A handful of the most interesting and current stories in the blockchain/web3 world not published on Decential this past week in case you missed them

Hello and welcome back to the Web3 Rewind! Per usual with the industry, lots has happened this past week so without further adieu, let’s dive into this week’s news.

The Latest

Solana has had a fairly rough time as an ecosystem. At one point, the token $SOL was down 95% from all-time highs. The rapid collapse of FTX was the final nail in the coffin, ultimately resulting in the shutdown of Serum, the liquidity and backbone of Solana, and one of Solana's largest ecosystem supporters, Multicoin, being down bad when their hedge fund lost 91.4% of its value in 2022.

We think it's fair to say that many people had written Solana off and that a comeback was unlikely. However, deep in the bear, the Solana ecosystem and its devs have continued to push on, showing the tenacity of the true believers in crypto. It would have been easy for Solana devs to relaunch their protocol on one of the shiny new venture capital-backed layer ones ( L1s) such as Aptos and Sui, but the community has stuck around for better or worse.

One fascinating piece of technology to come out of the Solana ecosystem recently is xNFTs. xNFTs are a special form of a non-fungible token (NFT) that contain executable tokenized code. Owning the xNFT means you control the rights over its execution. There are a few mental models in which to think about this. The easiest one is protocols; their front ends can now be replaced by xNFTs. If you're worried about a phishing scam or one of those Google ad scams where you get directed to the wrong URL and approve a malicious contract, those are things of the past with xNFTs. If Uniswap places all the Uni V3 code in an xNFT, you can now open and interact with the Uniswap app directly in your wallet through an NFT.

The first wallet built to support xNFTs is Backpack. Backpack acts as an operating system built specifically for xNFTs. Like any externally owned wallet you have today, it manages your private keys and connects to various dApps. But it's asset and protocol-agnostic, and everything in the wallet is an xNFT. This means NFTs can now do what apps/websites could traditionally do, all within a wallet.

The first team to launch an xNFT was Mad Lads. The launch was initially slated for Thursday but got pushed back to Friday evening after a series of DDoS attacks on the Cloudflare infrastructure they used. Despite being the most popular NFT mint of the year by a wide margin, Solana functioned perfectly. If you took a look at average transaction fees and the block space, you wouldn't have noticed an NFT mint was happening at all.

This is due to another great technological innovation from Solana, local/isolated fee markets. Without going into too much technical detail about how parallelization and compute units enable this, the tl;dr is that with isolated fee markets, if a hugely popular NFT mint is taking place and thousands of users are trying to mint the NFT, this does not push up the price of transactions in the global fee market. The easiest Ethereum comparison here is if NFT minters were paying thousands of dollars in gas fees to mint a piece of land for the Otherside metaverse, your normal DEX swap or ETH transfer would still have only been $10.

Solana has been quietly growing and laying its foundation for the future. DeFi on Solana is making a comeback with various new perpetual future exchanges, NFT AMMs, and more. The new Solana validator client, Firedancer, is slated to launch later in the year. Last but not least, Solana just shipped its first batch of its Android-based phone, Saga, with its own app store and built-in seed vault.

So is it too early to write Solana off? We'll let you be the judge. But we believe it's an ecosystem that deserves keen attention to for the rest of the year. And as usual, be willing to maintain an open perspective and don't be a maxi of any ecosystem, even if your bags are heavy there. — Joseph Cooper, Decential Media

Cross-chain swapping dept.

The AMM for a Modular Future

Is the future modular? I don't know. But it sure seems to be heading that way with data availability layers, shared sequencer solutions, and Rollups-as-a-Service popping up left and right. One of the problems associated with a modular future is liquidity fragmentation. If every app was its own chain or rollup, transferring assets repeatedly between different blockchain networks is going to get tiring, or straight-up impossible at times.

A new project announced on Wednesday, Catalyst, aims to solve that problem. Catalyst is a cross-chain automated market maker (AMM) that only requires an interoperability messaging layer to operate. If you're familiar with a traditional AMM, where the swap price is based on the internal state of the liquidity pool, Catalyst brings that same concept to a cross-chain level. It splits the state of the AMM across different chains, meaning you could have ETH on Ethereum and AVAX on Avalanche connected together as part of one liquidity pool to facilitate cross-chain swaps.

Catalyst is unique in a few ways. It is entirely permissionless, meaning anyone can add assets and create a cross-chain liquidity pool; it promises to redistribute protocol-captured MEV to LPs; and only one bridge message is sent, which greatly decreases the attack vector on that message, versus the multiple layers of attack vectors that existing cross-chain swap solutions are exposed to. I would continue to pay great attention to any infrastructure solutions that increase connectivity between modular blockchains. — JC

Quick Bits

Coinbase Fights Back and Sues the SEC

• On Monday, it was reported that Coinbase sued the SEC by filing a narrow action in U.S. Circuit Court. Last July, Coinbase requested that the SEC provide regulatory guidance for the crypto industry. Specifically, Coinbase asked for clearer regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities.

• The SEC has failed to respond thus far. In fact, in return, the SEC served Coinbase with a Wells notice a month ago. It seems like crypto has collectively had enough of Gary Gensler's enforcement-first approach and is finally taking the fight to him.

Arbitrum Finally Airdrops to DAOs

• Users got their $ARB airdrop, now it's the DAO's turn. 1.13% of the ARB token supply was airdropped to DAOs on Monday, representing ~$100M at current prices. A variety of metrics were used to decide how much each DAO received, including total value locked, activity, transaction volume, and when the protocol launched.

• Only Arbitrum projects with DAO treasuries were eligible for this airdrop. The goal here is to allow all sub-communities within the Arbitrum ecosystem to have a voice. Of course, some protocols such as TridentDAO sold their ARB allocation immediately.

Ethereum Stakers Apparently Like the Ability to Withdraw

• Remember when we were a few days out of the Shanghai upgrade and doom-posters and naysayers were saying there was going to be an unbelievable amount of sell pressure as everyone unstaked? Well, none of that really materialized even as a large amount of partial and full withdrawals were processed.

• In fact, on Wednesday, the entry queue flipped the exit queue. This means that there are more validators waiting to become stakers than validators waiting to unstake. It shouldn't be too surprising that some validators are more comfortable staking now that withdrawals have been enabled.

And last but not least

Monthly DEX Volume of Arbitrum and Optimism is Catching Up

Active developers? Core developers?

I don't know about you, but I never really liked that metric as a measure of ecosystem activity. A much better metric is DEX volume, as it shows actual economic activity taking place, assuming there's no wash trading occurring which doesn't make much sense anyway, as you would just be paying fees to LPs with no rewards.

This graph by Blockworks Research shows that monthly DEX volume on Arbitrum and Optimism is slowly catching up to Ethereum's volume. If it feels like most of the activity has been happening on rollups, then most of the activity has been happening on rollups. It will be quite a significant moment when DEX volume on L2s surpasses Ethereum, and the day that happens will truly cement rollups as a crucial component of Ethereum's future. — JC

Out of the Ether: Special NFT Edition

Have you read the definitive history of Ethereum? No? Well then get your special edition of Out of the Ether while you can. There are only 1,000 that were printed and each copy is an NFT that can be registered on the Lukso blockchain’s Universal Profile protocol.