Alkimiya protocol beta user guide.

In this article, we discuss the fundamental cause of the implicit cost of transactions in crypto, which is inherently rooted in the characteristics of the blockspace microstructure. We use observations from several case studies of discrete on-chain events, including notable NFT mints, stablecoin meltdowns, and airdrops to extract common patterns. In particular, we analyze their impacts on network fees, how the impacts decay, as well as the empirical negative externalities on L1s and rollups. As a coda, we discuss the long-term effects of implicit costs of blockspace for on-chain companies and projects, as well as the importance of gas expenditure for the frequent users of blockspace.

All economic activities on public blockchains settle on blockspace. Consensus producers, such as miners and staking validators, supply blockspace, while every transaction demands blockspace.

Since blockspace is a commodity, it can be used as a basis for financial instruments — either to hedge against production or enhance returns. In this article, we will dive into the historical context of commodities markets, the importance of decentralized consensus in the digital universe, the economics of consensus production, and what a crypto-native capital market for consensus will look like.

Introducing the Alkimiya, a permissionless open-sourced protocol for hashpower-backed contracts issuance and structured products.

In our last article, we modeled future price trajectory with a Jump-Diffusion process and used a linear function to characterize how global hashpower responds to changes in price.

In this article, we characterize miners into several archetypes, each with different profit margins and risk considerations.

Under this framework, change in network hashrate is not just a function of change in price, but an aggregation of the collective outputs of all miners with distinct economics and risk profiles.

Blockspace is the commodity that powers the heartbeats of all cryptocurrency networks. In this article, we illustrate the structure of the Ethereum blockspace market from the perspectives of the supply (miner) and the demand (users). We examine if the current blockspace market design provides depth, ease congestion, or participation is safe and simple. Next, we discuss the popular proposals to optimize the market structure, as well as how the blockspace market will likely evolve in the future.

In this paper, we illustrate that operating hashpower is akin to managing a portfolio, and the difficulties of reflecting the aspects of portfolio in the pricing of hashpower. We walk through how the popular pricing mechanism works, and the flaws of the current valuation heuristics. We parametrize a hashpower portfolio, and show how the outcome changes as we test a broad range of assumptions. As a coda, we argue that the importance of valuation framework is more than just a theoretical exercise, but a foundational step in developing a proper risk management practice for the hashpower industry.

In this article, we start by breaking the mining market cycle into four archetypal stages, each with distinct price trends, hardware capacity, and sentiments. We examine the driving forces in each scenario, and illustrate the roles that the hardware reaction time, and reflexivity in hashpower play in shaping these macro cycles.

We categorize all assets that produce hashpower in exchange for cryptocurrency, and synthetic contracts / financial instruments that mimic mining returns as part of the hashpower asset class. Despite its short history, investing in this asset class has grown popular. A number of mining special purpose vehicles (SPV), verticalized institutional mining projects, and mining infrastructure / service providers, mining-related financial contracts were launched to satisfy the demand.