Notes on Pyth and Blast
Notes on Pyth and Blast
Pyth
Note: Original thread is from the 18th of November
Pyth Network is an oracle offering low latency, pull-based data services, like price feeds.
The Oracle currently secures over 120 projects with a combined TVL of $2.06 B. On Mon 20th Nov, PYTH token will trade for the first time.
A look into the tokenomics & valuation:
The PYTH token will derive its utility from its use in governance, which will determine high level parameters of the network like:
Size of update fees
Reward distribution for data providers
Software updates
How new feeds are listed
How providers will provide data
The total supply will be 10B with the final token distribution looking like this:
Ecosystem Growth - 5.2 B
Publisher Rewards - 2.2B
Protocol Development - 1B
Private Sales - 1B
Community & Launch - 0.6B
However, when PYTH started trading, only 1.5B tokens or 15% of the total supply was circulating.
Of the initial 1.5B circulating tokens, the supply will be as follows:
There are no unlocks for 6 months post TGE then each category that isn't fully unlocked at TGE will unlock with this schedule:
Month of unlock:
6 - May 2024
18 - May 2025
30 - May 2026
42 - May 2027
With only 15% of the supply initially circulating, we expect the token to initially trade at a high FDV.
In part due to the strength in the Solana ecosystem, the success of the Celestia & Binance coin launches & the more positive tone in the altcoin market as of late.
We can also do a comparative valuation, looking at the circulating and fully diluted valuations of other existing Oracle solutions:
We expect PYTH to take the number 2 spot on this list.
Blast
Note: Original thread is from the 21st of November
Blast announced that they are building a L2 Optimistic rollup. Founded by Blur founder, Pacman, and with $20M in funding from Paradigm, Blast aims to gives users native yield for their ETH and stables.
Currently, the Blast L2 is just an Ethereum mainnet contract without any L2 capabilities. The contract is currently managed by a 3/5 multi-sig with the attached addresses in control. Currently, all tokens sent to the contract are locked until mainnet launch in Feb 2024.
The key idea of the Blast ecosystem is offering yield on users assets by default. Users can send USDT, USDC, ETH or stETH to the mainnet contract & on receipt of the assets, Blast will convert these assets into yielding derivatives.
The Blast flow depends on the type of token deposited:
User deposits USDC - Swap USDC to DAI in the PSM (1:1) & then place in Maker's sDAI
User deposits USDT - Swap to USDC in Curve Finance 3Pool, then follow USDC flow
User deposits ETH - Deposit ETH into Lido Finance for stETH
User deposits stETH - Hold in contract
Stables earn the stablecoin 'risk-free rate' via MakerDAO's sDAI contract. Placing DAI into this ERC-4626 vault enables DAI to earn 5%. ETH is simply converted into Lido's LST, stETH. This earns yield from consensus & execution layer rewards from Ethereum.
Unique to Blast, developers of smart contracts can integrate the native yield capabilities into their apps. Further, Blast gives the revenue from gas fee back to developers. This enables developers to keep revenue for themselves or to use it to subsidize gas fees for users.
Funds bridged will earn the aforementioned APY ‘s and “Blast points”, ahead of the Mainnet launch in February (2024). These Blast points will convert to an airdrop for early access members and developers on the network.
Users can earn more Blast points via inviting more users to sign up to Blast with their referral link. They earn 16% of the points a user they invite earns and an additional 8% off the users that person may invite.
Points can be earned by depositing ETH, referring other users, squad rewards and super spins. A larger squad will increase the amount of points you earn.
Users can also stake BLUR to receive a Blast airdrop. The airdrop is available throughout Blur’s new season - where airdrop rewards will be split 50/50 between NFT traders and BLUR stakers.
Unlike ETH & USDC depositors, BLUR stakers can withdraw tokens at any time while retaining earned points. The funding rate on BLUR has turned very -ve as people have run this strategy delta neutral (long Blur / short perps) A cumulative 289.8M BLUR has been staked so far.
Ballpark estimate of the return on deposited capital into Blast & from staking Blur:
Simplified assumptions:
The airdrop is split 50% to developers & 50% to 'Early Access Users'
The Early Access User airdrop is split 50/50 with Blast deposits & Blur stakers
This is an oversimplification for many reasons:
TVL of staking & deposits is changing
We don't take into account the distribution of points, which we believe will exhibit large power laws / Pareto's principle (80% of airdrop goes to 20% of users)
This analysis shows the mean average return on capital, i.e if $412M of TVL enters the Blast contract, we expect that $412M to earn $50M of BLAST tokens (at this specified FDV and airdropped %).
The actual distribution will be different depending on points distribution.
To work out the mean return on capital, we can sensitize the Blast FDV & the % of total supply that is airdropped.
Here we can see if FDV is between $2.25B - $3.75B & the airdrop % is between 15%-25%, the 3 month return on Blast deposits is between 28% & 78%
Similarly, we can look at Blur staking: In the same FDV & Airdrop range, we can see the mean return is higher, in a range between 39%-110%.
You can use the following invite links to gain access to Blast:
We have no affiliation / are not investors in Blast.
Disclaimer:
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