GM Builders. 🚧 

Welcome back to the BW3 newsletter! Today’s read we are hard launching our Tech Tuesday segment, breaking down the complex into the simple so you can even get your mom onchain 🤣 

Here’s the line up today:

• Technical Tuesday: Chain Abstraction ⛓️ 

• Is it worth all the HYPE? 📰

• Tech Tuesday: Scaling & Survival 📈 

• Recent Deal Flow 🤑 

• Meme City 🌇 

BUT FIRST, pat yourself on the back y’all, you deserve it.

TECHNICAL TUESDAY: CHAIN ABSTRACTION ⛓️

Chain abstraction is here to turn the crypto world inside out—and maybe, finally, onchain adoption will stop scaring away your tech-phobic uncle.

What Is Chain Abstraction?

Imagine living in a world where you no longer:

• Fumble with bridging assets between chains.

• Manage 50+ wallets like a digital hoarder.

• Check your balances across multiple networks like a stockbroker on speed.

With chain abstraction, none of this matters. It lets you focus on what you want to do instead of how to do it.

For example: Instead of saying:
“Bridge my USDC to Base and lend it on Moonwell,”
You just say:
“Lend my USDC on Moonwell.”

One click, no detours. 🛣️ 

Why This Matters:

• User-friendly DeFi: Simplifies crypto so your mom can join the party.

• Zoomer-ready UX: “It’s giving chainless vibes,” as the youth would say.

• 1 Billion Users: The promise is simple: make Web3 as intuitive as apps, and people will actually show up.

Chain Abstraction vs. Interoperability: What’s the difference?

A quick primer:

• Chain abstraction makes it feel like there’s only one chain. It hides all the complexities of Web3 so users can focus on what they want to do—not how to do it.

• Interoperability is the technical groundwork—how we connect the dots across chains to reach chain abstraction.

Think of chain abstraction as the pie-in-the-sky goal, while interoperability is the engineering road map that gets us there.

Here’s how Jax puts it 👇️ 

IS IT WORTH ALL THE HYPE? 📰

Let’s talk about HYPE—the token that dropped with a splash, launched a debate, and made everyone in crypto sit up a little straighter.

Here’s the breakdown of why it’s making waves and whether it’s built to last:

What’s the Deal with HYPE?

• The Basics: HYPE is the native token of Hyperliquid, a blockchain ecosystem boasting one of the largest decentralized exchanges (DEX) for perpetual futures and spot trading.

• The Big Bang: A massive airdrop distributed 31% of its 1 billion token supply to its community, catapulting its market cap to $1.7 billion on Day 1.

• Utility Beyond Hype: It’s not just a speculative play. HYPE powers staking (via HyperBFT), fuels transactions (on HyperEVM), and secures the network—all foundational to Hyperliquid’s operations.

What Makes Hyperliquid Different?

This isn’t just another blockchain trying to slap a “decentralized” sticker on a DEX. Hyperliquid introduces:

1. Hyper Liquidity

   • Deep, onchain liquidity rivaling centralized exchanges.

   • Instant finality, high throughput, and transparency.

2. Builder Codes

   • Developers can access liquidity pools seamlessly, adding utility beyond basic trading.

3. HLP Vaults

   • Think decentralized market making: users deposit USDC, earn trading fees, and participate in liquidity provisioning.

In essence, Hyperliquid is bridging the usability of centralized exchanges with the security and transparency of DeFi.

Why All the Buzz?

• Innovative Tech: The Hyperliquid ecosystem combines high-speed Layer 1 blockchain capabilities with a robust DEX, all underpinned by HyperEVM (Ethereum compatibility).

• Community Love: Airdrop recipients are buzzing, and bullish sentiment is strong across crypto social media.

• Market Performance: After its launch, HYPE surged from $3.20 to $4.80, with a trading volume that screams, “This isn’t your average token drop.”

But Is It Really Worth the HYPE?

The Good Stuff:

• A Complete Ecosystem: Hyperliquid isn’t just a token—it’s an infrastructure play.

• DeFi Evolution: It’s tackling liquidity and UX challenges that have plagued DeFi for years.

• Community-Centric Approach: Rewarding users early positions it for organic growth.

The Risks:

• Volatility: The massive airdrop caused wild price swings, appealing to speculators but adding overvaluation risk for holders.

• Regulation Watch: Hyperliquid’s advanced features might attract regulatory attention as it grows.

• Sustainability Questions: Will the hype outlast the hype, or is this another flash-in-the-pan DeFi project?

The Bottom Line

If Hyperliquid can deliver on its promises—merging the best of centralized and decentralized finance—HYPE might not just be worth it. It might set a new standard. But for now, keep an eye on how they navigate adoption hurdles, regulatory scrutiny, and market competition.

Because in crypto, hype is easy—execution is hard.

SCALING & SURVIVING: CAN ETHEREUM, SOLANA, AND EXCHANGES ADAPT? 🤔 

The Ethereum Dilemma

Ethereum has long been the king of smart contracts, but scaling has been its Achilles' heel:

• Skyrocketing Gas Fees: Making transactions unaffordable for most users.

• Sluggish Transactions: Slowing down user adoption.

• Developer Exodus: Builders started migrating to other blockchains.

Enter Rollups—Ethereum’s knight in shining armor:

• Transactions move off-chain but settle on Ethereum.

• But even rollups introduced headaches: bridges, fragmented liquidity, and clunky user experiences.

The Superchain Vision

Optimism’s Superchain is here to flip the script.

What Is It?
A network of chains built on the OP Stack, working like one cohesive blockchain.

How It Works:

• Shared Security: Chains protect each other, reducing vulnerabilities.

• Seamless Communication: Chains talk to one another without extra steps.

• Universal Tokens: Assets flow freely, no bridges required.

Why It Matters:

• For Developers:

  • Code once, deploy across 20+ chains (Optimism, Base, etc.).

  • Access shared liquidity for faster scaling.

• For Users:

  • No confusing network switches.

  • No risky bridging processes.

  • A unified, simple blockchain experience.

The Superchain is already powering Base, Ink, and 20+ chains. Will it solve Ethereum’s long-term issues? Too early to say, but it’s a framework to watch.

Solana’s Developer Struggle

Solana promised speed and low costs, but its complexity alienated developers:

• Rust was intimidating.

• Its account model was hard to grasp.

• Onboarding felt like climbing a mountain.

Now, Solana is fixing its developer problem with Poseidon:

What Is Poseidon?
A framework that lets developers write Solana programs in Typescript, which is then transpiled into Rust and deployed.

Why It’s a Game-Changer:

• Focus on Concepts: Devs can spend more time on Solana’s strengths instead of fighting Rust.

• Faster Development: Reduces time to build apps.

• Bigger Ecosystem: Lowering technical barriers invites more developers to innovate.

Rust remains the gold standard, but Poseidon acts as a gateway drug for newcomers. The result? More apps, more protocols, more composability.

Centralized Exchanges Going Onchain?

Centralized exchanges like Coinbase and Kraken are making bold moves onchain, and it’s paying off.

• Coinbase’s Base:

  • In October 2024, it raked in $3.78 million in onchain profits, leading in transactions, active users, and TVL.

  • It’s not just a win for Coinbase—it signals a shift in the centralized exchange model.

• Kraken’s Ink:

  • Kraken quickly followed suit with its own Layer-2.

Why the pivot to onchain?

1. Scalability: Faster and cheaper transactions are pulling users onchain.

2. Revenue Streams: Exchanges are unlocking new income from onchain activity.

The big question: Is the future of centralized exchanges really onchain? Base and Ink suggest the answer is “yes.”

TL;DR

Ethereum and Solana are working to solve their scaling and usability challenges with bold innovations like the Superchain and Poseidon. Meanwhile, centralized exchanges like Coinbase and Kraken are reshaping their business models by moving transactions onchain.

Whether these efforts are enough to survive—and thrive—remains to be seen. But one thing’s clear: the race to scale isn’t just about survival; it’s about setting the stage for crypto’s next billion users.

RECENT DEAL FLOW 🤑 

1. USDX Money

• Raised: $45M | FDV: $275M

• Category: Stablecoin, DeFi

• Chain: BNB Chain Ecosystem

• Backers: NGC Ventures, BAI Capital, Generative Ventures (+1)

USDX Money is stepping up as a serious contender in the DeFi and stablecoin ecosystem on the BNB Chain. With backing from major players like NGC Ventures, its $275M FDV reflects its potential to reshape liquidity in the DeFi space.

2. World Liberty Financial (WLFI)

• Raised: $30M

• Category: Lending/Borrowing, Yield Aggregator

• Chain: Ethereum Ecosystem

• Backers: Tron

With the backing of Tron, WLFI is pushing the envelope in decentralized lending and yield aggregation. Keep an eye on how they tackle liquidity management and integrate cross-chain capabilities.

3. Partior

• Raised: $20M | Series B

• Category: Payment Solutions

• Backers: Deutsche Bank

Partior is aiming to bring a modern, decentralized touch to payment systems. Their Series B round, anchored by Deutsche Bank, signals confidence in their vision of revolutionizing finance.

4. Kernel DAO

• Raised: $10M

• Category: Synthetic Issuer, Smart Contract Platform

• Chain: BNB Chain Ecosystem

• Backers: Binance Labs, SCB Limited, Laser Digital (+15)

Kernel DAO is positioning itself as a leader in synthetic asset creation. With Binance Labs in their corner, they’re set to amplify their presence across the DeFi and staking ecosystem.

5. Brighty

• Raised: $10M

• Category: Finance/Banking, Payment

• Backers: Futurecraft Ventures

Brighty is targeting the intersection of traditional banking and blockchain with a focus on accessible payment solutions. Their seed funding paves the way for innovative hybrid financial products.

🎙️ PLUG: THE FUTURE OF DEFI ON THE BUILDING WEB 3 PODCAST 🚀

This week on the Building Web3 Podcast, Jax sat down with Kain Warwick, the "Father of Modern Yield Farming" and founder of Synthetix, alongside Jed Watson, CTO of Infinex, to dive into their mission to make DeFi as seamless as centralized exchanges (but without the risks). 🌉

Key Highlights:

• The UX Revolution: How Infinex breaks down barriers for onchain transactions by abstracting gas fees, chains, and the complexities that scare off beginners.

• Kill Centralized Exchanges?: Why Infinex is gunning to replace Binance and Coinbase by making DeFi more user-friendly, accessible, and powerful.

• Lessons in Self-Custody: Kain and Jed discuss the bold mission to bring crypto back to its roots—genuine ownership without the headaches.

• Tech Deep Dive: How Infinex is leveraging account abstraction, resilient back-end systems, and cutting-edge tools like Gelato and TurnKey to deliver an unmatched DeFi experience.

🔗 Catch the Full Conversation: Mash that cursor on the link above 👆️ to learn how Infinex is changing the DeFi landscape and what it means for the future of crypto.

If you’re feeling extra generous this holiday season, you can help us with the algos by searching "Building Web3 Podcast" on your favorite platform! 😂 

MEME CITY 🏙️ 

Until Next Time Builders! 🏗️ 

Keep chugging tokens and buying water 🚰 

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