Hey Edge readers,

Hope everyone who attended Permissionless had an incredible time and got a chance to meet our team in person. For those who couldn’t make it to our side event, we’ll be sharing a recording soon. This week, we’re excited to highlight the key takeaways from the conference and explore what’s next for crypto.

In today’s edition:

• Takeaways from Permissionless 🔥

  Blockchain modularity, interoperability, stablecoins, and restaking were among the hot topics.

• Uniswap announces Unichain 🗞️

  Plus: more airdrop news, Trump token sale next week, and WBTC completes restructuring

Stay sharp. 🫡

-The Exponential team

Takeaways from Permissionless

A few takeaways from our time at Permissionless:

1. The future is modular

“If you build something useful, someone will modularize it.”

The notion that no blockchain can be truly monolithic is gaining traction. Every blockchain comprises modular components—execution, consensus, and data availability (DA). This modularity allows new chains and rollups to select, customize, and optimize these components to suit their specific needs.

By enabling multiple experiments to be conducted simultaneously, modularity fosters greater customization for app-specific chains. As such, the production velocity for modular teams is poised to outpace that of any single Layer 1 team.

Protocols like @RomeProtocol are already leveraging this as their main value proposition. Rome modularizes Solana’s consensus into a set of prescribed services, allowing L2s to achieve the same speed and decentralization as Solana.

2. Evolution of stablecoins

Fiat-backed stablecoins are projected to reach a market capitalization of $3 trillion, reflecting their growing importance in the digital economy.

The evolution from “Stables 1.0” like USDT (early stablecoins with limited transparency) to “Stables 2.0” like USDC (improved regulatory compliance/transparency but still operating under traditional models) has set the stage for “Stables 3.0,” which aims to redistribute revenue back to users, moving beyond traditional rent-seeking models.

Current stablecoin models were established before the multichain era and often fail to address liquidity fragmentation across different blockchains. A unified, interoperable approach is essential for a multichain world, where assets can move seamlessly between networks. Projects like @withAUSD are addressing this by leveraging @wormhole's Native Token Transfer (NTT) to unite AUSD stablecoin liquidity across all chains.

3. Restaking revolution

The appeal of building on crypto rails lies in its openness and verifiability. Restaking extends this by creating a verifiable cloud—a decentralized infrastructure where applications can outsource critical functions like consensus.

A key concern in restaking is determining the appropriate fees and token incentives that Actively Validated Services (AVSs) must offer to prevent attacks. The competitiveness among AVS tokens raises questions about the sustainability of incentive models and the stickiness of restakers.

Viewing AVS tokens as equity requires evaluating them based on their business models and revenue-generating potential. Some AVSs like shared sequencers or oracles will generate fees from day one. In contrast, areas like zero-knowledge (ZK) proofs and artificial intelligence (AI) may not have immediate revenue streams and might rely on token subsidies initially.

Restaking is also moving beyond just Ethereum where any token can be used for economic security. However, @sreeramkannan expects the tokens that accrue the most monetary premium (ETH, BTC, USD) to be most demanded for shared security purposes. Restaking leverages this by aligning incentives between token holders and the services that require security assurances.

4. DeFi renaissance

DeFi is on the cusp of a significant renaissance, transitioning from its experimental roots to a phase of maturation and consolidation. This maturation involves shifting attention toward profitability, building trust, and creating strong network effects. The goal is to position DeFi as a serious alternative to today’s centralized services.

The DeFi community recognizes that to break through to mainstream adoption, it must simplify user experiences and expand market access beyond the “decentralization maxis”. This involves acknowledging the shortcomings in user interfaces, onboarding processes, and overall accessibility. By doing so, DeFi can tap into the vast user base currently utilizing centralized services.

One notable trend fueling this renaissance is the move toward vertical integration. Projects are beginning to develop across various layers of the blockchain stack, aiming to offer seamless, centralized-like experiences without compromising on decentralization. For example, Uniswap's announcement of @unichain and @fraxfinance's Fraxtal chain indicates a strategic shift where protocols are building their own chains to improve scalability, interoperability, and control over their ecosystems.

That's a wrap! Excited to see how these narratives evolve over the coming year. If you were at Permissionless, let us know if you have any other thoughts.

In the news

• Uniswap unveils its own Layer 2 network, Unichain, built on the OP stack - Read

• Trump’s World Liberty Financial to start public token sale next week - Read

• WBTC completes restructuring and is now custodied in the U.S., Hong Kong, and Singapore - Read

• Babylon attracts $1.4 billion in BTC after second deposit cap unlock - Read

• Scroll network to airdrop 15% of token supply to community - Read

• Swell network releases airdrop checker - Read

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