State of SKALE - Q4 2023 Messari Report | SKALE

Key Metrics & Insights

Nebula's Remarkable Growth: The Nebula gaming hub witnessed an unprecedented surge in activity. Daily transactions, active addresses, and new addresses soared by 525%, 1,710%, and 1,147% quarter-over-quarter (QoQ), respectively.

Introduction of Chain Pricing: Following the approval of the "SIP 1: Addition of Chain Pricing" governance proposal in December, SKALE chain owners will transition to a model requiring monthly SKL payments to operate a chain. This move sets the stage for a sustainable and scalable future.

Metaport 2.0 Upgrade: The upgrade of Metaport introduced a slew of enhancements, including RainbowKit support, routed transfers, and a revamped user interface. Metaport remains a critical component of the SKALE bridge, facilitating seamless token transfers between SKALE chains.

Network Analysis

Network Usage

The network saw a 26% increase in average daily transactions QoQ and an impressive 136% year-over-year (YoY), totaling 908,000 in Q4 2023. This uptick was primarily driven by heightened activity on existing chains, with the Nebula gaming hub and the Exorde protocol leading the charge.

SKALE now boasts 115 active nodes ensuring robust performance and security across the ecosystem. The total SKL staked remained steady at 2.5 billion, but the total staked in USD terms surged by 216% QoQ to $176 million, thanks to the appreciating value of SKL.

Upgrades and Roadmap

The SKALE Portal received a comprehensive revamp in mid-November providing users with a more intuitive and informative experience. Future enhancements are already planned for the Portal, including expanded bridging options and an interface to manage SKL staking.

Looking ahead, the SKALE ecosystem is also preparing for the launch of Levitation and SKALE G, the initiatives to integrate ZK-rollups with the SKALE architecture and introduce a general-purpose ZK-rollup as a SKALE chain.

Ecosystem Overview

The last quarter saw exponential growth across the SKALE network, with the Nebula gaming hub leading the charge. Nebula's daily transactions, active addresses, and new addresses increased by 525%, 1,710%, and 1,147% quarter-over-quarter, respectively. This surge was fueled by the continued success of established games like MotoDex, 5tars, and GamiFly, alongside the introduction of new games such as DexGO and Yomi Block Puzzle.

Nebula wasn't the only chain experiencing growth. The entire network, including both dapp-chains and hubs, saw increased activity. Hubs, which are shared by multiple applications from similar sectors, played a significant role in this expansion. By the quarter's end, Nebula nearly surpassed Exorde as SKALE’s most active chain by daily transactions.

DeFi on SKALE

SKALE DeFi ecosystem is developing, and it will be one of the focus areas during 2024. Several partnerships have already been announced with many DeFi protocols set to launch on SKALE, such as Dirac, a structured products protocol, ReHold, a CLMM-based DEX, and Savvio, a “no-loss” lottery protocol.

In the SKALE DeFi ecosystem, the Europa Hub aims to solve potential liquidity fragmentation problems that arise with app-chain ecosystems by providing a central DeFi liquidity hub. Led by the Ruby Exchange team, Europa's development is on track to transition to a community-owned model.

Ruby Exchange is an AMM-based DEX featuring a “4Pool” consisting of stablecoins USDP, DAI, USDT, and USDC. At the end of Q4, TVL in the 4Pool stood at $370,000. Beyond that, Ruby also features pools that pair USDP with other tokens, including RUBY, SKL, ETH, and more. At the end of Q4, TVL in these pools stood at $550,000.

Development and Growth Initiatives

SKALE announced partnerships with several projects that are set to go live in 2024, including Haven’s Compass, a first-person shooter game, Sportzchain, a fan engagement platform, Chirper.ai, an AI agent social network, Cryptopia, an onchain role playing game, Overlai, an AI photo protection application, Katana Inu, a multiplayer action game, and WarEden, a player-versus-player game.

The launch of the SKALE Ecosystem Accelerator Program (SEA Program) at the end of Q3 laid the groundwork for these developments. The SEA Program, aimed at leveraging infrastructure and content creator partnerships to support application growth, welcomed several new partners in Q4, Magic Square, Yoda Labs, PixelRealm, JR Studio, and Arcadia. Additionally, the collaboration with Granted aims to enhance fundraising accessibility for projects on SKALE.

Moving forward, the N.O.D.E. Foundation will spearhead ecosystem partnerships and growth, continuing to allocate from its $100 million ecosystem fund to attract new projects and partners.

SKL Token Overview and Use Cases

The last quarter saw a remarkable rebound in the crypto market, with SKL benefiting from it. SKL token's circulating market cap surged by 238% to $353 million, underscoring the increasing recognition and adoption of SKL within the broader crypto ecosystem.

The SKL token has three primary use cases: SKALE chain subscription fees, network security (via validator staking), and governance.

SKALE Chain Subscription Fees

A pivotal development in Q4 was the announcement of the monthly SKL subscription fees for SKALE chain operations, following the "SIP 1: Addition of Chain Pricing" governance proposal in December. This transition marks a significant shift from the initial growth-focused model to a sustainable economic framework, ensuring the long-term viability and success of the SKALE network.

The subscription fee model is designed to balance the needs of developers and validators, providing a predictable and fair pricing structure for operating SKALE chains. The chain pricing model is going to be implemented through a phased approach. First implementing a static price curve, and moving in 12-18 months to a dynamic pricing model that will manage chain pricing depending on the current network usage.

SKALE Network Security and Validator Incentives

Validator operations are a critical component of SKALE's security, facilitated through the SKALE Manager smart contracts on Ethereum. Despite the computational costs associated with these operations, the introduction of SKALE chain payments is expected to create a favorable economic balance, enhancing the network's security and incentivizing validator participation.

SKALE subscription fees aim to replace inflation as the primary payment to validators. The SIP 1 proposal’s goal is to have 90% of validator rewards come from fees, instead of inflation, by Q4 2027. This strategic shift will ensure a more sustainable and robust economic model for SKALE, aligning the interests of validators, developers, and token holders.

SKALE Decentralized Governance

The implementation of a token-based governance system has empowered SKL holders to actively participate in key network decisions. This democratic approach to governance allows our community to shape the future of SKALE, from economic parameters to network upgrades, ensuring that SKALE remains responsive to the needs and aspirations of its users.

Looking Forward

Q4 wrapped up a 2023 featuring strong growth for SKALE. Onchain activity increased notably in the second half of the year, driven by the Nebula gaming hub and Exorde. 2023 also featured several significant protocol developments, including the launch of decentralized governance and the addition of chain pricing in Q4. With chain subscription fees, SKALE will transition out of its growth model and begin requiring SKALE chain owners to make monthly SKL payments to continue operating a chain.