Original Title: "Metrics Ventures Research Report | Alex Lab: Unlocking the Huge Potential of Bitcoin DeFi and BRC-20"

Original Author: Charlotte, Kevin, Metrics Ventures

TL;DR

1. Inscriptions have fully ignited the Bitcoin ecosystem narrative, but the popularity of inscriptions has also brought back into the public eye issues such as insufficient infrastructure and congested transactions in the Bitcoin ecosystem. After the inscriptions, the market has begun to explore the infrastructure and functional products of the Bitcoin ecosystem. Due to the limitations of the Bitcoin network itself, smart contract products can only be deployed as part of scaling solutions.

2. Alex Lab is a DeFi infrastructure built on the Bitcoin Layer 2 Stacks. Its released and under development features include Bitcoin oracle, Bitcoin bridge, AMM, order book, staking, Launchpad, and a series of functions that build a complete DeFi basic kit.

3. From the perspective of competitive landscape, Alex Lab is the absolute leader on Stacks. Compared with other scaling solutions, Stacks is currently the healthiest layer-two scaling solution in terms of ecosystem and data growth. Comparable to it are Rootstock and Sovryn, which are the leading DeFi protocols on Rootstock, but their current business focuses are not the same.

4. Nakamoto upgrade and sBTC issuance are expected to be launched in the first quarter of 2024. The Nakamoto upgrade will bring comprehensive performance improvements to Stacks, while sBTC will unlock new opportunities for Bitcoin DeFi. Alex Lab will be the best target for this upgrade.

5. Comprehensive ALEX's valuation and TVL, ALEX can serve as a leveraged target for the layout of the STX ecosystem. ALEX is currently not listed on major CEXs, which has a certain liquidity discount. Its future listing may bring about an increase in its coin price.

1. Introduction: After the Inscription, Where is the Next Alpha in the Bitcoin Ecosystem?

The domino effect of the inscription explosion showcases the potential of the Bitcoin blockchain. If a few months ago there was still debate about the legitimacy of establishing the Bitcoin ecosystem, it seems that this issue has now been diluted by the high market enthusiasm - people have higher expectations for the Bitcoin ecosystem. The attention to the Bitcoin ecosystem started with the inscription, but it will not stop at Meme. After the inscription, the market will begin to explore the basic construction and functional products of the entire ecosystem.

First of all, the explosion of Mingwen has brought the long-standing problem of the Bitcoin ecosystem back into the public eye. Firstly, the infrastructure construction on the Bitcoin ecosystem is seriously insufficient, which greatly limits the trading of BRC-20 tokens. Binance Research also mentioned in its research report on BRC-20 that the deployment of decentralized indexes and fully functional DEX will lead BRC-20 to the next level. Secondly, Bitcoin's extremely low TPS and block capacity have caused extreme congestion and high transaction fees, which also limit the issuance and trading of Mingwen, and the discussion on Bitcoin's scaling solutions has once again become the focus of the market.

Secondly, as the BTC halving approaches, the sustainability of BTC miner revenue has once again sparked discussion. Miner revenue is composed of transaction fees and mining rewards. Due to limited ecological applications on the Bitcoin network, the vast majority of revenue currently comes from mining rewards. With the decrease in BTC market value, mining rewards may not be able to support the security of the BTC network in the long term after the halving. The expansion of BTC ecological applications may introduce sustainable transaction fees as a source of income for Bitcoin miners.

Meanwhile, the Bitcoin blockchain is the most consensus-driven, orthodox, secure, and decentralized blockchain. Establishing smart contracts on the Bitcoin network would be an extremely inspiring narrative. However, Bitcoin itself does not have Turing completeness and cannot establish smart contracts on it. In order to expand the potential of the Bitcoin blockchain, we must currently focus on Bitcoin L2. Unlike Ethereum, the Bitcoin smart contract experience is not a choice between L1 and L2 for users. L2 is currently the necessary technology that endows Bitcoin with smart contract capabilities, and the main L2 includes Lightning Network, Stacks, Rootstock, and Liquid.

Alex Lab has therefore entered our field of vision. Alex is built on top of Stacks, which is the smart contract layer of Bitcoin and currently the most prosperous and highest market value ecosystem in the Bitcoin Layer 2. Alex is the leading DeFi protocol on Stacks. Alex Lab is committed to building a DeFi system for Bitcoin, and has launched and is developing a series of functions including BRC-20 token index, Bitcoin bridge, AMM, order book, staking, Launchpad, etc., initially building a complete DeFi ecosystem function, providing a set of comprehensive infrastructure guarantees for the development of Inscriptions and BRC-20 tokens.

2. Deconstructing Alex Lab: The Infrastructure Leader of Bitcoin DeFi

Alex Lab provides a range of products around the Bitcoin financial ecosystem, including core products such as AMM and Orderbook DEX for trading, Launchpad for discovering and participating in IDOs in the Stacks ecosystem, staking and liquidity mining, cross-chain bridges connecting Bitcoin layer 1 and layer 2 as well as Stacks and other chains, and a Bitcoin oracle for decentralized indexing of BRC-20 tokens.

AMM and Order Book

Alex Lab has launched both AMM Swap and B20 Market (Orderbook). We will not delve into the specific mathematical curves of AMM here. Currently, there are 5 pools on AMM with liquidity exceeding $1M, which are: STX-aBTC ($2.71M), STX-ALEX ($23.76M), STX-xBTC ($5.84M), STX-sUSDT ($1.49M), ALEX-atALEX ($6.82M).

The B20 market operates in the form of an order book and adopts a hybrid design of on-chain/off-chain. The commitment to buy or sell certain assets is transmitted through encrypted signatures and matched by the off-chain matching engine before settlement on-chain. Therefore, users can create and cancel orders without paying gas fees. Currently, there are multiple BRC20 token-sUSDT trading pairs available on the B20 market. The 24-hour trading volume of the B20 market is 675k, with a cumulative trading volume of 55.8M.

Launchpad Platform

Alex Launchpad adopts a hybrid on-chain/off-chain model to provide an IDO platform for BRC-20 tokens. All transactions related to user funds are on-chain, while the more computationally expensive lottery part is completed off-chain and submitted to the on-chain contract for verification. The community can use voting governance to decide on IDO projects. Currently, 5 IDO projects have been completed.

· ALEX（2022.1.19）

· BANANA（2022.6.21）

· ORMM (BRC20 token, July 28th, 2023)

· Bluewheel Mining（2023.8.25）

· CHAX (BRC20 token, November 13th, 2023)

Currently, there are not many ecological projects on Stacks, and even fewer coin issuance projects. ALEX's Launchpad has not yet demonstrated much ecological value.

Recently, Alex upgraded to the Multi-Chain Launchpad, and projects can be issued on BRC20, Stacks, and ERC20. Currently, the first candidate project for the ALEX Multi-Chain Launchpad is OrdzGames, a game project located on the Bitcoin network. The community will complete voting on December 23rd.

质押与流动性挖矿

Pledge and Liquidity Mining

The staking rewards of Alex Lab's native token are closely related to whether or not automatic staking is selected (see the token economics section). Currently, the total staked amount is 143.6M, and the token circulation is 642.1M, with a ratio of 22.4%.

Users can also choose to stake LP tokens for liquidity mining. The main LP pairs currently are STX-ALEX and STX-xBTC, with APRs of 34.94% and 63.6% respectively, paid out in ALEX tokens. However, the staking volume has not been ideal.

Cross-chain Bridge

Alex Lab has developed cross-chain bridges for Stacks with the Bitcoin network, Ethereum, and BSC Mainnet, as well as bridges for cross-chain support of BTC and BRC-20 tokens on the Bitcoin layer, and cross-chain support of USDT, LUNR, and BTCB (BSC)/WBTC (Ethereum) on Ethereum and BSC. The total accumulated cross-chain value is $11,568,749, with a total cross-chain fee of $76,067, and the current TVL is $2,324,830.

Regarding the usage scenarios of tokens, $ALEX can be used for staking and governance. The staking rewards are closely related to whether automatic staking is selected. Currently, a total of 140 million tokens have been staked with an APY of 7.25%. Both $ALEX and $atALEX (ALEX tokens staked automatically) can participate in community governance voting, including changes to token economics and selection of IDO projects.

Regarding token performance, $ALEX currently has a market value of $287,738,006, while FDV is $439,423,517, with an MC/FDV ratio of 65.48%. The token circulation ratio is relatively high. In terms of market value, ALEX is currently ranked 181st, while Stacks has a market value of $2,079,014,811 and FDV of $2,645,163,967, making its market value nearly 8 times that of ALEX. Although Stacks, as a Layer 2 public chain, has a higher valuation space than ALEX, ALEX is the absolute leader in protocol construction on Stacks. In the medium term, ALEX can be used as a leveraged target for investment in Stacks. (All data above are as of 12/21/2023.)

Regarding liquidity, ALEX currently has the majority of its trading volume concentrated on Bithumb, Gate, and Alex AMM, with relatively poor liquidity and has not yet entered major exchanges. The recent listing of various BRC-20 tokens on Binance and OKEx exchanges shows the mainstream CEX's attention to the Bitcoin ecosystem, and the announcement of the listing information has triggered a significant increase in token value. As a leader in the Bitcoin DeFi ecosystem, ALEX has some room for listing in the future, and the hype and liquidity improvement it brings will further increase the price growth potential of $ALEX.

6. Conclusion

Based on the above analysis, we can summarize the basic views of Alex Lab as follows:

First of all, under the high heat of inscriptions and BRC-20 tokens, the BTC ecosystem has the conditions to become the mainstream narrative of the bull market. In addition, the Bitcoin halving in April will make this track have higher speculative value. Considering the security and legitimacy of the Bitcoin network, as well as the sustainable incentive problem of miners, establishing the Bitcoin ecosystem has important practical significance. DeFi is the cornerstone of the ecosystem, and Alex Lab, as the leader of Bitcoin DeFi, will provide a foundation for the subsequent expansion of the Bitcoin ecosystem.

Next, Alex Lab closely follows the development of BRC-20 tokens and quickly develops on-chain indexing, Orderbook trading markets, and Launchpad for BRC-20 tokens, seizing the opportunity of the lack of infrastructure for BRC-20 tokens and becoming one of the few projects deeply involved in the narrative of BRC-20 tokens in the Bitcoin scaling layer, with practical and feasible product implementation, which will unlock more financial use cases for BRC-20 tokens.

Thirdly, in terms of competitive landscape, Alex Lab is the absolute leader project on Stacks. After completing the Nakamoto upgrade, Stacks will further consolidate its leading position as a Bitcoin scaling solution. Compared to the leading project Sovryn on Rootstock, Alex Lab has significant advantages in data performance, development progress, and connection with BRC-20 narrative. Therefore, in the Bitcoin DeFi field, Alex Lab has a very strong competitiveness and absolute leading position.

Fourthly, Nakamoto's upgrade is an important event in the field of Bitcoin expansion. The release of sBTC will unlock the potential and value of Bitcoin DeFi, and improve its security and legitimacy. Alex Lab will be the core target for this event's layout.

Fifth, based on the market value and FDV of Alex Lab and Stacks, we believe that ALEX can be one of the leveraged targets for laying out the Stacks ecosystem in the medium term. Major exchanges are vying for the Bitcoin ecosystem, and the listing of ALEX tokens in the future will bring more liquidity and effectively boost the token price.

The focus of the follow-up observation on Alex Lab will include: the subsequent development of the Bitcoin ecosystem; whether Nakamoto's upgrade and sBTC linkage can meet expectations; the number of supported trading pairs for BRC-20 tokens by Alex Lab, as well as its position in BRC-20 financial infrastructure; changes in user numbers, trading volume, TVL, and other data; and progress made on the token.

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