Artemis Weekly Wrap-up (9/8/2023)
your go-to source for weekly fundamental updates
This week, Vitalik (Ethereum co-founder) co-authored a paper detailing how private financial transactions could potentially coexist with the current regulatory environment and ex-FTX executive Ryan Salame plead guilt to federal criminal charges related to the exchange.
let’s jump right in 👇
🌞 Luxury Houses including Prada and Loro Piana launch services on Aura consortium’s blockchain
💫 Artemis Data Insights:
Uniswap Gas Usage on Ethereum, Arbitrum and Optimism
Uniswap Gas Usage vs. DEX Volumes
There were no significant fluctuations in L1 / L2 market prices over the week with average and median WoW price declines of ~0.2% and ~0.1%, respectively, while equity markets fell further (S&P 500 and NASDAQ index down ~1.6% and ~2.6% over past 5 days, respectively). This week, the CBOE filed two 19b-4 applications to the United States securities regulator, requesting for the ARK 21Shares Ethereum ETF and VanEck Ethereum ETF investment products to be listed on CBOE’s BZX Exchange. This action officially starts the clock for the SEC to respond, with a final deadline estimated to be around May 23, 2024.
🌞 Luxury Brands including Prada and Loro Piana launch services on Aura consortium’s blockchain
Over the past year, brands including Loro Piano, Louis Vuitton and Maison Margiela have begun dabbling in blockchain services that will allow customers to verify that their item is authentic and not counterfeited. Per a 2019 estimate by the Organization for Economic Cooperation and Development, as much as ~$464bn of counterfeit and pirated products are exchanged each year, which accounts for ~2.5% of global trade. In an attempt to combat this phenomenon, a group of luxury brands created the "Aura Blockchain Consortium” dedicated to using blockchain to improve traceability and transparency of their goods.
Aura was founded as a non-profit in April 2021 by LVMH, Prada and Cartier to provide luxury companies with a single blockchain that they could use to authenticate their products. Since that time, the group has expanded to include the OTB group (owner of Maison Margiela) and the Mercedes-Benz group.
Today, the brands have utilized the Aura blockchain in a number of ways. OTB has introduced a service using NFC chips, allowing customers to tap their smartphones on products, such as Maison Margiela Tabi shoes, to verify their authenticity. By doing so, they are directed to a website showing the product's authenticity certificate and origin, supported by the Aura Blockchain Consortium. In a similar move, LVMH’s Loro Piana enables customers to scan QR codes on its expensive Gift of Kings garments to confirm authenticity and learn about the product's origin. LVMH believes blockchain will play a pivotal role in ensuring traceability and authenticity in the luxury industry.
While critics remain skeptical about the usefulness of a physical chip that ties a product to the blockchain (Blockchain consultant Colin Platt asks “What happens if I pull that NFC chip out of the bags, make 10,000 copies and put them in 10,000 fake bags? Who owns the real bag?), executives from the brands note that a digital certificate and tamperproof online record could make it easier for customers to pass on items to family and friends. Historically, physical certificates of authenticity are printed on plastic or paper cards and are often discarded over time and blockchain technology is seen to be a marked improvement over existing systems.
💫 Artemis Data Insights: Uniswap Gas Usage on Ethereum, Arbitrum and Optimism
Uniswap has been by far the #1 gas-consuming application on Ethereum over the course of 2023. The Artemis team evaluated how Uniswap Gas consumption compared to total gas usage across three popular EVM-compatible blockchains: Ethereum, Arbitrum and Optimism.
In our analysis, we discovered that on average, Uniswap has contributed to a whopping ~25% of total gas usage on Ethereum in the YTD 2023 period.
Does that trend persist across Optimism and Arbitrum? Let’s take a look:
On Arbitrum, the figure is much lower. Looking at YTD 2023, Uniswap has only made up ~6% of total gas usage on Arbitrum.
On Optimism, that figure appears to be even lower (~2% over the YTD 2023 period).
This indicates that there are large applications on Arbitrum and Optimism that are consuming meaningful amounts of gas outside of Uniswap. By taking a look the Artemis Activity Monitor, we’re able to see that on Arbitrum, Stargate and Layer Zero are bridge applications that consume the highest amounts of gas, while on Optimism, Perp protocol consumes the highest amount of gas.
💫 Artemis Data Insights: Uniswap Gas Usage vs. DEX Volumes
We then evaluated gas usage in comparison to Uniswap DEX volumes for each of the aforementioned chains.
Ethereum saw the lions share of DEX volumes, with its ~$227bn YTD 2023 volume outpacing Arbitrum’s $49bn by a magnitude of 4x+ and dwarfing Optimism’s volume by ~40x.
With that said, Uniswap Gas Usage per dollar of DEX volume tells an interesting story. Based on the gas fees paid on each platform, it was much more expensive for a user to utilize Ethereum for each dollar traded on Uniswap. The multiple of gas paid for a dollar of volume on Uniswap-Ethereum was as high as ~90x the cost of Uniswap-Arbitrum in the period of August 2023.
It appears that there is still a significant premium for the liquidity and security that exists on Ethereum vs. its layer 2 platforms at this time. This is an evolving analysis and we will continue to add other dimensions to it.
Detailed L1 dashboard for people who love more numbers in smaller font:
Note: Revenue represents fees that go to the protocol’s treasury or are returned to tokenholders via a burn mechanism (source: Token Terminal). Weekly commits and weekly dev activity as of 8/25/23.
The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments.
Good analysis Jimmy! I would like to add the importance of MEV that happens on Uniswap on Ethereum related to the high % of the gas usage of the network. On the other hand we have L2 where MEV is captured by the sequencers and not at application level, thus the "low" % of gas usage of Uniswap in comparison. I wonder if all this makes sense at all.