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💰🏦 Zoth RWA 🏦💰
The real-world asset (RWA) narrative continues to gain momentum, with financial institutions showing strong interest in adopting it.
Zoth is an RWA DeFi infrastructure company bringing fixed-yield products on-chain. Their products deliver fixed, sustainable, and secure yields from real-world assets. Zoth is live on Mainnet and across 8 blockchains with over $75M+ in credit originated and a further $11M deployed/contracted.
They launched Atlas, a community-incentivized portal with 1.2M+ wallets, attracting DeFi natives with sustainable on-chain RWA yields.
Zoth plans new asset classes, permissionless products, partnerships, and a token launch soon. 🚀
Follow Zoth’s journey on Twitter now!
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Monthly Theme: EigenLayer AVSs
What is EigenLayer?
EigenLayer enables Ethereum stakers to re-stake their ETH to enhance trust guarantees for new decentralized services. ETH or a liquid staking token (LST) is recycled on the consensus layer through EigenLayer smart contracts, ensuring security for new applications. This eliminates the necessity for new applications or decentralized services, known as Actively Validated Services (AVSs), to establish a trusted network from scratch to secure their system.
Architecture
Figure 1. Eigenlayer Ecosystem
The major players in the EigenLayer Ecosystem include:
Restakers: Users who stake their ETH or Liquid Staking Token (LST) on EigenLayer to secure AVSs. Restakers can either delegate their staked ETH to operators or directly provide validation services as operators. They maintain control over their stake and choose which AVSs to support.
Actively Validated Services (AVSs): Applications and decentralized services that utilize re-staked ETH to operate their networks. AVSs offer modular services to consumers, rollups, and the broader Web3 ecosystem.
Operators: Third parties responsible for the validation tasks critical to AVSs.
Risks
According to Vitalik Buterin, the primary risk associated with restaking is the potential for Ethereum's ecosystem social consensus to be leveraged for forcing a fork or reorganization to resolve a protocol's issues.
Additional risks include:
Slashing - Users staking ETH on EigenLayer risk being slashed, with 50% of their ETH slashed on the consensus layer and the remaining 50% by the AVS to which they delegated.
Centralization - Restakers may seek to maximize yield, potentially concentrating restaking toward AVSs offering the highest yields and subsidies. This could trigger yield wars and centralize restaked ETH among a few AVSs.
What is an Actively Validated Services (AVS)?
Figure 2. EigenLayer Framework and AVS Overview
An AVS refers to any service that necessitates its own validator system. AVSs encompass:
DApps
Data Availability Layer: Restaking can enhance data availability with high DA rates at lower costs (EigenDA, Near Finality Layer).
Bridges: Restakers can validate off-chain bridge inputs; in case of challenges, EigenLayer operators may face slashing (Davos Protocol).
Decentralized Sequencers: Restakers can form a decentralized sequencer quorum serving multiple rollups, enhancing censorship resistance, and managing MEV (Espresso).
Keepers: Operators execute keeper automations and earn fee shares (Ditto Network).
Oracles: Oracles publishing prices to Ethereum can leverage EigenLayer for enhanced trust (Eoracles).
Trusted Execution Environments (TEEs): Operators can use TEEs to prevent slashing and verify completed validation tasks (SUAVE).
Restaking Platforms: Platforms using LSTs or ETH to secure EigenLayer AVSs, mitigating ETH withdrawal risks during downturns (GenesisLRT, Renzo Protocol, Kelp DAO, Puffer Finance, Rio Network, Restake Fi Swell Network).
Virtual Machines:
Rollups and other VMs: EigenLayer enables ETH restakers to participate in new consensus protocols, L2s, and sidechains.
How EigenLayer Helps AVSs
EigenLayer addresses the challenges faced by AVSs when launching their services through:
Bootstrapped Security. Instead of recruiting validators with subsidies, new AVSs can utilize Ethereum's existing validator set.
Capital Efficiency. ETH restakers incur minimal costs when delegating to EigenLayer operators, enabling them to earn yield from both Ethereum and AVS validation.
Pooled Security. EigenLayer consolidates economic security, allowing multiple AVSs to share a common security base.
Flexibility. AVSs can tailor their architecture, consensus mechanism, slashing conditions, and incentives according to their needs.
Additional Revenue Streams. Restakers earn extra yield from rewards and distributions provided by secured AVSs.
Market Size & Growth
Figure 3. EigenLayer TVL $17 billion as of June 29, 2024. DefiLlama.
TAM: $410B Ethereum market capitalization.
SOM: $112B ~ $3,408 ETH * 32,963,370 ETH staked [1].
SAM: $28B ~ 25% * $3,408 ETH * 32,963,370 [2].
[1] Total staked ETH.
[2] 25% = 32,963,370 / 120,182,781 = Total staked ETH / Total ETH supply
Spotlight Project: Ditto Network
Summary
Ditto Network builds modular infrastructure for intent-driven automation and a secure, trustless keeper network (AVS on Eigenlayer) to execute smart contract workflows. This network of external agents (keepers) triggers actions based on predefined conditions. As an Eigenlayer AVS, Ditto allows dApps to leverage Eigenlayer's security while streamlining smart contract deployment and execution for secure transactions, liquidations, and account rebalancing.
Use Cases
Developers can use Ditto to create keepers for:
Trading: Build custom orders (TWAPs, stop-loss, cross-market hedges).
Liquidations: Protect leveraged positions and automate liquidation bots across chains.
Transactions: Batch and schedule multi-chain token transfers.
Payments: Schedule token and NFT distribution, and automate transfers between CEX and non-custodial wallets.
Gaming: Automate NFT and token distribution based on in-game criteria.
Figure 4. Ditto Middleware Architecture
Architecture
Ditto Network utilizes a modular architecture with an SDK for swift keeper development. The network leverages User Gateway components for developers and Account Abstraction for secure, gasless transactions.
The core functionalities reside in two layers:
Application Layer: Manages stateful workflows and dApp communication.
Execution Layer: Provides a trustless environment for keepers to verify conditions and execute transactions efficiently.
The Data Availability Layer relies on EigenDA and NEARʻs Super Fast Finality Layer.
Execution Layer Benefits
Ditto's Execution Layer boasts capital efficiency thanks to its node operators running Actively Validated Services (AVSs). AVSs optimize resource allocation and expedite execution through:
Proportional Workload Distribution: Tasks are distributed among executors based on their delegated stake. Those with a larger stake receive more tasks, ensuring efficient resource use.
Stake-Based Incentives: Missed executions incur a penalty (stake slashing), while successful execution generates yield. This incentivizes reliable performance.
Leveraged Staking on Eigenlayer: By leveraging Eigenlayer, Ditto eliminates liquidity fragmentation and enables leveraged staking, maximizing capital utilization.
Ditto AVS
Figure 5. Ditto AVS Architecture.
Besides leveraging Eigenlayerʻs shared security and network reliability, Ditto AVS employs zero-knowledge (ZK) proofs to validate execution. This provides:
On-chain Verification: Workflows and load distributions are recorded on-chain and are enforced with a slashing mechanism.
Dispute Resolution: The blockchain state is resolved with ZK proofs.
Customized Security: Users can adjust their level of security through execution rewards and by selecting which node operators provide economic guarantees.
Business Model
Ditto Network earns a percentage of the priority gas fee per keeper execution. Fees: Ethereum ~ 20%, Polygon ~ 70%, Arbitrum ~50%.
Revenue is distributed amongst the following Ditto stakeholders:
Treasury - 10%
Nodes (executors) - 40%
Staking rewards - 50%
Traction
Founded in September 2023 and based in Portugal, Ditto Network has had impressive traction in 9 months with no paid marketing.
$10mm in transactions via the Ditto dApp
~200k strong social media community
5,000 beta participants providing valuable feedback
$300mm Total Value Locked (TVL) committed into the AVS network
2,000 automations created by users
Account Abstraction SDK has 5 B2B pilot projects generating $100k in revenue
Competition
Ditto Network stands out in the automation space with its fully decentralized AVS solution, leveraging zero-knowledge proofs for dispute resolution within a modular architecture.
Gelato Network: Offers gasless transactions across EVM chains using Rollups-as-a-Service.
Keep3r Network: Enables running smart contract jobs on Ethereum and Optimism mainnet.
Rhinestone: Provides infrastructure for developers to build modular smart account modules.
Enso Network: Focuses on creating an intent engine across various blockchain ecosystems.
DeFi Saver: Offers tools and automation specifically for DeFi portfolio management.
ZeroDev: Creates smart wallets for dApps via account abstraction.
Third Web: Provides account abstraction solutions for building dApps with in-app wallets (primarily on EVM).
Team
Ditto Network has a strong founding team with experience in Web3 and investments. The dev team features 5 developers and 2 designers.
Vlad Shadrintsev, co-founder & CEO. Angel and venture investor, co-founder of Web3 projects, former Mckinsey.
Yonatan Goldich, co-founder and business development. Angel investor, head of business development DcentralLab.
Anton, CTO. Contributor Uniswap.