A $ROSE By Any Other Name Would Smell as Sweet — Oasis Fundamental Analysis

This fundamental analysis was published September, 2023, and is part of a weekly paid newsletter from the Crypto Consulting Institute that provides market insights, actionable trade signals, and monthly fundamental analyses. For more information on receiving FAs as they are released, visit: https://www.cryptoconsultinginstitute.com/newsletter

Imagine a digital world as a bustling city filled with individuals and businesses conducting various activities. Each person in this city represents a user of the internet, and every transaction or interaction they have is like a conversation or exchange of information.

Now, in this city, there are bustling streets and crowded squares where most people go about their daily lives openly. This is similar to how we use the internet today, where our data and online activities are often exposed to everyone, including advertisers, social media platforms, and potentially malicious actors. It’s as if people are having their conversations on loudspeakers in these public areas, and anyone can listen in.

This lack of privacy can be uncomfortable and even risky, as some conversations are meant to be private. People want to have secure, confidential discussions in quieter, more secluded places where they can share sensitive information, like financial details, personal experiences, or medical records, without the fear of eavesdropping.

The Oasis Network operates as a secure, private courtyards network within this bustling digital city. These courtyards provide a safe and confidential space for people to have private conversations and conduct sensitive transactions. Here, users can trust that their personal information remains hidden from prying eyes, like private conversations in a secluded garden.

Oasis Network is like the digital equivalent of these tranquil courtyards, where users can enjoy the benefits of the internet while safeguarding their privacy and data. It offers a necessary escape from the noisy and often intrusive digital city, ensuring that sensitive information remains confidential and secure, just like a private conversation in a peaceful garden.

Privacy is one of the most valued yet hotly contested features in cryptocurrencies. On many levels, we have witnessed a false flag equivalency to target illicit dealings and malicious actors in exchange for users giving away their privacy for the promise of security. However, one of the key value propositions of a blockchain is that it is possible to have your cake and eat it, too.

In this fundamental analysis, we will skim the inner workings of the Oasis network at a high level to build our understanding toward nuanced concepts such as Account Abstraction, and one that has been seldom touched on in our FAs so far, and that is Web 4. We will explore just how well placed Oasis Network is to deliver on Account Abstraction and their place in theoretical concepts on an AI-driven that is Web 4.

Oasis Layer-1 platform whose primary capabilities facilitate the efficient execution of smart contracts, focusing on verifiability and confidentiality. The platform’s modular architecture offers the flexibility to seamlessly adapt the consensus layer, incorporating entirely different consensus mechanisms to leverage the latest advancements in the field. Additionally, the consensus layer can support multiple smart contract runtimes concurrently. These autonomous parallel runtimes, known as “ParaTimes,” can employ various verifiable and confidential computing techniques with minimal or no adjustments required to their interfaces.

The Oasis Network employs a modular design that divides the responsibilities of consensus and smart contract execution into two distinct layers: the Consensus Layer and the ParaTime Layer. These layers are seamlessly integrated to deliver the full range of functions expected from a unified network. Nevertheless, separating these layers enables ParaTimes to handle transactions of varying complexities concurrently while benefiting from a common consensus mechanism. This versatility allows tasks and upgrades executed within a specific ParaTime to harmonize with the consensus process independently, ensuring network security and finality without interfering with other ParaTimes.

The division from the consensus layer is a pivotal aspect enabling the network to tackle scalability with its modular design. This separation grants ParaTimes the capacity to diverge from one another in several ways. One significant distinction is their capability to operate as confidential ParaTimes or non-confidential ParaTimes, with the latter resembling platforms like Ethereum and other Layer-1 networks. Moreover, ParaTimes can advance autonomously while upholding consensus, even as advancements in security, scalability, or privacy technologies emerge. The network can maintain a public ledger while fostering an ecosystem of distinct ParaTimes capable of evolving with technological progress, ensuring adaptability for future use cases.

Beyond confidentiality, ParaTimes offers the flexibility to configure various parameters, such as the committee’s size responsible for executing transactions, which directly impacts the level of security required to meet specific business needs. ParaTimes can also execute different virtual machines (VMs), such as EVM or Rust-based smart contracts, and can be structured as permissioned or permissionless systems. Ultimately, the customization and adaptability of ParaTimes empower developers to strike the ideal balance between security, performance, and privacy.

Regarding Confidential ParaTimes, Oasis is renowned for its commitment to privacy-enabled smart contract execution. One such ParaTime, Cipher, is set to support confidential smart contracts. In a confidential ParaTime, nodes must utilize a secure computing technology called Trusted Execution Environment (TEE). TEEs can be likened to a secure vault for smart contract execution. Employing key management, encrypted data enters the secure enclave along with the smart contract. Inside this enclave, data is decrypted, processed by the smart contract, and subsequently encrypted before leaving the enclave. This meticulous process guarantees data confidentiality and prevents its exposure to the node operator or application developer. Secure computing technologies like Zero-Knowledge Proofs (ZKPs) can also execute private smart contracts. The interchangeability of these secure computing technologies exemplifies the modularity and value proposition of the ParaTime Layer.

An interesting enterprise DeFi use case for Cipher and TEEs is approving loans to align with a user’s financial credit score. In this scenario, individuals can employ Cipher alongside a Trusted Execution Environment (TEE) to safeguard their private data while also having the option to profit from and share this data with various DeFi services using the capabilities of Parcel. For instance, a user’s risk profile and reputation could be harnessed to enable lending services to assess risk levels and determine appropriate collateralization requirements. This knowledge could empower lending platforms like Aave to offer loans with lower collateral requirements for individuals with a strong credit history. Observing the adoption and usage of these ParaTimes will be intriguing, as they hold significant potential within the market. Additionally, the expanded utilization of these ParaTimes may generate new network activity or surpass the activity generated by their Emerald counterparts, much like the surge observed in early January 2022.

As alluded to by recent blog posts from Oasis, their network aims to facilitate the following use cases:

• Preserving Data Privacy: The fusion of Trusted Execution Environments (TEEs) with autonomous computing offers a secure means to process sensitive data, establishing a dependable foundation for various sectors that handle confidential information. This includes industries such as healthcare, finance, and legal services.
• Tailored Learning Environments: Educational institutions can employ autonomous AI to craft personalized learning environments that dynamically adapt to the unique needs of individual students while safeguarding privacy and data ownership.
• Responsible Advertising: Advertisers can harness privacy-preserving AI to develop personalized advertisements without intruding upon users’ privacy, fostering a more considerate and efficient advertising ecosystem.
• AI-Enhanced Decentralized Finance (DeFi): Financial institutions can integrate autonomous AI into their DeFi applications, augmenting security, privacy, and transactional efficiency within financial services.

Traditionally, verifying on-chain actions has demanded that users authenticate transactions using their distinctive public-private key combinations. While this approach is efficient, it can sometimes add complexity for newcomers looking to delve into the world of Web3. Account abstraction seeks to replace the need for key signing by introducing programmable entities that simplify these on-chain operations. This leads to a user-friendly experience that doesn’t require users to concern themselves with or fully grasp the intricate technical details of on-chain transactions, making the surface-level interaction much smoother.

While we had explored account abstraction during the SUI Fundamental Analysis, it warrants repeating as it is a significant proposal to reduce complexities around user experience (UX) that opens up many different use cases and will likely play a key role in facilitating the next wave of adoption.

ERC-4337 represents a significant advancement in Ethereum’s ecosystem, introducing the concept of account abstraction without requiring any changes at the consensus layer. This standard was deployed on the Ethereum mainnet in March 2023.

Account abstraction is an approach that amalgamates the attributes of externally owned accounts (EOA) and smart contract accounts into a unified account type. This innovation empowers users to use smart contracts without managing their private keys or worrying about gas fees.

ERC-4337 accomplishes account abstraction by introducing a novel transaction type known as a “UserOperation.” UserOperations closely resemble standard Ethereum transactions but have the added capability of including instructions for executing smart contracts.

Users dispatch their UserOperations to a dedicated user operation mempool, where a specialized group of participants, known as “bundlers,” monitor and assemble bundle transactions. Bundle transactions consolidate multiple UserOperations into a single transaction, subsequently included in a block.

The ERC-4337 standard offers several advantages toward enhancing UX:

• Simplicity: ERC-4337 simplifies the UX by allowing interaction with smart contracts without requiring an in-depth understanding of complex Ethereum concepts like gas fees and private keys.
• Security: It enhances the security of smart contracts by facilitating the implementation of features such as multi-signature wallets and sponsored transactions.
• Flexibility: ERC-4337 is a versatile standard that can be harnessed to develop various smart contract wallets and other applications.

Some practical applications of ERC-4337 include:

• Streamlined Onboarding: ERC-4337 can be utilized to create user-friendly wallets that simplify the onboarding process for newcomers.
• Enhanced Smart Contract Wallets can automate intricate tasks like trading on decentralized exchanges or using DeFi protocols.
• Novel Applications: ERC-4337 enables the development of previously unattainable applications on Ethereum, such as decentralized social media platforms or secure voting systems.

While ERC-4337 is still relatively new, it possesses the potential to reshape how users interact with Ethereum’s smart contracts. Here are specific examples of how it can enhance the user experience:

• Automatic DeFi Trading: ERC-4337 wallets can be programmed to execute trades on decentralized exchanges autonomously, simplifying DeFi participation.
• Sponsored Transactions: Users can employ ERC-4337 wallets to initiate transactions sponsored by others, aiding those with insufficient ETH for gas fees or transaction prioritization.
• Multi-Signature Wallets: These wallets can establish multi-signature functionality, requiring multiple user approvals for transaction execution, thereby bolstering security against unauthorized access.

ERC-4337 represents a promising standard that holds the potential to make Ethereum more accessible and user-friendly. While it’s still in its infancy, ERC-4337 wallets are beginning to emerge, notably Gnosis Safe, and we can anticipate a surge in innovative applications leveraging this standard in the future.

This development of ERC-4337 on Ethereum is relevant to Oasis as through Emerald Paratime Layers, and these functionalities can interoperate with Oasis.

It is important to recap and ensure we are across this concept as it lays the groundwork for theoretical applications that utilize AI under the buzzword banner of “Web 4,” which is proposed as a solution to simplify UX.

ERC-4337 and its implications are significant in the context of the development of Web 4 for several reasons:

• Enhanced User Experience: ERC-4337’s account abstraction and its simplification of user interactions with smart contracts align with the overarching goal of Web 4, which is to provide a more user-friendly and seamless online experience. As Web 4 aims to prioritize user needs and convenience, innovations like ERC-4337 can play a pivotal role in achieving this objective.
• Privacy and Security: Web 4 envisions a more secure and private digital environment. ERC-4337 contributes to this by enhancing security through features like multi-signature wallets and allowing users to control their private data and interactions more securely. This aligns with Web 4’s emphasis on privacy and security.
• Automation and Smart Contracts: Web 4 aims to fully harness the capabilities of blockchain technology, including smart contracts. ERC-4337 facilitates the development of more powerful and automated smart contract wallets, which are essential for realizing the full potential of decentralized applications and services in Web 4.
• Interoperability: As Web 4 seeks to create a more interconnected and interoperable digital ecosystem, ERC-4337’s adoption can help create a standard that multiple blockchain platforms and projects can implement. This fosters greater compatibility and collaboration within the blockchain space, a key aspect of Web 4.
• Decentralized Finance (DeFi) and Innovation: DeFi is a central theme in Web 4, and ERC-4337’s support for DeFi applications aligns with this focus. It enables users to participate in DeFi protocols seamlessly. It can drive continued innovation in the DeFi space, an integral part of Web 4’s financial infrastructure.
• Community-Driven Development: Web 4 emphasizes community involvement and development. The creation and adoption of ERC-4337 exemplify how communities of developers and users are actively shaping the future of the web. This participatory approach resonates with Web 4’s ethos.

ERC-4337’s introduction and alignment with the goals and principles of Web 4 highlight the ongoing evolution of blockchain technology and its role in shaping the future of the Internet. It addresses key aspects such as user experience, security, automation, and interoperability, all of which are central to the development of Web 4 and its vision for a decentralized, user-centric, and innovative digital ecosystem.

Oasis Sapphire empowers every smart contract with various capabilities as part of its inherent design. For instance, Sapphire contracts can autonomously generate and manage private keys, encrypt and decrypt data, produce cryptographically secure random numbers, and validate or authenticate signatures. These functionalities endow Sapphire smart contracts not only with the equivalent functionality of externally owned accounts (EOA), as found in ERC-4337, but also grant them the same advantages as hardware security modules or browser plugins. Remarkably, this is achieved without needing third-party services, intricate multi-party computation (MPC) protocols, additional client-side downloads, or hardware requirements.

By amalgamating its confidential state with native support for contract-managed accounts, Sapphire opens up extensive possibilities for the broader adoption of account abstraction. For instance, Sapphire permits a contract within the Oasis network to oversee the private key of a wallet residing on another blockchain. This private key information remains confidential despite being integral to the smart contract state. Consequently, a contract operating on Oasis can directly execute transactions on any other blockchain for trading, portfolio management, voting, or any conceivable use case. Alternatively, Sapphire contracts introduce innovative transaction signing methods, leveraging tools such as Apple FaceID and TouchID, Android Biometrics, or WebAuthN, further enhancing user convenience and security.

$ROSE Tokenomics (as of 13.09.2023)

Price: $0.0382

Market Cap: $192,294,999

Fully Diluted Valuation: $382,345,084

Circulating Supply: 5,029,357,184

Total Supply: 10,000,000,000

All-Time High: $0.597347 -93.60%

All-Time Low: $0.03200566 19.41%

38% of the total token supply are split between the Oasis Foundation, Strategic Partnerships, and Venture Capital Backers.

62% of the total token supply are allocated between stakers, core contributors (developers), and other community and developer incentives.

Only 50% of the token supply has been released, with the remaining 50% to be issued in the lead-up to 2030.

One of the most contentious issues in cryptocurrencies is to what extent various endeavors to launch blockchain-related projects can live up to the core promise of privacy.

Privacy has been the sacrificial lamb to the powers that seek to extend their control through the exchange for security. With the relentless onslaught against privacy coins and the ongoing rollout of CBDCs, finding ourselves at this pivotal fork in the road is unsurprising.

Oasis is one such technology that can walk both sides of the fence.

While it has a native network and DApps, Paratimes enables an overlay that can integrate a distinct privacy layer on top of the EVM, effectively a plug-and-play. If that sounds familiar, thinking of Cosmos and Polkadot, it is.

While Oasis was deployed with the Cosmos SDK, it has been customized to have privacy features at the core of its network with flexible modularity that ensures it does not become ‘rusted on the blockchain.’ This is a significant deviation from Polkadot and Cosmos, which, to some extent, have fixed privacy features, except the Secret Network deployed with the Cosmos SDK, similarly $TAO deployed as a Polkadot Parachain. However, both remain largely isolated from other ecosystems and cannot assume a level of interoperability that Oasis is capable of.

However, the privacy trope is not a reason alone to use the Oasis network. Rather, their focus is on Account Abstraction and “Web 4,” which, to water down the above explanation, is effectively the next generation of the internet where a user only has to enable one process for AI automated transactions to take place in the background.

While preserving privacy is a strong enough reason to use the Oasis Network, and AI will unlock unimaged use cases, account abstraction will be crucial for the next wave of cryptocurrency adoption.

The learning curve for using blockchain technology, in general, is steep, and breaking down these barriers to adoption is critical as it could be argued that the adoption of users eager to learn how to sign transactions through a Web3 wallet has reached a plateau on the learning curve.

We had recently covered account abstraction in the SUI fundamental analysis. Given its origins from Meta, we had not considered privacy to be a core feature, but rather placed value on the mechanism by which they seek to facilitate functions like Single Sign On (SSO) where users can create an account with an email address where a smart contract holds the private keys that control the account.

Oasis takes the account abstraction inspired by Vitalik’s EIP-4337, which has since become the ERC-4337 token standard and integrates privacy and AI automation at the core of its functionalities. To pull this off you need big brain contributors, and typically, when you start to see core contributors holding advanced degrees in Computer Science receive significant initial funding, whether they’re capable of pulling it off becomes less of a concern.

Since we are still in a bear market, with the possibility of light at the end of the tunnel once major ETFs reach D-Day, it is encouraging to see Github activity and monthly developer updates that indicate the Oasis team is still quietly building in the background. As we well know, you can have the best piece of technology in the world, but it’s not much good if there aren’t strong enough incentives or means of generating awareness, At the same time, there is limited value in launching marketing campaigns while the market is still trying to shake out the last bear.

This brings us to some of the thorns in $ROSE and the broader Oasis Network.

First and arguably the most potent of criticisms is the state of $ROSE’s tokenomics. If you purchase $ROSE, you are doing so under the thesis that it will generate more revenue back into the token through the continued rollout of Paratime Layers and activity on the Oasis Network. Given we are still bearish, it is a dubious proposition to expect Oasis to explode in popularity overnight or even overtake some of the more rusted-on layer-1s with an established user base. Ultimately, it is the products launched on Paratime layers that integrate with intuitive user interfaces that capitalize on the most desired outcome for any serious cryptocurrency project, and that is, onboarding users who are not aware they are operating on a blockchain or, rather need not understand how to use and protect their private keys. Simplifying UX will likely play a role in capturing the next wave of users and the revenue that will come into the token. However, until we see evidence of user growth on Paratime and Core networks, the somewhat ruthless emission and dubious token allocations skewed toward initial investors, will likely see continued sell pressure on the token.

To be fair to Oasis, this is not a short-term endeavor that can be realized overnight. Simplifying UX will likely take multiple iterations and continued development beyond the next bull market. As we have previously touched on with some gaming cryptos such as Sand and TCGWorld, a benefit of these gaming modularities, beyond creating unique in-game economies, is the discovery of the barriers around transitioning gamers from their traditional user bases. As we have seen, there is still a long way to go before blockchain games take off, and they will invariably involve a user not being aware they are on a blockchain but rather spend money as they would on a game to have fun. Observations from attempts to engage this transition will likely be transferable into use cases for Oasis, like Decentralized Social Media (DESO) and decentralized financial products.

Second, Oasis landed on the radar relatively later than its Layer-1 competitors. It has indeed been in the works since 2020. It was not until January last year that the market started to notice. In effect, their gaining traction in the mainstream was a double-edged sword. On the one hand, they have to play catch up to more household Layer-1s, such as Avalanche and Solana. Still, on the other hand, they were able to launch a versatile product to capture some niche narratives mentioned above that more rusted-on blockchains will struggle or give up before they even try. Oasis will need to differentiate themselves from the Layer-1 narrative for them to take off. It is not to say that the Layer-1 battle royale has been settled, but that at this stage of the game, those inclined to invest in Layer-1’s would likely seek proven solutions regarding performance and their history of price action. Moreover, Layer-2’s will no doubt complicate the competition for liquidity as most pundits already tip them to outperform other categories in a bull market, given that durable scalability remains one of the primary barriers to mass adoption.

Regarding technical analysis, there is an uninterrupted series of lower highs and lower lows across all time frames above one time frames. There are no clear plays here or any indication that $ROSE will outperform other segments in the market, and there are no actions of note.

Not to say that dollar cost averaging into $ROSE is not a viable approach to prepare yourself for a bull market, but I recommend doing so unless you are clear on the story they will have to tell when the bull market comes around to ensure it lives up to the myriad of competing narratives that may give it an edge over Layer-1 competitors.

While the approval of ETFs will unlock enterprise liquidity for $BTC and $ETH, it may unlock the confidence to invest in the transition of their infrastructure toward leveraging features of the Oasis Network. Since we have touched on Casper Network in the past, the likes of Oasis is forward-looking and should not be dismissed as a viable solution to give users and developers control over the degrees to which they can live up to the core value propositions of blockchains on privacy. As it stands, and with the high rate of token emissions, dollar cost averaging into building a position with the view of treating $ROSE as a mid-high risk investment is likely the smartest play. As we know, the higher the risk, the higher the possible returns (and possible downside). But until $ROSE sets itself apart from other Layer-1 blockchains by asserting its value in niche narratives like AI and account abstraction, it is yet to be seen whether $ROSE will outperform competitors in the next bull market.

References

Github, Oasis Protocol Foundation, https://github.com/oasisprotocol

Oasis Docs, https://docs.oasis.io/general/oasis-network/why-oasis/

Oasis Whitepaper, https://assets.website-files.com/5f59478e350b91447863f593/628ba74a9aee37587419cf65_20200623%20The%20Oasis%20Blockchain%20Platform.pdf

Oasis, ‘Breaking Down the Utility of the Oasis Privacy Layer’, August 3rd 2023, https://oasisprotocol.org/blog/opl-features-uses-explainer

Oasis, ‘Oasis July 2023 Engineering Update’, August 9th 2023, https://oasisprotocol.org/blog/july-2023-engineering-update

Oasis, ‘The Oasis 2023 Roadmap’, February 1st 2023, https://oasisprotocol.org/blog/the-oasis-2023-roadmap

Oasis, ‘The Future of Account Abstraction with Oasis’, September 8th 2023, https://oasisprotocol.org/blog/web3-account-abstraction

Messari, ‘Oasis Network: Growing a Responsible Data Economy with Privacy,’ March 30th, 2022, https://messari.io/report/oasis-network-growing-a-responsible-data-economy-with-privacy?referrer=asset:oasis-labs

Technopedia, ‘What is Web4? Definitions, Key Pillars, and Comparison with Web 3’, 28th July 2023, https://www.techopedia.com/definition/web4

YouTube, InvestAnswers, ‘What I think of Rose Network’, 21 June 2023, https://www.youtube.com/watch?v=A0G3i_wH8eU

YouTube, CoinBureau, ‘WATCH THESE Coins! Crypto Sectors For The Next Bull Run!!’, 14th May 2023, https://www.youtube.com/watch?v=FXUSu5U4cmQ

Notes

“For next generation blockchains, one of the main goals is to enable private computation”