Dear Reader,
Welcome to Gryphsis Academy’s weekly Crypto Digest. We bring you pivotal market trends, insights into emerging protocols, and fresh industry updates, all designed to enhance your crypto and Web3 expertise.
Enjoy!
Follow us on Bullbapp.
for more in-depth research and insights

Market and Sector Snapshot:

Layer 2 Overview:

Last week, all Layer 2s, except for Base, showed an upward trend. Base decreased by 3.33%, while the most significant growth was seen in Starknet, with an increase of 2.96%. Protocols such as Arcanum, Matrix Farm, Mountain Protocol, eZKalibur, and StarkDeFi demonstrated noteworthy TVL (Total Value Locked) growth percentages.

LSD Sector Overview:

In the LSD (Liquid Staking Derivatives) sector, the amount of Ethereum deposited decreased by 7.53%, with the total withdrawal volume increasing. In terms of market share, except for rETH, which rose by 29.28%, all other blue-chip LSDs saw declines, with swETH experiencing the most significant decrease of 25.22% this week.

RWA Sector Overview:

Last week, the market capitalization of real world assets (RWAs) rose by 7.69%, with an overall industry market share of 0.14%, while the 24-hour trading volume decreased by 6.48%. The tokenized RWA treasury saw a slight decline, but the value of tokenized U.S. Treasuries grew by 3.25%. Notable tokens showing growth included $DETF, $LCX, and $CTC. Tokens such as $TIA, $CPOOL, and $BRTR experienced significant losses.
Main Topics
Macro Overview:

• US Stock V.S. Crypto

Big Story:

• Bitcoin spot and futures market expectations in 2024

Protocol Spotlight:

• Clearpool

VC Funding Highlight:

• Eclipse Fi($1.9M)
• Tonka Finance($2.5M)
• BRC20.com($1.5M)

Alpha Threads:

• @TheDeFISaint on MUX Protocol
• @0xelonmoney on Metis
• @milesdeutscher on Cosmos
• @0xAndrewMoh on RWA
• @KingWilliamDefi on Solana Meme-coin

Macro Overview

This week, the stock market showed weaker fluctuations compared to the crypto industry, with the SPX and NASDAQ increasing by 0.32% and 0.29% respectively. In the coming week, it is important to pay attention to significant events such as the ISM Manufacturing Purchasing Managers’ Index, JOLTs Job Openings, ADP Non-Farm Employment Change, and Non-Farm Employment figures.

Story of the Week

Bitcoin spot and futures market expectations in 2024
US regulatory approval of a Bitcoin ETF is expected to trigger a 49% surge in the price since October 2024.
Currently, four exchanges dominate spot Bitcoin trading, namely Coinbase, Binance, Bybit and OKX, which account for 65% of spot Bitcoin trading. Binance has the highest share of 35.5%, followed by Bybit, OKX, and Coinbase with 11.3%, 9.2%, and 8.9% respectively.
Although smaller order amounts are associated with retail traders, institutional traders may also split orders into many smaller ones to minimize slippage. Therefore, it is unwise to assume that retail traders are the main force in recent spot Bitcoin trading based solely on the order amount.
According to Coinbase’s Q3 2023 trading summary, trading volume has declined in three of the past four quarters. The rate of decline in trading volume for both retail and institutional traders has been similar over the past year.
David Liang of Path Crypto says that history suggests we may see a slowdown in prices before the halving in April 2024.
In terms of Bitcoin futures market, CME Group’s Bitcoin futures open interest has reached $4.55 billion, accounting for about 25% of total open interest and reaching the level not seen since Q2 2022.
The majority of CME Bitcoin futures positions are held by asset managers and leveraged funds, with the former exhibiting a long bias and the latter showing a short bias, as asset managers tend to invest over longer time frames than other buyer clients. In contrast, hedge funds and commodity trading advisors (CTAs) tend to trade over shorter time frames and engage in basis trading and hedging.
CME Group notes that “average large Bitcoin open-interest holders, with at least 25 contracts, hit an all-time high the week of November 7, 2023,” as institutional investors become more active in the crypto space.
Funding rates align perpetual futures prices with spot prices. When the funding rate is positive, long contract holders pay funding fees to short contract holders, and vice versa. The funding rate rises with Bitcoin spot prices, indicating bullish sentiment and bias.
https://www.coindesk.com/markets/2023/12/27/what-to-expect-from-bitcoin-in-2024/

Weekly Protocol Pick

Welcome to our “Weekly Protocol Pick” — where we spotlight a protocol that’s making waves in the crypto space. This week, we’ve picked Clearpool, a permissionless decentralized lending protocol, enables institutions to fundraise without collateral.
Clearpool, an unpermissioned decentralized lending protocol, enables institutions to raise funds directly without collateral. Launched in March 2022, Clearpool has issued over $440 million in loans and has a growing user base that includes crypto and traditional financial institutions like Wintermute, Jane Street, Fasanara Digital, CoinShares, etc. The protocol was launched on the Ethereum mainnet in March 2022, expanded to Polygon PoS in July 2022, extended to Polygon zkEVM in July 2023, and to Optimism in October 2023.
Clearpool’s main operations include: Permissionless, Prime, Stake

• Permissionless

Borrowers must pass Global KYC & AML to ensure that digital asset lending activities comply with local financial regulations and compliance standards. Initiated pools are managed through Clearpool multi-signature, currently only supporting USDC/USDT funding.

• Prime

Prime, Clearpool’s entry into RWA private credit, is now operational on the Optimism mainnet. In Prime, all counterparties, including Borrowers and Suppliers, must undergo strict KYC and anti-money laundering AML due diligence. Borrowers can initiate funding pools with customized terms, while Suppliers can earn returns from high-quality institutional counterparts in a safe and compliant environment.
Prime lending does not require collateral; Borrowers create pools with specific conditions within the core smart contract. After creating the pool, the borrower can invite any other whitelisted institutions to fund the pool. The lent assets are automatically transferred directly to the Borrower’s wallet address, with Clearpool protocol not holding the assets in custody.

• CPOOL Oracles and Staking

Clearpool has its own oracle network, the Clearpool Oracle Network, with various institutions voting to determine pool interest rates. Staking $CPOOL tokens in the Oracle pool not only earns $CPOOL token incentives but also helps maintain the interest rate pricing mechanism.
The weight of each oracle is determined by the number of $CPOOL tokens staked/owned, with their voting power being 15% of their $CPOOL holdings. Holders can delegate their votes to oracles and earn $CPOOL rewards proportionate to their staking ratio, while oracles can also charge a commission.
Economic token model: The native token $CPOOL has an initial maximum supply of 1000M, with two main value captures:
1) Delegated Staking: Holders can delegate their tokens for staking to oracles, with 15% of the total staked amount as their Voting Power, earning staking returns based on their percentage of staked amount.
2) LP Rewards: Earn CPOOL mining incentives by supplying funds for liquidity.
The protocol’s business model is as follows:

• Origination Fee
• When borrowers make repayment transactions (including principal), the origination fee is sent directly to the Clearpool treasury and charged to the borrower. The fee is calculated annually, based on a standard year of 360 days and a standard month of 30 days for the loan amount.
• Protocol Fee
• The protocol fee is a percentage of the pool interest approved by governance and is transferred to the protocol treasury upon maturity/repayment. This fee is only applied when the borrower initiates a “repayment” transaction. Penalty interest is calculated immediately after overdue repayment.

The revenue generated by the protocol is used to buy back $CPOOL, either stored in the reward pool for later redistribution as LP/staking rewards or destroyed.

Our Insights

Currently, Clearpool ranks third in the uncollateralized lending protocol market, with an average monthly growth of 25.12%, and is ranked first on Optimism. Additionally, since the announcement of the Prime service on Optimism on December 12, its token $CPOOL has seen a monthly price increase of 111.29%.
As a lending protocol alone, Clearpool’s Total Value Locked (TVL) of 55.28M lacks competitive advantage in the sector. However, beyond basic lending services, it has introduced RWA (Real World Assets) private credit through its Prime service.
The first loan under Clearpool Prime was initiated by Portofino Technologies, a crypto-native HFT market-making institution that uses advanced technology to reduce friction in buying and selling digital assets on exchanges and over-the-counter markets. The lender for this first Clearpool Prime transaction was Azure Tide, a digital asset lending institution with clients including many traditional family offices and institutions.
After institutions are certified, they can apply for a loan without collateral, while users can also participate as suppliers to provide funds and earn APY returns. Clearpool further meets the compliance needs of institutional market participants for digital asset lending, while liquidity providers can earn attractive mining ($CPOOL) returns.
Furthermore, Clearpool has received a grant of 150,000 $OP tokens from the Optimism Foundation, which the protocol will use for liquidity mining rewards on the OP mainnet.
The voting mechanism of $CPOOL oracles acts as a feedback loop for its governance, participating in the core competition of the Curve War. The governance rights of $CPOOL also have value in potential vote-buying, further enhancing the demand for the token.
In summary, Clearpool is making strides in compliance and application in RWA lending, becoming a significant milestone in bridging the gap between traditional private credit and DeFi. It ranks among the top three in unpermissioned lending protocols and has received a substantial grant from Optimism, with rich incentives in its liquidity pool. Lastly, the governance feedback, mining incentives, and token buyback economic models of $CPOOL are strong positives for the future development of Clearpool.

VC Highlights: Top Funded Crypto Protocols This Week

Welcome to our weekly Investment Spotlight, where we shine a light on the most significant venture capital moves in the crypto space. Each week, we’ll focus on protocols that have attracted the most funding.
Eclipse Fi
Eclipse Fi is a modular launch and liquidity solution, supporting innovation on Cosmos and beyond. Eclipse Fi offers a comprehensive modular solution for token and liquidity needs, with the ability for projects to take charge of the entire token launch process from the beginning, to customise their launch method and flow based on their distribution and liquidity requirements.
https://finance.yahoo.com/news/eclipse-fi-raises-1-9-162000033.html?guccounter=1
Tonka Finance
Tonka Finance is a lending platform dedicated to enhancing the functionality and liquidity of inscription track assets. By utilizing advanced lending mechanisms, diversified collateral options, and seamless cross-chain interactions, it aims to enhance the functionality, feasibility, liquidity, and accessibility of Bitcoin inscriptions and other digital assets, offering a user experience superior to traditional lending protocols like AAVE and Compound.
https://www.chaincatcher.com/article/2110006
BRC20.com
BRC20.com is a DeFi protocol on Bitcoin that formed to bring critical infrastructure to the BRC20 ecosystem. BRC20.com integrates of advanced BRC20 focused features: mobile wallet, cross‑chain bridge, multi-mint, marketplace, staking and more. BRC20.com API provides built-in discovery tools for alpha discovery on trending mints and hot tokens.
https://x.com/BRC20com/status/1740396107962671237?s=20

See you soon an another blog.