This week we launched our new data portal: the Terminal.

An Analyst’s Guide to the Terminal

The definitive resource for all cryptoasset investors

After a few months of heads-down building, it’s time for us to reveal the first version of the Terminal. Our long-term goal is to work together with our users — the project teams and communities, investors, analysts, and other stakeholders — to build out the most robust and useful investment analysis toolkit for the crypto markets.

“Launched in 1982, long before PCs and the Internet became ubiquitous, the Bloomberg Terminal brought transparency to financial markets. It connected market participants to groundbreaking data, analytics, and information-delivery service and revolutionized an industry.”

Now, some forty years later, it feels like the Internet-native capital markets are on the verge of their Bloomberg moment.

In a nascent market like crypto, the lack of standards makes it hard to conduct relative analysis on the performance of crypto projects. With this initial release of the Terminal, we hope to provide tools for investors and analysts alike to tackle this issue. In this article, we go through the initial layout for the project-specific dashboards that can be found in the Terminal. We hope to engage the community to work together with us in improving this initial framework.

P.S. Even if crypto is still largely associated with cryptocurrencies and Bitcoin, we hope that the Terminal sheds light on the promise of Internet-native financial markets, especially for those who still believe currency to be the only viable use case for cryptoassets.

Metrics initially available in the Terminal

1. Market cap — what is a project valued at? Calculated based on a project’s fully-diluted token supply.
2. Price to sales ratio (P/S) — how is a project valued in relation to its revenues? Calculated as a project’s market cap divided by its annualized revenue. Annualized revenue is a forward-looking revenue estimate that is calculated based on a simple 30-day moving average.
3. Token trading volume to market cap ratio (VOL/MC) — how efficient is the price discovery for a project’s native token? Calculated as the daily trading volume for the project’s native token divided by its market cap.
4. Total value locked (TVL) — how much money has been deposited into a project’s smart contracts? Calculated as the liquidity deposited to a project’s smart contracts (exchange) or as the difference between the assets deposited and borrowed (lending).
5. Gross merchandise volume (GMV) — what is the demand for a project’s service? Calculated as the project’s trading (exchange) or borrowing (lending) volume.
6. Revenue — how much are users paying to use a project’s service? Calculated as GMV* Take rate. For now, revenue refers to the total fees paid by the project’s users. Where available, we’ve also included data on how the total revenues are split between the supply-side participants and the owners (tokenholders) of a protocol.
7. Take rate — what does it cost to use a project’s service? Refers to the fee charged on the GMV, either in the form of a trading fee (exchange) or an interest rate (lending).

How to get the most out of the charts

General tips

When going through an individual project’s dashboard, it’s useful to write down the:

1. launch date for the project’s native token,
2. dates for potential token incentive distributions, and
3. dates for when new assets (trading pools or lending markets) have been included to the project’s platform.

These events are usually clearly visible in the GMV and revenue composition charts. For example, the launch of token incentives can temporarily increase the demand for the project’s service (increase its GMV).

Counter charts

The counter charts focus on current values, benchmarked against the project’s peer group (currently other DeFi projects listed on Token Terminal). In addition, they include month over month changes and compounded monthly growth rates (CMGR) for longer time periods. When looking at the counter charts, it is useful to think about what could explain the upward or downward movement month over month? Is the movement inline or in contrast with the project’s peer group, why?

Historical charts

The historical charts provide deeper insight into a project’s development over time. In historical charts, it’s useful to look for patterns (stable, volatile, one-off spikes or drops, correlation with the peer group, etc.) and the underlying events that could explain them, such as token incentive launches. The toggle feature enables the user to focus the view on either the project or the peer group (DeFi average).

Composition and normalized charts

The composition charts reveal the underlying dynamics of a project’s business. For GMV, which trading pools or lending markets are most used? For take rates, which trading pools or lending markets charge the highest or lowest fees? For revenue, which trading pools or lending markets generate the most fees? Normalized versions of composition charts show how the relationships between the different trading pools or lending markets have evolved over time. The toggle feature enables the user to focus the view on specific trading pools or lending markets.

Charts with multiple trading pools or lending markets

For projects that have multiple different GMV and revenue components, we’ve chosen to visualize the nine components with the most GMV and revenue during the relevant time period (i.e. 30-days, 180-days or since launch) in addition to an “Other” category. A large “Other” category would indicate that the long-tail of trading pools or lending markets generate significant GMV or revenue and vice versa. The toggle feature enables the user to focus the view on specific trading pools or lending markets.

If you can imagine spending your days creating and analyzing charts similar to those in the Terminal, shoot us a DM on Twitter or email people@tokenterminal.xyz, and let’s figure out a way to work together!

Launching the Terminal was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

This interview was transcribed from an audio recording.

Your career is a combination of music, startups, and crypto — how have these experiences shaped you as an investor?

There’s a few straight lines through my career that may not be obvious. One is that I think there’s actually a lot that is similar between the work I was doing in the music industry as an artist manager prior to getting into the tech world. Before starting Mediachain Labs, I had started an artist management firm called Cool Managers where we helped independent artists such as Solange Knowles and Blood Orange.

What’s interesting is that there’s kind of a similarity in the work of being an artist manager and then working in VC. Both jobs require you to be constantly scouting out new talent, new ideas and creativity that you can get excited about and put work into to help realize those ideas. As an artist manager, the talent that you’re working with are musicians. And now, as a venture capital investor, the talent that I’m working with are entrepreneurs, developers and technologists.

For me this is a straight line — I’ve always been personally a technologist and someone who’s excited about culture, music and ideas. And so, I found the transition from working in music to working in tech, both as an entrepreneur and then later as an investor, as a very natural one. The other thing that I’d say is that in all of my careers, I think the guiding principle has been trying to help creative people capture more of the value that they create.

With the artist management firm, the goal was to help artists remain independent and reach their fans directly by using new technology platforms, which also helped them monetize their audiences without having to depend on the major label system.

Similarly, with Variant, the thesis is all about trying to help everyday Internet users capture more of the value from products and services that they contribute to every day. I think that’s the big unlock that crypto networks have exposed — the foundation for a new generation of Internet platforms that are getting started today.

Some of your writings have evolved into landmark pieces in the crypto space — how do you choose a topic to write about?

I’m in a very privileged position in that I get to meet entrepreneurs every day who have great ideas about how to build products. The benefit of talking to tons of technologists building stuff helps you see patterns emerge. You can then contrast these patterns against one another and build frameworks as to how these markets work.

When I start to see a pattern that’s emergent, and potentially something that is poorly or not widely understood, that’s where I see an opportunity to to collect my thoughts and share them to hopefully benefit other entrepreneurs that are trying to navigate the idea maze of running an early stage startup.

The progressive decentralization playbook is definitely an example of that. It was largely informed by my experience as an entrepreneur and the things that I was learning from other entrepreneurs who were executing through the idea maze.

Being close to the next wave of entrepreneurs that came on the back of the ICO boom, I started to see patterns emerge that I thought were better fact and design patterns. That’s what prompted writing that post.

It’s definitely not some stroke of genius, lightning in a bottle type thing. It’s more just about having the benefit of learning from the best entrepreneurs.

What has surprised you the most in the development of the crypto industry?

I would say one thing I’ve been surprised with are the progressive decentralization posts, and how often the concept is referenced. It’s a playbook that I think many projects are now following. That’s a net positive, because the reason I wrote that post was to provide a better framework for bringing a crypto project to market.

The surprise has been the degree to which that playbook has been executed and the speed of execution. So now, there are many projects that are going through the three steps of the progressive decentralization playbook literally in a matter of days. I would say that’s been very surprising and also interesting to watch, especially since it diverges from the intent of the post quite a bit, for better or worse.

You were responsible for the a16z Crypto Startup School initiative. As an organizer, what can you tell us from the experience and what were the key learnings from the course?

Many of the people who applied to crypto startup school, and ultimately ended up attending, were people who are new to crypto. I would describe them as crypto curious. Many of them worked in big technology companies like Google, Netflix and Amazon, and maybe some of them had bought some crypto in 2017, but hadn’t really yet taken a deep dive on it. At those companies, they don’t really have an avenue to explore this sort of new and very quickly moving space.

We intentionally designed the program to have a balance of crypto curious students and others that are more crypto native or people who are already deep down the rabbit hole, including people already building projects in the space. That dynamic between the two groups worked well, because the people who were new to the space came in with a healthy degree of skepticism.

How do you look at team-building for crypto protocols, especially since they enable global participation?

It’s more distributed, which is good in the sense that the goal of many crypto networks is to become fully community owned and operated networks, meaning that any user anywhere in the world can contribute to the network and earn value in exchange for their contribution. However, I would say that distributed teams do have a cost. If you look at the numbers, there are very few multi billion dollar companies where the teams started distributed.

Even though I’m very optimistic about that changing, I do think it’s important for startup founders to consider the fact that the most successful technology startups in the world started as traditional centralized teams. It can be helpful in the early days to have a very tight, close knit team that’s able to execute rapidly and ship, iterate, and learn. Once you’ve shipped a product and you have people using it, you can progressively decentralize both the control over the product itself, the team and the contributors to it.

What are the key differences or similarities between protocols and traditional online marketplaces?

The biggest difference is how you bootstrap liquidity in the marketplace. But let’s talk about similarities first: I think many crypto networks can be thought of as traditional marketplaces. For example in the Bitcoin network, there’s a simple marketplace with supply and a demand. The supply side consists of miners who provide blockspace and the demand side is investors or users who are sending transactions in order to invest or transfer Bitcoin, for which they pay a transaction fee. That transaction fee goes to the supply side, i.e. miners of the network.

Hopefully that illustrates in broad strokes that the business model is the same: you have at least a two sided marketplace with a transaction fee in the middle. What’s different is what’s done with that transaction fee revenue. Instead of that revenue going to third party shareholders, as is the case with most Web2 marketplaces, that revenue stream in crypto networks is distributed directly to the contributors on the supply side of the network — the people who make the network valuable in the first place. So, in Bitcoin, that’s the miners and in a network like Compound, that’s the liquidity providers who make the network effects of the Compound money market. And the fact that contributor’s are able to earn some of the value that they contribute is an incentive for them to begin using the product and see the product continue to grow over time.

That’s what’s fundamentally new about crypto networks. What’s different is that they can solve the classic chicken and egg problem of marketplaces by giving direct economic incentives or control over the platform directly to the users.

In addition to DeFi, what other use cases or verticals are you most excited about?

What’s going on in DeFi is something that I’ve been calling the ownership economy, which means that the users of these financial marketplaces are able to earn some of the platform value of the marketplace itself. The users own and operate the platforms that they interact with every day. I think that the same idea of user ownership is starting to increasingly play out in consumer facing verticals. At first, it started out with Bitcoin and Ethereum, where the early users of those networks were technologists and developers. They understood that the value of these tokens was, in fact, the value of the network as a whole.

Now that same idea is starting to get productized and applied to other areas. We’re starting to see this happen in consumer facing marketplaces like Foundation and Forte. In the case of Foundation, they’re helping creators fund and monetize creative projects by turning those projects into tokens and allowing their audiences to buy those tokens. Users can then sell them on the market or redeem them for the actual work. The result is that both the creators and their audiences can benefit from increased demand for the creators’ work, because as the demand goes up, so too does the price.

I would also give Reddit as another example. They’re running this great experiment where users of the Reddit mobile app get an Ethereum wallet and they don’t need to know or care. All they need to know is that they’re able to earn value for the contributions that they make — whether that’s moderating or posting content. Users can earn community currencies whose value derives from the product features that Reddit has built. For example, users can pay for gifts or badges with those community currencies, thereby giving them fundamental intrinsic value. What’s cool is that Reddit is distributing that value directly to the contributors, meaning that Reddit is aligned with their users’ success since the company retains 20 percent of each community currency they create. The company’s success being aligned with the users of the platform is an important new example of this model playing out outside of developer infrastructure and finance.

You recently launched your own crypto fund Variant. What’s the fund’s investment thesis and focus?

The ownership economy concept, which I touched on earlier, is the thesis for Variant. In short, it’s that crypto networks have highlighted a new economic foundation for the next generation of Internet products and services. It is a foundation where users own and operate the network. I know that may sound kind of far fetched, taken at a glance, but if you zoom out and look at the history of software innovation over the last 20 years, I actually think it’s a very linear progression, in that one of the biggest surprises in the software industry is the success of open source software. Twenty years ago, if you’d said that billions of devices would be powered by code written by random people all over the world, people working at the biggest technology companies likely would have laughed at you. But that is, in fact, the case today, where billions of devices, most of the Web servers, most of the major websites that we use everyday, rely on open source software that is crowdsourced from independent contributors all over the world.

What’s remarkable is also what’s been built with that open source software. Many of the most valuable platforms like YouTube, Airbnb, Uber, etc, also crowdsource a lot of their value directly from their users — content on YouTube, rooms on Airbnb, cars on Uber. The products and the content that make these platforms valuable is crowdsourced directly from the users.

Now that we have this technology breakthrough of crypto tokens, we’re able to distribute value in the way we distribute information. The fact that we can distribute value instantly to anyone, anywhere in the world, I think, is a major unlock for the next step in this evolution. We don’t only crowdsource code, content or products, we actually crowdsource the operation of the products and services we use every day directly from the users as well.

The thesis is that progression is going to play out across all technology or all Internet products and services, not only hyper technical platforms like Bitcoin and Ethereum, but with increasingly more consumer facing marketplaces and platforms as well.

What’s your call-to-action for builders in the crypto space? Which areas still need to improve before crypto becomes the default tech stack for entrepreneurs?

We need many more product driven builders in the space. The last 10 years or so of build out in crypto have been very infrastructure heavy. There have been a lot of deep technologists working on distributed systems, consensus and hard cryptography problems.

So the infrastructure is advancing at a rapid clip. But what’s necessary in order for the Ownership Economy thesis to be realized, is that we are going to need many more product driven founders that come in and make this new model and technology stack accessible to everyday Internet users. The experience of interacting with products and services built on this new stack needs to be on par and outcompete the experience of traditional web applications. We’re just starting to get to the point where that’s now possible in that we have the means to abstract complex crypto wallets from end users. We also have the means to extract the volatility of crypto through stable coins.

So there are fundamental building blocks in place today, meaning that great product people can come in and use those building blocks to build beautiful and intuitive product experiences. That’s only going to happen if we build a bridge from crypto to the traditional technology world, where there is really great product talent that has shipped software that’s reached billions and billions of users.

You can find more information about Jesse on his website, and follow him on Twitter.

Variant x Token Terminal: Interview with Jesse Walden was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

"I don't own any cryptocurrency. I never will," Warren Buffett tells @BeckyQuick. #AskWarren https://t.co/0VjIDJSi7L pic.twitter.com/il4cT2hWkP

“[Bitcoin is] probably rat poison squared”.

- Warren Buffett (Berkshire Hathaway 2018 annual shareholder meeting).

“Cryptocurrencies basically have no value and they don’t produce anything… I don’t own any cryptocurrency and I never will” .

- Warren Buffett (CNBC interview, February 24th 2020)

Where did we go wrong?

Most people who are excited about crypto react to Buffett’s comments with the proverbial “OK, boomer” mentality.

Buffett is old and doesn’t get it. He missed out on Amazon and Google and does not understand technology. Why listen to him when it comes to crypto?

Dismissing one of the greatest investors in history should be done with caution. Instead, it would be better to try to understand Buffett’s comments coming from the point of view of a value investor.

Note: it’s likely no one has ever pitched crypto to Buffett in terms he can easily understand.

Further, we argue that if one were to pitch crypto according to the true nature of the technology, it would become clear that cryptoassets are precisely the type of investments that Buffett could get excited about.

Warren Buffett is a value investor

Much has been written about Warren Buffett’s value-based and long-term investment strategy. A strategy most famously outlined in Benjamin Graham’s book The Intelligent Investor: The Definitive Book on Value Investing.

The value investing premise is easy to understand. Buy stocks that exhibit strong fundamentals and earnings power. Invest in companies with business models that stand the test of time, and thus have the potential for continued growth.

Buffett has never been a fan of investing in gold, or any other non-productive asset. This is based on the reasoning that gold does not generate any income or produce value. It’s price is simply based on what other people are willing to pay for it.

“Cryptocurrency” is a misunderstanding

Our focus at Token Terminal is to showcase that cryptoassets are not speculative, but productive assets that should be valued based on the cash flows they produce. Tokenholders of crypto protocols resemble shareholders in traditional companies — both tokens and shares give their owners financial and governance rights.

For example, Compound can be thought of as an open-source, Internet-native version of Lending Club. Users who use the Compound platform to borrow assets pay interest, which is divided between the lenders and owners of the Compound protocol.

Shifting the narrative from speculation to productivity

All crypto protocols today are comparable to startups in terms of their maturity. Investors base their decisions, not on today’s cash-flows, but the potential for future growth. Still, we think it’s important to change the narrative of tokens being merely speculative assets or currencies. Instead, they should be viewed as ownership shares in Internet-native companies.

Our hypothesis is that the world’s most valuable services will be owned and operated directly on the Internet.

Crypto protocols can be programmed to provide any kind of digital service directly to a global audience — from open financial instruments to computing resources. Protocols that emerge as winners within their respective vertical will become part of the core infrastructure of the Internet.

We think that the narrative about Internet-native companies could have a decent shot at converting Warren to a value-based, long-term HODLer.

For more, check out Token Terminal’s website and Twitter.

In this interview, we go through topics ranging from the team’s current product focus to future plans.

What is Augur?

Augur is the world’s first no limit betting platform. It lets people bet on real world events, anything from sporting events all the way to when the next Tesla Roadster will launch.

Who is the team behind Augur?

It’s a group of about 10–15 developers who work on the protocol, and a community of a few thousand people who all collectively contribute to what Augur is.

What made you decide to pursue a role at Pantera Capital alongside building Augur?

A lot needs to get built for decentralized finance to take off and work, and I’ve seen a lot of these problems while contributing to Augur, so investing is exciting as it’s a way to fund, help, and also learn from the best entrepreneurs in the space.

What are some less-known use cases for prediction markets that you are excited about?

I’ve seen some people discuss using them for predicting fashion trends, not that practically interesting to me but I’d be curious to see if markets actually can or not. I’m actually excited for markets on scientific subjects, e.g. whether a vaccine will be approved by a certain date, whether a bug will be found in a certain piece of software, that sort of things.

What are the pros and cons of building financial infrastructure out in the open?

The pros are that it’s permissionless, open, global, and has no middleman charging high fees. But the cons are that it can’t easily be modified after it has been released. Also, since blockchains today don’t scale that well, things get a bit slower than they otherwise could be.

What are the 3 most important changes in Augur v2? What’s the focus for Augur v3?

1. Dai stablecoin support.
2. 0x support which enables free order placements.
3. The average market should resolve in closer to 36 hours than a couple of weeks.

V3 is all about solving the challenges with scalability, as well as making Augur even easier to use. V2 is a 10x better experience than V1, V3 will be a 10x better experience than V2.

Do you see Augur becoming a fully on-chain governed protocol at some point?

I’m not sure, it really depends on the direction the community wants to take it. So far people favor opt-in updates Bitcoin style vs. ones that force everyone to use the new version (which is what on-chain governance does).

What is the path to Wall Street firms building UIs on top of Augur?

It’ll be 10 years before that happens in my view. They’ll want to see that it’s been proven to be secure and that it actually works. We’re still in the pre-Netscape era for all this stuff, hopefully V2 will be at least as easy to use as that was, and V3 should be as easy to use as, say, eBay was in the early days (getting easier and easier as fiat on-ramps improve).

If you would get to fix one thing in the blockchain ecosystem, what would it be?

Fast, cheap, fiat on ramps don’t exist. If I could fix anything right away it’d be that. It’s an extremely hard problem and I hope someone solves it because it’s needed for crypto to go mainstream.

How will the world be different once Augur and crypto have won?

Well, to me the whole idea behind them is fair markets. Markets that don’t cut you off or start charging super high fees if you start winning, and where everyone plays by the same rules. In the beginning, that’ll just mean a lot of benefits for people who like betting, but in the long run you could imagine markets on a lot of things. Imagine, in the very long term, asking Siri what the likelihood is that whatever the news is talking about actually happens, that’d be pretty cool, even if you don’t use stuff like Augur.

You can find more information about Augur on the project’s website, Twitter, Medium, Discord, and Github accounts.

Augur x Token Terminal: Interview with Joey Krug was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

What is Zerion?

Zerion is a non-custodial asset management tool for DeFi. Our goal is to become the one place where you can buy, sell and track just about every DeFi asset. We place a major focus on seamless DeFi portfolio management, with features like full wallet history, aggregated view for multiple wallets, advanced ROI metrics like Return vs HODLing, and support for every major DeFi instrument across different protocols.

Who is the team behind Zerion?

Zerion was founded in 2016 by myself, Vadim Koleoshkin (COO) and Alexey Bashklykov (CTO). We all met through our mutual interest in blockchain-based finance and participated in a number of hackathons and projects before we decided to formally become a company. Our deep technical knowledge was a huge advantage, and before developing Zerion into what it is today, we worked on everything from smart contract development and tokenized funds to blockchain games.

To date, you’ve decided to focus solely on building an interface for DeFi, what’s your thesis behind a pure UI play?

Zerion is not a protocol because the problem we’re focused on solving requires a different approach. We realized early on that the architecture of the DeFi ecosystem makes it incredibly easy to bootstrap new tokens, protocols and financial instruments. But from a user perspective, all these different components can begin to feel very fragmented. The ecosystem lacks products that are both simple enough for new users and powerful enough for DeFi pros. Our goal is to create that intersection — a place where you can access all of DeFi in a way that’s straightforward and intuitive.

In the end, I would not call it a “pure UI play”, but rather “pure aggregator play” as we exist on the intersection between users and smart contract-powered financial tools.

How do you evaluate and decide which protocols to integrate with Zerion?

Most of the time the proof is in the market. We prioritize protocols that we see a lot of demand for, however it is true that we get requests for much smaller, more obscure protocols. In this case it’s relatively easy to vet whether the protocol is a scam or not.

We generally try to integrate as much as possible because even if only a handful of users hold a particular asset, they expect to see that asset appear in their portfolio. If DeFi instruments don’t appear on Zerion, that makes the data on our product unreliable and contradicts our value proposition, so we lean towards supporting everything on the market with a few justified exceptions.

How have you approached user acquisition so far? How do you see your UA strategy evolving as the crypto space matures?

So far Zerion’s strategy has been almost entirely organic. We benefit immensely from integrations with new protocols that have their own communities. We get a lot of traffic from people who find out that their favourite asset is supported on Zerion. In addition, we can’t ignore the prolific growth of the entire DeFi ecosystem. According to Dune Analytics, the number of DeFi users since January 2019 has shot up more than 2,500%. People are naturally looking for the easiest and simplest way to manage their entire DeFi portfolio from one place. While there are a number of competing interfaces, few can claim to be as comprehensive as Zerion.

Other than this general traffic from protocol integrations and new users, we also put out a lot of DeFi content on our blog and DeFi newsletters such as Bankless and The Defiant.

What is your view on larger fintech players, such as Revolut and Robinhood, as future competitors?

We’ve already seen how fintech players have dipped their toes in the water when it comes to crypto. However, I’ve written before that fintech is fundamentally constrained because it is built on the same tools as legacy finance. DeFi is going to explode with a spectrum of new smart-contract based assets that won’t be compatible with these products, not to mention an ecosystem of dapp integrations that will benefit users. DeFi is also globally accessible, which is something the likes of Robinhood and Revolut can’t compete on. In short, traditional fintech can’t ever claim to be “decentralized finance” when every aspect of it is centralized.

What’s Zerion’s business model?

Zerion is completely free to use. The only time we would ever charge our users would be for value added on, such as advanced investing tools or exclusive DeFi content.

We are also considering monetizing the access to DeFi we provide through DeFi SDK. This could open up a B2B service that makes it easier for other platforms to integrate with DeFi.

Can you give our readers a hint about some upcoming feature(s)?

The next few months will see many exciting changes on Zerion. Right now, the interface feels very closed in the sense that the assets you see are the ones you own in your portfolio. We’re introducing a new “Explore DeFi” feature that lets you discover the entire DeFi market based on real-time asset performance.

How will the world be different once Zerion and crypto have won?

For one thing, I hope that sophisticated, high-yield financial products will become more accessible to ordinary people. Access to financial markets is a universal right. There is a growing weight of research suggesting that it significantly improves people’s lives. Similar to the Internet, people who don’t have it are at a disadvantage given the ever-changing nature of the world around us. Access to these new non-sovereign financial instruments will be crucial in the 21st century. Once crypto wins, finance will be more globalized, finally breaking the impediment of state-controlled monetary and fiscal policy.

You can find more information about Zerion on their website and on their Twitter, Medium, Telegram, and Github accounts.

Zerion x Token Terminal: Interview with Evgeny Yurtaev was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

In this interview, we go through topics ranging from the team’s current product focus to future plans.

What is Nervos?

Nervos is a multi-layered blockchain ecosystem. Layer 1 is the Nervos CKB (Common Knowledge Base), which uses a proof of work protocol. This base layer allows any crypto asset to be stored with the security, immutability and permissionless nature of Bitcoin. On top of that is layer 2, which enables users to create their own blockchains, protocols and integrations.

Who is the team behind Nervos?

The Nervos ecosystem is being built by a team of developers with deep roots in the crypto space. Past projects built by core team members include Ethereum clients (ruby-ethereum and pyethereum), creators of imToken — world’s largest Ethereum wallet, Spark Pool — largest ETH mining pool, Cryptape — leading blockchain engineering team, CITA, Peatio and core protocol research and development for Ethereum and Bitcoin.

Since launching the project in January 2018, we have grown into a diverse group with backgrounds in engineering, cryptography, token economics and community building — currently more than 95+ people across the world. We strive for openness, collaboration and integrity and are all passionate about decentralized technology and the impact it will have on the world.

How would you describe the relationship between Nervos and other L1 blockchains? Is it collaborative or competitive?

I don’t view the relationship between different blockchains as competitive. Every chain has things it is well-suited for, while other things it is not. Blockchains are really in competition with the large industry of financial services that has orders of magnitude more users and resources, and can offer users and developers a much better experience than blockchains can today.

Every blockchain struggles with the same blockchain trilemma, none to date has shown an effective path to scaling — the promise people have come to expect from blockchains. If we approach the industry as more of a landscape of open research problems and less about competing implementations and assets, we create a situation in which we are all better positioned for success.

What is the current state of the application ecosystem on top of Nervos? What use cases are the leading applications tackling?

The application ecosystem on Nervos is at a nascent stage, we are currently building infrastructure and developer tools that will make it much easier for developers to build applications in the future. This includes a number of DeFi primitives, frameworks to support cross-chain interactions and tooling that will lower the learning curve for developers and users approaching Nervos.

Some examples of the tooling that is being built on the developer side: support for smart contracts in the Rust programming language and support for Ethereum smart contracts and tools. On the user side, the focus is on enabling native support for existing dApp browsers, other blockchain wallets, and native mobile wallets, so users will not need to install new software to interact with Nervos.

How will Nervos catch the attention of developers entering the crypto space? What is Nervos’ developer acquisition strategy like?

Growing our developer community is one of our highest priorities for Nervos. We launched a 30MM USD grants program at the start of the year to support infrastructure and “common good” projects on Nervos. Some of these grants include Bitcoin interoperability, online IDE, a browser wallet (like MetaMask), zero knowledge proofs and more. We also recently launched CKLabs, an incubator for supporting product teams building use cases on Nervos. Additionally, we have a dedicated developer relations team who are focused on developer tools, documentation, tutorials, guides and supporting community devs in a variety of ways. We also have many hackathons, code jams, and developer courses lined up for the second half of the year.

What are some of the yet-to-be-solved design issues that Nervos is facing?

For almost two years, from the project’s initiation in 2018 to the mainnet launch in November of last year, the team was dedicated to ensuring the core design decisions of the Nervos network would be sustainable over the long term. Now that the network has launched, there are optimizations that can be made on the underlying blockchain, however our belief is that once blockchains are deployed, they become like hardware, very hard to change.

This means that the foundation of the network is relatively fixed, and since launch our focus has moved to Layer 2 and developing frameworks and design patterns that will allow Nervos to grow to Internet scale, without compromising the experience users have come to expect from the network. The team is currently researching deployment of a generalized payment channel network (like Lightning, but for any asset on Nervos), development of the Axon sidechain framework and support for the emerging family of zk rollup-style protocols on Nervos.

What metrics is Nervos interested in tracking and why? How do you gauge the growth of the Nervos ecosystem?

There are many network metrics that we track and we have integrated a dashboard into our explorer that tracks important network metrics like hashrate, blocktime, transactions, etc.

For the ecosystem, we see growth in the developer community through grant and CKlabs applications, people using our documentation, guides and resources as well as the wider community and ecosystem of people getting involved in a variety of ways through online and offline meetups, groups, social channels and more.

If you would get to fix one thing in the blockchain ecosystem, what would it be?

I think I would want to dispel the notion that the path to success is through disruption or displacement of existing systems in favor of a “blockchain” product. I believe that blockchains will ultimately succeed by finding integration paths in existing technologies and systems to create value for their users from the properties of trust and common knowledge that blockchains provide.

There are a couple of ways this improves our situation. First, it frees us from having to re-architect and re-build everything from the most basic infrastructure to vastly complicated web systems, which is a near impossible endeavor for a startup kind of ecosystem. Second, this creates a more natural path to adoption. Some people will always be open to trying new products and services, but many new technologies improve our lives on a regular basis without requiring deliberate “adoption”, because they are implemented in existing products and services we already use.

How will the world be different once Nervos and crypto have won?

Blockchains allow for the creation of common knowledge, which is information we all agree on and can trust the integrity of. Bitcoin showed us that this property is enough to create a currency and a system for distributing it. Nervos and crypto at large will increase financial inclusion and ensure that everyone on earth has access to modern banking, payment and other financial services.

Nervos has been designed as a network for capturing and storing common knowledge, which will go beyond just finance and create systems that increase trust across a variety of use cases. Cryptography can be deployed to authenticate someone’s identity or information that is being provided to create or increase trust, which will greatly benefit our relationships and the world at large.

You can find more information about Nervos on the project’s website, Twitter, Medium, and Github accounts.

Nervos x Token Terminal: Interview with Kevin Wang was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

TL;DR: zkSync (built by Matter Labs) is an L2 protocol for scalable low-cost payments on Ethereum, powered by ZkRollup technology. zkSync launched its v1.0 on mainnet on June 18th.

What’s unique about zkSync?
Since it builds on ZkRollup tech, zkSync can function without a challenge/withdrawal period (dispute game). This near-instant transaction finality differentiates zkSync from many other L2 scaling solutions.

Why use ZkRollups?
In a ZkRollup, external validators generate Zk-proofs of state transitions and submit them on-chain. Proofs are instantly verified by a Rollup contract on Ethereum. Assuming that the Zk-proofs only include valid transactions, its is extremely difficult to manipulate blocks.

How secure is zkSync compared to other L2 scaling techniques?
Zk-proof-based systems take a pro-active approach to security (blocks are final), while other dispute-based systems employ a reactive approach to security (blocks can be disputed).

What assets does zkSync support?
zkSync can be used to transfer ETH & ERC20 tokens. Currently, new tokens are proposed and approved by the operator (Matter Labs). This process will eventually become community-governed.

What does it cost to transact on zkSync?
Users that wish to transact on zkSync pay a small fee to the external validators that generate the Zk-proofs (~$0.001). Since the on-chain transaction costs are divided between all transactions within the Zk-Sync block, users are able to to save on total transaction costs.

How can I use zkSync?
Move your assets off-chain by making a deposit to zkSync from your Ethereum wallet (e.g.MetaMask). Now, the real-time balances are only visible in the zkSync wallet and zkSync’s own block explorer:

What’s on the roadmap?
Initially zkSync focuses on enabling faster payments. The goal is to eventually scale smart contracts.

Token Terminal provides financial and business metrics on crypto protocols — metrics we’re used to seeing applied to traditional companies, e.g the P/E ratio. Crypto protocols operate like traditional businesses, only they do it directly on the Internet.

For more, check out Token Terminal’s newsletter, website and Twitter.

ELI5: What is zkSync? was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

TL;DR: SKALE Network is an L2 scaling solution for Ethereum, primarily aimed for scaling smart contracts. SKALE enables the creation of app-specific sidechains, which are secured by SKALE’s own validator set.

SKALE’s V1 mainnet launched 1st of July 2020.

Why SKALE?
SKALE helps dApp developers speed up smart contract development and increase performance. SKALE is EVM-compatible and allows builders to make use of Ethereum’s existing developer tools.

How does SKALE work?
The goal of SKALE is to enable dApps to access independent app-specific chains secured by SKALE’s validator set. In other words, app-specific sidechains purchase security from SKALE’s validator set.

What is SKALE’s business model?
SKALE can be thought of as Ethereum-as-a-service. A dApp pays a subscription fee based on the resources it needs (computation, storage, bandwidth) from SKALE’s validator set.

How does SKALE connect to Ethereum?
App-specific chains connect to Ethereum via the SKALE Manager smart contract that serves as the point of entry and exit. dApps deposit their tokens to the SKALE Manager smart contract, which mints corresponding tokens on the app-specific chain.

How are app-specific chains secured?
Chains derive their security from the SKALE Manager contract, which is secured by a pool of randomly appointed and frequently rotated validators. Among the early signed up validators are ChorusOne, StakedUS, BisonTrails etc.

What is the role of the $SKL token?
Validators stake $SKL in the SKALE Manager smart contract to earn fees and inflation rewards. Holders of $SKL can delegate their tokens to any validator in the SKALE network.

How can dApps start using SKALE?
A dApp developer who wants to use SKALE has to:

1. Decide how much additional capacity they need;
2. Select the duration for the additional capacity; and
3. Pay the subscription fee to the SKALE Manager contract’s validators.

Who controls the protocol?
The SKALE network is currently governed by the non-profit N.O.D.E. Foundation. The goal is to transfer the ownership and control of the network to $SKL tokenholders over time.

Roadmap:
A restricted mainnet (secured by validators who have run the testnet and gone through an onboarding process) was launched on 1st of July 2020. Staking and delegation will be live in Q3’20.

Token Terminal provides financial and business metrics on crypto protocols — metrics we’re used to seeing applied to traditional companies, e.g the P/E ratio. Crypto protocols operate like traditional businesses, only they do it directly on the Internet.

For more, check out Token Terminal’s newsletter, website and Twitter.

ELI5: What is SKALE Network? was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

TL;DR: Optimism is the team behind the development of Optimistic Rollup (OR). OR is an Ethereum L2 scaling solution that promises an order of magnitude improvement in transaction throughput while preserving the L1 smart contract developer experience.

How does OR work?
OR increases the network throughput by allowing staked validators to compute state updates (latest activity) off-chain and post state roots (minimum viable data of the updates) on-chain. The validity of OR blocks can be challenged by anyone.

The OVM translates OR smart contracts for the EVM; The Optimistic Virtual Machine (OVM) makes sure that the L2 contracts can be correctly interpreted and executed on L1 by the Ethereum Virtual Machine (EVM).

Why is now the time for OR?
Ethereum needs to scale to support the growth of its application ecosystem. Unipig and the Synthetix demo showcased the promise of OR as a scaling solution for Ethereum.

Unipig demo
The demo was built in collaboration with Uniswap and included custom-built components. Unipig got to ~250 TPS. The team calculated that an optimized production version would be capable of ~2000 TPS.

Synthetix demo
Synthetix organized a trading competition, where DeFi users got to experience the near-instant and cheap Ethereum transactions of the OVM. Unlike Unipig, the demo ran on a generalized system meant to work for any Ethereum dApp.

History of Optimistic Rollup and Plasma:
OR has much in common with Plasma. Both use staked validators that commit blocks on-chain. Tradeoffs:

1. Plasma can achieve near-infinite scalability with a limited validator set.
2. OR improves scale while enabling anyone to dispute a block’s validity.

What is Optimism’s business model?
Miners on L1 make money on transaction fees, block rewards, and transaction ordering (this applies to block proposers on L2 as well).

Optimism has presented a proposal where the right to reorder transactions within a block would go to the highest bidder.

Token Terminal provides financial and business metrics on crypto protocols — metrics we’re used to seeing applied to traditional companies, e.g the P/E ratio. Crypto protocols operate like traditional businesses, only they do it directly on the Internet.

For more, check out Token Terminal’s newsletter, website and Twitter.

ELI5: What is Optimism? was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.

What is meant by L2 scaling?
L2 scaling techniques move transactions off-chain and bundle them into proofs that are submitted back to the main chain (external scaling). L1 scaling techniques try to improve the throughput of the main chain through sharding (internal scaling).

The different L2 scaling solutions can roughly be divided into:

1. State channels
2. Sidechains

State channels assume a fixed set of participants where everyone acts as a validator, whereas sidechains have a separate validator set and allow anyone to use the network.

State channels
In state channels, state changes are made by a fixed set of live participants. Any update to the channel must be digitally signed by all channel participants.

Sidechains
Sidechains are either custodial or non-custodial.

1. Custodial sidechains; assets are moved to a parallel chain with its own consensus mechanism and security.
2. Non-custodial sidechains; assets are held and state is secured by smart contracts on Ethereum (this means that non-custodial sidechains can survive an attack of the sidechain).

Plasma
Plasma is a general framework for building non-custodial sidechains. However, unlike custodial sidechains, Plasma chains derive their security from the main chain (Ethereum). In Plasma, the block headers (snapshots of the balances) are enforced on Ethereum.

Rollups
Rollups are non-custodial sidechains that solve Plasma’s data availability problem. Rollup blocks include enough data for anyone to reconstruct and challenge their state. In Plasma, only a subset of validators can challenge blocks sent to the main chain.

Rollups come in two flavours:

1. Optimistic rollups — ORs depend on a dispute game run by active validators.
2. ZkRollups — ZKRs rely on cryptographic zero-knowledge (ZK) proofs, which are instantly validated by a smart contract.

Optimistic rollups
Optimistic rollups resemble Plasma sidechains, but tradeoff some of their scalability to run fully general smart contracts (whereas ZKRs are currently better suited for simple payment transactions). Optimistic rollups can run anything Ethereum can.

ZkRollups
In a ZkRollups, validators generate ZK proofs of all state transitions. ZK proofs are instantly verified by the Rollup contract on Ethereum. This means that it is extremely difficult to manipulate a block or commit a block with an invalid state.

We recommend checking out Matter lab’s comparison framework of different L2 scaling solutions: https://docs.google.com/spreadsheets/d/19hl6CxG-RfWKsDEa86ZHWkHGvplyW4J1TqKFvcbbyvs/edit#gid=0

Token Terminal provides financial and business metrics on crypto protocols — metrics we’re used to seeing applied to traditional companies, e.g the P/E ratio. Crypto protocols operate like traditional businesses, only they do it directly on the Internet.

For more, check out Token Terminal’s newsletter, website and Twitter.

A Primer on Ethereum L2 Scaling Techniques was originally published in Token Terminal on Medium, where people are continuing the conversation by highlighting and responding to this story.