face the risk of losing the premium they have paid in case their option expires worthless.

## How does Polynomial finance work?

Polynomial Finance uses derivatives to create products that automate various yield generating  strategies. Polynomial Earn Vaults use weekly automated covered calls/put sells to generate yield from premiums and compound it by reinvesting the yield back into the vault every week. At the moment, Polynomial offers two different products that allows the users to generate yield on ETH and USD deposits respectively.

![pasted image 0 (2).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_2_b8f539c329.png)

**Covered call**

A [covered call](https://www.investopedia.com/terms/c/coveredcall.asp)  sells the right to purchase an asset at a fixed price in the future for a premium. The vault sells the right to purchase your $ETH at a specific [strike price](https://www.investopedia.com/terms/s/strikeprice.asp#:~:text=A%20strike%20price%20is%20a,the%20security%20can%20be%20sold.). The strike price is usually higher than the spot price of $ETH at the time the options are minted (“Out-of-the-Money”). Then, Polynomial executes the trade on Lyra and there are three different ways your trade can go:

1. The options expire below the strike price
 
The vault receives the premium and the ETH back as it is not profitable for the other party to exercise the options.

2. The option expires at the strike price

This situation is similar to option one. The vault will receive the premium from the option and also the ETH back that was initially deposited to collateralize the CALL options.

3. The option expires above the strike price

In this situation the vault receives the premium from the option but they are also required to sell the ETH to the party that purchased the original call option. This means that the difference between the current ETH price and strike price minus the premium is the loss on that particular trade. The math for this scenario looks like this:

Strike Price + Premium - Current ETH price = Loss on trade

In this situation the vault takes a loss and loses some of its principal in $ETH terms. This strategy is perfect for anyone that does not expect to see large spikes in price in a short period of time, as the vault sells options on a weekly basis and selects strike prices that allow for a moderate increase in price.

The ideal market for depositors in this vault is if $ETH goes up moderately week-by-week, so they earn premiums in $ETH while the $ value of their deposits goes up. If however, there is a sharp increase in price one week users may lose some $ETH (they’ll still be up in $ terms though as their $ETH will be worth more).This vault is currently generating yield of up to 36% which is significantly above average for this asset.

To put this in perspective with a practical example, assume investor Bob is confident that the price of Ethereum will increase. Let's assume Bob bought 1 Eth at a price of 3.000 USD and is going to deposit ETH (sETH to be exact) into Polynomial's covered call options vault. Polynomial will then automatically sell Eth call options via Lyra Protocol with a strike price of 3.500 USD and expiration of 1 week. During that week the ETH price goes slightly up but remains below 3.400 USD. Therefore, no call (buy) is triggered and at the end of the week the initial investment of 1 Eth + collected premiums from the options sold are reinvested into the vault (auto compounded). The following week, Polynomial will sell ETH call options with a strike price of 3.600 USD. The following week, ETH price sees an unexpected exceptional increase to 3.900 USD and the option buyers will exercise their call option. In this example Bob incurs a net loss since realized strike price + received premiums are still below the current Eth price.

**Put Selling**


Another strategy that Polynomial offers is a [put selling](https://www.investopedia.com/articles/optioninvestor/10/sell-puts-benefit-any-market.asp) strategy where users deposit USD instead of $ETH. This involves the user agreeing to purchase an asset (in this case ETH) at a given price (strike price) in the future. The vault sells OTM put options and receives a premium for doing so weekly. The option can go in three different ways:


1. The option expires above the strike price
In this scenario, Ethereums price is above the strike price which means that the vault keeps the premium as profit and the original sUSD used to perform the put sell.

2. The option expires at the strike price

This situation is similar to the one in scenario 1, which means that the vault keeps the premium and retains the original input.

3. The option expires below the strike price

In this scenario the vault makes a loss as it is required to purchase ETH at above market rate. In this situation the vault takes a loss and continues to sell weekly covered calls. The math for this scenario looks this:

Strike price - ETH price + premium = Loss on trade

This strategy is ideal for anyone that does not expect the price of ETH to fall sharply in the short-term. In comparison to the covered call strategy this strategy is subject to more risk as the user may end up in a position where they have to purchase ETH at a less favorable price and hence make a loss.

Polynomial charges an annualized management fee of 1% of AUM and a 10% annualized performance fee. The fees are prorated and are charged on a weekly basis with unprofitable weeks being excluded from any fees.

As a practical example: Investor Alice is weary of the current macroeconomic conditions and very pessimistic in regard to the price outlook of Ethereum. Alice deposits 3.000 sUSD into the Polynomial put option vault, since she believes the Eth price will suffer. Polynomial will then automatically sell put options via Lyra Protocol with a strike price of say 2.500 USD and expiration of 1 week. During that week the Eth price goes slightly down but remains above 2.600 USD. Option buyers were not able to exercise their puts and so the premium collected from the options sold are added to the vault collateral. Polynomial will sell from the now increased collateral even more Eth put options on Lyra protocol the week thereafter at a strike price of 2.400 USD. That week unexpected macro events completely destroy investor confidence and crypto assets plummet, Eth drops down below 2.000 USD and put options are exercised. Alice will incur a loss, since the premiums collected will not make up for the negative difference of the current Eth price from the strike price (at which option buyers were able to sell Eth for sUSD).

## How to use Polynomial

Now that we know the basics of options let’s put this into practice and start using Polynomial protocol. As mentioned previously, Polynomial is a structured product that offers two option vaults at the time of the launch, with more to come later. Right now the user gets the possibility to invest in Ethereum covered call vault and in a put selling strategy vault. The user interface is completely straightforward, just navigate to the [Polynomial website](https://earn.polynomial.fi), connect your wallet in the top right corner and login via your web3 browser extension wallet.

![Untitled.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_b4000ab116.png)


A strategy overview is shown and is explained in simple terms. When selecting a vault, you can browse through the vault's performance, vault transactions and withdrawals and further explanation on risks & fees.

![Untitled (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_1_5d3eb1b982.png)


As a quick side note, Polynomial is built on top of Lyra Protocol which in turn leverages synthetic assets from Synthetix and therefore you will interact with synthetic tokens instead of vanilla $ETH or $USDC. 

To get started, approve the asset you want to deposit (sETH in the case of the covered call or sUSD in the case of the put selling strategy). After the transaction is confirmed, which usually takes just a few seconds on Optimism, click on get sETH and you will be redirected to 1inch exchange in a new browser window or tab.  There might be a pop up warning screen since the synthetic ETH token is not currently enabled on 1inch exchange on Optimism. Click understand and Import token, then swap as you like.

![Untitled (2).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_2_cd14d9e7a8.png)


Heading back to the Polynomial interface click on preview Deposit and confirm the collateral deposit again in your wallet. 

At this point the user will be able to track their positions in the Portfolio section. The deposited asset is now earning yield. In our opinion, Polynomial was able to abstract away most of the complexities from options and provide the user with an intuitive product and a sleek user interface.

Withdrawals can be requested at any time but keep in mind that Polynomial sells weekly options and therefore the actual withdrawal can only be executed after expiry of the options so you may need to wait for a couple of days before being able to access your funds. If no withdrawal is requested then the deposited collateral and the generated yield go back into the vault and the week after sells even more options, which means the yield is compounded. No user interaction whatsoever is required since everything is managed automatically by the protocol.

## First of its kind

Polynomial has launched on Optimism, a Layer 2 scaling solution on Ethereum. Optimism offers extremely low fees in comparison to Ethereum and allows users with smaller budgets to enter. As well as lowering the barrier to entry, they enable easy access to high yield without the need of complicated strategies on assets that typically have significantly lower APRs. 

In addition to that, Polynomial has no competitors on Optimism and other L2s which gives it a first mover advantage. The only comparable product to Polynomial is Ribbon Finance which found success on Ethereum mainnet offering various strategies and currently expanding to some alt-L1’s like Avalanche and Aurora.

Currently Ribbon holds around $270 million in assets under management and is the largest options vault provider. Polynomial can certainly expand to such levels provided the Layer-2 scaling solutions gain more mainstream adoption and increase their TVL. 

At the time of writing the vaults offered by Polynomial have been completely filled and are currently at 450 sETH in the covered calls vault and 1,500,000 sUSD in the put selling vault. 

## Feeling optimistic about the future

Even though Polynomial has achieved plenty in a short period of time the team is working hard behind the scenes to launch more products and assets. Currently the aim is to increase TVL by opening up the vaults to a higher threshold but in the future the team is looking to expand to various other assets like Bitcoin or Solana and other option strategies such as a [long or short straddle](https://www.investopedia.com/articles/optioninvestor/08/straddle-strategy.asp) which sees the user less exposed. 

Furthermore, Polynomial may eventually decide to expand and explore other L2 protocols. It is believed that the reason that they decided to make Optimism their home is due to the option liquidity that is available on [Lyra](https://www.lyra.finance/). As ecosystems expand it is very possible we will see Polynomial across various different ecosystems such as Arbitrum. The team has mentioned wanting to build an option aggregator several times and wanting to become the best liquidity venue for on-chain options by aggregating liquidity from Lyra, Dopex, Premia, Hegic and many other decentralized exchanges. We’ll see what the future for Polynomial entails but it’s clear that the team is very talented and ready to shake the options space up.





I am passionate about Bitcoin and Ethereum and want to on-board new people to crypto.

Emanuel Coen

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How Courtyard is turning collectibles like Pokemon Cards into NFTs

Courtyard: Bringing Billions of Dollars of Physical Collectibles as NFTs


Driven by a San Francisco based [team](https://docs.courtyard.io/courtyard/about-courtyard/meet-the-team) of six people who used to work at YouTube, Apple & Google, Courtyard has set sail to conquer the open Web3 seas with the mission to **offer physical collectibles on the blockchain.**

Wait, physical collectibles on the digital blockchain? Aren’t we going full circle here? It might look so at first glance but NFT’s were never only about static digital pictures of Bored Ape’s and Punks.  As we have written before NFT’s are simply a data structure allowing to record ownership on the most secure, globally available and programmable ledger in the world. Of course NFT’s were going to find their way into music, filmmaking,  photography, writing, collectibles and every other sector of the creator and ownership economy.

[Courtyard](https://courtyard.io/) for its part has set its eyes on the billions of dollars people spend on physical collectibles every year. It has built an infrastructure to securely tokenize physical collectibles like cards, sneakers, watches and more into NFTs. The NFT acts as a digital 3D model of the underlying physical object that is safely stored by Courtyard’s partner Brink's, a world leader in secure transportation and storage of valuable assets.

As NFT’s these collectibles become instantly tradeable on-chain 24-7 around the globe. And it unleashes a ton of use cases. Other developers can come and integrate these collectibles in Metaverses and gaming experiences, DeFi protocols can issue loans against high-value pokemon or magic cards and young teenagers can make their dream come true and buy a fraction of Rolex NFT via a protocol like [Fractional.](https://fractional.art/) The bottom line is that a physical collectible receives **new superpowers** once it is turned into a digital NFT.

![2.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/2_b510d4e8d2.png)

## How does Courtyard work?

When you mint a Courtyard NFT or buy one on OpeSea you receive an NFT that essentially represents ownership over the physical collectible and gives you the right to redeem it at any time by burning your NFT. 
As a holder  of a Courtyard NFT you have several options. 

- **Trade** their physically backed NFT’s on any Polygon compatible marketplace (e.g Opense)

- **Burn** their NFT on Courtyard’s platform to redeem the underlying asset. Pending KYC, Courtyard ships corresponding collectibles globally
- **Display** their valued collection in the Metaverse as NFTs and connect with other collectors

If you want to redeem your NFT for the underlying physical collectible you’ll need to burn it through Courtyard’s redemption page and the item will be shipped to a location near you (150 countries as of now). For this purpose, Courtyard has partnered with Brink’s, a world leader in secure transportation and storage of valuable assets with locations in over 150 countries. 

This means Courtyard can truly serve the globalized Web3 customer base and guarantee that valuable collectibles are handled with utmost care. How long the shipment process takes after a user initiates the redemption remains unclear at this point as the redemption phase is to start next week. 

One big concern for users of course is authenticity. How can you trust Courtyard that the physical collectibles are authentic and in good condition?  In its documentation Courtyard claims it only sources the item from established dealers in the industry that have operated for many years in the field.

For their first drop, a batch of 800 Pokemon cards, it relied on the famous Professional Sports Authenticator (PSA) Association grading system. All cards have a bar code that allows users to verify authenticity against PSA’s database.

## Back to School Drop

![3-min.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/3_min_84fbbf9156.png)

The [Back To School Genesis Drop](https://drops.courtyard.io/back-to-school) is Courtyard’s first NFT collection and also the first of its kind. According to their own website, Courtyard has chosen trading cards for their first drop in order to best manage storage and handling of the collectibles. 


The collection features 800 unique NFTs modeled after real Pokemon cards that are physically stored by Brink’s in a secure location. All 800 cards are authenticated by [Professional Sports Authenticator](https://www.psacard.com/), PSA for short, a major authenticator of sports and trading cards. PSA classifies Pokemon cards according to different traits like condition (unsealed being the most valuable of course), year of publication, rarity, special edition, and so on. This means that the rarity traits of this NFT collection are derived from real life traits.

## Gotta Catch 'Em All!

Each NFT of the Courtyard Genesis Collection is “sealed” at mint to reproduce “the excitement of tearing open the pack to reveal the precious cards inside”. The reveal will happen a few days after the mint. Until then the sealed cards can be traded freely [on OpenSea](https://opensea.io/collection/courtyard-nft) (trading at 0.4 $ETH right now or 2x mint price).

To guarantee fairness the token metadata of each unrevealed Courtyard NFT contains a hash of the metadata for the card inside. When the token is revealed, you’ll be able to hash the now-visible metadata and verify that it matches the hash in its unrevealed state. Moreover, to ensure the token each minter gets is randomly assigned, Courtyard uses Chainlink, the most widely used randomness oracle. This way you can be sure that you really received the card you were supposed to receive and the reveal mechanism wasn’t tampered with.

## Which One to Catch?

Here are the stats:
- Mint Date: March 14th 2022

- Type: ERC721 NFT

- Price at mint: 0.2 WETH (ETH on Polygon)

- Chain: Polygon

- Total: 800

- Pokemon Editions: Mostly Base Set Unlimited & 1st Edition

![4-min.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/4_min_87225872f7.png)

On their [Instagram](https://www.instagram.com/courtyard_nft/) Courtyard teases with some high ranking Pokemon cards that are part of the Genesis drop. Ranging from the 1st Edition Holo Zapdos currently [ranked](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/zapdos-holo-1st-edition-16/605286) at around [$500](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/zapdos-holo-1st-edition-16/605286) to a Base Set Holo Charizard at around [$30K](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/charizard-holo-1st-edition-4/605253/).
With the mint price at 0.2 ETH the whole collection brought in 160 ETH in sales. According to Courtyard’s website the team has chosen the mint price based on the **average value** which implies they spent around $500k to acquire the 800 cards. It also means the reveal process will be like a lottery, some people will receive a card that will be worth a lot more than the 0.2 $ETH they spent and some will receive a pokemon card worth a bit less than what they spent. However, it will be interesting to see how the market prices these NFTs. Maybe they will trade at a premium compared to their “fair market value” in the physical world.  Just like with physical unsealed Pokemon cards you never know what you’ll get, and that’s all the thrill. You can browse current offers [here](https://opensea.io/collection/courtyard-nft). 

And here’s the list of high value cards featured on the official Courtyard Instagram (7/800):

- [1999 Pokemon Base Set 1st Edition Shadowless Holo Mewtwo #10 PSA 9](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/mewtwo-holo-1st-edition-10/605269/)
- [1999 Pokemon Base Set Shadowless 1st Edition Holo Zapdos #16 PSA 8](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/zapdos-holo-1st-edition-16/605286)
- [1999 Pokemon Base Set Shadowless 1st Edition Holo Chansey #3 PSA 8](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/chansey-holo-1st-edition-3/605249)
- [1999 Pokemon Base Set Holo Charizard #4 PSA 10](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/charizard-holo-1st-edition-4/605253/)
- [1999 Pokemon Base Set 1st Edition Shadowless Holo Venusaur #15 PSA 10](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-game/venusaur-holo-1st-edition-15/605284)
- [2015 Pokemon Japanese Pikachu Poncho Magikarp #150/XY Promo PSA 10](https://www.psacard.com/auctionprices/tcg-cards/2015-pokemon-japanese-xy-promo/pretend-magikarp-pikachu/values/2181590)
- [1999 Pokemon Fossil 1st Edition Holo Hypno #8 PSA 10](https://www.psacard.com/cardfacts/non-sports-cards/1999-nintendo-pokemon-fossil/hypno-holo-1st-edition-8/641229)

![Screen Shot 2022-03-18 at 1.57.59 pm-min.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Screen_Shot_2022_03_18_at_1_57_59_pm_min_711fdcc876.png)

These seven cards have an approximate fair market value of around $280K (according to PSA). This means that the remaining 793 cards are left with around $120K in total value or an average per card  cof 150$. This average is only derived by the total value of the 7 cards, of course the real number most likely differs as we only know the approximate value 0.88% of all cards.

Don’t treat any of this as financial advice but merely an idea on how to calculate chances. It doesn't take in a lot of other important factors like potential price increase or depreciation over time or the actual rarity of the featured cards.  At time of writing the unsealed Genesis NFTs are trading at a floor price of 0.4 ETH and only around [50 items are listed for  sale. ](https://opensea.io/collection/courtyard-nft)



Courtyard: Bringing Billions of Dollars of Physical Collectibles On-Chain

Project Manager, analyst and copywriter. 

@aafolabee

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The music NFT ecosystem that is set to take off in 2022. Here is all you need to know about the space.

Find out why music NFTs are going to be big in 2022 and which are some of the most interesting projects to follow.

The music NFT ecosystem is set to take off in 2022. Here is all you need to know about the space.

NFTs have been the talk of the town in the crypto world all throughout 2021. Knowledge and interest in it have now largely transcended the crypto world. NFT sales volume totaled $25 billion in 2021, compared to just $95 million in 2020! NFT artist Beeple’s “The First 5000 Days”, offered by auction house Christie's sold for a whopping $69,346,250. NFT marketplace Opensea reported a total EOY sales volume upwards of $14.6 billion in 2021 alone.

Celebrities like Jay-z, Paris Hilton, Serena Williams, and Justin Bieber have their NFT collections as profile pictures. With his recent acquisition of Death Row Records, hip hop legend Snoop Dogg has stated his intention to make the label “the world’s first NFT record label”. He has also announced that he would be releasing his latest album on the blockchain through a partnership with blockchain gaming platform Gala Games, via his “Stash Box” NFTs.

Global brands like Nike, Adidas, and Gucci have launched their open NFT collections, with Adidas and Prada teaming up to launch a user-generated NFT collection early this year.

Although Non-Fungible Tokens or NFTs are mostly associated with digital art, graphics, or pictures, there are limitless opportunities with the use of NFT technology. NFTs can represent anything that is unique (a.k.a non-fungible) and benefit from being represented digitally on the most secure ledger technology available to mankind: a Blockchain. The characteristics of a Blockchain make it easy to trace provenance, verify authenticity, and pay creators on an open global market. Already, Web3 enthusiasts are thinking of the next use cases like photography, digital identity, land ownership, NFTs backed by physical collectibles, and title ownership of any document you can think of.

One ecosystem that is poised to take off in 2022 is the music NFT space.

What are Music NFTs?
At their core - Music NFT’s are simply **tokenized audio files**. To the same extent that static image NFT’s track ownership of a .jpeg or .png image, Music NFT’s point to a .mp3 or .wav file. What the NFT exactly represents legally speaking varies case by case but by default **they do not come with inherent ownership rights**.

![The Music NFT industry.jpeg](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/The_Music_NFT_industry_5ee4ef02f0.jpeg)
*An overview of the Music NFT space by ​​[@Cooopahtroopa](https://twitter.com/Cooopahtroopa)*

The vast majority of Music NFTs today can be thought of as rare digital collectibles for the most devoted fans to show their loyalty .In some cases, such as NAS’ recent single “ULTRA BLACK” they also grant owners a share of the royalties.

The latter is of course the long-term vision for Music NFT’s but requires more legal engineering and overcoming of barriers laid by the legacy music industry.

## What's the big potential?

At first, music NFTs may appear like the blockchain alternative to buying songs on iTunes. However, when you buy a track, you only buy the right to listen to that music offline whenever you want. Music NFTs offer something more sentimental in value; they allow fans and listeners to own the tokenized works of artists. Think of them as extremely rare digital collectibles, with huge sentimental and also resell value.

There is usually no claim on masters, royalty rights, publishing or licensing abilities - more like limited quantity audio files from an artist that you can resell to someone else. So as a collector of your favorite artist’s music NFTs, this is the best way to build a relationship with them.

Music NFTs might sound counterintuitive: you already have access to all the songs you want on Spotify or iTunes. Why buy the music you can already listen to? The answer to that question is the same as buying JPEGs anyone can right-click and save. Markets, or people, find value in holding rare collectibles, including musical works (as long they are issued by the original artist of course).

That value is also driven by the artist and the perks they assign to their collector fanbases - access to discounted concert tickets, special areas at concerts or meetups with the artist, and so on.

## How do music NFTs work?

Essentially, the artist decides what song, or songs, they want to offer their fans as NFTs and what kind of “utlility” the NFT will receive. This could be musical works like audio files, but could also be music videos, merchandise, concert tickets, and so on. Then, they will go to either the general marketplaces like Opensea or dedicated markets to mint their NFT. You can see that the entire process rests solely on the artist/musician.

## How music NFTs help musicians

For so long, artists have not been fairly compensated for their work. This has been particularly apparent in the music industry.

Changes in distribution and the introduction of streaming services have changed the business model of the music industry. Yet, streaming does little to help artists get fair compensation- only the top 0.8% of artists on Spotify earn $800,000 and above. The vast majority of artists still have a hard time retaining control over their work and monetizing it.

## So how can Music NFTs help?
1. Collectibles: Fans always attach a sentimental value and worth to the work of their favorite musicians. Music NFTs allow music works to be collected as digital collectibles allowing early fans to show support and thereby finance the production costs of an artist's album/song. This way, the early supporters turn into ambassadors/ marketing army for their favorite artists and are part of their growth

2. Royalties. Music NFTs allow artists to earn money by selling their products and music directly to fans without the need for traditional music industry intermediaries such as record labels, publicists, managers, etc. They can grow their fan base as well. NFT airdrops, for example, allow musicians to reach new audiences.

3. Unique fan experiences, such as selling one-time meet and greet events with their fans in person or virtually, are another possibility.

4. If you purchase the music NFT of your favorite artist, apart from the commercial value, there is also the sentimental value of becoming an owner of their work.

5. Newer artists have great opportunities because there are no barriers to entry to the music NFT scene. You can tailor your content to fit particular audiences and upload/market your work to your fans directly without the need for industry middlemen.

6. Music NFTs allow artists to hold on to ownership of their work, even if they market them as NFTs due to the record of ownership built into the NFT’s metadata. So, if the subsequent owner decides to resell the NFT, the original creator can automatically receive royalties—and this process can continue each time the NFT is sold.

7. There are also “upgradable NFTs”. Think of this in terms of remixes. NFTs can capitalize on the increasingly popular “remix” culture—which means editing content to produce new creative content, either from artists themselves or the fans. So, music NFTs incentivize remixes, such as “fan edits” that allow for more efficient distribution of music and the creation of exclusive material, collaborations, and remixes.

## Top marketplaces for music NFTs
1. **Sound.xyz:** Music NFT platform Sound seeks to bridge the relationship gap between listeners and artists. It wants to “create a platform for a more collaborative music movement, built on web3 technology and values”. On Sound, fans have the opportunity to support the artists they love directly. Essentially, early fans buy the work of artists as collectibles and stake their claim on being there before everyone else.

2. **Royal.io:** In contrast, Royal allows fans and collectors to buy a claim, in the form of royalties, on musical works. Musicians use Royal to sell royalty ownership in their songs and also give collectors access to special perks and benefits. Collectors can buy royalty ownership in songs directly from their favorite artists in the form of tokens, and claim royalties for the music they own after they’ve accrued. The bigger the artist becomes, the bigger the gains.

3. **Audius:** Audius is a free music streaming platform directly competing with the likes of Spotify and Soundcloud. Unlike their Web2 counterparts, it is structured as a DAO allowing holders of its $AUDIO token to unlock premium features for curated engagement and participation in voting. It also allows artists to engage more directly with their fansby unlocking special features and benefits with the $AUDIO token, allowing artists to monetize their audience without the need for industry middlemen.

4. **MusicFund**: MusicFund distributes membership via NFTs, and holders vote each month to donate ETH to three musicians through the community fund. The top three artists receive 0.6 ETH, 0.25 ETH, and 0.15 ETH, respectively.

## Conclusion
Will NFTs truly disrupt the music industry? These are very early days, and it has to be said that a lot of hype around music NFTs is a direct effect of the explosion of profile picture NFTs in the last year. Yet, music NFTs provide some real value and disruption to a traditionally repressive and underserved industry. There is the unfair compensation and distribution of revenue, ownership of creative works, uniqueness of the artist, connection to fans and so much more

As we have seen, there are lots of different players tackling these problems from very different angles and it yet remains to be seen which one of these platforms will find most traction among music enthusiasts and artists. But it’s clear already that NFT’s enable artists to reimagine cultural and artistic expression of music as art and at the same time help them financially.



The Rise of Music NFTs - Will this unleash the next NFT mania?

Weiting Chen

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On-chain DEX with highly efficient liquidity provisioning and up to 10x leverage for makers and takers.

Perp Protocol: A Decentralized Perpetual Protocol on Optimism Layer-2

Since day 1, Perpetual Protocol aims to be the Uniswap equivalent for perpetual futures trading - allowing anyone to create new perpetual markets, accessible to anyone in the world, and fully composable with other protocols. 

However, due to the unsustainable nature of Perp v1 and the fact that Perp v1 was only available on Gnosis Chain, a less popular EVM-compatible chain, we haven’t achieved the goal so far. That being said, Perp v1 occupied the no.1 spot as the largest decentralized derivative platform by trading volume for a long time before DyDx started liquidity mining.

With the experience Perp Protocol gained from Perp v1 and months of research and development came Perp v2, which we believe is the right approach to build the dominant derivative exchange in DeFi.

But before explaining the reasons, we need to understand the perpetual contract and what makes it the most popular derivative in the crypto space. If you’re already familiar with perpetual contracts, please jump straight to “How does Perp v2 Work?”. 

## What is a Perpetual Contract?
A perpetual contract is a derivative, or a financial tool, that lets you speculate on the price movement of an asset with leverage.

Expect the price of an asset to go up? You can open a long position with an asset (usually a stablecoin) as the collateral. If the price of the said asset indeed goes up, you can close your position and get more money back than the amount you put in. If it goes the opposite way, you will receive less collateral in return.

The ease of use, the capital efficiency (no need to hold the underlying asset), and the liquidity, thanks to the leverage, make perpetual contracts the most traded derivative in the crypto space. 

You can learn more about perpetual contracts in [this article](https://medium.com/perpetual-protocol/why-use-perpetual-contracts-and-how-do-they-work-57e4a44fb79a), including how they are priced, how perpetuals compare to other financial instruments, and a lot more.

## How does Perp v2 work?
On a high level, Perp v2 is a derivative-enabler for Uniswap v3, making perpetual contracts trading possible. 

![V1 vs V2 Guest Post - Traders.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/V1_vs_V2_Guest_Post_Traders_aa88fda63b.png)

As the first step, users need to deposit their USDC into **Clearing House**, a smart contract on Perp v2 that mints and burns virtual tokens and keeps a record of trading activities (more on this later). Once the deposit is made, Clearing House will credit the depositor with 10x the amount of virtual USD, or vUSD, on its balance sheet than the amount of USDC that the user deposited.

![pasted image 0 (3).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_3_f8d0bea27a.png)

The 10x amount of vUSD is the maximum leverage that Perp v2 provides to users, who can but don’t need to use their entire leverage all at once.

Now, users can then instruct the Clearing House to use their vUSD credits to trade or provide liquidity on the markets of the protocol. Since Perp v2 is built on top of Uniswap v3, each perpetual market is a market on Uniswap v3. For instance, the[ ETH perpetual market on Perp v2](https://app.perp.com/markets/ETH:USD) is a [Uniswap vUSD/vETH pool ](https://info.uniswap.org/#/optimism/pools/0x36b18618c4131d8564a714fb6b4d2b1edadc0042)where both vUSD and vETH are minted by the Clearing House.

So when you open a long order on ETH perpetual market, under the hood, you’re instructing the Clearing House to use your vUSD credit and mint vUSD tokens, then send them to the vUSD-vETH pool on Uniswap v3 and get vETH from the said pool (pictured in the diagram above).

![pasted image 0 (4).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_4_682fe29053.png)

But who is the counterparty of this trade, and why are they taking the opposite side of your bet?

On Perp v2, the counterparty of each trade are the liquidity providers, or “makers” as we call them. To compensate Liquidity providers for the risks, they can earn transaction fees whenever a trade happens in the price range they set.

![V1 vs V2 Guest Post - Makers.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/V1_vs_V2_Guest_Post_Makers_070d923311.png)

Similar to traders, the first step for makers is to deposit their USDC into the Clearing House. Then they can instruct the Clearing House to use their credit and mint virtual tokens to provide liquidity on the perpetual markets on Uniswap v3. Makers can specify which markets they want to provide to and in which price range.

![pasted image 0 (5).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_5_694330d6ba.png)

To simplify the liquidity provision for makers, Perp protocol works with managed liquidity protocols such as Teahouse Finance, Visor Finance, or Popsicle Finance, where users can simply deposit their stable coins, and the said platforms will do the heavy lifting.


## What makes Perp v2 unique?
**Permissionless**
To create a new perpetual market, the only thing Perp v2 needs is a price feed from an Oracle provider. Perp works with multiple Oracle providers. This flexibility paves the way for one of our ultimate goals - letting anyone create new markets permissionless. While we’re still working on this feature, the community (or token listing DAO) can vote to decide which markets the protocol should list.

**Accessible**
Currently, the primary way to access Perp v2 is through [app.perp.com](https://app.perp.com/). But anyone can interact with its smart contracts on-chain. To make it easier for people to access the protocol, we have partnered with multiple protocols and wallets such as dHEDGE, Frontier, StakeDAO, and [a lot more](https://medium.com/perpetual-protocol/perpetual-ecosystem-map-will-continue-to-update-89f190347583)! In the following months, they’ll integrate Perp v2 into their applications.

**Composable**
Because Perp v2 is entirely on-chain, other protocols can integrate it to build up their services without starting from scratch. For example, our partner Indexzoo is building leveraged tokens and index funds using Perp v2’s perpetual contracts as the underlying.


Additionally, Perp v2 itself is built on top of Uniswap v3, making it easier to tap into the ecosystem of the latter. As mentioned previously, managed liquidity protocols can support Perp v2’s markets without that much modification of their existing Uniswap v3 strategies.  


## Closing

Hopefully, this short introduction gave you a good overview of how Perp v2 works and what makes it unique!

Perp v2 is available on Optimism as of December 2021, and will expand to other L2 or (side)chains in the future. You can try out the testnet [here](https://testnet.perp.exchange/) without any risks to get familiar with the platform using play money. Once you feel ready, you can trade on the mainnet [here](https://app.perp.com/).

Deep dive into Perpetual Protocol v2

Wannabe researcher interested in documenting insights & strategies from the best whether it be in DeFi, NFTs, Gaming and the wider Metaverse.

wassiecapital

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Governed by the TreasureDAO, Bridgeworld is comprised of various DeFi, NFTs and gaming elements to create one of the most exciting Metaverse projects out there.

TreasureDAO: the Metaverse project you need to know about in 2022

In the past few weeks, we’ve seen several key narratives take shape:

- The first being the NFT sector seeing a resurgence with OpenSea trading volumes set to make record highs

- The second being Layer 2 ecosystems becoming more popular and attractive to users as more projects begin to deploy and launch incentive programs on them.

With users looking to capitalize on these narrative rotations, one of the projects that has been the talk of the town that combines the best of both narratives is [Treasure DAO](https://twitter.com/Treasure_DAO). Stick around as we dive deep into the Treasure DAO metaverse, understand the craze behind it, and uncover why you should probably be paying attention to it.

## How Treasure Started
**Loot Derivative**

Treasure started out as a 10k free to mint LOOT derivative NFT project by [John Patten](https://twitter.com/jpatten__) & [Yuta](https://twitter.com/0xyyyy) that followed the same bottom-up approach that LOOT encouraged when it came to development; start with simple primitives and allow the community to imagine and build these out for the ecosystem.

![image_2022-01-21_04-47-03 (6).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/image_2022_01_21_04_47_03_6_fb572d3395.png)

**Loot Dilemma**

The key problems of many LOOT derivatives were the misaligned interests of its founders and the vicious pump and dump cycles that occurred as users were sold into “The Next LOOT” narrative.

The result was a non-existent metaverse, with builders nowhere to be found and a community that just disappeared overnight having accepted the loss, and moving on to mint the next Loot derivative to hopefully make a profit from.

This competition of extracting as much value as possible is completely the opposite of the Bottom Up Decentralized Gaming Ecosystem Thesis (BUDGET) that LOOT set out to achieve.

![image_2022-01-21_04-47-03 (5).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/image_2022_01_21_04_47_03_5_965b6e2acb.png)


## Treasure DAO
Treasure realized this early on and iterated upon this model. By serving as the bridge between metaverses and offering an interrelated resource economy, Treasure DAO seeks to establish a Decentralized NFT ecosystem that helps bootstrap other metaverses; a Nintendo for Web 3.

![image_2022-01-21_04-47-03 (4).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/image_2022_01_21_04_47_03_4_c1218d325c.png)

## Bridgeworld
Bridgeworld is Treasure’s first flagship game and the central hub of the Treasure Metaverse that revolves around exploring, creating and extracting MAGIC through an interrelated resource economy involving MAGIC, Treasures & Legions.

![image_2022-01-21_04-47-03 (3).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/image_2022_01_21_04_47_03_3_3c9a69dfd6.png)

## Interrelated Resource Economy

**MAGIC**
- Native token and currency of the Treasure Metaverse

- Used to power everything and emissions are designed to be increasingly scarce as the ecosystem grows

- Earned by staking in the Mine & playing Treasure Games such as Bridgeworld and others

**Treasure NFT**
- Scarce resources shared across the Treasure Metaverse

- Currently, it’s main utility is that it can be staked to earn MAGIC in the Genesis Mine at an average rate of ~0.14 MAGIC per point per day

- Future utility involving Treasures in Bridgeworld will come through some form of  **consumable farming** where the rarest Treasures will be required to create the rarest items in the Treasure Metaverse

**Legions**
- Mandatory to play in the Bridgeworld

- Genesis Legions are unmatched even against max upgraded Non-Genesis Legions

- Genesis All-class Legions will be able to do anything

- Genesis Legions also get staking multipliers

As the Treasure metaverse scales, Gen1 Legions will be inflated via summoning to accommodate the next wave of users. The supply of Genesis Legions, however, will never increase.

![7 (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/7_1_7f23b8d003.png)
## Treasure NFT Marketplace
![image_2022-01-21_04-47-04 (4).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/image_2022_01_21_04_47_04_4_01680f398d.png)

- Native marketplace on Arbitrum where Treasure’s NFTs as well as its partner-project’s NFTs are listed and sold with **MAGIC as the medium of exchange**

- For Treasures & Legions, a **5% royalty fee is charged**

- Since inception, the Treasure NFT Marketplace has overtaken Axie Infinity’s Daily Marketplace volume on **3 separate occasions**

- This week saw the Treasure NFT Marketplace generate $25.8M of volume of which 5% translates to (**~$1.29M of revenue that goes to Treasure DAO**)

![image_2022-01-21_04-47-04 (3).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/image_2022_01_21_04_47_04_3_504b40f9e9.png)


## Partner Projects

![6.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/6_7b3ea0d074.png)

1. [Smol Brains ](https://twitter.com/SmolBrainsNFT)**(Live)** - A game by Treasure where users stake Smol Brain monkeys to make them smarter and build their world

2. [Smol Bodies](https://twitter.com/SmolBodies) **(Live)** - A game by Treasure where users stake Smol Body bodybuilders to get them swol

3. [LIFE](https://twitter.com/LifeNFT_) **(Soon)** - A game by [Jumpman](https://twitter.com/jumpmanft) that simulates life as an experiential board game

4. [Toadstoolz](https://twitter.com/toadstoolzNFT) **(Soon)** - More info coming soon

5. [Peek-A-Boo!](https://twitter.com/PeekABooGameNFT) **(Soon)** - An interactive and skill-based P2E game by independent developers where Ghosts & Busters try to hunt each other

6. [Enjoyooooor](https://twitter.com/enjoyooooor) **(Soon)** - No further information available yet

7. [Battle Fly](https://twitter.com/battleflygame) **(Soon)** - An experimental PvP/P2P DeFi strategy game

8. Imperium **(TBA)** - No further information available yet
 
9. [Mushrohms](https://twitter.com/Mushrohms) **(TBA)** - A game developed in collaboration with Olympus Odyssey
 
10. [Ether Orcs](https://twitter.com/EtherOrcs) **(TBA)** - No further information available yet


## SubDAOs and Guilds

![5.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/5_32b6cf8d27.png)
1. [ClocksnatcherDAO](https://twitter.com/clocksnatcher) - First & biggest guild / sub-DAO in the Treasure Metaverse

2. [Alliance DAO](https://twitter.com/DreamwinderETH) - Preeminent Bridgeworld DAO

3. [Fly Tribe](https://twitter.com/FlyTribeGuild) - Guild focused on collecting feathers

4. [Gather Guild](https://twitter.com/GatherGuild_) - Collect, Collaborate, Conquer, Gather Treasures & set ourselves free

5. [Ox DAO](https://twitter.com/OxDAOGuild) - Be as strong as an Ox

6. [The Treasure Hunter Guild](https://twitter.com/Treasuresquadd) - Treasure Hunter Guild

7. [Rent-A-Kek](Rent-A-Kek) - Rent-A-KEK Smol Car

8. [Magic Conch Shell](https://twitter.com/ConchDao) - All hail the magic conch. The Conch welcomes all

9. [Cult of Favor ](https://twitter.com/cultoffavor)- Decentralized Guild of Mysticism in Bridgeworld 
 
10. [Pink Hat Posse](https://twitter.com/thepinkhatposse) - A guild for music, style, and fashion 
 
11. [Donkey DAO](https://twitter.com/DonkeyDAOGuild) - DonkeyDAO will be the largest & most equitable sub-DAO
 
12. [Stonecutters Guild](https://twitter.com/stonecuttersgld) - The guild of castle owners in the Treasure ecosystem
 
13. [Cap Only Smol Guild](https://twitter.com/CapOnlySmols) - Fellow cap smols UNITE
 
14. [The Void](https://twitter.com/TheNumeraire) - We see all. We tell stories

## Tools
![4.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/4_059374b822.png)

1. [Treasure Tools](https://twitter.com/TreasureTools_) - A suite of tools ranging from Rarity for NFT collections, NFT Gallery and many more to navigate Treasure DAO

2. [The Collectors](https://thecollectorsnft.xyz/vaults/magic/) - Auto compounding vaults for MAGIC-ETH LPs

3. [Treasure Stats](https://treasurestats.xyz/) - Display and view Treasure NFT Sale Statistics

## Closing Thoughts
In the span of 5 months, the Treasure DAO ecosystem has grown extensively to over 10+ partnered projects, 14+ Sub-DAOs / Guilds, and a community that is only bound to grow exponentially as network effects take the metaverse to new heights.

With a suite of products set to launch in the coming weeks by a team that has been consistently shipping, it’s hard to not be bullish on the Treasure Metaverse as a whole and should certainly be on everyone’s radar this 2022.

**A little MAGIC can go a long way ~**
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Deep dive into Treasure DAO

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Cowswap is a new decentralized exchange aggregator originally developed by GnosisDAO that promises users best trade execution and protects from MEV.

Why you might want to use Cowswap for your everyday DEX trades 


Over the past few years DeFi users have been victims of MEV attacks such as front/back running or sandwich attacks. The Cowswap team has developed an MEV protection protocol that has experienced huge growth over the past few months. It has already achieved over $5bn cumulative volume across their V2 contracts and it’s showing no signs of slowing down.


## What are MEV attacks?

As transactions are broadcasted to the Blockchain by users they go into a **public mempool.** Miners have a holistic view over the transactions that are in the mempool and have the ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce.This exposes any potential trades to attacks from miner extractable value (MEV) bots which aim to take advantage of this information by submitting their transaction prior or after a traders transaction in order to profit from it.

A front running bot works in a simple although very profitable way. An example of a front running bot can be seen below.

1. A trader places an order into the mempool.

2. The front running bot purchases the token for a given rate raising the value of the token.

3. The original transaction that was placed by the trader occurs further increasing the price of the token.

4. The MEV bot sells the token at a higher price, making a profit. This all happens in the same block.

In summary, MEV acts like an invisible tax that miners collect from users. There are lots of other reasons why MEV is harmful and considered one of the [biggest challenges](https://research.paradigm.xyz/MEV) the Ethereum community needs to address.


## What is CoW Protocol?

CoW Protocol is a fully permission-less trading protocol that leverages so-called “Batch Auctions” as its price finding mechanism. CoW protocol enables batch auctions to maximize liquidity via Coincidence of Wants, CoW for short. The coincidence of wants is an economic phenomenon where two parties each hold an item the other wants, so they exchange these items directly without any monetary medium. Cowswap aims to find COW’s across its users to find the best price and protect them from MEV attacks.

CowSwap is the first trading interface built on top of CoW protocol. It guarantees users the best price by either:

1. Matching the user with a fitting sell order (CoW)

2. Routing the order to the best liquidity venue on-chain (Uniswap, Sushi etc.)

Effectively, Cowswap acts as **Meta DEX aggregator.**

## How does CowSwap work under the hood?

Unlike traditional DEXs, CowSwap users don't execute their trades themselves. Instead of creating an executable  transaction swapping token A for B, users sign a message which gives so-called **solvers** the permission to withdraw the specified funds within a specified timeframe in order to execute the most optimal trade for the user.

The term solver relates to anyone that submits an order settlement solution for a batch. Solvers aim to maximize traders' surplus by spotting the most optimal CoW, finding the best liquidity sources or combining both in a single settlement.  

Since CoW protocol replaces a central operator by an open solvers competition for order matching, solvers play a vital role in finding the best settlement for each trade.Signatures are used so that you signal your intent to trade to the solvers. This means that once the user submits the trade there is a **deadline** by which the solver must find a path that gets the promised price for the trade in the allocated time. If no trade is found then no funds are taken out of the traders account and no fee is charged for the failed transaction! In addition to that, fees used for the transaction are paid in the token that you are trading, so no $ETH required to pay for the transaction.

![cowswap_batch.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/cowswap_batch_c71ca2822c.png)

Batch auctions work by placing orders off-chain and executing them in batches rather than settled immediately. Batch auctions help reduce MEV by matching orders together and settling a maximum amount of order internally thereby bypassing external markets. A trader using an AMM traditionally is vulnerable to MEV attacks, as miners can choose the order of the transactions that arrive to the liquidity pool. Additionally,  batch auctions allow to enforce rules such as, all same token pairs in the same batch, must have the same uniform clearing price across trades.

![pasted image 0 (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_1_562eadb377.png)

One of the advantages of using batch auctions is that you can not only find Coincidence of Wants, but you can also create ring trades. Ring trades share liquidity across all orders, rather than a single token pair. This allows the protocol to dissect trades into pieces improving price for traders. For example, let's take 4 traders trying to exchange different token pairs. Alice is trying to sell DAI into OWL, Daniel is trying to sell OWL to USDC, and Bob & Carry are trying to sell USDC to DAI. Instead of routing all the trades through an AMM, Cowswap Protocol forms a ring matching the three different pairs directly amongst each other thereby getting better trades for all involved parties.

![pasted image 0 (2).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_2_e62385017f.png)

Overall, by leveraging Batch Auctions which are tailored for Coincidence of Wants, CoW Protocol is able to give better prices for trades because batching transactions results in a lower spread, as well as a much more optimized transaction management for the user.

To summarise the benefits of CoW Protocol are:

- Fully permission-less Meta DEX Aggregator on which anyone can trade any tokens and build integrations;

- Implementation of batch auctions promoting fair uniform clearing prices;

- Trades are protected from different sorts of MEV such as front/back running or sandwich attacks;

- Maximized liquidity and access to all on chain liquidity in one single place;

- Best prices when COWs are found, or at least as good as the best DEX aggregator price if they aren't;

- Many token pairs available for trading, off-chain order submission enables gas-less trading;

- Fair, decentralized settlement in which an open competition for order matching replaces a central operator or a constant function market maker;

- Tokenomics ensure that solvers are competing against each other to deliver the best order settlement solution for traders in exchange for the reward of each batch auction.


Cowswap team has set up phenomenal incentives for users to experience CoW Protocol. Users can participate in 80% gas fee reductions every Friday at barn.cowswap.exchange during their happy hour (check discord for exact time). The Cowmunity is amongst the most friendly and supportive communities in DeFi so if you have any doubts after reading this article, don’t hesitate to jump into their Discord and ask questions.


Website: [https://cowswap.exchange/#/swap](https://cowswap.exchange/#/swap)

Twitter: [https://twitter.com/MEVprotection](https://twitter.com/MEVprotection)

Discord: [https://discord.gg/27pzeYU5wy](https://discord.gg/27pzeYU5wy)

Why you should use Cowswap for all your DEX trades

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Bitwala is both a bank and a crypto wallet. How will these worlds converge in the future? Benjamin Jones, CEO & CTO of Bitwala has some interesting answers.

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Bitwala is both a bank and a crypto wallet. Their CEO Benjamin Jones gives us a glimpse on the role of banks in a crypto-first world.

Bitwala CEO Ben Jones on the Cryptotesters podcast on crypto banks

[Spotify](https://open.spotify.com/episode/7cSOFyzQTgo2kjUKzKWw4l?si=xNT4eGQgSBSLWSTHeOKFyw), [Apple Podcast](https://podcasts.apple.com/de/podcast/cryptotesters/id1507883894?l=en&i=1000487712137), [Breaker](https://www.breaker.audio/cryptotesters/e/69570800)
In this episode we talk to Benjamin Jones, the CEO of Bitwala. Bitwala is in a pretty unique position because they are both a bank and a crypto wallet.

They are between the two worlds.

Many folks in crypto want to make banks redundant. So we asked Ben for his thoughts on how these two worlds will co-exist in the future. 

He had very interesting thoughts on this topic and how banks could adapt.  

Read the [Bitwala review](https://cryptotesters.com/best-non-custodial-wallets/bitwala-review) or [sign-up](https://bitwala.x89scb.net/1xYMd) for a wallet straight away!

Ben Jones CEO of Bitwala on the future of banks in a crypto-first world

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