Hillstone Finance Weekly Update (Apr 17~ 21)

Hillstone Finance
6 min readApr 21, 2023

Welcome to the weekly update from Hillstone Finance. We have brought one news for this week:

  1. Duk-hyun Hong participated in the NBN news

NBN News (Apr 20)

Q1. What do you think of EOS’s release of EVM beta? We’re paying a lot of attention to whether these changes can improve interoperability with Ethereum, so can you explain about EVM?

A1.

Ethereum Virtual Machine (EVM) is a virtual machine for running smart contracts on the Ethereum blockchain. EVM is a key component of Ethereum’s network, helping smart contracts run safely and network participants reach agreement.

Key components of EVM

Smart Contract Execution Element: A smart contract is code that automatically executes according to predefined rules. EVM is responsible for executing and managing these smart contracts.

Code Isolation Element: EVM isolates code to prevent possible security issues while running a smart contract. In this way, each smart contract runs in an independent environment so that there is no interference between each other.

Gas system elements: The EVM uses a gas system to measure and manage resources required to execute smart contracts. The gas represents the amount of computation required to run each smart contract and is paid by ETH. EFFICIENTLY DISTRIBUTING RESOURCES FROM Ethereum NETWORK THROUGH GAS SYSTEM, PREVENTING ABUSE.

Solidity Language: EVM executes smart contracts written in a programming language called solidity. Solidity is an object-oriented language with characteristics such as explicit type and inheritance, and is optimized for smart contract development.

In summary, EVMs play an important role in running and managing smart contracts on Ethereum networks and can help improve security and resource management efficiently.

Q2. EOS has released a beta version of EVM. Can you explain the limitations of EVMs today?

A2.

EOS’s release of EVM beta is a significant development. This update will support Solidity, making it a strategic decision to meet the needs of developers focused on Ethereum. Improved interoperability between EOS and Ethereum is expected to facilitate cooperation between the two platforms.

Ethereum Virtual Machine (EVM) is an environment for running smart contracts on Ethereum networks. EVMs have Turing integrity, which means they have the ability to handle a variety of calculations. However, there are several limitations to EVMs.

Scalability Issues: Since EVMs run on the Ethereum blockchain, they are affected by Ethereum’s scalability issues. In the current structure, limited throughput and slow trading are considered major issues.

Gas Costs: When the gas cost of running a smart contract increases, it limits blockchain utilization by developers and users.

Development Language Limitation: EVM currently primarily supports Solidity languages. As a result, developers’ options are limited, and blockchain development using various programming languages can be difficult. For this reason, it is considered ideal to develop various blockchains in the form of not EVMs, but in reality, EVMs are widely adopted.

Q3. So, are there any other technologies that can be combined to overcome the limitations of EVMs?

A3.

As technology is developing at a very rapid pace, many experts expect new ways to overcome the limitations of EVMs.

Layer 2 Solutions: Layer 2 solutions are being developed to address the scalability of EVMs. These solutions can reduce the burden on the main chain and increase throughput by running smart contracts on layers separated from the main chain.

New Programming Language Support: To overcome EVM’s development language limitation, new virtual machines supporting various programming languages are being studied. For example, eWASM Ethereum Web Assembly is a web assembly-based virtual machine that is expected to expand developers’ choices by supporting multiple programming languages.

Smart Contract Optimization Plan: Compiler optimization and improvement of developer support tools are needed to reduce gas costs for smart contracts. They say this will allow developers to create more efficient smart contracts, which will reduce gas costs.

Interchain Interoperability: Protocols that support interoperability between various blockchains are being developed. These protocols allow resources and data to be shared between different blockchains, providing an environment that can overcome the limitations of EVMs.

These developments are expected to overcome the limitations of EVMs and expand the scope of use of blockchain technology.

Q4. There are a lot of issues with the version 2 token airdrop of Gala, a P2E game project, what is the expert’s opinion?

A4. Gala Game’s Version 2 Token Airdrop offers an opportunity for investors, and these events will help raise the awareness of Gala Games. However, the success of the airdrop event will depend heavily on how it is executed and the value of the token.

What I think is important is the pros and cons of introducing the incineration mechanism in Version 2 tokens, but the value of Version 1 tokens is expected to disappear, and I think it is to build a new token structure through the transition to Version 2 tokens. Some investors may suffer losses in the process, but in the long run, it can be seen as a strategy to increase the value of the Version 2 token.

Q5. What is the expert’s view on the proposal to lower CAKE token inflation to 3%-5% in pancake swaps?

A5.

I think the proposal to lower CAKE token inflation to 3%-5% in pancake swaps is a positive strategy that could boost token value in the long run. It’s a big change compared to current inflation of more than 20%, but it will help maintain and increase the value of tokens.

And while token rewards will decrease for stakers and traders, the impact on profits may be offset by the expected rise in token value in the long run. However, in the short term, some investors may be unhappy.

For starters, compensation is expected to be significantly reduced for liquidity providers, which could allow some liquidity providers to move from pancake swaps to other platforms. But considering the long-term benefits of rising token value, some liquidity providers may accept the change.

Q6. Why do you think it’s a big boon for DeFi tokens to turn to deflation or low inflation numbers?

A6.

Because returning to deflation or low inflation figures helps maintain and increase token value. Excessive inflation can lead to a decline in token value and cause investors to lose credibility. By maintaining deflation or low inflation figures, we can protect the value of tokens and provide investors with a more stable investment environment. This will increase the likelihood that the demand and value of tokens will rise, and it will have a positive impact on the entire DeFi ecosystem.

Q7. Recently, Lido deposits reportedly surpassed $12 billion. What are the main causes of this growth, and can you explain the relationship between the Ethereum Shanghai upgrade and Lido?

A7.

The main reason for Lido’s significant increase in deposits is the increased liquidity along with the Ethereum Shanghai upgrade. After the Shanghai upgrade, LSD protocols became active, and Lido is one of them. Lido is a non-consignment staking that utilizes stETH assets generated through Ethereum staking, and is now evaluated to have increased stability as even withdrawals are guaranteed. This seems to have led to a sharp increase in TVL, with many investors participating in Lido.

It is also known that 10% of Lido’s staking profits are commissions, 25% of which belong to Lido Treasure. Let me briefly explain what changes the Lido DAO’s vote will have in terms of TREASURE’s rights to the amount of money and the price of tokens. First of all, Lido DAO’s vote affects decisions regarding the direction of use of TREASURE’s amount. This plays an important role in making decisions on the direction of development, investment strategies, and other protocol-related issues of the Lido project. Lido token prices will be affected by the project’s growth potential, stability and sustainability following Lido DAO’s vote and Treasure’s use of the amount. Token prices are expected to move depending on the soundness of the project and the trust of token holders. You can expect Lido Tokens to be a more promising asset.

That is all for this weekly update.

Thank you.

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https://twitter.com/hillstoneFin

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